LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 10, 2001
TO: Honorable Paul Sadler, Chair, House Committee on Public
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2201 by Hochberg (Relating to the instructional
facilities allotment and to state assistance with the
payment of existing debt of school districts.), As
Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2201, As Introduced: negative impact of $(234,000,000) 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. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(120,500,000) *
* 2003 (113,500,000) *
* 2004 (263,500,000) *
* 2005 (263,500,000) *
* 2006 (413,500,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* Foundation School Fund *
* 0193 *
* 2002 $(120,500,000) *
* 2003 (113,500,000) *
* 2004 (263,500,000) *
* 2005 (263,500,000) *
* 2006 (413,500,000) *
*****************************************************
Fiscal Analysis
The bill limits a school district's participation in the instructional
facilities allotment (IFA) program to two years. After receiving an IFA
for no more than two years of biennium, the district would only be
eligible for state aid in the existing debt allotment (EDA) program.
The bill also amends the debt eligibility requirements for the EDA.
Currently, only debt for which taxes have been levied and collected in
the 1998-99 school year is eligible for the EDA. The bill effectively
rolls the EDA eligible date forward two years every biennium. Finally,
the bill would increase the limitation on the tax rate subject to EDA
state aid from $0.12 to no more than $0.50 per $100 of valuation.
Methodology
Based on a review of previous applications for the IFA for which funding
was not available in the current biennium, it is estimated that the state
cost in the 2002-03 biennium for recognizing this debt under the EDA
would be approximately $75,000,000 a year. This cost estimate will be
updated based on data being compiled by the Texas Bond Review Board, as
soon as it becomes available.
In fiscal year 2001, the ceiling rate for the EDA was raised from $.12 to
$.29 per $100 of valuation, at a cost of approximately $62,000,000. This
bill would also lift the EDA tax rate ceiling; it is estimated that
increasing property values and adjustments for student enrollment
projections would result in a cost for fiscal year 2002 of $45,500,000
over current law cost, and $38,500,000 for fiscal year 2003.
The bill also would effectively "catch up" to debt each biennium. In
fiscal year 2004, any debt issued by districts, even if funded by the
IFA during the 2002-03 biennium, would be eligible for funding through
the EDA. Based on current trends in debt issuance, a conservative
estimate of $2 billion in new issues per year would cost about
$150,000,000 in debt service. Assuming a state share of 50 percent,
each year's cost of $75,000,000 to the state would lead to a biennial
increase of $150,000,000 million.
Local Government Impact
There is no net fiscal impact upon school districts.
Districts receiving the EDA would be required to reduce related tax
effort by a corresponding amount to reflect this increase in state
assistance.
Source Agencies: 701 Texas Education Agency
LBB Staff: JK, CT, PF, JM