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

SPONSOR Asbill

ORIGINAL DATE

LAST UPDATED

1/31/06

HB

SHORT TITLE Increase School District Cash Balances

SB 95

ANALYST Earp

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

Indeterminate

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates House Bill 301

Conflicts with Senate Bill 450 and House Bill 432

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance & Administration (DFA)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

Senate Bill 95, sponsored by Senator Asbill on behalf of the Funding Formula Study Task Force,

amends the Public School Finance Act to increase the allowable limits for a school district or

charter school’s ending operational cash balances based on the size of the district’s current year

budgeted program cost.

FISCAL IMPLICATIONS

The bill proposes to increase the current statutory limits on the cash balances of school districts

and charter schools according to each entities' program costs in increments as follows:

-Program cost of less than $5.0 million: increased from 9 to 15 % of budgeted expenditures;

-Program cost of $5.0 million or more, but less than $10.0 million: from 7.5% to 12 % of

budgeted expenditures;

Senate Bill 95 – Page

2

-Program cost of $10.0 million or more, but less than $25.0 million: from 6%% to 9% of

budgeted expenditures;

-Program cost of $25.0 million or more, but less than $200.0 million: from 4.5% to 7% of

budgeted expenditures; and

-Program cost of $200.0 million or more: from 3 % to 5% of budgeted expenditures.

The Public Education Department (PED) and Department of Finance & Administration (DFA)

report that, while SB95 carries no appropriations, increasing school district and charter school

cash balance limits could have an indeterminate fiscal impact on statewide public school sup-

port funding since emergency supplemental funding flows through the Public Education De-

partment to districts and charter schools based on their certification of need. Historically there

is considerable variability across the 89 public school districts in cash balance management, de-

pending upon local conditions and interpretation of emergency needs.

SIGNIFICANT ISSUES

This bill conflicts with the provisions of House Bill 432 and Senate Bill 450. These duplicate

bills contain provisions which eliminate the statutory limitations on school district/charter school

operational cash balances.

ADMINISTRATIVE IMPLICATIONS

No significant administrative implications are apparent.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 95 and House Bill 301 are duplicate measures.

This bill conflicts with House Bill 432 and Senate Bill 450 as noted in Significant Issues above.

OTHER SUBSTANTIVE ISSUES

PED notes that, with higher cash balance limits, school districts could carry forward higher cash

balances. This extra cash could pay for unforeseen non-recurring expenditures (i.e. increased en-

ergy costs) and allow districts to rely less on supplemental emergency funding.

Allowing school districts to carry larger cash balances would also provide greater flexibility in

the event of delays in the distribution of State Equalization Guarantee revenues or other unan-

ticipated cash flow issues.

DKE/nt