| TO: | Honorable John Whitmire, Chair, Committee of the Whole Senate |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | HB5 by Grusendorf (Relating to public school finance.), As Engrossed |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | ($672,400,000) |
| 2005 | $516,625,000 |
| 2006 | ($70,000,000) |
| 2007 | ($70,000,000) |
| 2008 | ($70,000,000) |
| Fiscal Year | Probable Savings/(Cost) fromFOUNDATION SCHOOL FUND 193 |
|---|---|
| 2004 | ($672,400,000) |
| 2005 | $516,625,000 |
| 2006 | ($70,000,000) |
| 2007 | ($70,000,000) |
| 2008 | ($70,000,000) |
The bill provides $150 per student to all school districts in 2004 and in 2005 in addition to what is generated by districts through the current law funding formulas. A number of other school finance-related provisions are included in this bill; the provisions with fiscal implications include the following: The eligibility date for the Existing Debt Allotment is "rolled forward" to include debt for which a payment was made in the 2002-03 school year. A provision which would otherwise expire under current law providing additional state assistance to school districts that do not offer all grades is extended for fiscal year 2005. This bill creates assistance for certain small school districts under a stipulated formula. A provision for adjusting the cost of education index is also included, but only takes effect if surplus funds are available. A provision requiring the state to fund 50% of the school finance system by 2007 is included, but without a formula mechanism. Such a provision could likely cost upwards of $3 billion but due to the lack of specificity on the formula the costs are not included in the table.
The bill directs the commissioner of education to reduce state aid payments to school districts in 2005 if the final taxable value of property is greater than the amount used to estimate payments. The bill defers the August 2005 Foundation School Program payment to September 1, 2005.
The cost to provide $150 per
The new allocation to small districts will cost approximately $10 million in 2004 and $19 million in 2005. The cost to maintain higher property wealth levels in certain small districts teaching less than all 12 grades is $12 million in 2005.
The provision directing the commissioner to refrain from overpaying school districts in 2005 is estimated to reduce state aid payments by a range of $300-400 million. The August FSP payment is estimated to be in the $800-900 million range.
The cost to fund additional debt in the EDA is estimated to be $60 million per year, but there is the potential that it could be higher, since the change in this bill would allow districts to issue debt between now and the end of the year and make a debt service payment from available funds to make the new debt eligible. The proration of yield mechanism should limit the fiscal impact to whatever funds are appropriated.
The classroom supply program has been estimated to cost several million dollars per year, but the bill only authorizes a non-general revenue source of funds. Until a funding source is identified, it will be assumed that this feature of the bill has no impact on General Revenue.
The repeals in Section 11 and the continuation of Chapter 46 or Chapter 42 payments for debt service purposes will result in substantial savings, but the laws would continue in effect if the legislature fails to adopt a replacement law by
| Source Agencies: | 701 Central Education Agency
|
| LBB Staff: | JK, SD, UP
|