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: HB3418 by Grusendorf (Relating to the financing of
public school facilities.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3418, As Introduced: negative impact of $(84,000,000) 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. *
**************************************************************************
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(45,500,000) *
* 2003 (38,500,000) *
* 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 $(45,500,000) *
* 2003 (38,500,000) *
* 2004 (263,500,000) *
* 2005 (263,500,000) *
* 2006 (413,500,000) *
*****************************************************
Fiscal Analysis
Section 46.034 of the bill would increase the tax rate limitation on
state assistance from the existing debt allotment (EDA) program from
$0.12 to $0.29.
Section 46.004 of the bill requires the state, in making instructional
facilities allotment (IFA) awards, to recalculate the allotment amount
every year based on current year average daily attendance (ADA), instead
of based on the district's ADA in the biennium in which the bonds were
issued (current law). This provision would not generate significant
additional state cost; however, together with the bill's amendments to
the EDA, this amendment could shift the state aid paid in the IFA and EDA
on an annual basis.
Under current law, the EDA provides state aid for debt that a district
levied and collected taxes for in school year 1998-99. Section 46.033
of the bill would eliminate this requirement and require school
districts to certify to the commissioner of education prior to January 1
of the second year of the biennium the amount of debt payments due in
the following biennium in order to be eligible for EDA funding. After
the bill would take effect on September 1, 2001, the next January 1 of
the second year of a biennium would occur on January 1, 2003. Thus,
there would be no EDA-related cost to this bill for the 2002-03
biennium.
Methodology
The increase in the limitation on assistance for EDA from $0.12 to $0.29.
In fiscal year 2001, the ceiling rate for the EDA was raised from $0.12
to $0.29 per $100 of valuation, at a cost of approximately $62 million.
It is estimated that increasing property values and adjustments for
student enrollment projections would result in an estimate cost for
fiscal year 2002 of $45.5 million over current law cost, and $38.5
million for fiscal year 2003.
Regarding section 46.033 of the bill: because January 1 of the second
year of the current biennium has already passed, no districts have
certified their eligible debt payments to the commissioner for EDA
assistance in the 2002-03 biennium. Therefore, for the purposes of this
fiscal note, it is assumed that there would be no cost to the state in
the 2002-03 biennium. The next opportunity to certify EDA-eligible debt
would be January 1, 2003, and so the state costs of the EDA would begin
in the 2004-05 biennium.
The bill would roll the EDA eligible date forward two years every
biennium, starting with the 2004-05. There would be two biennia of debt
to "catch up" to for the 2004-05 biennium. As a result, and based on a
review of previous applications for the IFA for which funding was not
available in the current biennium, the estimated state cost of
recognizing these debts in the EDA is approximately $75 million per year
from the 2001-02 biennium, and an additional $150 million from the
2002-03 biennium, for a total of $225 million.
Due to the ambiguity of this provision, it is possible that the intent of
the bill is to begin the certification process in January 2001. If this
is the case, there would be a state cost in the 2002-03 biennium; it is
estimated that the state cost to recognize debt from the 2001-02
biennium would be approximately $75 million per year.
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, JM, PF