LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 11, 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.), Committee Report 2nd House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2879, Committee Report 2nd House, Substituted: negative impact * * of $(386,100,000) 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 $(179,500,000) * * 2003 (206,600,000) * * 2004 (206,600,000) * * 2005 (206,600,000) * * 2006 (206,600,000) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * Foundation School Fund * * 0193 * * 2002 $(179,500,000) * * 2003 (206,600,000) * * 2004 (206,600,000) * * 2005 (206,600,000) * * 2006 (206,600,000) * ***************************************************** Fiscal Analysis The bill makes substantive changes to the Foundation School Program. Sections 1 and of the bill increase the Equalized Wealth Level (EWL) from $295,000 per weighted student to $300,000 per weighted student in 2002 and to $305,000 in 2003. Section 3 of the bill provides an alternate method of computing average daily attendance (ADA) for certain districts that have significant declines in ADA from one year to the next. School districts that experience declines in ADA exceeding two percent from one year to the next would be funded on the basis of 98% of the prior years actual ADA, if the decline is not due to the closure or reduction in personnel at a military base. Section 4 of the bill allows expands the eligibility criteria for the Existing Debt Allotment (EDA) by including debt for which taxes were levied and collected in the 2000-01 school year. Section 5 of the bill increases from $0.12 to $0.29 the number of pennies of a district tax rate which may be equalized under the EDA. Methodology Sections 1 and 2 of the bill increasing the Equalized Wealth Level reduce anticipated recapture payments from impacted school districts and therefore results in a cost to the state of $102 million for the 2002-03 biennium. Section 3 of the bill provides additional state aid to school districts experiencing precipitous declines in average daily attendance. TEA estimates that the adjustment described by the bill would cost the state of approximately $25 million per fiscal year. Sections 4 and 5 of the bill impact the cost to the state of the Existing Debt Allotment. Section 4 is estimated to increase state aid by approximately $150 million for the 2002-03 biennium, and section 5 is estimated to increase state aid by approximately $84 million for the biennium. Local Government Impact The provisions of the bill generally increase available revenues to school districts. Source Agencies: LBB Staff: JK, CT, UP