FISCAL NOTE
Date Requested: February 03, 2022
Time Requested: 04:13 PM |
| Agency: |
Education, WV Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1392 |
Introduced |
HB4545 |
|
|---|
| CBD Subject: |
Education (K12) |
|---|
|
FUND(S):
0317
Sources of Revenue:
General Fund
Legislation creates:
Creates New Expense
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
Upon full implementation, the total estimated annual cost of this proposed legislation is $4,542,715. The estimated annual cost to the State for the proposed legislation under the Public School Support Plan (PSSP) is $3,231,043, while the estimated annual cost to the county boards of education is $1,311,672. This estimate assumes an average inspection cost of 10¢ per square foot applied to 45,427,146 of total building square footage as of the end of the 2020-21 school year. However, it should be noted that due to the approximate two year lag in PSSP funding for Other Current Expenses (Step 6A), county boards of education will bear the full cost of the inspections for the 2022-23 and 2023-24 school years. However, those costs would start being reimbursed to the counties via Step 6A of the PSSP at a rate of approximately 71.25% beginning with the 2024-25 funding year.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
4,542,715 |
4,542,715 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
3,231,043 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
4,542,715 |
1,311,672 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
Industry experts have indicated that a baseline inspection cost of 10¢ per square foot of building area is expected in order to prepare annual inspection reports required by this proposed legislation. As of the end of the 2020-21 school year, the state-wide total square footage of school buildngs was 45,427,146 square feet, which results in a total estimated annual cost of $4,542,715.
Under the Public School Support Plan (PSSP), the foundation allowance for other current expenses (Step 6A of the PSSP) is based, in part, on non-salary related operations and maintenance expenditures, exclusive of special revenue funds, for the latest available school year. The costs associated with this proposed legislation are likely to fall within that category as county boards of education begin to pay for such services. Accordingly, as county board of education expenditures for operations and maintenance increase, so will the foundation allowance for other current expenses under the PSSP. However, given that the foundation allowance is based upon expenditures of a completed school year, there is a time lag between when the increased costs are incurred and when the county will see the related increase in Step 6A funding. For instance, if a county board of education incurred additional costs to comply with this proposed legislation during the 2022-23 school year, the county's Step 6A allowance would increase for the 2024-25 fiscal year.
Upon full implementation, the total estimated annual cost of this proposed legislation is $4,542,715. The estimated annual cost to the State for the proposed legislation under the Public School Support Plan (PSSP) is $3,231,043, while the estimated annual cost to the county boards of education is $1,303,771.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The most critical distinction in this estimate is the industry standard difference between the words “inspection” and “observation.” During the West Virginia Department of Education's (WVDE) normal course of operations, most routine facility assessments are done at an “observation” level. Meaning the facility will be walked by individuals who have a broad knowledge of a school’s critical systems, and recommendations will be made that a system appears to be functioning as designed and is being maintained appropriately. Should something be seen during this observation that warrants an escalation, the “observation” will lead to instances where a system such as an HVAC unit needs a more thorough “inspection.” The individual performing this “inspection” level service must have the experience and/or credentials to perform diagnostic level work that would typically go beyond routine facility assessments. This distinction is important due to the significant cost difference between “observing” and “inspecting” a facility. The estimate provided herein has been calculated on the assumption that an "inspection" level assessment is being required by the proposed legislation. Furthermore, industry experts have advised WVDE that inspections of older buildings could incur additional costs above the baseline of 10¢ per square foot as those inspections are likely to become more involved due to the inherent risk associated with aging properties. An estimate of such additional costs is indeterminable at this time.
Additionally, in cases where something is missed or funding is not available to immediately address an identified need, moving from an “observation” level to an “inspection” level could potentially increase liability for the company providing the service and/or the county board of education.
Lastly, the definition of the kind of service provided could make the county’s procurement of these services difficult, as there might not be enough qualified providers to perform specific assessments across the state on an annual basis. Therefore, it may be difficult for some county boards of education to comply with the proposed legislation.
Person submitting Fiscal Note: Sam Pauley
Email Address: sepauley@k12.wv.us