Allows for a use of a portion of the Louisiana Education Quality Trust Fund when there is a projected deficit (EG INCREASE SD EX See Note)
Impact
If enacted, HB 706 would significantly alter how the Louisiana Education Quality Trust Fund is utilized. The current law strictly prohibits appropriations from the fund, aimed at preserving its financial integrity. However, this bill introduces the possibility of using the fund as a financial resource to mitigate cuts in education funding during budgetary shortfalls. This could lead to a more flexible financial approach for handling deficits in the educational sector, particularly affecting funding for both elementary and secondary education.
Summary
House Bill 706 seeks to amend the Louisiana Education Quality Trust Fund regulations, permitting the use of a portion of the fund during periods of projected budget deficits. Specifically, the bill allows for the allocation of up to 10% of the fund's annual investment income—comprising interest income, realized capital gains, and dividends—provided that a two-thirds majority approval is obtained from both houses of the legislature. This change aims to enhance financial stability in education funding during times of fiscal uncertainty.
Sentiment
The sentiment surrounding this bill appears to be cautiously optimistic among proponents who advocate for the need to address funding shortfalls in Louisiana's education system. Supporters believe that tapping into the trust fund, under specific conditions, will help safeguard education appropriations and provide necessary funding during fiscal emergencies. However, there may also be considerable concern about the long-term implications of altering the trust fund's usage, particularly regarding its intended purpose as a permanent funding source for educational quality.
Contention
Notable points of contention may arise around the legislative process required to access funds from the trust. The need for a two-thirds majority could lead to challenges in ensuring that sufficient political support exists when deficits are anticipated. Critics might express concerns about the reliance on the trust fund as a band-aid solution rather than developing more sustainable financial strategies for Louisiana's educational system. Furthermore, the bill's effectiveness would hinge on a proposed constitutional amendment being successful, adding another layer of uncertainty and debate.
(Constitutional Amendment) Allows for the use of a portion of the Louisiana Education Quality Trust Fund when there is a projected deficit (EG INCREASE SD EX See Note)
Provides that the Louisiana Education Quality Trust Fund shall be known as the "Kevin P. Reilly, Sr. Louisiana Education Quality Trust Fund." (gov sig)
Provides for additional authority for the governor and legislature to reduce appropriations if there is a projected deficit (EG SEE FISC NOTE SD EX See Note)
Constitutional amendment to revise the circumstances that would allow the reduction of constitutionally protected expenditures and dedications to eliminate a projected deficit in an ensuing fiscal year. (2/3 - CA13s1(A)) (EN SEE FISC NOTE SD EX See Note)
(Constitutional Amendment) Provides for additional authority for the governor and legislature to reduce budgets if there is a projected deficit (EG SEE FISC NOTE SD EX See Note)
Constitutional amendment to repeal certain constitutionally dedicated and protected allocations and funds. (2/3-CA13s1(A)) (OR INCREASE GF RV See Note)
Provides for the prohibition of the expenditure of state funds to refund a tax credit, pay certain rebates, or repurchase or grant transferable tax credits granted through incentive contracts unless budgeted and appropriated. (gov sig)
Provides for monies in the Budget Stabilization Fund to be available for appropriation in Fiscal Year 2020-2021 (Item #14) (EG +$90,062,911 GF RV See Note)