LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 30, 2001
TO: Honorable Paul Sadler, Chair, House Committee on Public
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2879 by Sadler (Relating to public school finance.),
Committee Report 1st House, Substituted
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2879, Committee Report 1st House, Substituted: negative impact *
* of $(1,144,900,000) 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. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(399,200,000) *
* 2003 (745,700,000) *
* 2004 (778,900,000) *
* 2005 (792,500,000) *
* 2006 (826,700,000) *
****************************************************
All Funds, Five-Year Impact:
*****************************************************
* Fiscal Year Probable Savings/(Cost) from *
* Foundation School Fund *
* 0193 *
* 2002 $(399,200,000) *
* 2003 (745,700,000) *
* 2004 (778,900,000) *
* 2005 (792,500,000) *
* 2006 (826,700,000) *
*****************************************************
Fiscal Analysis
The bill makes substantive changes to the Foundation School Program.
Section 1 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 2 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 3 and 4 of the bill increases the tier II guaranteed yield to
$25.96 in 2002 and to 27.30 in 2003.
Section 5 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.
Sections 5 and 7 broaden the definition of local share for the purposes
of debt payments.
Sections 6 and 10 of the bill prohibit districts from receiving state aid
under both chapters 42 (operations) and 46 (facilities) for the same tax
effort.
Section 8 makes a non-substantive change to the definition of eligible
debt under the Existing Debt Allotment.
Section 9 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 11 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 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 2 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. Most districts receiving additional state aid for
professional staff salaries in 2000-01 were either gap (districts only
receiving tier I payments) or chapter 41 school districts; the bill does
not provide additional state aid (or reduced recapture) to either gap or
chapter 41 districts. The Texas Education Agency estimates a savings to
the state of approximately $2 million per year due to this provision.
Section 3 of the bill increases the guaranteed yield in tier II from
$24.99 to $25.96 in 2002 and $27.30 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 $1,054 million for the 2002-03 biennium.
The Instructional Facilities Allotment (Section 5) guaranteed yield
adjustment has no fiscal impact to the state.
The extension of the number of pennies of debt eligible for the Existing
Debt Allotment (Section 9) 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, PF, UP