FISCAL NOTE, 85TH LEGISLATURE 1st CALLED SESSION - 2017
August 8, 2017
TO:
Honorable Dan Huberty, Chair, House Committee on Public Education
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB387 by King, Ken (Relating to the extension of additional state aid for tax reduction provided to certain school districts.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB387, As Introduced: a negative impact of ($200,000,000) through the biennium ending August 31, 2019.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018
($100,000,000)
2019
($100,000,000)
2020
$0
2021
$0
2022
$0
Fiscal Year
Probable Savings/(Cost) from Foundation School Fund 193
2018
($100,000,000)
2019
($100,000,000)
2020
$0
2021
$0
2022
$0
Fiscal Analysis
The bill would amend various provisions in Chapter 42, Education Code and revise the effective dates of certain actions of the 82nd Legislature to reinstate a Foundation School Program (FSP) hold harmless mechanism relating to school district maintenance and operations tax rate compression resulting from legislation enacted in 2006. The Additional State Aid for Tax Reduction (ASATR) mechanism currently expires at the end of fiscal year 2017. The bill would reinstate and continue ASATR through fiscal year 2019. Districts receiving less than 4 percent of total M&O revenue from ASATR and districts with M&O tax rates below $1.00 would be ineligible for the additional aid. The measure would also prevent districts that receive no ASATR funding for fiscal years 2017 and later from requalifying for ASATR in a subsequent year. The bill would limit appropriations for ASATR funding to $200 million for the 2018-2019 biennium. This bill would provide continuation of the percentage adopted under reinstated 42.2516(i) at the FY17 level of 0.9263.
The bill specifies that the Commissioner of Education is to provide additional state aid for tax reduction only if the legislature makes a specific appropriation for that purpose. The bill would require the amount appropriated to be $200 million or less for the 2018-19 biennium.
Methodology
The bill would increase state cost for the FSP relative to current law for the 2018-2019 biennium. Actual cost for ASATR will vary depending primarily upon fluctuations in school district property values and student populations. For example, significant value declines among districts eligible for ASATR would result in increased state cost. This estimate was constructed using preliminary tax year 2016 school district values, statewide assumptions of tax year 2017 and tax year 2018 property value growth provided by the Comptroller in March 2017, and school district student population projections provided by the Texas Education Agency in March 2017.
Based on these assumptions a model of the proposed extension of ASATR through fiscal year 2019 before the appropriations limit established by the bill indicates estimated additional state cost of $164.4 million in FY18 and $142.8 million in FY19 with no costs in subsequent years due to expiration of the mechanism. The bill is silent with respect to how state aid would be limited to align with the biennial appropriations limit of $200 million. For the purpose of this analysis, it is assumed that the commissioner of education would limit aid to $100 million in each fiscal year of the biennium and would prorate individual district aid amounts using the existing proration mechanism codified in Section 42.253, Education Code.
Local Government Impact
Approximately 130 school districts would receive additional state aid during the 2018-2019 biennium.