Honorable Florence Shapiro, Chair, Senate Committee on Education
John S. O'Brien, Deputy Director, Legislative Budget Board
HB2 by Grusendorf (Relating to public education, public school finance matters, and the imposition of a state ad valorem tax; imposing criminal penalties. ), Committee Report 2nd House, Substituted
|Fiscal Year||Probable Net Positive/(Negative) Impact to General Revenue Related Funds|
|Fiscal Year||Probable Savings/(Cost) from
GENERAL REVENUE FUND
|Probable Savings/(Cost) from
FOUNDATION SCHOOL FUND
|Probable Savings/(Cost) from
STATE TEXTBOOK FUND
|Probable Revenue Gain/(Loss) from
|Fiscal Year||Probable Revenue Gain from
FOUNDATION SCHOOL FUND
|Change in Number of State Employees from FY 2005|
The school finance provisions of the bill result in a net revenue increase to local school districts and a cost to the state.
In fiscal year 2006, the net state cost of the provisions described above is $2.9 billion. Of that amount, $896 million represents an increase in total revenue to school districts.
In fiscal year 2007, the net state cost of the single-tier provisions described above is $6.4 billion. Of that amount, 2.3 billion represents an increase in total revenue to school districts.
Due to the provisions of the bill that shift over time, including the phase-in of the new Cost of Education Index, phase-in of the new small and mid-size district adjustment, and the gradual elimination of restrictions on net gain the costs in the out years are expected to increase by about $500 million per year, with 2010 reflecting net state cost of $7.9 billion.
The provisions for equalized enrichment also result in increased state cost and local revenue generation over time. At the yield generated by the 92nd percentile of wealth, each penny of enrichment would cost the state $118 million. Assuming that school districts statewide access the equivalent of half the $0.05 maximum, state cost associated with enrichment is estimated to be $295 million in 2007. In 2010 (the last year of the five-year period of this analysis) enrichment is estimated to cost the state $1.2 billion. If all pennies were accessed, the cost in 2010 would be $2.4 billion.
1A.04, 1B.02, and 1B.05: It is estimated that completing the analyses required by these provisions would cost the Legislative Budget Board $750,000 each biennium.
1C.02: Rolling the date forward for the Existing Debt allotment is estimated to cost $90 million in each of 2006 and 2007, decreasing somewhat in the out years as estimated property value increases lower the state share of the program.
2A.02: The school leadership pilot program would be funded from a set-aside from the Foundation School Program, resulting in no fiscal impact to the state. Local districts would see state aid decreased proportionately.
2A.10: For salary increases to the minimum salary schedule, the estimated cost of providing this additional state aid would be $626 million in fiscal year 2006 and $1.1 billion in fiscal year 2007. These amounts are included in state aid totals above.
Increases in public education salaries have an impact on the state’s contribution to TRS. For purposes of this estimate, it is assumed that 60 percent of employees would elect to receive a portion of salary as a health care supplement. At a 6 percent contribution rate, the increased state contribution to TRS associated with the provisions of the bill related to school district employee salaries would be an estimated $31 million in fiscal year 2006 and $61 million in fiscal year 2007. These amounts include additional TRS contributions associated with increases to minimum salary schedule employees as well as other school district employees, as described in Section 2A.13.
2A.11: For the mentoring program, in 2006 there will be an estimated 40,200 teachers with less than two years experience. For the purpose of this fiscal note, it is assumed that the commissioner would adopt rules assigning one mentor teacher to no less than three teachers. It is also assumed that the cost per mentor teacher for teacher stipends, mentoring time, and mentor training would be approximately $1,500 annually. Under these assumptions, one mentor teacher per three teachers would require approximately 13,400 mentors; at $1,500 per mentor, this would give an initial cost of $20.1 million annually. However, it is estimated that federal funds available for this purpose could be used to defray the cost to general revenue, lowering the annual cost to $14.1 million. Assuming a growth rate in new teachers of 2 percent, program costs would increase by approximately two percent thereafter.
2A.12: For the purpose of this fiscal note, it is assumed that the educator excellence incentive program would be appropriated the maximum amount allowed by the provisions of the bill: $100 million annually, starting in fiscal year 2007. Additionally, TEA estimates that the agency would incur administrative costs associated with approving local plans under this initiative, in the amount three full-time equivalents and $160,000 in supporting costs annually.
2A.14: For the tuition exemption program for teachers, it is assumed that, of the approximately 21,000 teachers with between 15 and 18 years of experience and approximately 75,000 teachers with 19 or more years of service, about 70 percent have an average of 2 children, or about 134,000 children. Of these, assuming a fairly even spread in age range, it is further assumed that approximately 7 percent of them would be college age, or about 8,900. It is assumed that 70 percent (6,200) of these children would go to college, and of those children, 45 percent will attend community college and 55 percent will attend universities. It is assumed teachers would apply exemptions to the more expensive of tuition or fees, $1,150 in fees annually at community colleges and $2,758 in tuition annually at universities, and that children of teachers above 19 years would apply their credit to both tuition and fees. Because funding for universities lags, the state will not realize costs associated with exemptions at universities until fiscal year 2010. Costs associated with community colleges would be realized beginning in fiscal year 2007. Under these assumptions, the cost of the program in fiscal years 2007 through 2009 would be an estimated $16.2 million, increasing to $43.2 million in fiscal year 2010 as the lagged cost of university exemptions is realized.
2B.01: Based on submitted proposals from vendors, development of the electronic student records system is estimated to incur a one-time development cost to the Texas Education Agency of $2 million in 2006, with ongoing maintenance costs of $300,000 each year thereafter. It is assumed that public institutions of higher education would be able to absorb any cost of modifying their records systems within their existing resources.
2B.04: The agency estimates that the curriculum management requirements of the bill, including the report to the legislature, would require a one-time contracted cost of approximately $150,000. Although the bill would allow the commissioner to use available federal funds for this purpose, the agency was not able to identify federal funds allowed for that purpose; therefore, it is assumed for the purpose of this fiscal note that the cost would be to General Revenue.
2B.05: Cost-outcome analysis of at-risk program consolidation. The bill directs the agency and LBB to contract for the analysis at a one-time cost of $500,000, from funds set aside from the Foundation School Program. Thus, the section would have no net fiscal impact to the state.
2C.02, 2C.13, and 2C.15: It is assumed that for purposes of this fiscal note that the legislature would fund the college entrance assessments, the college preparation assessments, and the development of a student achievement growth measure, in the same manner as all other assessments are currently funded, as a set-aside from the Foundation School Program. Under this assumption, this provision would have no net state fiscal impact, but local districts would see their state funding decrease proportionately.
2C.07: For the gifted and talented education performance incentives, it is assumed for the purpose of this fiscal note that the legislature would fund the maximum amount allowed under the bill: $6 million annually, beginning in fiscal year 2007.
2C.23: For the incentive program for improving performance at at-risk campuses, the maximum amount of $50 million annually is assumed for the purpose of this fiscal note, beginning in fiscal year 2007.
2C.26: For the management of intervention operations, the agency estimates that the workload would require an outside contract at a cost of $768,000 annually.
2D.17: At an estimated 4,440,000 students in average daily attendance, the $70 per student instructional materials allotment would cost the state $311 million starting in 2008, increasing by an estimated two percent each year thereafter as enrollment increases. However, the bill would eliminate the current method of appropriating funds for textbooks. Therefore, projected appropriations to the State Textbook Fund for instructional materials the 2008-09 biennia (estimated to be $516 million based on the current adoption cycle, all appropriated in 2008) and 2010-11 biennia (estimated to be $536 million, all appropriated in 2010) would not be made.
Juvenile justice alternative education enrollment data for the 2003-04 school year shows a peak JJAEP enrollment in a given month of approximately 4,300 students. For the purposes of this fiscal note, it is assumed that this number would be considered the “maximum attendance” for the calculation of the $70 per student instructional materials allotment. Under this assumption, the state cost would be approximately $300,000 annually, starting in 2006.
TEA estimates that, after assuming that existing staff allocated to purchasing-related functions would be reassigned, the agency still would require six full-time equivalents and related administrative resources of about $297,000 each year to fulfill the new functions in the instructional materials review and adoption process.
2E.01-2E.06: Dual language teaching certificate and pilot program. Based on a previous study, the agency estimates that the average cost per student for a dual language program was approximately $525. For the purpose of this estimate, it is assumed that the pilot program would serve approximately 2% of the current population served in traditional bilingual and ESL programs (2004-05 - 631,668 students) and an equal number of native English speaking students or about 25,300 students. At an average of $525 per student, annual grant costs of $13.3 million are assumed. Staffing resources to administer all aspects of the pilot program for the fiscal year 2006-2011 period of authorization would be estimated to require two full-time equivalent positions with annual costs of about $114,000.
2F.02: The agency estimates the contracted cost for the P-16 Council review of dual credit programs and the possible revision of the recommended high school program to be $300,000 in one-time costs in 2006.
Establishment of a statewide property tax is estimate to generate $10.2 billion in revenues in 2007, growing to $11.5 billion in 2010.
4.02: Regarding closure costs for charters, the agency estimates that it would incur approximately $500,000 in contracted costs associated with charter closure in 2006, $750,000 in 2007 and $250,000 in 2008.
For the facilities allotment for charters, the agency estimates that the charters that have been rated exemplary or recognized and meet the other requirements of the section represent approximately 6,000 students in ADA. At $1,000 per ADA, the annual cost of this allotment is estimated to be $6 million.
The estimated cost of providing additional state aid to qualifying charter schools for the stipulated salary increases assumes that all employees are appropriately certified. Data on certification status of charter school employees is not available. Under this assumption, the increases of $1,000 for full-time teachers, nurses, librarians, and counselors; $500 for other full-time employees; and $250 for part-time employees would be $3.7 million in fiscal year 2006 and $4.1 million in fiscal year 2007.
Increases to salaries of employees of charter schools that are TRS participants has an impact on contributions to TRS. For the purposes of this estimate, it is assumed that 60 percent of employees elect to receive a portion of salary as a health insurance supplement. Based on a 6 percent contribution rate, the increased state contribution to TRS related to increases in charter school employee salaries would be an estimated $89,000 in fiscal year 2006 and $97,000 in fiscal year 2007.
5A.03: For additional aid to school districts that pay social security, the estimated cost is $800,000 annually.
5B.10: The provision holding the Schools for the Blind and Deaf harmless for the loss in their revenue due to local property tax relief is estimated to cost approximately $350,000 annually, starting in fiscal year 2007.
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 schedule.
Participating school districts would be eligible for state funding for teacher mentoring and educator incentive programs. Revenues to school ditricts for these projects are discussed above.
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.
The bill 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.
Various provisions of the bill funding programs via set-asides from the Foundation School Program would decrease revenues available to school districts through the funding formulas in a like amount.
Sections 2C.03-2C.05 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.
Provisions providing supplemental funding for gifted adn talented as well as provisions establishing a state incentive program for improving student performance on at-risk campuses wuld both result in additional revenues as identified above.
Sections 2C.24-2C.26 would provide sanctions for the low performing campuses ranging from technical assistance teams to reconstitution or alternative campus management. Based on language in the bill and existing statute, it is assumed 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. However, traditional state purchases of textbooks would not be made, starting in the 2008-09 biennium.
405 Department of Public Safety, 701 Central Education Agency, 705 State Board for Educator Certification, 781 Higher Education Coordinating Board
JOB, CT, UP