FISCAL NOTE

Date Requested: February 09, 2016
Time Requested: 01:18 PM
Agency: Education, Department of
CBD Number: Version: Bill Number: Resolution Number:
2512 Introduced HB4469
CBD Subject: Education (K12)


FUND(S):



Sources of Revenue:

Other Fund N/A

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


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


This proposed legislation will not have a financial impact on the State. However, the maximum estimated cost to the county boards of education for providing all of their school employees with a free lunch on each school day is $23,190,800. This cost includes $21,476,050 of individual additional meal costs and additional employer payroll taxes of $1,714,750.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2016
Increase/Decrease
(use"-")
2017
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 23,190,800 23,190,800
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 23,190,800 23,190,800
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


This proposed legislation will not have a financial impact on the State. However, county boards of education will incur additional costs related to this proposed legislation. The maximum estimated annual cost to the county boards of education for providing all of their school employees with a free lunch on each of the 180 instructional days is $23,190,800. This estimate includes $21,476,050 of increased meal costs (ex: food, cook labor, etc.) and additional employer payroll taxes of $1,714,750. Under current IRS regulations, receiving free meals would be a taxable benefit to the employees. Not only would the value of the benefit be added to the employees' W-2s, but the county boards of education would have to pay the additional FICA taxes on the benefit. This estimate was determined by multiplying the average cost per lunch meal for each county board of education (ranging from $2.80 to $4.88 per meal) by the total headcount of school employees within each respective county (31,869 school employees state-wide) and then by 180 school days. The proposed legislation limits the free lunches to employees of a school. Therefore, county board of education employees who are coded to central office, non-school building, private school, or parochial school locations are not included in the school employee headcount for purposes of this estimate. Also, because it is not possible to provide a reasonable estimate of the number of employees who will utilize free lunches or the frequency at which they will participate, a maximum estimate was calculated by assuming all employees coded to a school location would utilize the free lunch all 180 instructional days. An estimated fair market value of the taxable employee fringe benefit ($22,415,031) was used to calculate the additional employer payroll taxes of $1,714,750. The estimated fair market value of the taxable employee fringe benefit was calculated using the prices each county board of education currently charges for an adult lunch (ranging from $3.00 to $5.00 per meal) multiplied by the total headcount of school employees within each respective county (31,869 school employees state-wide). The resulting fair market value estimate was then multiplied by the FICA rate of 7.65% to arrive at the annual additional employer payroll taxes resulting from the proposed legislation. Note that the actual costs to the county boards of education could be significantly less depending on the actual number of employee meals served each year.



Memorandum






    Person submitting Fiscal Note: Brenda Freed
    Email Address: bfreed@k12.wv.us