Honorable Dan Huberty, Chair, House Committee on Public Education
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB2014 by Parker (Relating to designation of mathematics innovation zones by the commissioner of education and to the establishment of pay for success programs to provide necessary funding.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2014, As Introduced: a negative impact of ($19,984,424) 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
($10,000,212)
2019
($9,984,212)
2020
($9,984,212)
2021
($9,984,212)
2022
($9,984,212)
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Change in Number of State Employees from FY 2017
2018
($10,000,212)
2.0
2019
($9,984,212)
2.0
2020
($9,984,212)
2.0
2021
($9,984,212)
2.0
2022
($9,984,212)
2.0
Fiscal Analysis
The bill would amend the Education Code to allow the Commissioner of Education to award a grant to a campus at a school district or open-enrollment charter school, designated by the Commissioner upon application, as a mathematics innovation zone. The bill would specify the requirements and certain intervention allowances under the state accountability system for a campus designated as a mathematics innovation zone. The bill would allow the Commissioner to revoke the mathematics innovation zone designation and suspend grant funding under certain circumstances.
The bill defines a pay for success program as a program involving private financing under which payments are dependent on achievement of measurable outcomes. The bill would allow a school district or open-enrollment charter school to use a pay for success program approved by the Commissioner under Education Code, Section 44.04 to pay costs associated with the designation of a campus. The bill would allow the Commissioner to accept gifts, grants, or conations from any public or private source, and adopt rules as necessary to administer, and implement the mathematics innovation zone program.
The bill would amend Education Code to allow the Commissioner to structure and approve pay for success programs for use by a school district or open-enrollment charter school; evaluate and approve certain participants in a pay for success program; and require an approved participant to comply with the objectives, metrics, and other pay for success program requirements determined by the Commissioner. The bill would allow the Commissioner to evaluate potential participants in certain ways. The bill would exempt a school district or open-enrollment charter schools using a pay for success program approved by the Commissioner from certain state procurement requirements, and grant the Commissioner, the agency, and agency employees immunity for actions associated with the program.
The bill would take effect September 1, 2017.
Methodology
Designating eligible campuses as mathematics innovation zones and awarding funding for that purpose would result in a cost of approximately $10 million in each fiscal year.
As specified by the bill, the Commissioner may award a grant to support school district and open-enrollment charter school implementation of a campus designated as a mathematics innovation zone and adopt rules necessary to administer the grant program. The Texas Education Agency (TEA) estimates two-year grants would be awarded to 20 public schools for fiscal years 2018 and 2019, totaling $9.7 million in grant awards (20 grantees x $485,000) in each fiscal year. Following the 2018-19 biennium, TEA anticipates awarding grants in a similar way so that two-year grants are awarded every biennium.
For purposes of grant implementation, TEA estimates that mathematics innovation zone grants would be awarded to the same 20 districts for two consecutive years. According to TEA, the first two years of the program would include a planning year and then the first year of implementation. For example, in year one (fiscal year 2018), selected districts and charters would be awarded grant funding for start-up technology, teacher support and training, and planning. In year two (fiscal year 2019), selected districts and charters would be awarded grant funding for first year student participation and continued implementation planning. TEA estimates structuring the mathematic innovation zone grants so that participating districts and charters would continue grade-level expansion for three years following the grant, but would use their own local funds for that purpose.
As specified by the bill, the Commissioner would be allowed to structure and approve pay for success programs for use by a school district or open-enrollment charter school. For purposes of the mathematics innovation zone grants, TEA indicates the Commissioner would select, through an Request for Qualification (RFQ), one or more vendors of high quality blended learning mathematics systems that districts can use in their kindergarten to Grade 8 classes. The Commissioner would require each selected system to provide a mechanism to assess the quality of implementation and have some evidence that a high quality implementation has been associated with higher levels of gains on state assessments.
According to TEA, pay for success programs would allow participating districts and charter schools a method to finance the changes necessary to successfully implement mathematics innovation zone practices upon conclusion of grant funding, and prior to using local funds. TEA estimates that after identifying investors to provide funding for the mathematics innovation zone grants, participating districts and charters would be required to implement the system at a high quality level. In structuring the pay for success program, TEA would select independent evaluators that would be used to determine both whether the quality implementation levels have been reached and to assess outcomes; and structure payback arrangements contingent upon whether those independent evaluators identified gains in state assessment proficiency rates.
TEA estimates that two FTEs would be required to determine eligible high quality and cost effective math curriculum programs to be used by districts and charter schools; design a designation process, grant opportunities, and the pay for success program; assist with rule adoption; monitor and review accountability requirements; and assist with the revocation process if necessary. The estimated cost of the FTEs, including salary, benefits, and other operating expenses, would be $300,212 in fiscal year 2018 and $284,212 in subsequent years.
Local Government Impact
School districts and charter schools participating in mathematics innovation zone grants would incur costs related to teacher training, software, and hardware acquisitions. According to the Texas Education Agency (TEA), these initial costs would be offset by grant funds received by participating districts and charters. However, participating districts and charters would be required to use local funds to support these blended learning systems upon completion of the grant. Participation in the grant program would be voluntary.
In addition, school districts and charter schools would incur costs associated with participation in the pay for success program if the quality indicators were achieved by the district or charter. In these cases, districts and charter would be required to use local funds to pay the investor principal plus interest as determined through the payback structure designed by TEA. However, participation in the pay for success program would be voluntary.
TEA estimates participating districts and charters could partially offset costs through changes to instructional materials purchase and staffing adjustments related to implementation of mathematics blended learning systems.