| TO: | Honorable Florence Shapiro, Chair, Senate Committee on Education |
| FROM: | John S. O'Brien, Deputy Director, Legislative Budget Board |
| IN RE: | SB2 by Shapiro (Relating to public education and public school finance matters; imposing criminal penalties.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2006 | ($4,391,817,865) |
| 2007 | ($6,796,860,058) |
| 2008 | ($7,387,024,875) |
| 2009 | ($8,432,347,341) |
| 2010 | ($8,795,860,570) |
| Fiscal Year | Probable Savings/(Cost) from GENERAL REVENUE FUND 1 |
Probable Savings/(Cost) from FOUNDATION SCHOOL FUND 193 |
Probable Savings/(Cost) from STATE TEXTBOOK FUND 3 |
Probable Revenue Gain/(Loss) from School Districts |
|---|---|---|---|---|
| 2006 | $232,328,085 | ($4,623,548,950) | ($597,000) | ($3,735,866,537) |
| 2007 | $36,366,742 | ($6,832,629,800) | ($597,000) | ($4,312,176,156) |
| 2008 | $36,235,023 | ($7,627,343,339) | $204,083,441 | ($4,183,773,436) |
| 2009 | $40,208,350 | ($8,153,770,681) | ($318,785,010) | ($4,159,162,721) |
| 2010 | $14,100,750 | ($9,020,009,906) | $210,048,586 | ($4,199,899,098) |
| Fiscal Year | Change in Number of State Employees from FY 2005 |
|---|---|
| 2006 | 12.0 |
| 2007 | 15.0 |
| 2008 | 15.0 |
| 2009 | 15.0 |
| 2010 | 15.0 |
The bill would make substantive changes to the method of funding public education. The bill would amend current law regarding the calculation of entitlements under the Foundation School Program, would amend the method by which the state finances the Foundation School Program and would also make changes to various public education programs.
Article I of the bill relates to public school finance, including formula funding and property tax reduction.
The provisions of the bill are significantly different in fiscal year 2006 than in fiscal year 2007 and beyond.
In fiscal year 2006, school district tax rates are limited to a local fund assignment of $0.76 with $1.15 as a total M&O tax rate limitation. The current law funding formulas are increased, with a state guaranteed yield of $33.09 and an Equalized Wealth Level of $339,000. In addition to revenues generated by those formula amounts, school districts are guaranteed by the provisions of the bill $37 per weighted pupil more than they would have otherwise received in FY 2006 under the funding formulas in effect in FY 2005. Total gains in revenues per pupil are limited to 103% of gain over the 2006 calculated current law amount.
In addition to the amounts referenced above, school districts are entitled to $2,000 per minimum-salary schedule employee and are directed to distribute those funds as a salary increase to those employees. Had HB 3 (Acts of the 79th Legislature Regular Session, 2005) passed but without immediate effect, that salary increase would be reduced to $1,500 per eligible employee.
Beginning in fiscal year 2007, the provisions of the bill directing the calculation and distribution of state aid in the Foundation School Program shift significantly.
Effective FY 2007, the bill creates a single tier school finance system with a $4300 Accreditation Allotment and a system of student and district weight and adjustments. The weights and adjustments remain largely the same as under current law, save for the bilingual allotment, the Cost of Education Index and the Small and Mid-Size District Adjustments. These adjustments increase relative to current law.
The Bilingual Allotment shifts from a single weight under current law to a series of weights graduated by grade level with limitations on the number of years a student is eligible for the enhanced weight.
The current law Cost of Education Index values are phased out over an eight-year period and replaced with the values found in the Teacher Fixed Effects CEI. The rate of application of the CEI is limited to the net effect of the current law rate, increasing over time at the same rate as the increase to the small and mid-size adjustments described below. The ratio between the highest and lowest index values is limited. Provision is made in the bill to ensure that no district has a lower value than under current law, and the Legislative Budget Board is directed to update the index at stated intervals. The findings of the LBB are explicitly subject to appeal to the State Office of Administrative Hearings.
The adjustment for small and mid-size districts is also increased over an eight-year period.
For the transportation allotment, the bill would codify a set of linear density groupings and route-mile allocations that for three groupings are higher than current law and for one grouping is lower.
The bill makes provision starting in 2008 for an adjustment to the Cost of Education Index specifically for school districts paying Social Security for district employees.
School districts are held harmless to the 2006 per weighted pupil revenues, and are guaranteed an increase of $98 per weighted pupil over those 2006 revenues; total gains by districts over that 2006 amount are limited to 108% for 2007, 116% in 2008, and 124% in 2009.
In addition to the amounts described above, districts are entitled to $3,500 per minimum-salary schedule employee and are directed to distribute those funds as a salary increase to those employees. Had HB 3 (Acts of the 79th Legislature Regular Session, 2005) passed but without immediate effect, that salary increase would be reduced to $3,000 per eligible employee.
The Foundation School Program is financed via a $1.10 Local Fund Assignment. Districts are authorized to levy an additional $0.15 of enrichment tax effort, with access to enrichment limited to $0.05 in 2007 and to $0.10 in 2007 and 2008. Enrichment is equalized by the state to the 92nd percentile of wealth in 2007 and in 2008, growing to the 93rd percentile in 2009 and 2010 and in each year thereafter increasing by one percentage each year reaching the 98th percentile in 2014.
The bill would direct the Legislative Budget Board to conduct biennial analyses on public education expenditures (1A.04), the formula funding elements (1B.02), and the cost of education index (IB.05).
Section 1B.14 of the bill would allow an allotment of $250 per student in the first school year of a new instructional facility and a $250 per student allotment for each additional student in average daily attendance in the second and third years in school districts other than a fast growth district. Fast growth districts would be entitled to $500 per student in the first year and $500 in the following two years for each additional student.
1C.01 would require the commissioner to give priority, under the Permanent School Fund bond guarantee program, to districts that have had bonds refunded and defeased, under the bill's provisions.
1C.02 would add new statutory provisions related to the potential refunding of certain school district debts to be state debt as a mechanism for reducing the bonds outstanding guaranteed by the Permanent School Fund. The bill would require the commissioner to determine whether it is feasible to refund eligible school district bonds in order to instruct the Texas Public Finance Authority (TPFA) to issue obligations to accomplish a refinancing. If the commissioner determines it is feasible to refund bonds, the commissioner is required to periodically identify outstanding bonds and notify the affected school districts. The commissioner would be required to enter into agreements with the TPFA to pledge appropriations of IFA and EDA state aid to support the TPFA’s obligations.
1C.04 of the bill would direct the comptroller and the Texas Education Agency (TEA) to conduct a study of instructional facilities, and report findings to the legislature by December 1, 2006.
The bill would also, in 1C.05, roll the date by which district facilities bonds would become eligible for state aid under the Existing Debt allotment from the 2002-03 school year to the 2004-05 school year.
Article II of the bill relates to various education programs and educator incentives and instructional materials. The provisions in the article with fiscal impact are summarized as follows:
2A.02 would establish a school leadership pilot program for principals.
2A.11 would direct school districts to provide a salary increase in an annual amount of $1,500 per minimum salary schedule employees in fiscal year 2006 or $2,000 per minimum salary schedule employee if HB3 were to have passed and taken effect immediately. The bill would direct school districts to provide an additional annual amount of $1,500 per minimum salary schedule employee in fiscal year 2007 (for a total of $3,000 or $3,500 in fiscal year 2007). Sections 1.A.05 and 1B.16 would provide additional state aid above formula funding in corresponding amounts.
2A.11 would allow school districts to pay below the minimum salary schedule for Teacher Retirement System (TRS) retirees who return to work and for educators who do not hold a standard or lifetime certificate who are teaching under a probationary, temporary, or emergency certificate. To the extent that school district payroll decreases, contributions to TRS that are based on payroll would also decrease.
2A.12 would authorize districts to assign a mentor to each classroom teacher with fewer than two years of teaching experience. The commissioner is directed to provide appropriated funds for teacher stipends, scheduled mentoring time, and mentor training and to evaluate annually the effectiveness of district mentoring programs.
2A.13 would create an educator excellence incentive program to provide payments to school employees whose students demonstrate successful annual individual achievement growth. The program would be limited to $100 million annually and would begin in 2007. The commissioner is directed to evaluate the effectiveness of the program annually.
2A.14 directs school districts to provide a wage increase of $1,000 to full-time employees not subject to the minimum salary schedule and $500 to part-time employees, excluding administrators. School districts are directed to use state and local M&O revenue for this purpose.
Under the provisions of the bill, school district employees who are not administrators and who participate in a cafeteria health plan are authorized to elect that a portion of annual salary up to $1,000 for full time employees and $500 for part-time employees be received as a health care supplement as described under Chapter 1580, Insurance Code (repealed by the 79th Legislature, Regular Session). Salary received as a health care supplement is not considered compensation for the purpose of calculating contributions to TRS.
2A.16 would provide exemptions from the payments of tuition or required fees at an institution of higher education for the children of classroom teachers who have completed at least 15 years of service. The number of academic years of tuition or fee exemption increases with each year of teacher service after 15. The participating child must meet eligibility criteria regarding grade point average, baccalaureate degree attainment, and credit hours completed.
2B.01 would direct school districts, open-enrollment charter schools, and institutions of higher education to participate in an electronic student records system, with an implementation date no later than the beginning of the 2006-07 school year.
2B.06 would require the agency to identify available curriculum management materials, the costs associated with them, and the feasibility of technological applications for making them available and to prepare a report to the legislature.
2B.07 would direct the commissioner to consolidate funding for certain at-risk programs in a block grant. The agency would consolidate funding streams, evaluate applications, redistribute funds in the form of block grants to meet statewide goals, and make available research-based guidance.
Section 2B.08: For the 2006-07 school year, the bill would require school districts to allocate no less than 50 percent of total revenue to direct instructional activities, defined as direct classroom instruction expenditures for courses in the foundation curriculum. The required percentage would increased by 5 percent each year until it reaches 65 percent in the 2009-2010 school year and beyond.
2C.01 of the bill would direct the commissioner to make available on the internet all financial information provided by districts and campuses through the Public Education Information Management System (PEIMS), including campus-level information.
2C.03 would direct the agency to pay the cost of a college entrance assessment, on one occasion, for any student choosing to take it, starting in the 2005-06 school year. Funding is by appropriation or, if funds are not appropriated, by a set-aside from the Foundation School Program.
2C.08 would provide incentive funding for districts to meet commissioner-adopted performance standards in gifted and talented education. Districts would be awarded $100 for each student meeting the performance criteria previously developed by the agency for gifted and talented students. Appropriations for this may not exceed $6 million annually, and the commissioner may fund administrative costs from this amount.
2C.15 directs the agency to fund district administration of a college preparation assessment instrument in two different grade levels each year. Funding is by appropriation or, if funds are not appropriated, by a compensatory education allotment set-aside. 2C.17 requires the development of a measure of student achievement growth.
2C.29 would establish a state incentive program for improving student performance on campuses that have at least 65 percent educationally disadvantaged students, and that demonstrate superior growth in academic performance. The grants would begin in fiscal year 2007, and may not exceed $50 million in appropriated funds a year. The commissioner is directed to evaluate annually the effectiveness of the program.
2C.31 would require the commissioner to select and assign technical assistance teams to campuses failing certain performance criteria, and would direct agency to monitor the progress of the teams, supervise the activities of management entities, establish rules, advocate for effective practices and coordinate improvement activities. The bill would allow the commissioner to contract these services.
2D.17 would establish an instructional materials allotment starting in fiscal year 2008. Districts would be entitled to $70 per student enrolled, or a greater amount by appropriation. The section also would entitle juvenile justice alternative education programs to the allotment, beginning in the 2005-06 school year.
In addition, the bill would add new administrative activities to the instructional material review and adoption process, even as responsibility for purchasing the materials shifts from the state to local districts. The bill would require the creation of an additional process for out-of-cycle materials to be submitted, reviewed and adopted in a timely fashion, and authorize new expert panels for checking statements in the materials in which the factual basis is in dispute.
2E.01 would direct the State Board for Educator Certification to establish a dual language education teaching certificate. Section 2E.05 would require SBEC to establish dual language instruction teaching certificates. (Note: SBEC references in this provision conflict with Article 7, which abolishes the board). It is assumed that associated costs will be offset by increased fee revenue.
2E.06 would require the commissioner to establish a dual language pilot project of at least a three-year duration in selected school districts, and to evaluate the program’s impact on graduation success. The agency would give an interim report to the legislature no later than January 1, 2009 and a final report not later than January 1, 2011.
2F.01 would continue the functions of the Texas Education Agency until September 1, 2017.
2F.02 would require TEA and Regional Education Service Centers (RESCs) to solicit, collect, and disseminate best practices information from districts and charters rated exemplary and recognized, including the effective use of online courses, and to develop incentives for school districts and charter schools to implement best practices. The bill also would require TEA to develop and implement a comprehensive, integrated monitoring system to address school district performance and compliance under federal and state education laws.
2F.08 would require implementation of a comprehensive performance-based grant system, with full implementation by the 2009-2010 school year. The agency also is required to identify successful grant programs.
2F.12 would require the P-16 Council to review dual credit and concurrent enrollment programs, and the recommended high school program curriculum, to determine the feasibility of offering a revised curriculum that would provide graduates with at least 12 hours of coursework via dual credit. The report would be due to state leadership by January 1, 2007.
Article 2, Part H would require the Educators' Professional Practices Board (established in Article 7) to collect fingerprints from applicants for teaching permits and each person for whom the board has received information from a public charter district for the purpose of conducting a criminal history background check. The board is authorized to charge a fee to educators to cover the costs of the program and currently contracts with the Department of Public Safety (DPS) for services related to criminal history investigations of educators. It is assumed that any additional caseload associated with the provisions of the bill would be covered under that contract and that any additional costs to either the board or DPS would be funded through additional fee revenue.
2J.01 would direct the commissioner to develop a safety training program for various school district employees and volunteers associated with extracurricular athletic activities.
Article 4 of the bill is related to charter schools. Various provisions of current law are codified, and new requirements on the operation of charters are established:
4.02 would provide procedures for the closure of open-enrollment charter schools that do not meet certain criteria for continuation. The bill would provide for closure costs and outstanding charter school liabilities to be paid from the foundation school fund and the proceeds from the disposition of affected charter school assets.
The section also would establish a $1,000 per ADA facilities allotment for charters meeting certain eligibility requirements.
Section 4.02 also directs charter schools that operated as open-enrollment charter schools and participated in the ActiveCare group health insurance program administered by TRS as of January 1, 2005 to provide a salary increase of $1,000 to full-time teachers, nurses, librarians, and counselors; $500 to other full-time staff; and $250 to part-time staff who are certified under Chapter 21, Education code. This provision would exclude administrators. A corresponding amount of additional state aid is stipulated for this purpose in the same section. Under the provisions of the bill, charter school employees who participate in a cafeteria plan would be eligible to receive a portion of salary as a health insurance supplement as described by Chapter 1580, Insurance code (repealed).
Article 5 of the bill lays out conforming amendments. Section 5A.03 amends Section 1581.702, Insurance code to continue a provision that directs TRS to provide additional aid to a school district that pays social security for its employees in an amount based on supplemental salary for health insurance that employees would have received as the policy existed on January 1, 2005.
5B.10 would effectively hold the Texas School for the Blind and Visually Impaired and the Texas School for the Deaf harmless for any decrease in revenue caused by the bill reducing district payments of local revenue to the schools for the education of referred students. From the foundation school fund, the commissioner would allocate to the schools the amount they would have received had current law continued.
Article 6 amends the tax code relating to property tax collections.
Article 7 of the bill would abolish the State Board for Educator Certification and move its functions to the Texas Education Agency. It would establish the Educator Professional Practices Board to oversee the standards of conduct of public school educators and would grant the commissioner rulemaking authority over educator certification.
Article 8 provides repealing provisions and effective dates for various sections of the bill.
School districts would see a decrease in local revenue and an increase to state aid commensurate with the funding formula changes described above. School districts would receive additional state funding to provide the salary increases to employees subject to the minimum salary structure.
Participating school districts would be eligible for state funding for teacher mentoring programs. Revenues provided for this purpose would be expected to be approximately $14.1 million in 2006, increasing slightly thereafter.
School districts would receive additional funding for educator incentive programs. Funding would be expected to total $100.0 million annually.
School districts would incur additional local cost for wage increases for employees not subject to the minimum salary schedule who are not administrators. Local costs under this requirement are anticipated to range from $223 million in fiscal year 2006 to $240 million in fiscal year 2010.
2B.01 would require each school district to participate in a student enrollment and tracking system. It is likely that districts will realize some additional costs in modifying the current data systems, and these costs will vary by district.
2B.08: Based on current expenditure patterns, it is estimated that directing districts to allocate a certain percentage of total revenue to direct instructional expenditures would require many districts to significantly restructure their operations. The transition costs related to this requirement would vary from district to district, but could be substantial on a statewide basis.
Section 2C.03 would provide state funding for one administration of the SAT or ACT for each student, through an amount withheld from foundation school program payments to districts. Assuming about 253,000 administrations per year at $30-40 per test, the bill would decrease district revenues by about $7.7 - $10.1 million annually under this provision. Section 2C.13 would fund two assessments of a college preparation exam annually using the same funding source. Assuming 650,000 administrations per year at $5-10 per test, the local cost would be $3.3 - $6.5 million annually.
Sections 2C.05-2C.07 would affect provisions relating to bilingual education including a requirement for a two-year follow-up period with students who have exited the program. To the extent that the criteria in the bill regarding the monitoring and evaluation of students who have exited the program is more rigorous than that employed locally, additional administrative workload could result for school district staff.
Section 2C.08 would entitle school districts to $100 per student if the minimum level of performance on the standards adopted for gifted and talented programs are met. School districts would receive additional revenue totaling $6.0 million annually under this provision.
Section 2C.29 would establish a state incentive program for improving student performance on at-risk campuses. On a statewide basis, school districts would receive awards totaling $50.0 million beginning in fiscal year 2007.
Sections 2C.30-2C.32 would provide sanctions for the low performing campuses ranging from technical assistance teams to reconstitution or alternative campus management. The bill establishes that the cost of these interventions would be borne by the affected school districts.
Section 2D.17 would provide an instructional materials allotment, estimated to be $311 million for 2008 increasing to $325 million by fiscal year 2010.
2J.01 would direct the commissioner to adopt a safety training program for certain school district personnel and volunteers associated with extracurricular athletic or other activities. School districts could incur costs estimated at $500,000 statewide associated with implementing a training program.
| Source Agencies: |
| LBB Staff: | JOB, CT, UP, JGM
|