LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 28, 2001 TO: Honorable Teel Bivins, Chair, Senate Committee on Education FROM: John Keel, Director, Legislative Budget Board IN RE: SB1766 by Bivins (Relating to the eligibility of school district bonds for payment with state and local funds under the existing debt tier of the school finance system.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1766, As Introduced: negative impact of $(150,000,000) 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 $(75,000,000) * * 2003 (75,000,000) * * 2004 (75,000,000) * * 2005 (75,000,000) * * 2006 (75,000,000) * **************************************************** All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Savings/(Cost) from * * General Revenue Fund * * 0001 * * 2002 $(75,000,000) * * 2003 (75,000,000) * * 2004 (75,000,000) * * 2005 (75,000,000) * * 2006 (75,000,000) * ***************************************************** Fiscal Analysis The bill amends Section 46.003 of the Texas Education Code by moving forward the date that a district's bonds may be eligible for the existing debt allotment (EDA) from the 1998-99 school year to the 2000-01 school year. Under the bill, a district's outstanding bonds would be EDA eligible if taxes are levied and collected in the 2000-01 school year to pay for principal and interest of bonds, and if the district did not receive Instructional Facilities Allotment (IFA) state aid. Methodology This estimate is based on analyses made by the Texas Education Agency (TEA). TEA has reviewed previous applications for the IFA for which funding was not available in the current biennium to develop an estimate of debts that might meet a change in the eligibility dates. Based on this review, TEA estimates the State cost of recognizing these debts in the EDA is approximately $75,000,000 per year, although there are indications that a number of districts have issued debt for which no application was submitted due to the limitation on IFA funding available this biennium. As a result, the true cost could be significantly higher than $75 million per year. TEA is currently awaiting new information being compiled by the Texas Bond Review Board to determine a more accurate cost. Local Government Impact School districts under $350,000 property wealth per average daily student attendee (ADA) and that levied taxes to pay for principal and interest of bonds in the 2000-01 school year for which they received no IFA support would receive additional state aid. The statewide increase in state aid would be approximately $75,000,000 and would result in a corresponding decrease in local revenue. Source Agencies: 701 Texas Education Agency LBB Staff: JK, CT, PF, JM