HBA-MPM H.B. 2879 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2879 By: Sadler Public Education 7/17/2001 Enrolled BACKGROUND AND PURPOSE Current state policy regarding public education requires that the public school finance system of Texas adhere to a standard of neutrality that provides for substantially equal access to similar revenue per student at a similar tax effort. Changes were needed to maintain compliance with this equity standard. Also, many districts struggle to build new instructional facilities despite the institution of the instructional facilities allotment (IFA) existing debt allotment (EDA) changes could assist more districts with facilities. In addition, the 76th Legislature changed the way students from districts that do not offer all grade levels were counted, leaving many of these districts with greatly reduced revenue. Prior to the 77th Legislature, a substantial reduction in attendance could leave schools overstaffed and underfunded, since funds are allocated based on computations of the average daily attendance (ADA) for each district. House Bill 2879 provides a three-year transition for districts that do not offer all grade levels to restore the level of state and local revenue to the 1999-2000 amount, modifies the IFA and EDA, increases funding for districts that experience a rapid decline in enrollment, and modifies the minimum salary schedule. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2879 amends the Education Code to modify the minimum monthly salary schedule for certain professional staff by increasing the salary factor for each step (Sec. 21.402). The bill provides that for the 2001-2002, 2002-2003, and 2003-2004 school years, a school district that in the 1999-2000 school year did not offer all grade levels is authorized to have, after detaching territory or purchasing attendance credits, an equalized wealth level in the amount needed to maintain state and local revenue in an amount equal to state and local revenue per weighted student for maintenance and operation of the district for the 1999-2000 school year, less the district's current year distribution per weighted student from the available school fund other than amounts distributed for textbooks, if the district imposes an effective tax rate for maintenance and operation of the district equal to the rate imposed for maintenance and operation for the 1999-2000 school year. The bill requires the commissioner of education to compute the wealth per student levels using weighted average daily attendance (ADA), notify each district that is eligible to have its wealth per student calculated in this manner, and establish a date by which such a district must elect to have its wealth per student computed. The bill provides that such a district is not entitled to state aid to achieve the permitted funding levels under the provisions of this bill, is not subject to a limitation on tuition payments for students in grade levels not offered by the district to be educated in another district, is not eligible for credit for tuition payments for those students, and is not eligible for the property value adjustment for school districts not offering all grade levels (Sec. 41.0021). H.B. 2879 requires that a school district that experiences a decline of two percent or more in average daily attendance (ADA) be funded through the Foundation School Program to the extent that funds are specifically appropriated for that purpose on the basis of an ADA equal to 98 percent of the actual ADA of the preceding school year if the decline is not the result of the closing or reduction in personnel of a military base. The bill requires the commissioner of education to adjust the ADA of school districts that are entitled to funding on the basis of an adjusted ADA so that all districts are funded on the basis of the same percentage of the preceding year's actual ADA and so that the total cost to the state does not exceed the amount specifically appropriated for that year. The bill provides that an open enrollment charter school is not subject to this funding adjustment (Sec. 42.005). The bill provides for purposes of the compensatory education allotment that the number of educationally disadvantaged students is determined in the manner provided by commissioner rule if no campus in the school district participated in the national school lunch program during the preceding school year (Sec. 42.152). H.B. 2879 repeals provisions requiring the commissioner of education, for each year of a state fiscal biennium, to reduce the guaranteed yield by an amount sufficient to reduce state costs in an amount equal to the increase in state costs due to the provision that a reduction in the compensatory education allotment does not affect the computation of students in weighted averaged daily attendance for the guaranteed yield program (SECTION 12). Under the instructional facilities allotment (IFA) and the existing debt allotment (EDA), the bill authorizes the amount budgeted by a district for payment of eligible bonds to include: _bond taxes collected in the current school year; _bond taxes collected in a preceding school year in excess of the amount necessary to pay the district's share of actual debt service on bonds in that year, provided that the taxes were not used to generate other state financial assistance for the district; or _maintenance and operations taxes collected in the current school year or a preceding school year in excess of the amount eligible to be used to generate other state financial assistance for the district. These provisions apply only to taxes collected by a school district in the 1999-2000 school year or later (Secs. 46.003 and 46.032 and SECTION 13). H.B. 2879 specifies that a district is not entitled to state assistance under the IFA and EDA based on taxes with respect to which the district receives state assistance under the guaranteed yield program (Secs. 46.012 and 46.036). The bill increases the existing debt tax rate limit from $0.12 to $0.29 per $100 valuation and repeals provisions authorizing the commissioner to provide assistance under the EDA to a district that would be entitled to the assistance but for the limit on the existing debt tax rate ( Sec. 46.034 and SECTION 14). H.B. 2879 provides that school bonds are eligible to be paid with state and local funds under the EDA if: _the district made payments on the bonds during the 2000-2001 school year, or taxes levied to pay the principal of and interest on the bonds were included in the district's audited debt service collections for that school year, rather than only for the 1998-1999 school year; and _the district does not received state assistance for payment of the principal and interest on the bonds under the instructional facilities allotment (Sec. 46.033). H.B. 2879 authorizes the commissioner to make adjustments to amounts due to a school district under the foundation school program, the IFA, or the EDA or to amounts necessary for the district to comply with equalized wealth level requirements. The bill authorizes a school district to apply to the commissioner to have the district's taxable property value or ad valorem tax collections adjusted if a major taxpayer fails to pay all or a portion of the ad valorem taxes due to the district because of a protest of the valuation of the taxpayer's property. The commissioner is authorized to make the adjustment only to the extent the commissioner determines that doing so will not cause the amount to which school districts are entitled to exceed the amount appropriated for purposes of the Foundation School Program in the fiscal year in which the adjustment is made or for the second year of the state fiscal biennium (Sec. 42.2531). H.B. 2879 sets forth implementation provisions for the adjustments made by this bill (SECTION 14). The bill requires the commissioner to assist regional education service centers in providing financial management or planning assistance to school districts and open-enrollment charter schools from funds appropriated to TEA that may be used for that purpose (SECTION 15). The bill creates the Communities in Schools Advisory Committee (SECTION 16). H.B. 2879 sets forth provisions for the distribution of funds allocated by Rider 2, Rider 55, funds appropriated to the Texas Education Agency (TEA) under Strategy A.3.3., Strategy A.1.2., and other TEA appropriated funds (SECTIONS 17, 18, 20, 21 and 22). The bill limits the appropriation amount of the funds allocated by Rider 2 to TEA or the fiscal biennium ending August 31, 2003 (SECTION 21). The bill requires the Legislative Budget Board to increase the number of full-time-equivalent positions authorized for TEA by two for the fiscal year ending August 31, 2003 for purposes of the mathematics initiative proposed by H.B. 1144 (SECTION 19). EFFECTIVE DATE September 1, 2001.