LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION April 4, 2011 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 Estimated Two-year Net Impact to General Revenue Related Funds for HB2485, As Introduced: a positive impact of $10,849,557,107 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
April 4, 2011
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
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
Honorable Rob Eissler, Chair, House Committee on Public Education
Honorable Rob Eissler, Chair, House Committee on Public Education
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
HB2485 by Hochberg (Relating to public school finance.), As Introduced
HB2485 by Hochberg (Relating to public school finance.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2485, As Introduced: a positive impact of $10,849,557,107 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2485, As Introduced: a positive impact of $10,849,557,107 through the biennium ending August 31, 2013.
The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
General Revenue-Related Funds, Five-Year Impact: 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
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
All Funds, Five-Year Impact: Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromFoundation School Fund193 Probable Savings/(Cost) fromFoundation School Fund193 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
Fiscal Year Probable Savings/(Cost) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromFoundation School Fund193 Probable Savings/(Cost) fromFoundation School Fund193 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
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
Fiscal Analysis
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.
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.
Methodology
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.
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.
Technology
The Texas Education Agency estimates costs of $55,840 in FY12 for modification of the system used to calculate Foundation School Program entitlement and make payments to accommodate changes under the bill. Costs for ongoing maintenance associated with the system modifications would be approximately $8,376 in FY13 and each year thereafter.
Local Government Impact
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.
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
701 Central Education Agency
LBB Staff: JOB, LXH, JGM, JSp, SD
JOB, LXH, JGM, JSp, SD