Fiscal Note - SB 0168 - High School Graduation Rates
L.R. NO. 0255-10
BILL NO. HCS For SS For SCS For SB 168
SUBJECT: Schools: Elementary and Secondary Education
TYPE: Original
DATE: May 13, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($1,964,700 to ($2,020,938 to ($7,890,546 to
UNKNOWN) (UNKNOWN) UNKNOWN)
School Building
Revolving $0 $0 $50,000,000
State School
Moneys $0 $0 ($60,000,000)
Total Estimated
Net Effect on All ($1,964,700 to ($2,020,938 to ($2,109,454 to
State Funds UNKNOWN) UNKNOWN) UNKNOWN)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
None $0 $0 $0
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government (UNKNOWN) (UNKNOWN) (UNKNOWN)
FISCAL ANALYSIS
ASSUMPTION
SPECIAL EDUCATION
Officials from the Department of Economic Development-Professional
Registration, Office of the State Courts Administrator and St. Louis Special
School District assume the proposal would have no fiscal impact on them.
Officials from the Office of Administration, Division of Accounting, assume
the proposal would result in no fiscal impact to them. They assume the
language requiring DESE to pay the serving district as soon as funds are
appropriated should not result in any changes to the timing of payments
because the same administrative work would have to be done.
Officials from the Department of Mental Health assume the proposal would
result in no fiscal impact to them. Instead, they assume the fiscal impact
would be on the Department of Social Services, Division of Youth Services for
the staff approved by DESE and for services provided in public or special
school districts. They state payments to special school districts were made
by the department previously. However, in the FY 97 appropriation process,
this appropriation was transferred to the Department of Elementary and
Secondary Education as they began making the payments to the special school
districts. As far as DMH is concerned, the legislation basically cleans up
the issue of who will be making the payments to the special school districts.
Officials from the Department of Social Services assume the proposal would
result in no fiscal impact to them because DESE officials have explained to
them that the formula for figuring monies going to the Division of Youth
Services would not be affected by the proposal. Officials from the
Department of Social Services also state that in FY 97 the Division of Family
Services' appropriation for this responsibility was transferred to DESE.
They assume this legislation would bring the existing statutes into line with
current appropriation language and practice.
Officials from the Department of Elementary and Secondary Education (DESE)
assume the new formula for state special education funds would redistribute
any new funds among districts. However, the legislation specifically states
that the formula would be subject to appropriation, so no cost is assumed by
DESE. The increase to a maximum of 90% for state funding for early childhood
special education could lead to increased state funding for this program.
The remaining 10%+ would be paid from federal funds. Therefore, the actual
cost to state funds would be dependent on the availability of federal funds
and decisions of the General Assembly.
In FY 97, $34.5 million is appropriated for early childhood special
education. DESE estimates this would provide the state maximum of 77% of the
cost. Total cost would be estimated at $44.8 million ($34.5/.77). If the
legislation were effective for FY 97, the maximum increased cost to state
revenue would be $5.8 million:
$44.8 x 90% = $40.3
$40.3 - $34.5 = $5.8 million
However, sufficient federal funds would be available to continue paying 23%
of the cost for FY 97 and FY 98. The cost would therefore be $0 for FY 98
and range from $0 to $5.8 million for future fiscal years. Cost, if any,
would be to General Revenue.
DESE officials assume the early childhood special education change would
redistribute any increased state special education funds among school
districts. They could receive more state and less federal funds for the
program, but the net impact would be $0. DESE states the Missouri Supreme
Court has ruled that the state cannot require districts to pay for any
portions of the program from local revenue or non-earmarked state revenue.
DESE officials state they became responsible for reimbursing schools for the
excess costs of the Department of Social Services-Division of Family Services
(DFS) and Department of Mental Health (DMH) placements in the fiscal year
1997 budget. Therefore, no new cost would be anticipated from this part of
the proposal. However, DESE assumes the proposal would expand the type of
DFS placement which is reimbursable which would increase the cost of the
program. However, since it would be subject to appropriation, no new cost is
anticipated.
However, based on a response to similar legislation (HCS For HBs 641 & 593),
DESE made the following assumptions and calculations:
1. A maximum of 40% of the placed population (10,000 x .4 = 4,000) would
have some amount of excess cost associated with their education.
2. The average excess cost of a residential care facility (RCF) placed
child is approximately $3,000, based on DESE's data.
3. The average excess cost for non-RCF placements which have a cost is half
that of the RCF placements ($3,000 x .5 = $1,500 per non-RCF placement).
Total number in placement with excess costs = 4,000
Minus those in RCFs 1,500
Number of additional from proposed statute change 2,500
Times average cost per non-RCF $1,500
Additional cost of statute change to include excess costs
for public placements not currently billable for excess costs $3,750,000
DESE's projection includes the following estimates which could increase or
decrease actual costs:
1. The estimation of the number of those in placement who would have
billable costs,
2. The growth of placements is unknown,
3. The change in the average cost per student in unknown, and
4. The extent of participation by schools in applying for excess costs.
Based on additional information from the Department of Social Services (DOS),
approximately 10,291 children are residential placements by DOS, and of those
7,745 are school age (ages 5-18) and 1,809 are in group homes or residential
care facilities. Therefore, the Oversight Division has recalculated the
number of additional children who would fall under "publicly contracted
residential site" under the proposal: (7,745 x .4) - 1,809 x $1,500 =
$1,933,500.
ELEMENTARY AND SECONDARY EDUCATION
Officials from the Department of Elementary and Secondary Education (DESE)
assume the following:
1. The proposal would require the first $10 million of any desegregation
savings to go to dropout prevention programs and the next $50 million to the
School Building Revolving Fund. This could require other funds to be used to
fully fund the foundation formula.
Based on information supplied by DESE in SS For SB 360 (0820-07), DESE
officials assume the total desegregation savings would not all be realized
during the fiscal note period. Projected desegregation costs through FY 2000
are as follows:
FY 97: 257.9 million
FY 98: 264 million
FY 99: 263.2 million
FY 00: 163 million
Based on the above projections, the most significant desegregation savings,
$100 million, would not be realized until FY 2000. Therefore, the Oversight
Division has assumed that the transfers to dropout prevention and to the
School Building Revolving Fund would be consistent with the projected
desegregation savings in FY 2000, and has shown a cost to the General Revenue
Fund in the fiscal impact to continue to fully fund the formula without the
desegregation savings. Because current law directs desegregation savings to
the State School Moneys Fund for use in the formula per section 166.275,
RSMo, additional General Revenue would be needed to fully fund the formula,
assuming a proration factor of 1.00, since desegregation savings would not be
available for the formula. Therefore, the fiscal impact in FY 2000 includes
General Revenue savings of $10 million for dropout prevention, General
Revenue costs ranging from $0 to $10 million and $0 to $50 million to fully
fund the foundation formula, a loss to the State School Moneys Fund of $60
million, and income of $50 million to the School Building Revolving Fund.
2. The provisions related to transfers of funds could increase the
foundation formula aid for some districts. However, the criteria are so
restrictive that the impact should be minimal.
3. Transfers of students between districts could have some fiscal impact to
the full funding cost of the formula. However, no assumption could be made
about this impact since which students would transfer is unknown. Any
student who transferred to a district with a high formula payment would
increase the cost to fund the formula.
4. The reporting of attendance on an individual student basis would require
a major increase in data collection by DESE. For FY 98, a computer
programmer would be contracted to develop the database. The programming
would take about 20 hours per week for 12 weeks, 20 x 12 weeks x $120/hour =
$28,800 (state contract for computer consultants = $100 - $140 per hour). In
addition, DESE estimates the consultant would have expenditures of $200 per
week, $200 x 12 = $2,400. In FY 99 one FTE supervisor ($33,048) would be
requested to maintain the database, work with school districts and develop
the required reports. The Oversight Division has excluded $1,000 of FY 99
equipment requested by DESE because the desk ($500) and file cabinet ($500)
were already included in the systems furniture of $2,500 included by DESE,
according to Office of Administration guidelines. DESE assumes schools would
have additional reporting requirements related to the attendance database and
dropout information. Additional staff could have to be hired. Oversight
assumes schools already maintain this information, and any additional
reporting requirements could be absorbed in existing budgets.
5. DESE would have to monitor building loan repayments from school
districts and would need an additional FTE to do this (director, $42,444).
The School Building Loan Program was established by SB 380 (1993), but has
not been funded. In the fiscal note response for SB 380, the department
noted one FTE (director) would be needed to monitor the building loan
repayments from school districts if the loan program were funded (this FTE
has not been funded). The Oversight Division has included an FTE supervisor
($33,048) in the fiscal impact section to perform this function for FY 2000,
since that is when the School Building Revolving Fund would be expected to be
funded.
6. DESE assumes the charter schools, in the aggregate would not cost the
state any additional money, but would redistribute state aid among districts.
DESE assumes there would be the potential that some private or parochial
schools would become charter schools. DESE states there are about 100,000
students in such schools. The average distribution on line 1 of the formula
is $3,700 per student. The potential cost of this provision could not be
determined. Oversight has included unknown cost in the fiscal impact section
for state and local governments for charter schools.
7. DESE assumes the provisions in section 167.131 could change the tuition
districts charge each other which could redistribute money among districts,
but would not affect state costs.
A+ SCHOOLS
DESE assumes the changes to section 160.545 would expand the A+ Schools
reimbursement for tuition, books and fees to Missouri Western State College
and Missouri Southern State College. This language could create three
potential types of costs: 1. An increase in the cost per eligible A+
student since the four year colleges are more expensive than community
colleges and vo-tech schools; 2. An increase in the number of students who
take advantage of the reimbursement (already eligible, but would not take
advantage without this change); 3. An increase in eligible students as
additional schools in close proximity to the two colleges choose to
participate in the A+ program. Since the legislation limits the grant amount
to the average tuition cost for community colleges, the first type of
potential cost is eliminated. However, there is a possibility of increased
cost due to the second and third categories. It is estimated that there
would be no impact from category two or three in the first two years (fiscal
year 1998 and 1999) since it would take two years for additional students to
become eligible. In the third year (FY 2000), it is estimated that a minimum
of 50 additional students for each of the two colleges would take advantage
of the reimbursement assuming that the number of participating students in
the A+ Schools in close proximity to the two colleges would double. At an
average cost of $1,000 per student per semester ($300 books, $600 tuition,
and $100 fees), the added cost would be: 50 students x 2 colleges x $1,000 x
2 semesters = $200,000 for FY 2000. The long-term impact of this change
would be even greater as additional schools and students would choose to
participate in the A+ Schools Program.
Officials from the Coordinating Board For Higher Education (CBHE) state that
although there would undoubtedly be expanded costs to extending this program
to even one four-year public institution, it is now CBHE's position that cost
estimates for this program should be provided by DESE based on their
knowledge of schools participating or forecasted to participate in the A+
program as well as information that the department may have regarding
participation rates of students.
According to the Comprehensive Fee Schedules Public 4- and 2-Year
Institutions, academic year 1996-1997, average tuition at public two-year
colleges is $1,819. Based on a similar proposal (HB 786), CBHE and DESE
assumed it would take several years before this program would gear up fully,
and costs would not be incurred until FY 1999. CBHE also assumed tuition
inflation at 5.8%. Based on a similar proposal, DESE officials stated
approximately 43,000 students are in schools receiving A+ benefits. Of those
approximately 25% (10,750) would be seniors that could potentially be
eligible to receive grants. Based on the Statistical Abstract of the United
States 1996 which utilized 1990 census information, in Missouri 4.5% of the
population attained associate degrees. According to enrollment information
from the Coordinating Board For Higher Education, enrollment at Missouri
Southern and Missouri Western State Colleges is approximately 6.25% of total
enrollment for all public institutions. Therefore, the Oversight Division
multiplied the calculation by 4.5% and 6.25%. The proposal states that the
student would be required to first secure all available federal sources of
funding. According to information obtained from the Coordinating Board For
Higher Education, approximately 42% of college students receive need based
federal aid. According to the Statistical Abstract of the United States
1996, the average Supplemental Educational Opportunity Grant award in 1993
was $730 and according to information from CBHE, the average Pell award is
$1,372 (total of $2,102). Because the average federal aid total of $2,102
exceeds the average public two-year college tuition of $1,819, Oversight used
$1,819 when deducting federal aid. The Oversight Division calculated the
fiscal impact based on DESE's number of students in A+ schools as follows:
FY 1999
(43,000 students in A+ schools x 25% seniors = 10,750) x $1,819 = $19,554,250
x 4.5% x 6.25% = $54,996
$54,996 - ((10,750 x 4.5% x 6.25%) x 42% x $1,819 = $23,098) = $31,898
FY 2000
$31,898 x 1.058 = $33,748 x 2 (freshmen and sophomores) = $67,496
DESE officials assume that eventually 75% of graduating senior classes would
qualify for this reimbursement, which could substantially increase the fiscal
impact in future years.
HIGHER EDUCATION - STUDENT AND FACULTY REPRESENTATIVES
Officials from the Coordinating Board For Higher Education, Missouri Southern
State College, Harris-Stowe State College, University of Missouri, Central
Missouri State University, Missouri Western State College and the Governor's
Office assume the proposal would have little or no fiscal impact on them.
Officials from Truman State University assume the estimated fiscal impact
would be $5,200 per year to cover operational costs of an additional board
member. The Oversight Division assumes the university could accomplish the
provisions of the proposal with existing resources.
RULES
Rules promulgated pursuant to the provisions of this proposal would expire on
August 28 of the year after the year in which the rule became effective
unless the General Assembly extended by statute the rule or set of rules
beyond that date to a date specified by the General Assembly. In an action
challenging any rule, the Department of Elementary and Secondary Education
would be required to provide by a preponderance of evidence that the rule or
threatened application of the rule is valid, is authorized by law, is not in
conflict with any law and is not arbitrary and capricious. The court would
award reasonable fees and expenses as defined in section 536.085 to any part
who prevailed in such an action.
DESE officials assume the fiscal impact for changes in rulemaking are
unknown.
Oversight assumes that the Department of Elementary and Secondary Education
would write procedural and emergency rules in conformity with provisions of
the proposal so that court awards to plaintiffs for reasonable expenses in
bringing suits against rules could be absorbed within current budgets.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
SCHOOL BUILDING REVOLVING FUND
Transfer in From State School Moneys Fund
Desegregation Savings Redirected $0 $0 $50,000,000
Lease purchases would be entered into with schools from the School Building
Revolving Fund for capital improvements. The lease purchases would be repaid
with interest.
GENERAL REVENUE FUND
Transfer in from State School Moneys Fund
Desegregation Savings Redirected for
Dropout Prevention $0 $0 $10,000,000
Cost-Department of Elementary and Secondary
Education
Personal Service (0, 1, 2 FTE) $0 ($34,721) ($71,178)
Fringe Benefits 0 (9,906) (20,307)
Expense and Equipment 0 (10,913) (16,973)
Consultant (31,200) 0 0
Early Childhood Special Education 0 (0 to (0 to
5,800,000) 5,800,000)
Additional Payments to School Districts for
Public Placements (1,933,500) (1,933,500) (1,933,500)
Foundation Formula 0 0 (0 to
60,000,000)
Expansion of A+ Schools Program 0 (31,898) (67,496)
Charter Schools (UNKNOWN) (UNKNOWN) (UNKNOWN)
Total Cost-DESE ($1,964,700 to ($2,020,938 to ($2,109,454 to
UNKNOWN) UNKNOWN) UNKNOWN)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND ($1,964,700 to ($2,020,938 to $7,890,546 to
UNKNOWN) UNKNOWN) (UNKNOWN)
STATE SCHOOL MONEYS FUND
Transfers to School Building Revolving Fund
and General Revenue Fund
Desegregation Savings Redirected $0 $0 60,000,000)
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
Income-School Districts
Additional state payments for public
placements $1,933,500 $1,933,500 $1,933,500
Sponsoring Charter Schools (UNKNOWN) (UNKNOWN) (UNKNOWN)
ESTIMATED NET EFFECT ON
LOCAL GOVERNMENT (UNKNOWN) (UNKNOWN) (UNKNOWN)
FISCAL IMPACT - Small Business
Small businesses could be fiscally impacted to the extent more educated
people would enter the workforce.
DESCRIPTION
The proposal would clarify the definitions of "district", "elementary
school", "high school", "seven-director district" and "taxpayer".
The proposal would expand the A+ Schools Program by including reimbursement
of the cost of tuition, books and fees to Missouri Western State College and
Missouri Southern State College for the purpose of obtaining an associate in
applied science degree. The amount of the grant per student would not exceed
the average community college tuition in this state as determined by the
Coordinating Board For Higher Education.
The proposal would change the term of school board members of the Springfield
School District from six years to four years, beginning with the 1998
election.
The proposal would create entitlements for state aid for children receiving
services on homebound status or served by contractual arrangement with a
private or public agency approved by DESE; approved extended school year
services for handicapped children; approved special education services
provided by the Department of Social Services-Division of Youth Services; and
approved professional and paraprofessional staff providing special education
services for handicapped children.
Each school district providing special education services for handicapped
children would receive state aid for each eligible pupil in K-12 education.
School districts would be entitled to receive state aid for approved remedial
instruction programs.
Entitlements would not exceed 90% (currently 77%) of the approved cost of the
program.
The proposal would consider children of regular employees of school districts
resident pupils of the school district in the definition of "average daily
attendance".
In the definition of "operating levy for school purposes", for any district
which has not enacted a voluntary tax rollback nor increased the amount of a
voluntary tax rollback from the previous year's amount, the tax rate used to
determine a district's entitlement and deductions would be no less than the
largest operating levy for school purposes since and including property tax
year 1994 or school year 1994-95, provided that the use of this largest tax
rate would be a result of a change due to reassessment to a smaller rate of
taxation during tax year 1995.
Protested taxes would be deducted from the district entitlement for each
district.
For the purposes of distribution of state school aid, a school district could
elect to use the district's equalized assessed valuation for the preceding
year or an estimate of the current year's assessed valuation if the current
year's is more than ten percent less than the district's equalized assessed
valuation for the preceding year.
Each school district would be required to allow each resident pupil to attend
the same district school throughout the school year at which the pupil was
first enrolled for that school year, provided that all transportation costs
would be borne by the pupil or the pupil's parent or guardian.
Prior to setting the tax rates in the teachers' and incidental funds, school
boards meeting certain criteria would set the tax rate for the capital
projects fund to meet the fund's expenditures.
School districts could borrow from the teachers' fund, incidental fund or
capital projects fund to meet obligations in another of those funds, provided
repayment is made within the same fiscal year.
School districts meeting certain criteria could make a one-time combined
transfer from the teacher's and incidental funds to the capital projects
fund, with a limit on the amount.
School districts would be required to annually approve and publish a budget,
which would be an open and public record and would include items in the model
budget created by DESE.
The audit report would document whether salary compensation amounts reported
to retirement systems were accurate, based on comparing district payroll
records with retirement system records.
The proposal would require school boards to select depositaries of the school
district, which could be selected annually or the school district and
depositary could enter into a one to five-year agreement, which could be
terminated by mutual consent. School boards would verbally read each bid
publicly.
Desegregation funding in fiscal year 1998 which is less than fiscal year 1997
amounts would be transferred to the State School Moneys Fund and distributed
through the formula. The first ten million dollars would be appropriated for
dropout prevention programs and activities, provided that no less than two
million dollars of that amount would be appropriated for A+ Schools and no
less than two million dollars of that amount would be appropriated for
alternative schools. For fiscal year 1998, 1999 and 2000, the next fifty
million dollars would be transferred annually to the School Building
Revolving Fund, and any remainder would be transferred annually to the State
School Moneys Fund. For fiscal year 2001 and thereafter, any such fund would
be transferred annually to the State School Moneys Fund.
No more than $150 million of revenues would be transferred to the School
Building Revolving Fund. Only lease purchases, not loans or grants, would be
funded by the fund. The proposal would add more eligibility requirements for
the lease purchases and rank the order districts would be offered credit.
The proposal would specify repayment requirements.
The proposal would require the Department of Elementary and Secondary
Education to pay, as soon as funds are appropriated, the serving school
district the amount by which the per pupil cost exceeds the amount received
by the domiciliary district for placements by the Department of Mental Health
or placements by the Department of Social Services or court into any type of
publicly contracted residential site. Under current law, the Departments of
Mental Health and Social Services are required to pay the excess costs of
children placed by DMH or DOS.
For districts not maintaining an accredited school, the rate of tuition
charged by the district attended and paid by the sending district would be
the per pupil cost of maintaining the district's grade level grouping minus
the sum of tuition received, allowable transportation costs and state and
federal categoricals other than state transportation aid.
The proposal would require DESE to provide a public school attendance and
dropout reporting system.
DESE would report annually the high school graduation rate for the previous
year for each school district on or before December 15. School districts
would report to DESE annually.
The proposal would allow student representatives of the University of
Missouri and Lincoln University to attend closed meetings. The student
representative would be required to remain current on tuition and fee
payments. The student representatives would receive the same reimbursement
for expenses as other members of the board.
The Governor would appoint a faculty member representative to the Board of
Curators of the University of Missouri and Lincoln University, the Board of
Regents of each education institution per section 174.020, and the Board of
Governors of Truman State University. The faculty member representatives
would receive the same reimbursement as other members of the board.
Meetings would be closed to the student or faculty representative pursuant to
sections 610.021 and 610.022.
The Governing Board of Truman State University would consist of eleven
members (under current law ten members).
The proposal would require all teacher-training institutions to provide
courses in first aid and cardiac-pulmonary resuscitation.
Any urban school district under a court-ordered obligation to desegregate
could adopt a policy of enrolling students who voluntarily apply for
admission from other school districts where the race of the pupils would
advance the receiving school district toward fulfillment of its court-ordered
obligations. Any school district could adopt a policy of enrolling
nonresident students where such pupils reside in an urban school district
under a court-ordered obligation to desegregate and where the race of the
pupils would advance the urban school district under a court-ordered
obligation to desegregate, provided that such nonresident admission policy
prohibits evaluation of whether or not the pupil should be enrolled based
upon such pupil's academic, athletic, or artistic performance. The school
district enrolling such nonresident pupils would receive state aid payments
in the lesser amount of such per pupil aid received for resident pupils of
the district or such per pupil aid received for pupils residing in the
district or residence of such transfer pupils. The school district of
residence would not receive state aid for such pupils. The school district
enrolling nonresident students would have no obligation to transport the
pupils from their district of residence, but enrolling districts could
provide transportation to nonresident pupils within the boundaries of the
enrolling school district on the same basis it provides transportation to its
resident pupils. These provisions would not be intended to cause any
increase in the financial obligations of the state.
The proposal includes charter school requirements and application process.
Each school district would provide an annual amount equal to the product of
the school district's equalized, adjusted operating levy for school purposes
for the current year times the guaranteed tax base per eligible pupil times
the number of resident pupils attending the charter school. A charter school
and local school board could agree by contract for services to be provided by
the school district to the charter school. A charter school could not charge
tuition or impose fees that a school district is prohibited from imposing.
Rules promulgated pursuant to the provisions of this proposal would expire on
August 28 of the year after the year in which the rule became effective
unless the General Assembly extended by statute the rule or set of rules
beyond that date to a date specified by the General Assembly. In an action
challenging any rule, the Department of Elementary and Secondary Education
would be required to provide by a preponderance of evidence that the rule or
threatened application of the rule is valid, is authorized by law, is not in
conflict with any law and is not arbitrary and capricious.
The proposal contains an emergency clause for section 165.011.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Elementary and Secondary Education
Department of Economic Development
Office of State Courts Administrator
St. Louis Special School District
Office of Administration
Department of Mental Health
Department of Social Services
Coordinating Board For Higher Education
Missouri Southern State College
Harris-Stowe State College
University of Missouri
Central Missouri State University
Missouri Western State College
Governor's Office
Truman State University
This Fiscal Note is not an official copy and should not be quoted or cited.