TO: | Honorable Florence Shapiro, Chair, Senate Committee on Education |
FROM: | John S. O'Brien, Director, Legislative Budget Board |
IN RE: | SB574 by Jackson, Mike (Relating to an exception to the wealth per student limitation for school districts that, as a result of natural disasters, are suffering financial hardship.), As Introduced |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2010 | ($14,245,832) |
2011 | ($1,890,074) |
2012 | ($837,088) |
2013 | ($740,508) |
2014 | ($634,478) |
Fiscal Year | Probable Savings/(Cost) from Foundation School Fund 193 |
Probable Savings/(Cost) from General Revenue Fund 1 |
---|---|---|
2010 | ($14,195,832) | ($50,000) |
2011 | ($1,890,074) | $0 |
2012 | ($837,088) | $0 |
2013 | ($740,508) | $0 |
2014 | ($634,478) | $0 |
To estimate the possible fiscal impact of the bill, the Texas Education Agency (TEA) identified several school districts that were significantly affected by Hurricane Ike in 2008. TEA assumed that these districts -- Galveston, High Island, Bridge City and Sabine Pass ISDs -- would lose 20 percent of their pre-hurricane attendance in fiscal year 2010, and that their tax year 2009 property values would be reduced by 30 percent. Under the current law school finance system, the attendance decline would cause a district's wealth per weighted student (WADA), the basis for wealth equalization obligations under Chapter 41 of the Texas Education Code, to increase in the same year. However, due to the use of lagged property values in the state funding system, the tax year 2009 property value decline would not lower wealth per WADA until fiscal year 2011.
Based on these assumptions, Galveston, High Island and Sabine Pass ISDs would be subject to wealth equalization in fiscal year 2010. TEA estimates the 2010 state cost of forgoing the recapture revenue from these districts to be $14.2 million. This cost is estimated to fall significantly in the following years as the reduced property values lower the districts' wealth equalization obligations.
For the purpose of this estimate, identified state costs are assumed to be limited to costs resulting from application of the bill's provisions to Galveston, High Island and Sabine Pass ISDs. However, the bill would render eligible for Chapter 41 relief any school district in a designated disaster area and for which the commissioner has determined financial hardship. Currently, there are 570 school districts in a county designated by the Governor as a disaster area; of this number, 81 are subject to wealth equalization. Should more districts than the three assumed by the agency be determined by the commissioner to have suffered financial hardship as a result of a disaster, state costs due to the provisions of the bill could increase significantly.
TEA estimates that accounting for the provisions of the bill in the current Foundation School Program management and payment system would require approximately $50,000 in software modification costs in fiscal year 2010.
Source Agencies: | 701 Central Education Agency
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LBB Staff: | JOB, JSp, JGM
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