FISCAL NOTE
Date Requested: January 28, 2019
Time Requested: 03:06 PM |
| Agency: |
Education, WV Department of |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2975 |
Introduced |
SB451 |
|
|---|
| CBD Subject: |
Education (K12) |
|---|
|
FUND(S):
0313 and 0317
Sources of Revenue:
General Fund
Legislation creates:
Creates New Program, Creates New Fund: WV Public Charter School Commission
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 $136,725,697. 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, and the anticipated operating costs for the newly established WV Public Charter School Commission. We were unable to quantify cost or potential 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 |
136,725,697 |
136,725,697 |
| Personal Services |
0 |
164,000 |
164,000 |
| Current Expenses |
0 |
136,561,697 |
136,561,697 |
| 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 $136,725,697. The estimated cost includes the following:
$200,000 for the operations of the newly established WV Public Charter School Commission. This estimate includes the salary and fringe benefits for the Executive Director and a secretary, for a combined total of $164,000, and operating costs of $36,000 to cover building rent, travel costs, office supplies, etc. Since the Commission will be separate from WVDE, a new fund will be needed under Org 0402.
$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.
$134,161,481 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; Retirement - $7,023,162; and PEIA - $4,564,061.
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:
• 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.
• The proposed changes to WVC 5-16-13 would allow participants in TRS to convert sick leave into PEIA coverage upon retirement. The actuarial analysis and cost implications to the State for this change should be provided by PEIA, as the proposed changes will increase the State’s OPEB liability. However, this could potentially lead to a reduction in substitute costs for county boards of education since teachers are more likely to start saving their sick days moving forward to take advantage of this post-employment benefit, but there is no way to estimate that potential cost savings. Improved employee attendance will also have a positive impact on student performance.
• 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 the maximum allowable rates by a majority vote of the board members. County boards of education that vote to 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 classroom teachers 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.
• There is no estimated cost to the State for the changes to WVC 18-5-18a because nothing changes under the PSSP. The increased class sizes should theoretically result in a cost savings to the county boards of education, but we are unable to estimate the potential cost savings. Currently, county boards are required to add full teachers for grades 1-3 when enrollment exceeds 25 students in a classroom and are required to add full teachers for grades 4-6 when enrollment exceeds 28 students (25 plus 3 max). Under the proposed legislation, counties will be permitted to pay existing teachers for additional pupils in their classroom, which would cost less than adding a full teacher. Current teachers in grades 4-6 receiving additional pupil pay will continue to be paid when in excess of 25 pupils in their classroom, so that aspect of the proposed legislation is cost neutral to the county boards of education.
• The proposed change to WVC 18-5-18b modifies the statutory duties of school counselors to say their “main responsibility shall be providing direct counseling services to students.” There is no estimated cost to the State because this change does not impact PSSP. However, there is a potential cost to county boards of education because counselors will no longer be able to assist with administrative activities to the extent they do currently. This may result in county boards needing to hire additional administrative or clerical positions to replace the administrative time currently provided by counselors. We are unable to predict the number of additional positions that would be needed.
• 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 for the provisions of WVC 18-5-45a regarding the school calendar implications for work stoppages. If there is a work stoppage that ultimately results in pay being withheld from employees due to employment terms not being completed, such withheld funds would be returned to the State. We are unable to estimate any potential cost to the county boards of education related to the cancellation of extracurricular activities during a work stoppage.
• 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 proposed creation of the WV Public School Commission under WVC 18-5G-10 has an estimated cost to the State of $200,000. This estimate includes the salary and fringe benefits for the Executive Director and a secretary, for a combined total of $164,000, and operating costs of $36,000 to cover building rent, travel costs, office supplies, etc. Because the WV Public School Commission will be separate from the WVDE, a new fund should be created under Org 0402 to track their appropriations.
• The provisions of WVC 18-5G-13 regarding the funding for charter schools will reduce the amount of funding available for existing public 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. The students will still be included in Net Enrollment under PSSP, so the county board of education will still receive credit under PSSP for the charter school student. However, they will be sending 90% of both their local share (regular levy taxes - not excess levy) and their state aid funding to the charter school, which reduces the amount of funding available to operate existing public school programs. County boards will also experience a reduction in federal funds since the policy requires federal funds follow the charter school students as well.
The legislation requires the State Board to develop a policy regarding the funding for charter schools and allows the State Board to modify the calculations under WVC 18-9A-7 and WVC 18-9A-9(1) for the purpose of providing additional state aid funding to county boards of education related to the operation of public charter schools. There will be an increased cost to the State under PSSP because there will be instances under the State Board’s policy where the calculations under Step 4 and Step 6a of the funding formula will be modified to include the transportation and operations/maintenance costs of the charter schools in the calculations (which are currently based on the actual expenditures of the county boards of education) so that the county boards of education are not required to give away funds provided to the county based on the county’s actual expenditures to the charter schools. There is currently no way to estimate the increase under PSSP for the inclusion of those charter school actual costs because there is no way to estimate how many charter schools will be established or the makeup of those schools (new or converted), what the actual transportation and operations/maintenance costs incurred by the charter schools would be, or even exactly what the State Board Policy will say regarding any modifications to the PSSP calculations. Please note that the county boards are required to send 90% of their Step 4 transportation allowance per pupil to the charter schools, but there is currently no requirement for the charter school to 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.
• 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 $10.9 million.
• The proposed change to WVC 18-9A-2(n) needs further clarification. The definition for “levies for general current expense purposes” now refers to the rates “as determined” pursuant to WVC 11-8-6f. The language in 11-8-6f refers to both the existing levy rates (19.40 cents per hundred for Class I) and the maximum rates (22.95 cents per hundred for Class I) to which a county board of education can elect to increase their rates. While WVDE believes the intent is for the local share calculation to be based on the existing levy rates now established in 11-8-6f, the current proposed language is unclear. Leaving the local share calculation at the existing rates has no cost implication to the State. Basing the local share calculation on the higher levy rates that a county board of education may elect to use would result in a higher local share calculation for those county boards and a reduced state share under PSSP (subject to the local share cap proposed in WVC 18-9A-12).
• 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 $24.3 million 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 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. However, this change will potentially reduce funding to the current public schools since the charter schools will be entitled to a portion of the funding if they have students that meet the eligibility criteria.
• There is an estimated additional cost to the State for the ESA program under WVC 18-31-3, but the amount shall depend on the amount appropriated for that purpose by the Legislature. WVC 18-31-4 limits the expenditures for the ESA program (i.e. - the number of applications the WVSTO can approve) to the amount appropriated for the fiscal year. Each ESA account will be provided 75% of the prior year statewide average net state aid per pupil based on net enrollment adjusted for state aid purposes (the same amount provided to the Mountaineer Challenge Academy). For FY19, that amount would be $3,172.63 per ESA account. The West Virginia State Treasurer’s Office (WVSTO) should also be consulted regarding a fiscal note for the ESA program.
• 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 $67.7 million under PSSP (exclusive of 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 $2.29 million. 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 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 the proposed change to WVC 18A-4-9 regarding annual payroll authorization for dues to employee organizations. This will require an additional amount of effort on the part of the county board of education payroll offices to collect the annual authorization, but the additional work is expected to be performed by existing staff.
• There is no additional cost to the State for the proposed change to WVC 18A-4-10 requiring county board of education employees to accrue personal leave monthly 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 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