| TO: | Honorable Rob Eissler, Chair, House Committee on Public Education |
| FROM: | John S O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2485 by Hochberg (Relating to public school finance.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2012 | $5,300,713,424 |
| 2013 | $5,548,843,683 |
| 2014 | $5,896,396,200 |
| 2015 | $5,251,422,556 |
| 2016 | $4,560,836,249 |
| Fiscal Year | Probable Savings/(Cost) from General Revenue Fund 1 |
Probable Revenue Gain/(Loss) from Foundation School Fund 193 |
Probable Savings/(Cost) from Foundation School Fund 193 |
|---|---|---|---|
| 2012 | ($55,840) | $128,104,520 | $5,172,664,744 |
| 2013 | ($8,376) | $225,925,591 | $5,322,926,468 |
| 2014 | ($8,376) | $356,863,671 | $5,539,540,905 |
| 2015 | ($8,376) | $341,389,553 | $4,910,041,379 |
| 2016 | ($8,376) | $314,240,372 | $4,246,604,253 |
The bill would make structural changes in the Foundation School Program that would result in significant savings beginning in FY12 and continuing thereafter.
The bill would provide Tier 1 allotments with a variable local share representing effective tax effort of up to $1.06. The basic allotment used to determine Tier 1entitlement would be the product of the stated amount of $4,530 and the district's Tier 1 effective tax effort of up to $1.06. The basic allotment would be indexed to reflect statewide property value growth beginning in FY14. Maintenance and operations tax effort of up to $1.06 would be subject to recapture at an individually determined equalized wealth level corresponding to the district's Tier 1 basic allotment level.
Tax effort exceeding $1.06 would be equalized under a guaranteed yield of $31.95 and would be subject to recapture at an equalized wealth level of $319,500.
The bill would fully repeal the target revenue hold harmless structure that was established in 2006.
In addition to the overall changes listed above, specific structural changes affecting Tier 1 entitlement would include increased weighting for the bilingual education program and compensatory education program, incorporating career and technology education attendance within the regular program allotment rather than funding as a stand-alone allotment, and discontinuation of separate add-on amounts for gifted and talented education, high school, net transfers in and out under the public education grant program, and course completion via the virtual school network. The bill would also prevent school districts located in metropolitan statistical areas with populations exceeding 700,000 from receiving the small district scale adjustment.
As noted above, the bill would eliminate the target revenue hold harmless that was established in 2006 and would also repeal the limitation on gain that currently limits each district's revenue gain to $350 per weighted student over the prior year. Separate state aid for conversion of a former health care supplement amount to salary for employees who are not subject to the minimum salary schedule would be discontinued. The bill would also repeal provisions allowing certain districts subject to recapture to benefit from a hold harmless provision based on indexed 1992-93 revenue per weighted student. In addition, a discount applied to recapture for districts submitting an early agreement to purchase attendance credits from the state would be discontinued.
Property values used to determine wealth per WADA, effective tax effort, and local share amounts would shift from lagged values to current tax year values.
School districts would experience significant loss of revenue under the bill. In total, revenues available to school districts would decline by more than $5.0 billion per year relative to current law for fiscal years 2012 and 2013. Reductions in revenue would vary considerably among districts depending upon specific local circumstances.
To the extent that the bill would allow school districts to reduce salary-related costs, local savings could be realized as well. The bill would repeal a provision currently entitling employees subject to the minimum salary schedule a salary that is at least equivalent to the salary they received in 2010-11 for the duration of their employment with the district in which they were employed during 2010-11.
| Source Agencies: | 701 Central Education Agency
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| LBB Staff: | JOB, LXH, JGM, JSp, SD
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