LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 24, 2001
TO: Honorable James E. "Pete" Laney, Speaker of the House,
House of Representatives
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1144 by Grusendorf (Relating to public school
accountability and to measures to improve proficiency in
certain subjects.), As Passed 2nd House
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1144, As Passed 2nd House: negative impact of $(39,635,941) *
* through the biennium ending August 31, 2003. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(17,876,447) *
* 2003 (21,759,494) *
* 2004 (17,908,961) *
* 2005 (26,966,762) *
* 2006 (35,389,488) *
****************************************************
All Funds, Five-Year Impact:
***********************************************************************
*Fiscal Probable Probable Probable Probable Change in *
* Year Savings/ Savings/ Savings/ Savings/ Number of *
* (Cost) from (Cost) from (Cost) from (Cost) from State *
* General Foundation General State Employees *
* Revenue School Fund Revenue Textbook from FY 2001 *
* Fund 0193 Fund Fund *
* 0001 TRS Costs 0003 *
* 0001 *
* 2002 $0 $0 $0 22.5 *
* $(17,876, *
* 447) *
* 2003 0 0 0 22.5 *
* (21,759,494) *
* 2004 0 0 0 18.5 *
* (17,908,961) *
* 2005 1,150,000 (1,050,000) (4,212,908) 18.5 *
* (22,853,854) *
* 2006 2,400,000 (2,350,000) (5,130,634) 18.5 *
* (30,308,854) *
***********************************************************************
Technology Impact
Section 1 of the bill would require coordination of databases between the
Texas Education Agency (TEA) and the Higher Education Coordinating Board
(THECB), which would likely necessitate contract efforts to match
student-level data.
Fiscal Analysis
Provisions in the bill with fiscal implications are noted in the
methodology section:
Section 1 would require the development of a coordinated student-level
database for student performance information across primary, secondary
and post-secondary school.
Section 2 of the amended bill would require school districts to ensure
that each student, with some limited exceptions, enrolls in courses
necessary to complete the curriculum requirements identified by the State
Board of Education for the recommended or advanced high school program.
Students entering 9th grade in the 2004-05 school year would be the
first class subject to this provision.
Section 3: TEA would be required to award grants for the conduction of
research on mathematics skills acquisition and program effectiveness.
Section 3 also would require TEA to develop and make available,
preferably via the Internet, a service that assists teachers in providing
and grading mathematics homework assignments. This section of the bill
would also require the Commissioner to help make available internet-based
mathematics homework and grading services.
Section 4: The State Board for Educator Certification (SBEC) would be
required to establish a master mathematics teacher certificate and
develop a related course of study by January 1, 2003.
Section 5: The Texas Education Agency (TEA) would be required to
establish the master mathematics teacher grant program, providing $5,000
stipends to qualified teachers at high-need campuses, starting in the
2003-04 school year.
Section 6: TEA would be required to develop professional development
institutes for mathematics teachers and to develop training materials.
Section 7: TEA would be required to develop and make available to school
districts assessment instruments that can be used to diagnose student
mathematics skills.
Section 8 would authorize districts to provide optional intensive after
school or summer programs to provide mathematics instruction to students
who are not performing at grade level or are not performing successfully.
Section 9: TEA would be required to adopt or develop appropriate
criterion-referenced assessment instruments designed to assess the
ability of and be administered to students who are determined to have
dyslexia or a related disorder, by the 2005-06 school year. Section 9
would also permit but not require the commissioner of education to
participate in multi-state end-of-course test development, and requires
the development of an end-of-course test for Algebra I.
Section 10 would provide a definition of dropout rates under the Academic
Excellence Indicators System (AEIS) to include dropout and completion
rates for grades 9-12.
Section 11 would require school district annual performance reports to
include information received from post-secondary institutions concerning
student performance in the first year following graduation.
Section 12 would require the board of trustees of each school district to
have the district's dropout record audited annually beginning in the
2001-2002 school year. TEA would be required to review the audits. Not
later than February 1, 2002, TEA also be required to develop a training
program for auditing dropout records and make the training program
readily available to public accountants and CPAs throughout the state.
Section 13 would direct the development of a voluntary gold performance
rating system, although the existence of the system is mandatory.
Section 14 would authorize the Commissioner of education to appoint a
board of managers composed of residents to function as the board of
trustees in a district that has had a master or management team for one
year or longer.
Section 15 would require TEA's biennial report to include a statement of
the completion rates of students for grades 9-12.
Methodology
This estimate is based in part upon information provided by TEA and SBEC.
Section 2: The requirement for students to graduate under the
recommended high school program begins with students entering the 9th
grade in the 2004-05 school year. Thus there is no fiscal impact for the
next biennium; the fiscal implications begin in 2005 and continues
thereafter.
Of an estimated 300,000 student cohort, for the purposes of this fiscal
note it is estimated that 30 percent will opt-out of the recommended high
school program via the agreement between the student, parent, and school
representative, or with the option to complete an individualized
education program. The number of additional staff districts would have
to hire to meet the additional enrollments in required courses is
estimated to be 1,680, for the 259,000 additional enrollments. It is
assumed that these teachers would be phased-in on an as-needed basis over
the implementation period. As this happens, the state would incur costs
related to the contribution 6.5 percent of the new salary for these
teachers to the Teacher Retirement System. These costs are estimated at
$1.05 million in 2004, $2.35 million in 2005, and gradually increasing
thereafter. The state would also incur costs for textbooks for these new
enrollments; over the implementation period, this cost is estimated to
be $31 million, starting in 2005.
There also would be some savings that would accrue due to this provision.
It is likely that, as students are required to take courses under the
recommended high school program, students may elect to not enroll in
career and technology programs to the extent they are being enrolled in
currently. As attendance in these courses is funded through the
Foundation School Program at a higher rate than regular attendance, there
would be a savings to the Foundation School Program. It is estimated
that these savings would not accrue until 2006.
Section 3: It is estimated that activities budgeted in the provision of
professional development institutes (section 6) would satisfy the
requirement to award grants to institutions for the development and
identification of research on mathematics skill acquisition; thus there
would be no cost. The grant awards for monitoring the effectiveness of
the institutes are estimated to cost $500,000 in 2003 and 2004. The
grant awards for identifying best practices in math instruction are
estimated to cost $175,000 in 2002 and 2003. The grant awards for
developing research on cognitive development concerning math skills are
estimated to cost $300,000 in 2002 and $100,000 in 2003.
Section 3 also requires the commissioner to use appropriated funds to
help make available, preferably via the Internet, services to distribute
mathematics homework assignments with immediate assessment of a student's
work on the assignment. Because the bill would simply require TEA to
help in making such services available, it is assumed that minimal cost
would be involved and that TEA efforts would mainly be limited to making
districts aware of available services. However, if helping make the
services available were construed to require TEA to incur development and
distribution costs, the TEA estimates that costs could range from $2 to
$10 million over the five-year period. Costs would also increase
significantly from the $10 million level if the TEA were expected to
ensure sufficient capacity for a very large number of potentially
simultaneous student users.
Section 4: The master mathematics teacher certification exam is estimated
to have a contracted cost $363,000 and require one additional employee
with salary costs of $115,589 over a two-year period to oversee the
development of the exam and the course of instruction. The number of
teachers earning certificates for the 2004 grant cycle is assumed to be
435, which is based on the actual number of teachers earning master
reading teacher certificates in 2001. The number of new teachers earning
certificates for each year thereafter is assumed to increase by 491 for
each year thereafter, until 2008 when the cumulative number of teachers
eligible for a master mathematics teacher grant stabilizes at the TEA's
estimate of 2,400.
Section 5: The estimated cost of the master mathematics teacher grant
program is based on $5,000 stipends for 435 teachers (actual master
reading teacher total) for a total of $2,175,000 in fiscal year 2004. It
is assumed that grant-receiving teachers will remain eligible for the
stipend in future years. It is assumed that an additional 491 teachers
will be certified to receive the stipend in fiscal year 2005 and each
fiscal year thereafter, increasing the grant cost by $2,455,000 per year.
It is assumed that the total number of certified teachers will
stabilize at 2,400 in fiscal year 2008.
Section 6: The professional development institutes are estimated to serve
about 28,741 teachers of mathematics. It is assumed that half the
teachers (14,370) would be trained in each of 2002 and 2003 at a cost of
$600 each for stipends, and that each of the 360 training sessions would
cost $10,000 to provide. Initial course material and development costs
are estimated at $1,500,000, for a total cost of $13,735,275 for each of
the first two years. These costs would decrease to $5,000,000 in 2004,
and $3,000,000 in 2005 and 2006. Also, TEA estimates that it would
require one professional and one administrative support position, along
with some additional contracting expenses and operating costs. The
estimated expense for administration would be $807,850 in the first year
and $209,650 in each year thereafter.
Section 7: The cost of diagnostic instruments is an estimated contracted
cost of $150,000 per grade per year, for an annual total of $1,800,000,
and three additional FTE's for a two-year development period. These
costs and the additional personnel would not be needed after fiscal year
2003.
Section 8: The bill would require the state to fund optional district
after-school or summer intensive mathematics instruction programs. It is
assumed that TEA would need .5 FTE to administer the grant application
process. It is anticipated that this program will have a build-up of
funding over four years as the diagnostic tools and training programs
focus attention on mathematics performance. The grant funding would be
assumed to increase from $5,000,000 in 2003 to $20 million in 2006. The
funding at $20,000,000 would be sufficient to provide services to about
30,000 students for a thirty-day time period.
Section 9: The provisions that would allow the commissioner of education
to participate in multi-state end-of-course test development, and
require an end-of-course Algebra I exam have no fiscal implications.
Section 9 also would require the development of assessment instruments
for students with dyslexia and related disorders. Because of the
requirement for appropriate criterion-referenced assessment instruments,
tests would need to be developed to assess the Texas Essential Knowledge
and Skills statewide curriculum. The language requires tests in
mathematics at grades 3 through 11, reading at grades 3 through 10,
writing at grades 4 and 7, English language arts at grade 10, social
studies at grades 8 and 10, and science at grades 5 and 10.
Considering current contract costs for development and administration of
the Texas Assessment of Academic Skills (TAAS) and the State-Developed
Alternative Assessment (SDAA) for exempted special education students, a
new assessment system for dyslexic students is estimated to cost the
following contract amounts: fiscal year 2002, $5 million; fiscal year
2003, $5 million; fiscal year 2004, $10 million; fiscal year 2005, $10
million; fiscal year 2006, $8 million. These figures are based on
English-version tests only and multiple administrations of the certain
tests required under TEC 28.0211 for the elimination of social
promotion. The language does not require annual public release of these
new tests; however, annual release is included in the estimates since all
other tests will be released. If the tests for dyslexic students do not
need to be released, the cost estimate could be reduced. Additionally,
the estimate may be affected once it can be determined how many dyslexic
students would be administered the new tests.
In addition to the contract amounts above, costs for full-time equivalent
employees or contracted personnel for the Student Assessment and Special
Education divisions would be required. It is estimated that an
additional 10 full-time employees would be needed. Associated
administrative and travel budget for these positions would also be
required. These positions would be required beginning in fiscal year
2002 to begin the lengthy test development process. Because the
provision is added to Texas Education Code 39.023, it is expected that
the cost of these assessments can be funded from the Foundation School
Program compensatory education allotment. There would therefore be no
net cost to the state.
Section 12: It is assumed that Texas Education Agency s audit division
would be responsible for implementing Section 12 of the bill and that two
additional employees would be required to implement this bill, including
receiving and reviewing the reports, developing audit standards and
training and any necessary follow-up work. The cost to develop the
training materials and provide training is estimated to be $30,000 in the
first year.
Section 13: Regarding the development and implementation of the
voluntary gold performance rating system. It is estimated that three
professional positions would be needed for system development and
administration, along with one support position, with annual support
costs of $204,094, as well as a one-time $200,000 contract in 2002,
would be needed to develop the voluntary gold performance rating system
by June 30, 2002.
Local Government Impact
Regarding section 2: School districts would incur costs in providing the
recommended high school program to all students. Districts would likely
experience a shortage of teachers in subject areas key to the
recommended high school program: sciences, mathematics, and foreign
languages. Even if it is assumed that all instructors currently teaching
related, non-required courses were certified/capable of teaching the
required courses and were reallocated to teach them, districts would
still need to hire approximately 1,680 full-time teachers statewide for
full implementation (if none were reallocated, the number of needed
teachers would be 2,465).
Based on phase-in assumptions and assumed variations due to hardship
exemptions, it is expected that about 498 additional teachers would be
needed in 2004, followed by an additional 560 in 2005, 459 in 2006, and
161 in 2007. The respective annual costs would be $21 million in 2004,
$44 million in 2005, $63 million in 2006, and $70 million in 2007.
It is also likely that most districts would incur costs to construct or
expand facilities to accommodate the additional staff/courses. The
average cost per classroom is assumed to range from $120,000 to $150,000
(based on averages of $100 per square feet and 1,200 square feet). With
these assumptions, new classroom costs are estimated to range from
$200,000,000 to $250,000,000. Construction costs would likely be funded
through long-term bonded indebtedness in most districts.
It should be noted that annual payments on $200,000,000 in new debt
issued as thirty-year bonds would probably be about $13,000,000 under
current market conditions. The state has existing mechanisms to equalize
the tax burdens to school districts that issue debt that may further
defray the costs to the school districts. The current state share in the
Instructional Facilities Allotment is approximately 50%, so school
districts might experience annual costs of about $6,500,000 if the state
appropriates sufficient funding to offset local costs for new debt.
Regarding the provisions of the bill which would expend funds from the
compensatory education allotment for test development: to the extent
that test development draws funds from the compensatory education
allotment of the Foundation School Program, there would be a reduction
of state aid to districts.
Source Agencies: 701 Texas Education Agency
LBB Staff: JK, CT, PF, JM