LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session May 16, 2001 TO: Honorable Bill Ratliff, Lieutenant Governor, Senate FROM: John Keel, Director, Legislative Budget Board IN RE: SB702 by West (Relating to compensatory, intensive, and accelerated education in public schools.), As Passed 2nd House ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB702, As Passed 2nd House: negative impact of $(4,000,000) * * 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 $(2,000,000) * * 2003 (2,000,000) * * 2004 (2,000,000) * * 2005 (2,000,000) * * 2006 (2,000,000) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * Foundation School Fund * * 0193 * * 2002 $(2,000,000) * * 2003 (2,000,000) * * 2004 (2,000,000) * * 2005 (2,000,000) * * 2006 (2,000,000) * ***************************************************** Fiscal Analysis The bill makes a number of substantive changes to sections of the Texas Education Code relating to compensatory education, eligibility for high school equivalency examinations, and agency and district data reporting. The bill re-focuses the compensatory education program in Section 2, adding language to the statutory description of the compensatory education program focusing on reducing disparity in student performance and high school completion rates for those students at risk of dropping out of school. The bill also amends the definition of an at risk student . The bill in Sections 3, 8 and 9 requires TEA to make the current agency biennial report an annual report, and requires that additional data be reported. Section 4 changes the academic excellence indicators to add aggregate percentages of students receiving accelerated instruction services or are promoted by a grade placement committee, and to add completion rates to the data reported. Section 5 directs the commissioner to adopt accountability measures to assess the progress of students who have failed TAAS in the preceding year. Section 6 amends school district annual reporting requirements and Section 9 makes a number of changes to TEA's annual (under current law, biennial) report. Section 10 amends the requirements for an interim report such that it is limited to a report on waivers and exemptions. Section 7 adds TAAS failure rates to the criteria used for school district accreditation. Section 11 makes modifications to the use and purposes of the compensatory education allotment. It limits the compensatory education funds that may be used by a district for disciplinary alternative education programs to no more than 18% of the total allotment, but allows the commissioner to waive that limitation in certain circumstances. In addition, Section 11 permits commissioner's rule to allow students in districts in which no campuses participate in the national free or reduced price lunch program to be identified as "educationally disadvantaged." The legislation takes effect immediately. Changes to the academic excellence indicators and the district annual performance report take effect for the 2002-03 school year. Most other provisions would generally apply to the 2001-02 school year. Methodology Most of the provisions of the legislation do not have a fiscal implication to the state. The Section 11 provisions regarding participation in the federal free or reduced price lunch program do, however, have a fiscal implication to the Foundation School Program. The provision adds a population of students for compensatory education funding purposes that are not currently counted. TEA estimates that there are 81 school districts or open-enrollment charter schools that do not participate in the national school lunch program. For the 1999-2000 school year, there were 12,795 students enrolled at those school districts and open-enrollment charter schools, of whom 1,796 were reported as low-income. TEA estimates an average compensatory education allotment for those schools is of $700 for purposes of this estimate. In addition to the allotment amount, each student would generate additional funding through the guaranteed yield program, estimated at approximately $400. Assuming 1,796 students generating an additional $1,100 in state aid, the impact would be approximately $2.0 million in additional annual state costs. This estimate will be impacted by the actual adopted language of the commissioner's rule and by the behavior of school districts. Local Government Impact School districts and open enrollment charter schools not participating in the federal free or reduced price lunch program would benefit from the $2 million in increased state aid. School districts in general may also redirect compensatory education funds to target the defined population in the legislation. Source Agencies: 701 Texas Education Agency LBB Staff: JK, CT, UP