FISCAL NOTE
Date Requested: February 13, 2019
Time Requested: 10:35 AM |
| Agency: |
Education, WV Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2975 |
Amendment |
SB451 |
|
|---|
| CBD Subject: |
Education (K12) |
|---|
|
FUND(S):
0313 and 0317
Sources of Revenue:
General Fund
Legislation creates:
Creates New Program, Creates New Fund: Innovation Zone Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The total estimated cost to the State for the proposed legislation is $137,707,172. The estimated cost includes additional costs related to the salary increases for teachers and service personnel, the various changes to the Public School Support Plan, the proposed one-time salary supplement for math teachers, the annual attendance bonus and innovation zone funding. The cost estimate does NOT include the additional retirement funding since those costs will be provided by CPRB. We were unable to quantify cost or cost savings related to certain portions of the proposed legislation and the fiscal implications for other portions will be determined by other state agencies.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2019
Increase/Decrease
(use"-") |
2020
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
137,707,172 |
137,707,172 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
137,707,172 |
137,707,172 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The total estimated cost to the State for the WVDE portion of the proposed legislation is $137,707,172 (excluding retirement related costs). The estimated cost includes the following:
$2,364,216 for the creation of the Mathematics Incentive Program line. This estimate assumes that 1,089.40 full-time equivalent (FTE)math teachers will meet the eligibility requirements for the one-time $2,000 salary supplement. The line item appropriation covers the cost of the salary supplement and the related employer share of benefit costs (FICA, workers compensation and unemployment compensation). Since the supplement is not subject to retirement, no retirement costs were included in the cost estimate. Note that after the initial year of implementation when existing math teachers will take the specialized math courses, the cost of the program will decrease since only newly eligible math teachers will qualify for the supplement.
$127,138,319 increase under the Public School Support Plan (PSSP), which includes the estimated cost for the 5% average basic across-the-board salary increase for teachers ($2,120) and service personnel ($115/mo), the provision to give eligible math teachers a three step increase on the salary tables, a provision to fund all county boards of education at a minimum of 1400 students, a change in the calculation of the Allowance for Professional Student Support Personnel, an increase in the Step 6a percentage from 70.25% to 71.25% and a cap on Local Share at the 2015-16 levels. The increase by step of the funding formula is as follows: Step 1 - Allowance for Professional Educators - $49,607,581; Step 2 - Allowance for Service Personnel - $15,862,701; Step 3 - Allowance for Fixed Charges - $7,361,093; Step 5 - Allowance for Professional Student Support Personnel - $21,029,054; Step 6a - Allowance for Current Expense - $1,723,815; Step 6b - Allowance for Professional Substitutes - $1,765,715; Step 6c - Allowance for Service Substitutes - $396,564; Step 7a - Allowance for the Improvement of Instructional Programs - ($1,505,581); Step 7b - Allowance for the 21st Century Technology Systems - ($3,011,161); Step 7d - Allowance for Teacher and Leader Induction - ($3,011,161); Step 9 - Local Share - $32,355,638; and PEIA - $4,564,061.
$3,204,637 for the annual $500 bonus for county board employees who utilize 4 for fewer personal days during the school year. This assumes 5,907 individuals will be eligible for the bonus for the 2019-20 year and includes both the additional salary and employer portion of fringe benefits.
$5,000,000 for the Innovation Zone Fund as required by the proposed provisions of 18-5B-15.
See below for an analysis of the major provisions of the bill and the potential cost implications, including the provisions we are unable to estimate and provisions that have cost implications that should be provided by other agencies. Please note that the cost of retirement under PSSP was removed from the cost estimates provided by WVDE after discussion with House Finance Staff to avoid confusion with the fiscal note provided by the WV Consolidated Public Retirement Board (CPRB). The total retirement cost for the proposed legislation will be taken from the CPRB fiscal note since they can address the impact on the State’s unfunded retirement liability.
• The proposed changes to WVC 5-16-2 and WVC 5-16-22 would allow charter schools to participate in PEIA. Any potential cost estimate should be provided by PEIA.
• There is no estimated cost to the State for the proposed changes to WVC 11-8-6f since the regular levy rates for the county boards will be established at the current level. This provision of the legislation also allows county boards of education to increase their regular levy rate up to the maximum allowable rates by a majority vote of the board members, as approved by the majority of the voters in the county. County boards of education that successfully increase their regular levy rate would receive additional regular levy tax revenue to help operate their school systems. We are unable to predict which county boards might vote to increase to the maximum rates.
• The proposed changes to WVC 11-21-25 would provide a tax credit for public and private school teachers or service personnel for the purchase of supplemental materials and professional development. Any potential cost estimate for this provision would need to be provided by the WV State Tax Department.
• The cost to the State for the proposed changes to WVC 18-5-16 is expected to be minimal. In general, the proposed legislation would likely result in a greater number of students transferring county boards of education, and the state aid funding for those transfer students would follow the students to the receiving county. The cost impact would vary by county. The provisions could also result in a minimal increase in Step 4 funding under the Public School Support Plan (PSSP) due to the requirement that county boards of education provide transportation for enrolled students with specialized transportation in their IEP who reside in a different county and to the extent that any county boards of education choose to provide transportation to other transfer students. This would theoretically increase the actual transportation costs of the county boards of education, which would flow through the Step 4 calculations.
• The proposed change to WVC 18-5-18b increases the percentage of a counselor’s time working in a direct counseling relationship with students from 75% to 80%. There is no estimated cost to the State because this change does not impact PSSP. However, there could be a potential minimal increased cost to county boards of education because counselors will no longer be able to assist with administrative activities to the extent they do currently, resulting in the need for additional employees in other capacities to assist with those administrative activities. Since the reduction in counselor time on administrative duties is only 5%, the number of additional staff hired in other capacities is expected to be minimal.
• There is no estimated cost to the State or to the county boards of education for the provisions of WVC 18-5-32 which would move central office administrators, supervisors and directors to at-will positions.
• There is no estimated cost to the State or county boards of education related to the change to WVC 18-5-46 regarding teacher recommendations for promotion.
• The estimated cost to the State for the provisions of WVC 18-5B-15 related to the creation of the Innovation Zone Fund is $5 million. The proposed language requires, at a minimum, a $5 million line-item appropriation into the fund.
• The provisions of WVC 18-5G-13 regarding the funding for charter schools will reduce the overall amount of funding available for existing public schools. However, the potential reduction in funding to existing public schools is limited by the provisions of WVC 18-5G-3 that limit the creation of public charter schools to two conversion elementary schools. County boards of education will be required to pay the charter schools 90% of the Total Basic Foundation Allowance for their county for each pupil enrolled in the charter school, which includes both their local share (regular levy taxes - not excess levy) and their state aid funding. The county board of education will also experience a reduction in federal funds since the policy requires federal funds follow the charter school students. However, the potential exists for these reductions in revenue to be offset by a reduction in actual expenditures currently being incurred by the county board of education since an existing elementary school will be converted to a charter school. Since we cannot predict which two elementary schools would convert to public charter schools, we are unable to predict whether the reduction in actual expenditures incurred by the county will be sufficient to offset the reduction in available funding, the possibility does exist.
The legislation requires the State Board to develop a policy regarding the funding for charter schools and allows the State Board to modify the PSSP calculations under WVC 18-9A-7 (Step 4 – Student Transportation) and WVC 18-9A-9(1) (Step 6a – Current Expense) for the purpose of providing additional state aid funding to county boards of education related to the operation of public charter schools. Because the two potential charter schools will be conversion charter schools, the Step 6a impact of including charter school costs in the calculations should be cost neutral to the State since the actual operations and maintenance costs incurred for those existing schools are already included in the existing Step 6a calculations. However, there may be an increased cost to the State related to Step 4 depending on the actual transportation costs incurred by the conversion charter schools. Assuming transportation is provided to the charter school students, such costs could be in addition to the costs already being considered in the current Step 4 calculation related to the county boards of education. We are unable to predict the potential cost increase to the State without knowing the specific transportation arrangement that would be established by the charter schools. Please note that the county boards are required to send 90% of their Step 4 transportation allowance per pupil to the charter schools regardless of whether the charter schools provide transportation for their students.
• The potential cost impact under WVC 18-7A-3 and WVC 18-7B-2 to allow charter schools to participate in the TRS and TDC retirement systems should be provided by the WV Consolidated Public Retirement Board.
• There is no estimated cost to the State for the proposed changes under WVC 18-8-4 which now requires “meaningful contact” if a student misses more than a certain number of days of school.
• There is no estimated additional cost to the State for the definition change under WVC 18-9A-2(f) that expands professional student support personnel to include professionals providing direct social and emotional support services to students, including but not limited to social workers and psychologists. The definition change provides county boards with more flexibility regarding what positions are eligible for state aid funding.
• There is no estimated cost to the State for increasing the maximum number of adults enrolled in secondary programs from 1,000 to 2,500 under WVC 18-9A-2(i)(1)(A). This proposed language was taken from SB 1. That proposed legislation treats students who have been awarded a high school diploma and who have continued to be enrolled in the public schools in a program leading to an advanced certification or in an Advanced Career Education (ACE) program as adults enrolled in regular secondary programs in accordance with the PSSP. For purposes of calculating state aid funding, such adults enrolled in secondary programs are currently included in net enrollment on the basis of full-time equivalency (i.e. actual contact hours) in the prior year. The current statutory language contains a maximum of 1,000 such adults for funding purposes, but the proposed legislation increases the cap to 2,500. Although the cap is increasing by a possible 1,500 students, overall student enrollment in West Virginia has been declining annually since the 2014-15 school year, with decreases ranging from a low of 2,557 students to a high of 4,858 students. The average decline in enrollment over the five-year period is 2,829 students per year. The total number of births in West Virginia have continued to decline, so declines in enrollment are projected to continue into future years. Therefore, any projected additional student enrollment from the proposed legislation is expected to be offset by the normal decline in student enrollment in grades PK-12 for state aid funding purposes, resulting in no additional cost to the State under the PSSP.
In the event that economic conditions in West Virginia improve and regular PK-12 student enrollment does not continue to decline as anticipated, and if the full potential new 1,500 student FTEs are included in the net enrollment total for state aid funding purposes, the maximum estimated increase in state aid funding would be $6,345,255. This maximum amount was estimated by multiplying the potential new 1,500 FTE by the $4,230.17 average state aid per pupil for the 2018-19 school year. The first potential year for any increase in state aid funding would be the 2021- 2022 school year (FY22), based on any students that would be enrolled in qualifying programs during the 2019-20 school year.
• The proposed change to WVC 18-9A-2(i)(5) to fund all county boards of education with less than 1400 students at a base level of 1400 students will increase the cost to the State under PSSP. There are currently 11 county boards of education with less than 1400 students. For FY20, those county boards receive funding for an additional 1,666.98 students statewide. After the proposed change, the number of additional students increases to 3,557.30. Exclusive of the other changes that impact PSSP which will increase the cost further (pay increases and Step 5 change), the estimated cost to the State for this provision of the proposed legislation is $10.3 million (excluding retirement).
• The proposed change to WVC 18-9A-2(n) is cost neutral to the State. The language clarifies that the local share calculation under PSSP will be based on the existing regular levy rates utilized by the county boards of education and not the higher rates that some county boards would now be permitted to adopt with the approval of the voters of the county.
• The proposed change to WVC 18-9A-8 will result in an increased cost to the State because additional professional student support personnel positions will be funded under PSSP. This provision will fund all county boards of education at the same 4.70 ratio per thousand students moving forward, fixing a current problem with the existing Step 5 calculation where the allowance has been fixed at the 2012-13 levels regardless of student enrollment changes. Exclusive of the other changes that impact PSSP which will increase the cost further (1400 base funding and salary increases), the estimated cost for the proposed change is $22.9 million (excluding retirement) for an estimated additional 393.69 professional student support positions to help meet the social and emotional needs of students.
• The proposed change to WVC 18-9A-9(1) to increase the Step 6a funding percentage from 70.25% to 71.25% is an estimated to cost the State of $1.7 million. This will help provide additional funding to county boards for operations and maintenance expenses since the actual costs incurred by the county boards far exceed the current Step 6a allowance.
• The proposed change to WVC 18-9A-12 creates a cap on the local share calculation under PSSP at the 2015-16 levels. This will result in an increased cost to the State because 38 counties are currently estimated to have a local share for FY20 that is higher than their 2015-16 level. When the local shares for those counties are lowered, the portion of PSSP funding contributed by the State increases due to the inverse relationship between the two. The additional cost to the State is offset by currently projected FY20 growth in Steps 7a, 7b and 7d of the funding formula that will be reduced back to the prior year appropriation level. The net cost to the State for this proposed change is an estimated $24.8 million. The cost estimate will change upon the receipt of the final Certificates of Valuation from the county assessors in March 2019.
• The proposed change to WVC 18-20-5 to allow charter schools to receive high cost/high acuity funding will result in no additional cost to the State since the amount of funding being provided will not increase. This change will potentially reduce funding to the current county boards of education since the charter schools will be entitled to a portion of the funding if they have students that meet the eligibility criteria. However, the potential reduction in revenue to the county boards of education would be offset by a reduction in the actual costs incurred by the county since they would no longer be incurring costs for a high acuity student.
• The proposed changes to WVC 18A-4-2(b) and WVC 18A-4-8a(a) to provide an average 5% basic across the board salary increase for professionals ($2120/year) and service personnel ($115/month) are estimated to cost the State an additional $63 million under PSSP (exclusive of retirement and the other provisions that impact PSSP and will increase the cost, including the 1400 base enrollment and Step 5 changes).
• The proposed change to WVC 18A-4-2(d) to allow math teachers meeting certain eligibility criteria to be provided three additional years of experience on the salary schedule will have an additional cost to the State under PSSP of an estimated $2.13 million (excluding retirement). Each eligible teacher, currently estimated at 1089.40 FTE, will receive an additional $588 per year, for a total of $1,764 per teacher.
• The estimated cost to the State for the creation of the Mathematics Incentive Program line under WVC 18A-4-2d is $2,364,216. This estimate assumes that 1,089.40 full-time equivalent (FTE) math teachers will take the courses necessary to meet the eligibility requirements for the one-time $2,000 salary supplement. The line item appropriation covers the cost of the salary supplement and the related employer share of benefit costs (FICA, workers compensation and unemployment compensation). Since the supplement is not subject to retirement, no retirement costs were included in the cost estimate. Note that after the initial year of implementation when existing math teachers will take the specialized math courses, the cost of the program will decrease since only newly eligible math teachers will qualify for the supplement.
• There is no additional cost to the State for the proposed change to WVC 18A-4-5. The State will continue to fund the current amounts being provided as an equity supplement for professionals and service personnel. The current evaluation of equity under the prescribed methodology is removed moving forward.
• There is no additional cost to the State for the proposed changes to WVC 18A-4-5a regarding county salary supplements for teachers.
• We are unable to estimate the cost implications to the State as a result of the proposed changes to WVC 18A-4-7a regarding reductions in force, but we expect any changes to be minimal.
• There is no additional cost to the State for a proposed change to WVC 18A-4-10 requiring county board of education employees to accrue personal leave instead of receiving the days at the beginning of the year. There would be a theoretical cost savings to the county boards of education because some employees may enter into "dock" status earlier if they miss when they do not have leave accrued. There will be some cost savings to the county boards of education related to having to pursue employees to return leave for which they were paid but had not earned upon termination of employment since those instances can sometimes turn into legal issues.
• The estimated cost to the State for the proposed addition of WVC 18A-4-10(c), which provides a $500 bonus annually for any full-time employee of a county board who has not utilized more than 4 personal leave days during the 200-day employment term, is $3,204,637. Based on 2017-18 attendance data for county board of education employees, an estimated 5,106 employees would have been eligible for the bonus if it had been in existence. Using data from Upshur and Mingo County boards of education and the average 15.68% improvement they experienced in employee attendance after the implementation of a county-paid attendance incentive of a comparable amount, WVDE estimates that 5,907 individuals will be eligible for the $500 bonus. The estimated cost to the State for the bonus of $3,204,637 includes both the salary and employer share of fringe benefits. The bonus is not subject to retirement.
The implementation of the proposed attendance incentive may reduce the actual substitute costs incurred by the county boards of education.
• The potential cost of changes to WVC 18C-4-1 et. seq, should be determined by the WV Higher Education Policy Commission.
• There is no additional estimated cost to the State under the PSSP for the required written BRIM notification under WVC 29-12-5a. There is no additional estimated cost to the county boards of education to provide the written notice since email is an acceptable form of notification. If a county board elects to send the notification via first class mail, the county would electively incur a cost to provide the notice. BRIM should also be consulted for any potential cost implications regarding this proposed change.
Memorandum
Person submitting Fiscal Note: Brenda Freed
Email Address: bfreed@k12.wv.us