LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
February 28, 2001
TO: Honorable Teel Bivins, Chair, Senate Committee on
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 Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB385, As Introduced: 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. *
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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 (5,525,815) *
* 2006 (1,561,267) *
****************************************************
All Funds, Five-Year Impact:
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*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 0193 *
* 2002 $0 $0 $0 $0 *
* 2003 0 0 0 0 *
* 2004 0 (2,000,000) 0 0 *
* 2005 (8,425,815) (4,100,000) 4,700,000 2,300,000 *
* 2006 (10,261,267) (5,700,000) 9,600,000 4,800,000 *
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Fiscal Analysis
Because of the bill, school districts would be required 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. This bill applies to students entering the ninth grade in the
2004-2005 school year and thereafter.
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. The first would be 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. The second cost would be for
instructional materials associated with required courses. Providing a
textbook for the additional students in each new required course would
cost approximately $31,000,000, which would be spread out over the
implementation period beginning in 2005. The third cost would be for
Teacher Retirement System contributions related to the expected increase
in teachers needed under this bill.
It is estimated that the bill would entail two types of General Revenue
and General Revenue-Related savings as well. First, 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 $28,200,000 million, distributed
across three years and beginning in 2005.
Second, the Texas Education Agency (TEA) estimates a savings to the
Foundation School Program due to an assumed enrollment decrease in
career and technology education courses. During the implementation
period, the required courses of the recommended high school program will
pull an increasing number of students from elective classes, including
career and technology education. Because career and technology
education courses draw 37% more state funding than the required courses,
their declining enrollment in these courses results in a savings to the
Foundation School Program. Because the recommended high school program
would require at least one credit in technology applications, which
could fall within the career and technology funding area, this would
minimize the reduction in career and technology courses.
Methodology
TEA and the State Board for Educator Certification (SBEC) jointly
prepared a report, entitled "Implementing the Recommended High School
Program as the Minimum Graduation Requirement: A Study of the Need for
Teachers" (January 2001). This report makes the following assumptions:
1. The number of students in a class cohort: 300,000
2. The total number of additional enrollments in the required courses
identified as having teacher shortages at full implementation: 519,000
3. The number of teachers needed to serve these additional enrollments,
(assuming 100% reallocation of teachers that are currently teaching a
related, non-required course but are certified to teach a required
course): 3,359
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 $31,000,000. This
cost would be distributed across the implementation period based on an
analysis of the grade levels at which students are currently taking these
courses. 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 2008, 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 Contribution Costs: The increase in state
contributions related to the increase in teachers would be phased in over
three years.
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.
The 519,000 additional enrollments used in this analysis is based on an
assumption that 100% of a class cohort of 300,000 students would be
taking the recommended high school program. The bill contains two
provisions that permit students to "opt out" of this requirement. It is
assumed that neither provision would be utilized to an extent that would
significantly alter the 300,000 student assumption. This assumption is
made in part based on current behavior. For example, currently only 2-3%
of students with individualized education programs do not pursue the
requirements of the minimum high school program; it is assumed a
similarly small number would not pursue the requirements of the
recommended high school program. Also, it is assumed that few exemptions
from the requirement would be granted by an agreement between the
student, his or her parent, and school officials, and those exemptions
that are granted would be done far enough into the students' high school
careers that the cost reductions would be minimal.
To the extent that more students are exempted from the recommended high
school program than is assumed, the state may realize lower textbook
costs.
Additionally, 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 universities would see a 10% decrease in
developmental education in 2005, a 20% decrease in 2006, and a 25%
decrease in 2007. A smaller decrease is assumed for community and
technical colleges (5%, 10%, and 15%, 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 significant costs in providing the
recommended high school program to all students. Districts would likely
experience a serious shortage of teacher 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 3,359 full-time teachers statewide (if
none were reallocated, the number of needed teachers would be 4,929).
The local cost of providing salaries and benefits for 3,359 teachers
would amount to at least $140,000,000 annually. Districts would also
incur increased local costs associated with supervision and staff
development of the additional personnel.
It is also likely that most districts would incur significant costs to
construct or expand facilities to accommodate the additional
staff/courses. Assuming that 100% reallocation of teachers occurs, about
3,359 additional classrooms would be needed to attain full
implementation. 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 $400,000,000 to $500,000,000. Construction costs would
likely be funded through long-term bonded indebtedness in most districts.
Districts would incur increased one-time costs associated with debt
issuance and increased annual costs for debt service.
It should be noted that if districts exempt students from the recommended
high school program at a greater rate than is assumed, that may result
in a smaller number of teachers needed, thus reducing the salary and
facilities costs to districts. Additionally, as demand for elective
courses declines over the implementation period (due to successive
classes being subject to the recommended high school program) and these
courses are phased out, it is likely that the classroom space devoted to
these elective courses will become available, thus reducing the need for
new facilities space and lowering district costs. However, because
there are no data with which to predict the classroom capacity that
might be realized as some electives are eventually phased out, and
because it is not likely that all districts will be able to reallocate
100% of classroom space currently being used to teach related
non-required courses (as is assumed), this estimate does not take the
potential cost reduction of elective phase-outs into account.
Source Agencies: 781 Texas Higher Education Coordinating Board, 701
Texas Education Agency
LBB Staff: JK, CT, PF, JM