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(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 169

SOURCES OF INFORMATION

State Department Of Public Education

LFC Files

SUMMARY

Synopsis of HEC Amendment

The House Education Committee amendment revises that portion of the funding formula used to calculate enrollment growth units. The amendment also changes the original bill to require the use of prior year 40^th day and December 1 membership for calculation of program units effective July 1, 1999, then effective July 1, 2000, an average of the membership on the 40^th, 180^th, and 120^th of the prior year shall be used to calculate program units.

Synopsis of Bill

House Bill 125 amends the Public School Finance Act to require the use of prior year 40^th day and December 1 membership for calculation of program units for distribution of State Equalization Guarantee (SEG) funds. Current year adjustments for exceptional growth would remain in effect.

Significant Issues

Enrollment Growth Units

In 1989 the Legislature approved an enrollment growth factor to provide for marginal cost increases for each additional student over the prior year when growth exceeds one percent. At the time, the incremental cost was determined to be approximately 0.5 times the unit value. The HED amendment proposes to change the 0.5 factor to 1.0 which in effect doubles the enrollment growth program units generated by school districts.

At this point it is unclear what methodology was used to determine a factor of 1.0. The current factor of 0.5 was based on two studies which were conducted in 1988 that examined the "marginal cost principle".

The Public School Finance Act currently requires the use of projected 40^th day and December 1 membership for calculation of program units for distribution of SEG funds.

According to LESC, in 1992 the General Appropriation Act established the overall appropriation level, and established the level of distribution for the state equalization guarantee based on a program unit value determined by the Superintendent of Public Instruction for the school year 1992-93. The Superintendent of Public Instruction was required to set the initial unit value for the purpose of establishing tentative budgets for the school year. Upon verification of the number of units statewide, the Superintendent of Public Instruction adjusts the program unit value. The intent of the language was to encourage the State Department of Public Education and school districts to be more accurate in their enrollment projections. This language has been included in the General Appropriation Act each year since 1992.

FISCAL IMPLICATIONS

The distribution of the SEG would be based on prior year enrollment rather than current year enrollment projections.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

House Bill 125 relates to House Bill 169. House Bill 169 eliminates the requirement for school districts to submit a temporary and an operating budget and establishes a school district's temporary operating budget as the operating budget.

OTHER SUBSTANTIVE ISSUES

According to SDE, school districts do not know their total operating resources until late January which results in budget delays on important decisions about educational programs.

Included in the Public School Support package for fiscal year 2000, the State Board of Education endorsed the use of prior year 40^th day and December 1 enrollment with an adjustment for current year exceptional growth to support the board's policy of stable budgeting.

The Legislative Finance Committee did not endorse the request to use prior year 40^th day and December 1 membership for calculation of program units for distribution of State Equalization Guarantee (SEG) funds. The committee recommended no changes to current student count mechanisms, however, recommended that SDE require school districts to report student daily attendance data via the Accountability Data System, and that the department collect and compile attendance data from school districts and report to the Education Subcommittee, the feasibility of implementing an attendance based allocation system that provides positive incentives for retaining students for the 2000-2001 school year.

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