FISCAL NOTE

Date Requested: February 15, 2021
Time Requested: 01:09 PM
Agency: Education, WV State Board of
CBD Number: Version: Bill Number: Resolution Number:
1643 Introduced HB2501
CBD Subject: Education (K12)


FUND(S):

0317

Sources of Revenue:

General Fund

Legislation creates:

Increases Existing Expenses



Fiscal Note Summary


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


The total estimated cost to the State for fiscal year 2022 to suspend the implementation of the school aid formula and fund county boards of education at the 2020-21 PSSP levels is $81,998,367 based on the preliminary Public School Support Plan (PSSP) request for FY22. Insufficient data exists to determine the projected costs beyond 2022.



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 81,998,367 81,998,367
Personal Services 0 0 0
Current Expenses 0 81,998,367 81,998,367
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 to suspend the implementation of the school aid formula until FY24 and fund county boards of education at the 2020-21 PSSP levels is $81,998,367 annually. The FY21 Final Basic State Aid Allowance was $1,221,870,804 and the FY22 Preliminary Basic State Aid Allowance was $1,155,395,680 for a decrease of $66,475,124 from FY21 to FY22. Additionally, the FY21 PEIA appropriation was $222,461,499 and the FY22 amount requested was $206,938,256 for a decrease of $15,523,243. Therefore, the estimated cost to the State under the Public School Support Plan (PSSP) to suspend the implementation of the school aid formula until FY24 and fund county boards of education at the 2020-21 levels is $81,998,367 annually. It is assumed that there will be no cost savings associated with the funding for the Teachers' Retirement System (TRS). The WVDE's initial funding request for retirement funding for FY22 under Fund 0317 was $30,309,000 higher than the FY21 levels in that fund based on estimates provided by the actuaries of the WV Consolidated Public Retirement Board (CPRB), but this legislation would fund at the 2020-21 level and not the higher level requested. Note that in FY21, $20 million of the retirement funding came from Fund 7007, Debt Reduction Fund instead of Fund 0317. Also, please note that the final amount for retirement funding needed for FY22 will need to be updated to the final amounts from the TRS Actuarial Valuation Report. Since this Legislation would fund all of the PSSP at the 2020-21 level, it is assumed that the retirement appropriation would also remain at the 2020-21 level for purposes of this fiscal note. It is important to note that the county boards of education may also have a cost associated with this bill, but that cost cannot be determined at this time. The cost for each county would depend on future enrollment changes.



Memorandum


The purpose of this proposed legislation appears to be suspension of the annual Public School Support Plan (referred to in the bill as "school aid funding formula") funding calculations (as outlined in Chapter 18, Article 9A of West Virginia Code) for the 2021-22 through 2023-24 school years and to provide funding during those years at the same amounts appropriated during the 2020-21 school year. However, the proposed legislation does not amend or add language to any parts of Chapter 18, Article 9A. Instead, the bill has added language to Article 9B, which relates to school district budgeting. The proposed language in Article 9B is contradictory to the current language contained in Article 9A. To accomplish the desired goal of the legislation, revised language would need to be added to Chapter 18, Article 9A instead of Article 9B. Funding county boards of education at the 2020-21 amounts for the 2021-22 through 2023-24 school years could potentially cause great inequities in funding levels for the county boards of education. Although most county boards of education experienced a significant decline in student enrollment and would benefit from this provision for 2021-22, it is difficult to predict beyond the initial year. Those county boards of education experiencing increased enrollment would not receive sufficient funding to provide a thorough and efficient education to the students in their county and those county boards of education with declining enrollment will receive far greater than the state aid funding formula would calculate for that county's needs to provide a thorough and efficient education to the students in their county. The legislation would also lock in the local share of all county boards of education at the 2020-21 level, even though the assessed valuations in each county might change. Some county boards of education are seeing a decline in property values while other county boards are seeing a drastic increase in property values. Holding local share values flat could be viewed as a potential violation of the Recht decision since counties may not be able to afford the local share amounts from 2020-21 in future years. Finally, please note that although WV Code 18-9A-6a outlines the funding for the Teacher's Retirement System under the Public School Support Program, WV Code 18-7A-18(a) separately requires an annual allocation from the State General Revenue Fund to the Teachers' Retirement System Fund in an amount equal to the actuarially required contribution, reduced by any employer contributions and other allocated amounts. The proposed legislation does not amend WV Code 18-7A-18(a); therefore, per discussion with the CPRB, the provisions of WV Code 18-7A-18(a) may still force the State to contribute the amounts calculated for the actuarially required contribution for the Teachers' Retirement System for any year in which the amount required from the TRS Actuarial Valuation Report exceeds the funding levels from 2020-21 for that purpose.



    Person submitting Fiscal Note: Kristen Lanham
    Email Address: kristen.lanham@k12.wv.us