LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 10, 2001
TO: Honorable Teel Bivins, Chair, Senate Committee on
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2879 by Sadler (Relating to public school finance.),
As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2879, As Engrossed: negative impact of $(1,105,200,000) 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 $(357,800,000) *
* 2003 (747,400,000) *
* 2004 (777,800,000) *
* 2005 (791,900,000) *
* 2006 (810,800,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* Foundation School Fund *
* 0193 *
* 2002 $(357,800,000) *
* 2003 (747,400,000) *
* 2004 (777,800,000) *
* 2005 (791,900,000) *
* 2006 (810,800,000) *
*****************************************************
Fiscal Analysis
The bill makes substantive changes to the Foundation School Program.
Section 1 and 2 of the bill increase the equalized wealth level from
$295,000 to $298,000 in 2002 and $303,000 in 2003.
Section 3 of the bill allows certain districts not serving all grades to
exercise an option to have their wealth per-student adjusted in order to
maintain a 1999-2000 amount of state and local revenue. The provision
expires September 1, 2004.
Section 4 of the bill provides an additional mechanism for the
computation of the compensatory education allotment entitlement. It
directs that the commissioner develop a rule to calculate educationally
disadvantaged students in districts with no campuses participating in the
federal free or reduced lunch program.
Section 5 of the bill amends the calculation for determining additional
state aid for professional staff salaries eligibility. The bill directs
that 2002-03 district funding changes due to the equalized wealth level,
basic allotment or guaranteed yield are taken into account when
calculating whether a district must spend 80% of additional funds on the
required teacher salary increase from the 2000-01 biennium.
Sections 6 and 7 of the bill increases the tier II guaranteed yield to
$25.75 in 2002 and to 27.14 in 2003.
Section 8 directs that the yield for the Instructional Facilities
Allotment (IFA) be $25 per ADA for any state aid first received on or
after September 1, 2001. All previous issuances retain the current law
$35 per ADA yield. The section also expands the definition of what may
be counted as the local share of the instructional Facilities Allotment.
Section 9 and 13 prohibit districts from receiving state aid under both
chapters 42 (operations) and 46 (facilities) for the same tax effort.
Section 10 expands the definition of what may be counted as the local
share of the Existing Debt Allotment.
Section 11 refines the definition of eligible Existing Debt Allotment
debt.
Section 12 of the bill increases the limit on the number of pennies of
eligible debt that may be covered under the Existing Debt Allotment (EDA)
from $0.12 to $0.29 per $100 of valuation.
Section 14 repeals two provisions: it repeals Section 42.152 (t) which
directs the commissioner of education to reduce the effective tier II
yield in order to ensure that the calculation of weighted students is
not impacted by set-asides from the Foundation School Program. Section
46.034 (d) is also repealed; this section allows the commissioner to
extend the number of pennies in the EDA if funds are available.
Methodology
Section 1 and 2 increasing the Equalized Wealth Level has an estimated
fiscal impact of $21 million in 2002 and $57 million in 2003.
Section 3 of the bill holds harmless for three years certain
property-wealthy school districts. Eligible districts may not teach all
twelve grades, and must forego any credit for tuition paid against
recapture expenses, and change in the taxable value of property used to
compute state aid that results from recognition of tuition paid. The
revenue hold harmless may not involve direct state aid payment. For the
current school year, about a dozen districts are eligible for some
tuition credit against recapture costs under current law. This bill
would reduce the amount of recapture for such districts, but also reduce
the credits awarded against recapture. An analysis of the implications
of changing the law indicates a reduction in revenues from recapture of
$11 million for the biennium.
Section 4 increases the number of students who many be counted in
computing a districts entitlement for the compensatory education
allotment and therefore creates a cost to the Foundation School Program.
The Texas Education agency estimates that 1,796 students were identified
as low-income by the 81 school districts and charter schools which do
not participate in the free or reduced price lunch program. Those
districts educate a total of nearly 13,000 students.
The estimated compensatory education allotment per student in the 81
districts in question is about $700. In addition, the increase to
weighted pupils created by the allotment would generate an additional
$400 per student in tier II. While the wording of a commissioner's rule
implementing the provision is not known at this time and may impact the
actual cost of the bill, it is estimated that based on the data above
that the provision would cost approximately $2 million per year.
Section 5 of the bill amends current law to stipulate that only districts
receiving assistance under the section in 2000-01 are eligible for
payments in 2002-03. The provision generally provides state assistance
to certain districts who would not otherwise generate sufficient state
aid to meet the requirements of the $3,000 per teacher pay raise enacted
by the 76th legislature. The increase to the guaranteed yield and
equalized wealth level in this bill flow additional state aid (or reduce
recapture requirements) and therefore the cost of the provision is
reduced. The Texas Education Agency estimates a savings to the state of
approximately $11 million in 2002 and $15 million in 2003.
Section 6 and 7 of the bill increases the guaranteed yield in tier II
from $24.99 to $25.75 in 2002 and $27.14 in 2003. The net effect of this
section, along with the repeal of 42.152 (t) (Section 11) results in a
cost to the state of $954.3 million for the 2002-03 biennium.
The extension of the number of pennies of debt eligible for the Existing
Debt Allotment (Section 12) is estimated to generate an additional $84
million in state aid for the 2002-03 biennium for districts with
eligible debt.
Local Government Impact
The provisions of the bill generally increase state aid available to
local school districts.
Source Agencies: 701 Texas Education Agency
LBB Staff: JK, CT, UP