NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

State Department of Public Education (SDE)

LFC files

SUMMARY

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee amendment strikes the HEC amendment; removes the provision which created a transportation emergency fund, designated a funding stream and expenditures from the fund; strikes the appropriations to fund a transportation management information system and the appropriation to develop and refine the transportation funding formula. The amendment also removes a temporary provision which would have allowed SDE to retain funds remaining at the end of FY99 from the transportation distribution in order to develop and implement a transportation management information system.

Synopsis of HEC Amendment

The House Education Committee amendment adds an appropriation of $75.0 to SDE for the purpose of conducting training for school bus contractors on safety issues, administrative procedures and methods for improving efficiency.

Synopsis of Bill

House Bill 123 revises the public school transportation formula; establishes a three-year hold-harmless provision; repeals the current distribution formula; repeals the proposed formula changes effective July 1, 2001; creates an emergency fund; appropriates $2,461.5 to SDE for a transportation management information system; and includes a temporary provision that allows SDE to retain unexpended or unencumbered transportation balances remaining at the end of fiscal year 1999 for a transportation management information system.

Significant Issues

House Bill 123 amends the public school transportation formula for the distribution of operational funds to include a variable and a fixed component and repeals the formula changes effective July 1, 2001.

The bill establishes a three-year hold-harmless provision so the transportation allocation for each school districts shall not be less than 100 percent or more than 115 percent of the 1998-99 school year's transportation allocation. Laws 1995, Chapter 208 also included a 5 year hold-harmless provision which is still in effect.

The proposed formula will continue to use the number of students determined by the 40^th day count, and will also include the December 1^st count for special education students.

The mileage calculation will include the total per capita feeder miles from each school district beginning with FY99.

This bill creates a non-reverting transportation emergency fund and proposes that 50 percent of remaining balances at the end of the year in the transportation fund shall be deposited in the emergency fund. Of the remaining 50 percent of non-reverting balances, 25 percent shall be retained by the district and budgeted in the subsequent year for other transportation related services and at least 25 percent shall be budgeted specifically for to-and-from transportation related services, excluding salaries and benefits. Current statute requires excess funds from the transportation distribution to revert to the general fund.

Funding Formula

House Bill 123 replaces the current public school transportation formula with a formula that incorporates both a fixed base component and a variable component to determine the total funding for school districts. The values for each of the cost components are determined through multiple regression.

The base component will be a fixed amount that will be the same for all school districts. The fixed amount will be calculated by regressing the total operational expenditures from the two years prior to the current school year for school district operations. Each site characteristic is assigned a numerical value determined by the State Board of Education.

The variable component is based on regression analysis of the variable amount per day vs. number of students transported and site characteristics then multiplied by the number of days of operation. The recommended site characteristics incorporated into the model are: number of students transported; number of special education students transported; students per square mile; unpaved miles; unimproved miles; and annual miles traveled per student.

The allocation to each school district is determined by adding the base component plus the variable component.

The transportation director of the State Department of Education will develop the site characteristics and the State Board of Education will be responsible for approving the site characteristics. The Legislative Education Study Committee (LESC) and the Legislative Finance Committee (LFC) may review the site characteristics prior to approval by the State Board of Education.

FISCAL IMPLICATIONS

House Bill 123 appropriates $2,313.1 from the general fund to SDE for expenditure in fiscal years 1999 and 2000 to develop and implement a transportation management information system. This bill also appropriates $148.4 from the general fund to SDE for expenditure in fiscal years 1999 and 2000 to develop and refine the transportation funding formula. Any unexpended or unencumbered balance remaining at the end of fiscal year 2000 from both appropriations shall revert to the general fund.

There are no costs associated with the proposed changes to the transportation formula.

The bill includes a temporary provision to allow SDE to retain unexpended or unencumbered transportation balances remaining at the end of fiscal year 1999 for a transportation management information system. This amount is estimated to be $900.0

In FY96, $1,213.4 reverted to the general fund from the operational allocation of the transportation fund, in FY97, this amount was $772.0 and in FY98 the reversion was $812.3, thus, an estimate of $900.0 (an approximate average of the three years) was used to indicate the future loss to the general fund if current reversion language is amended.

ADMINISTRATIVE IMPLICATIONS

The appropriation of $2,313.1 includes $694.0 for 2 additional staff at SDE, 45 additional staff at school districts and annual support and training for the transportation management information system.

The appropriation of $148.4 includes $94.2 to develop and refine the modified current formula proposed in this bill plus $54.2 to conduct statewide workshops on the new formula for district personnel.

According to SDE, the recommended changes to the transportation formula will provide school districts with a more predictable distribution of transportation funds which, may result in opportunities to for future planning.

TECHNICAL ISSUES

A definition of "emergency" should be provided to clarify appropriate expenditures from the emergency fund.

Page 7, line 21, do not strike the word "allocation".

OTHER SUBSTANTIVE ISSUES

Some of the key findings of the independent contractor that studied the current transportation formula are: overall the transportation funding level is sufficient, however, some districts are over-funded and some are under-funded; density groupings create inequities; the averaging method does not provide incentives to maximize efficiency; the formula recognizes density and road conditions, but not other factors influencing transportation resources; and the methodology used to determine the groupings is not predictable or easy to understand.

The LFC did not recommend the $2,313.1 requested by the State Board of Education for a transportation management information system or the $148.4 requested to refine the transportation funding formula but rather recommended that the request be given a thorough review along with other computer systems by appropriate legislative committees.

The LFC also recommended operational cash balances remain reverting and believes the formula contains sufficient funds to cover emergencies. The committee did not endorse the inclusion of a repeal provision on the formula changes if funds are provided for a transportation management information system. Prior to recommending additional staff at SDE, the committee recommended the department document increased workload and provide outputs and outcomes associated with the request.

POSSIBLE QUESTIONS

• The appropriation of $148.4 includes $94.2 to develop and refine the modified current formula. Why are these funds necessary since a funding formula has already been developed and especially given that the cost for the initial study of the transportation formula was $90.0?



• What sort of emergencies in the transportation of students to-and-from school have districts encountered that may have jeopardized the safety of students and would justify the need for an emergency fund?

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