HBA-MPM C.S.H.B. 2879 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.H.B. 2879 By: Sadler Public Education 4/30/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Current state policy regarding public education provides that the public school finance system of Texas is required to adhere to a standard of neutrality that provides for substantially equal access to similar revenue per student at a similar tax effort. Changes are needed to maintain compliance with this equity standards. Also, many districts struggle to build new instructional facilities despite the institution of the instructional facilities allotment (IFA). Decreasing the guaranteed yield of the IFA would allow more districts to receive funding from the limited pool of money for construction of new school facilities. Changes to the existing debt allotment (EDA) could assist more districts with facilities debt. 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. C.S.H.B. 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, increases the guaranteed yield, and modifies the IFA and EDA. 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 C.S.H.B. 2879 amends the Education Code to provide that for the 2001-2002, 2002-2003, and 20032004 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, 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). Effective September 1, 2001, C.S.H.B. 2879 increases from $24.99 to $25.96 the guaranteed yield of state and local funds per weighted student per cent of tax effort. Effective September 1, 2002, the guaranteed yield is increased to $27.30 or a greater amount (Sec. 42.302). C.S.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 11). The bill modifies the formula used to calculate the amount of additional state aid for professional staff salaries and applies the formula only to districts that received such aid in the 1999-2000 and 2000-2001 school years. The bill provides that the amount to which a district is entitled is the difference between: _the sum of an amount equal to the product of $3,000 multiplied by the number of professional staff entitled to the minimum salary schedule and the amount of additional salary cost the district experiences that results from the increase made in the guaranteed yield by this bill; and _the sum of an amount equal to 80 percent of the amount of additional funds to which the district is entitled due to the increases made last session to the equalized wealth level, the basic allotment, and guaranteed yield and an amount equal to 80 percent of the amount of additional funds to which the district is entitled due to the increase made in the guaranteed yield by this bill (Sec. 42.2512). The bill modifies the guaranteed yield under the instructional facilities allotment (IFA) to $35 or a greater amount for any year provided by appropriation for eligible bonds for which the district first received state assistance before September 1, 2001, and $25 or a greater amount for any year provided by appropriation for eligible bonds for which the district first received state assistance on or after September 1, 2001. Under the 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 (Secs. 46.003 and 46.032). C.S.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 11). C.S.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 1998-1999 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). EFFECTIVE DATE September 1, 2001, except as otherwise provided by the bill. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute increases the guaranteed yield from $24.99 to $25.96 effective September 1, 2001, and to $27.30 effective September 1, 2002, whereas the original bill increased the guaranteed yield from $24.99 to $25.00. The substitute removes provisions in the original bill that increased the equalized wealth level from $295,000 to $295,001. The substitute removes the provision in the original that required the commissioner of education to develop an equitable formula for funding districts not covered by increases in the guaranteed yield or the equalized wealth level for the 2001-2002 and 2002-2003 school years. The substitute adds provisions regarding the instructional facilities allotment and the existing debt allotment, as well as provisions related to school districts that do not offer all grade levels and additional state aid for professional staff salaries.