LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session May 17, 1997 TO: Honorable Teel Bivins, Chair IN RE: House Bill No. 318, Committee Report 2nd House, Substituted Committee on Education By: Cuellar Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on HB318 ( Relating to the public education grant program.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by HB318-Committee Report 2nd House, Substituted Implementing the provisions of the bill would result in a net (NEGATIVE) impact of $(376,248-3,762,483) to General Revenue Related Funds through the biennium ending August 31, 1999 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 Analysis This bill would change the Public Education Grant (PEG) Program by altering the amount of the grant. It would continue grants even when the campus from which a student comes is no longer considered low performing. Funding is altered to be based on the funding to which the district providing services is entitled under the Foundation School Program. For each student attending school at a district outside the district of residence under the PEG program, the educating district is entitled to an allotment equal to 10% of the adjusted basic allotment. Districts that are ineligible for funding under the guaranteed yield program are given supplemental assistance which is equivalent to any excess cost experienced by the district in providing services to a student that uses a PEG. School districts that agree to accept at least one percent of their population on the basis of a PEG are entitled to additional assistance in the school facilities assistance program. School districts would be required to notify the parents of all students assigned to campuses which meet the criteria for the PEG program that the campus qualifies and that the student is eligible for a grant. The notification must be provided by February 1 of each year. School districts are also specifically authorized to contract with other private or public entities for educational services to students eligible to receive a public education grant, although the authority already exists in Section 11.157, Education Code. Methodolgy Pursuant to current law, 652 campuses with 491,005 students were eligible for a PEG grant in 1995-96. Of these, 31 students actually requested and received a Public Education Grant (.006 percent). Due to natural growth in program participation and the financial incentive provided in the bill, this estimate assumes growth in the rate of student participation. Section 29.203 stipulates that Foundation School Program formula funding amounts of the receiving (or educating) district are used to calculate the grant amount. These amounts are equivalent to the amounts which would be generated for a typical transfer student, and are therefore assumed to have no direct fiscal implications for the state. The Senate Committee Substitute for this bill would be synonymous with current law under which a campus is considered eligible only if in each of the three preceding school years 50% or more of the students did not perform satisfactorily on a TAAS instrument. Sections 29.203 and 42.4101 provide additional assistance under the facilities program, but only about 26% of districts receive that assistance. It appears that the amount of assistance would be about equal to that provided under current law, and therefore is expected to have no significant impact. Section 42.157 creates the Public Education Grant Allotment. This allotment is equal to 10% of the adjusted basic allotment and would likely average about $267 based on the current average adjusted basic allotment amount. This allotment would also tend to increase the number of weighted students used in calculating the guaranteed yield amounts. In addition, districts which do not receive funding in the second tier guaranteed yield program would be eligible for additional funding to the extent that actual costs of services exceed the amount of benefit in the Foundation School Program. While this would increase costs to the state, it is unclear how much this calculated excess cost would be. The typical amount of extra funding available in the guaranteed yield is about $1100 per weighted student, although the actual amount is variable, and would apply to approximately 10% of the participants. Given the low participation in the first year, this estimate provides two scenarios with different rates of participation. The first scenario assumes 0.1% of eligible students would participate, or roughly 491 students. At this level, the additional assistance in the form of the extra allotment would cost about $131,097 per year. In the second scenario of a participation rate of 1%, cost of the allotment would reach about $1,310,970 each year. The effect of extra allotments in the second tier of funding is approximately 40% of the cost in the first tier. This would raise the financial impact to the state to about $183,536 per year for 0.1% participation, and to about $1,835,358 for 1% participation. Both scenarios assume an annual growth in participants of 5%. The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: The probable fiscal implications of implementing the provisions of the bill during each of the first five years following passage is estimated as follows: Five Year Impact: Fiscal Year Probable Savings/(Cost) from Foundation School Fund 0193 1998 ($183,536) 1998 (192,712) 2000 (202,348) 2001 (212,465) 2002 (223,089) Fiscal Year Probable Savings/(Cost) from Foundation School Fund 0193 1998 1999 (1,927,125) 2000 (2,023,482) 2001 (2,124,656) 2002 (2,230,889) Similar annual fiscal implications would continue as long as the provisions of the bill are in effect. The bill would require a specific notice be sent to the parents of students assigned to low performing schools as described by section 29.202. No significant fiscal implication to units of local government is anticipated. Source: Agencies: 701 Texas Education Agency - Administration LBB Staff: JK ,LP ,UP