LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
May 26, 2001
TO: Honorable Bill Ratliff, Lieutenant Governor
Honorable James E. "Pete" Laney, Speaker of the House
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2879 by Sadler (Relating to public school finance.),
Conference Committee Report
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2879, Conference Committee Report: negative impact of *
* $(448,800,000) through the biennium ending August 31, 2003. *
* *
* The Conference Committee Report on Senate Bill 1 includes funding *
* of $448,800,000 for these purposes. *
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General Revenue-Related Funds, Five-Year Impact:
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* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(246,700,000) *
* 2003 (202,100,000) *
* 2004 (201,800,000) *
* 2005 (201,800,000) *
* 2006 (201,800,000) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Change in Number of State *
* Year Foundation School Fund Employees from FY 2001 *
* 0193 *
* 2002 $(246,700,000) 2.0 *
* 2003 (202,100,000) 2.0 *
* 2004 (201,800,000) 2.0 *
* 2005 (201,800,000) 2.0 *
* 2006 (201,800,000) 2.0 *
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Fiscal Analysis
The bill makes a number of substantive changes to the Foundation School
Program, particularly in the financing of school district debt, and
authorizes the allocation of funds to various education programs.
Methodology
Section 2 of the bill allows certain districts not serving all grades to
exercise an option for three years 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. 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. An analysis of the implications of changing the law
indicates a reduction in recapture revenue of $11 million from the twelve
districts for the biennium.
Section 3 of the bill provides additional state aid to school districts
experiencing declines of 2 percent or more in average daily attendance.
The bill limits allocations for this provision to $22 million for the
biennium.
Section 4 of the bill 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; as
the provision increases the number of students who many be counted as
being entitled to the compensatory education allotment, a cost to the
Foundation School Program is created. 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. The estimated compensatory education
allotment per student in the 81 districts in question is about $700, with
an additional increase to weighted pupils created by the allotment
generating $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 $4 million
for the biennium.
Section 10 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 in 2002 and moves forward the
date by which school district debt is eligible for funding. These
provisions are estimated to cost $205 million for the 2002-03 biennium.
Section 12 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. {The fiscal
implication of this repeal is reflected in the fiscal note for HB 3343
in the context of the increase in the funding formulas.}
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; this current law provision is amended in Section 14 below.
Section 14 provides a mechanism by which certain programs may receive
additional funding if the commissioner identifies a funding surplus in
the Foundation School Program (FSP). In the event district property
values exceed the estimated values used for state aid purposes, the
commissioner is directed to create a surplus in the FSP by using the
higher values for current year payments. In 2002, the commissioner is
directed to use such funds to provide additional state aid to districts
experiencing rapid decline in property values under 42.2521 first, and
then to use funds to implement the optional homestead provision of
42.2522 and finally to make adjustments under 42.2531. In 2003, the list
of eligible programs is expanded to include extension of the Existing
Debt allotment to $0.29 first and expansion by $50 million of the
Instructional Facilities Allotment. The items identified above fall 3-5
on the priority list in 2003.
Sections 15-19 direct the commissioner in the use of appropriated funds
for purposed related to reading, math, Communities in Schools and teacher
training.
Section 20 directs the allocation of certain funds appropriated in SB 1,
77th Legislature. The total allocation is $209.3 million for the 2002-03
biennium (An additional $205 million allocated in this section for the
Existing Debt Allotment is noted under section 10 in this fiscal note).
Section 21 directs the reduction of certain funds appropriated in SB 1,
77th Legislature. The total reduction is $2.5 million for the 2002-03
biennium.
Local Government Impact
The provisions above tend to increase funds available to school districts.
Source Agencies:
LBB Staff: JK, SD, PF, UP