LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 19, 2001
TO: Honorable Paul Sadler, Chair, House Committee on Public
Education
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB385 by Bivins (Relating to the curriculum requirements
for graduation from public high school.), As Engrossed
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB385, As Engrossed: positive impact of $0 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 $0 *
* 2003 0 *
* 2004 (2,000,000) *
* 2005 (1,710,759) *
* 2006 (483,368) *
****************************************************
All Funds, Five-Year Impact:
***************************************************************************
*Fiscal Probable Probable Probable Probable *
* Year Savings/(Cost) Savings/(Cost) Savings/(Cost) Savings/(Cost) *
* from State from General from General from Foundation *
* Textbook Fund Revenue Fund Revenue Fund School Fund *
* 0003 0001 0001 (development ed *
* savings) *
* 0193 *
* 2002 $0 $0 $0 $0 *
* 2003 0 0 0 0 *
* 2004 0 (2,000,000) 0 0 *
* 2005 (1,390,259) (3,050,000) 2,350,000 379,500 *
* 2006 (3,083,368) (3,350,000) 4,800,000 1,150,000 *
***************************************************************************
Fiscal Analysis
The bill, as substituted, requires school districts to ensure that each
student enrolls in courses necessary to complete the curriculum
requirements identified by the State Board of Education for the
recommended or advanced high school program. A student would be allowed
to take courses under the minimum high school program only if the
student, the student's parent, a school counselor, and a school
administrator agree that the student should be permitted to do so.
Students receiving special education would continue to have the option of
graduating through the completion of an individualized education program
(IEP). This bill applies to students entering the ninth grade in the
2004-2005 school year and thereafter. However, the commissioner of
education would be granted the authority to exempt a school district from
the implementation date for up to three years if the requirement places
an undue hardship on the district.
Methodology
While the bill has no fiscal implications for the state in the next
biennium, the state would incur three types of costs during the
implementation period.
1. Additional funding to be distributed to Regional Educational Service
Centers for teacher retraining, estimated at $2,000,000 per year for 2004
and 2005, with the cost diminishing to zero in the out years.
2. Instructional materials associated with required courses. Providing
a textbook for the additional students in each new required course would
cost approximately $15,500,000, which would be spread out over the
implementation period beginning in 2005.
3. Teacher Retirement System (TRS) contributions related to the expected
increase in teachers needed under this bill. At full implementation,
state TRS costs would be approximately $3,900,000 annually, but would
begin lower and be phased-in over the implementation period.
It is estimated that the bill would entail two types of General Revenue
and General Revenue-Related savings as well.
1. The Higher Education Coordinating Board (THECB) estimates that
requiring the recommended high school program would decrease the amount
of state-funded developmental education courses needed at universities,
community and technical colleges. THECB estimates a savings of
$14,100,000 million, distributed across three years and beginning in
2005.
2. The Texas Education Agency (TEA) estimates a savings to the
Foundation School Program due to an assumed enrollment decrease in
elective career and technology education courses. These savings are
estimated at $379,500 in 2005, $1,150,000 in 2006, and increasing
significantly in each successive year until full implementation has been
reached. This fiscal note makes the following assumptions:
1. Of a student class cohort of 300,000, 30% would opt-out of the
recommended high school program using the provisions of the bill
regarding students with IEP's and agreements between parents, students
and school officials. This would leave 70%, or 210,000, participating in
the program at full implementation.
2. Based on analysis by TEA and the State Board for Educator
Certification (SBEC), the total number of additional enrollments in the
required courses identified as having teacher shortages at full
implementation would be 259,500. The number of teachers needed to serve
these additional enrollments at full implementation, (assuming 100%
reallocation of teachers that are currently teaching a related,
non-required course but are certified to teach a required course) would
be 1,680.
4. 700 districts (67%) would request, and receive, hardship exemptions
for the 2004-05 school year, and 350 of those would continue to use the
exemption for 2005-06. Nearly all districts would be participating in
the 2006-07 school year.
5. State costs for textbooks and TRS contributions (as well as local
teacher salary costs) would be phased-in over a six year implementation
period. The costs are phased-in based on an analysis of the grade levels
at which students are currently taking the recommended courses and
assumptions concerning district hardship exemptions; in other words,
school districts would hire staff on an as-needed basis, rather than
hiring teachers in 2005 for recommended courses that would not be taken
by students until 2007 or 2008.
Retraining Costs: TEA would be called upon to assist school district
efforts to establish the capacity to provide at least the recommended
high school program for all students. It is assumed that TEA would need
additional funding to be distributed to Regional Education Service
Centers to support capacity development activities aimed at retraining
teachers. It is assumed that TEA would need to fund approximately
$100,000 per service center, or $2,000,000 total per year beginning in
2004, the year prior to the first year that students are subject to the
requirements of the bill. This cost is expected to diminish during the
implementation period as districts attain the capacity to provide the
recommended high school program to all students.
Textbook Costs: It is assumed that each additional enrollment in the
required courses will need a textbook for that course. Assuming an
average cost of $60 per textbook, the cost approaches $15,500,000,
distributed over the six-year implementation period. This cost likely
would not persist past the implementation period, because there would be
some offsetting reductions in the cost of textbook purchases for elective
subjects as student demand shifts away from them to the required
courses. However, these potential savings will not begin to be realized
for several years beyond the initial implementation because of the
current textbook adoption and purchase cycles. For example, by 2010,
there may be sufficient decrease in demand to allow the state to purchase
fewer fine arts textbooks, but no textbook savings from decreased
enrollments in fine arts courses would be attainable until that year
since books have already been purchased and will remain in circulation
until then.
Teacher Retirement System (TRS) Contribution Costs: The state contributes
6% of every teacher's salary, up to the minimum salary, for TRS costs,
along with 0.5% of all salary for TRS-Care.
Foundation School Program Savings: Because the requirement to take
specific courses will reduce current student course selection
flexibility, it is possible that there may be impacts on other courses
and programs. However, the is no consensus on which courses students
would choose to exclude from their schedules. It has been speculated
that some of the courses students would choose not to take would be
career and technology courses, which are funded at a 37% higher rate in
the Foundation School Program than the new course requirements. Because
of this, a change in course enrollment patterns away from career and
technology courses could lead to noticeable savings in the cost of the
Foundation School Program. However, the full impact of these savings
would not materialize until the initial class of students covered by the
new requirement reaches its senior year.
Developmental Education Savings: THECB estimates a General Revenue
savings due to a decrease in the amount of developmental education
courses funded by the state. It is assumed that enrollment in the
recommended high school program would increase upon enactment of the
bill into law. Thus, universities would see a 5% decrease in
developmental education as early as 2005, a 10% decrease in 2006, and a
12.5% decrease in 2007. A smaller decrease is assumed for community and
technical colleges (2.5%, 5%, and 7.5%, respectively), because they are
not "open admissions" institutions and will continue to enroll larger
numbers of returning adults who would not have been under the
recommended high school program requirement.
Local Government Impact
School districts would incur costs in providing the recommended high
school program to all students. Districts would likely experience a
shortage of teachers in subject areas key to the recommended high school
program: sciences, mathematics, and foreign languages. Even if it is
assumed that all instructors currently teaching related, non-required
courses were certified/capable of teaching the required courses and were
reallocated to teach them, districts would still need to hire
approximately 1,680 full-time teachers statewide for full implementation
(if none were reallocated, the number of needed teachers would be 2,465).
Based on phase-in assumptions and assumed variations due to hardship
exemptions, it is expected that about 164 additional teachers would be
needed in 2005, another 349 in 2006, 506 in 2007, 395 in 2008, 210 in
2009, and 56 in 2010. The respective annual salary costs would be
$7,000,000 in 2005, $21,500,000 in 2006, $42,500,000 in 2007, $59,000,000
in 2008, $68,000,000 in 2009, and $70,000,000 in 2010.
It is also likely that most districts would incur costs to construct or
expand facilities to accommodate the additional staff/courses. These
facilities would be need starting in fiscal year 2004. The average cost
per classroom is assumed to range from $120,000 to $150,000 (based on
averages of $100 per square feet and 1,200 square feet). With these
assumptions, new classroom costs are estimated to range from $200,000,000
to $250,000,000. Construction costs would likely be funded through
long-term bonded indebtedness in most districts.
It should be noted that annual payments on $200,000,000 in new debt
issued as thirty-year bonds would probably be about $13,000,000 under
current market conditions. The state has existing mechanisms to
equalize the tax burdens to school districts that issue debt that may
further defray the costs to the school districts. The current state
share in the Instructional Facilities Allotment is approximately 50%, so
school districts might experience annual costs of about $6,500,000 if
the state appropriates sufficient funding to offset local costs for new
debt.
Source Agencies:
LBB Staff: JK, CT, PF, JM