Honorable Larry Taylor, Chair, Senate Committee on Education
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB419 by Kolkhorst (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 SB419, As Introduced: a negative impact of ($402,400,000) 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
($207,900,000)
2019
($194,500,000)
2020
($226,300,000)
2021
($210,000,000)
2022
($221,700,000)
Fiscal Year
Probable Savings/(Cost) from Foundation School Fund 193
2018
($207,900,000)
2019
($194,500,000)
2020
($226,300,000)
2021
($210,000,000)
2022
($221,700,000)
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 2023. The bill would take effect the 91st day after the end of the legislative session or immediately upon enactment with the specified voting majorities.
Methodology
The bill would increase state cost for the FSP relative to current law for fiscal years 2018-2023. This estimate assumes continuation of the percentage adopted under reinstated Education Code §42.2516(i) at the FY17 level of 0.9263. Adoption of a higher percentage would result in a significantly higher cost than this estimate. Likewise, adoption of a lower percentage would result in a lower cost than estimated. Actual cost for ASATR will also 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 October 2016, projected value growth for tax year 2019 and subsequent years of 4.89%, and school district student population projections provided by the Texas Education Agency in October 2016.
Based on these assumptions a model of the proposed extension of ASATR through fiscal year 2023 indicates estimated additional state cost of $207.9 million in FY18 and $194.5 million in FY19, increasing to $221.7 million in FY22 with no costs after FY23 due to expiration of the mechanism.
Local Government Impact
Approximately 160 school districts would receive additional state aid during the 2018-2019, 2020-2021, and 2022-2023 biennia. The funding received by each qualifying school district would vary significantly.