FISCAL NOTE

Date Requested: February 19, 2021
Time Requested: 02:29 PM
Agency: Education, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
2560 Comm. Sub. HB2013
CBD Subject: Education (K12)


FUND(S):

0317

Sources of Revenue:

General Fund

Legislation creates:

Creates New Program, Creates New Fund: WV Hope Schol Prog. Trust Fund, WV Hope Schol. Prog. Expense Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The estimated cost to the State under the Public School Support Plan (PSSP) to establish the Hope Scholarship Program is $126,557,939. This cost will be split among fiscal year 2022-23, the initial year of implementation which has more restricted eligibility, and 2027-28, the year after all existing private and home school students become eligible to participate in the program.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 126,557,939
Personal Services 0 0 0
Current Expenses 0 0 126,557,939
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 proposed legislation provides an annual allocation to the West Virginia Department of Education (WVDE) in an amount equal to the greater of no less than two percent of net public school enrollment adjusted for state aid purposes or the total number of eligible Hope Scholarship applicants received by the Treasurer, if available, multiplied by the prior year's statewide average net state aid allotted per pupil. Because there are currently no Hope Scholarship applicants, two percent of the fiscal year (FY) 21 net public school enrollment adjusted for state aid purposes, used to calculate the FY22 state aid funding computations, was used to calculate the estimated cost of the Hope Scholarship Program for FY23, which is the initial year of implementation under the proposed legislation. The estimated cost in the initial year of implementation is $23,667,486.Additionally, the estimate assumes that all students currently participating in private and home school will apply for a Hope Scholarship when allowable by the proposed legislation, which would create an additional cost of $102,890,453. This additional cost to the State is projected for 2027-28. Although private and home school students will be eligible for the program effective July 1, 2026 (which is for the 2026-27 fiscal year), the higher level of applications to expand the funding under the provisions of 18-9A-25 would not be known until submitting the funding request for the 2027-28 year.
    
    The total estimated cost to the State under the Public School Support Plan (PSSP) for the proposed legislation is $126,557,939 and is applicable to FY23 and FY28, which are the initial year and the full year of implementation, respectively. The estimated cost includes the initial FY23 cost of $23,667,486 applicable to public school students as well as an estimated $102,890,453 when current private and home school student can apply for the program. These cost estimates are based on the most recent statistical data available and the assumption that 100% of all current private and parochial students will apply for a Hope Scholarship when they become eligible under the statute. The actual cost to the State will depend on the applicable student enrollment count, number of applicants, and net state aid per pupil amounts at the time of implementation and eligibility expansion.
    
    The estimated cost for FY23 is based on 2% of net enrollment adjusted for state aid purposes for the 2021-22 school year and the final state aid per pupil amount for 2020-21. The number of applicants will not be known at the time of the FY23 funding submission request, so the 2% figure will determine the funding needed. The estimated additional cost to fully implement the proposed legislation at the time of eligibility expansion to current private and public school home students will be based on actual Hope Scholarship applicants received by current private and home school students for the 2026-27 school year, which will be known when requesting Hope Scholarship funding for the 2027-28 year. There are approximately 11,250 current private school students and approximately 11,000 home school students, for a total of 22,250 additional students that would become eligible under the program. The total estimated cost under PSSP, based on the most recent data available, is calculated as follows:
    
    
    FY21 Net Enrollment Adjusted for State Aid Purposes      255,903.84 
             
    
    2% of Net Enrollment   5,118.08                                                      
    
    Approximate School Year 21 Private and Home School Enrollment 22,250.00
    
    
    Total Estimated Hope Scholarship Participants 27,368.08
    
    FY21 State Aid Per Pupil        4,624.29
    
                                                            Estimated Hope Scholarship Cost at 2%     126,557,939    
                            
    
    As mentioned previously, there would be two separate fiscal years in which the State will incur costs for the proposed legislation. The initial year would essentially be a one-time cost of to the State of $23,667,486. After current public school students would begin participating in the Hope Scholarship program, they would no longer be counted in public school enrollment and the county boards of education would no longer receive state aid funding for those students. Under the PSSP, state aid funding is based on the prior year enrollment, so there will be a one-year lag before the other PSSP appropriations would be reduced to offset the Hope Scholarship appropriation amount. However, please note that not all steps of the PSSP are based on student enrollment so the subsequent reduction in the other PSSP appropriations may not equal the full cost for the Hope Scholarship program. Also note that in any year in which the number of public school applicants would exceed two percent of net public school enrollment adjusted for state aid purposes, there would be an additional cost to the State for that specific year until the funding formula would naturally adjust for the reduced public school enrollment.
    
    The additional cost estimate of $102,890,453 for the 2027-28 year for existing private and home school student program participation in the Hope Scholarship Program will be a recurring cost to the State since the State currently provides no funding under the PSSP for private and homeschool students. There will be no offsetting reduction under the PSSP in a subsequent year.
    
    



Memorandum


    Based on the current language for the proposed legislation, current private and home school students are eligible for Hope Scholarships effective July 1, 2026. There are approximately 11,250 current private school students and approximately 11,000 current home school students based on the latest data available. The cost estimate assumes that 100% of these students will participate in the Hope Scholarship Program. Since these students are not currently funded under PSSP, there would be no offsetting reduction under the other provisions of PSSP for those students.
    
    As stated previously, the cost estimates provided assume 100% participation among current private and home school students. The cost estimate to the State will decrease if the actual participation/application rate is less. The WVDE believes it would be reasonable to assume that 100% of current private school students would apply for the Hope Scholarship program since those funds could pay a significant portion of the students' private school tuition. Because the assessment reporting requirements for Hope Scholarship homeschool students would exceed the current assessment reporting requirements for home school students, a small portion of homeschool students may not apply for the Hope Scholarship. However, all homeschool students are already required to perform an annual assessment, but currently only have to report the results to the public schools in certain grade levels. Since the annual assessment is already legally required, the annual reporting requirement will likely not be a significant deterrent given the amount of funding available under the Hope Scholarship Program.



    Person submitting Fiscal Note: Melody Cochran
    Email Address: melody.cochran@k12.wv.us