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F I S C A L I M P A C T R E P O R T

SPONSOR Stewart

DATE TYPED 2/25/05

HB 854

SHORT TITLE School Size Adjustment Program Units

SB

ANALYST Chabot

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$0.1

See Narrative

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

House Bill 854 amends the Public School Finance Act, Section 22-8-23, on Size Adjustment

Program Units, to eliminate the restriction on allowing separate schools providing special pro-

grams, including but not limited to vocational and alternative education in the calculation of

small sized schools. The schools must have a membership of less than 400 including early

childhood education, but excluding membership in class C and D programs and full-time equiva-

lent in 3 and 4 year-old developmentally disabled programs to be eligible for size adjustment

program units. This will allow additional schools to earn program units from the public school

funding formula.

Significant Issues

DFA assesses there are 29 small schools with vocational or alternative programs with 4,142 stu-

dents that may now qualify for size adjustment program units. One complaint with the current

funding formula is small school districts and schools do not generate sufficient program units to

House Bill 854 -- Page 2

fund requirements.

PED assesses this bill would generate approximately 2,969.451 additional units for the small

schools with vocation or alternative programs. The cost to fund these units is estimated at $9.1

million.

The LESC Small School District Work Group recommended a comprehensive study of the pub-

lic school funding formula which is supported by the Executive, LESC and LFC.

PERFORMANCE IMPLICATIONS

Schools may under-perform because of lack of funding to provide required programs.

FISCAL IMPLICATIONS

Adding additional program units to the formula, without adding additional revenue, will reduce

the unit value calculated from the state equalization guarantee. If this change had been in effect

for the current school year, it would have reduced the current unit value by $14.65.

ALTERNATIVES

Enact legislation requiring a public school funding formula study and defer action on this bill.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

POSSIBLE QUESTIONS

1.

Can this change to the funding formula be held in abeyance until a formula study is com-

pleted and recommendations made to the 2006 Legislature.

GAC/yr:lg