Summary: Executive Budget Recommendation

Summary: House Recommendation

SCHOOL AID – SB 279 (H-2)

FY 2004-05 Revision

Analyst: Mary Ann Cleary

	Current Law FY 2004-05		*Difference: from FY 2004-05 Current Law*
	Current Law FY 2004-05	House Proposed	*Amount*	%
IDG/IDT	$0	$0	$0	0.0
Federal	1,353,540,100	1,353,540,100	0	0.0
Local	0	0	0	0.0
Private	0	0	0	0.0
Restricted	10,909,200,000	10,948,322,200	39,122,200	0.4
GF/GP	165,200,000	165,200,000	0	0.0
Gross	$12,427,940,100	$12,467,062,300	*$39,122,200*	*0.3*

NOTE: FY 2004-05 includes the $99.5 million general fund reduction from E.O. 2005-7.

Overview

Executive Order 2005-7 reduced the general fund appropriation to the school aid budget by $99.5 million. There was, however, no corresponding funding increase in school aid revenue to offset the general fund reduction. Senate Bill 279 (H-2) would make changes to match revenue and appropriations by increasing revenue by $39.1 million and reducing appropriations by $60.4 million. The additional revenue would come from the change in the school bond loan program and from FY 2003-04 school aid reserve. Reductions in appropriations are the result of lower pupil membership estimates and increased taxable values which are reflected in the foundation allowance payments and lower estimated costs for special education services. There would be no impact to schools from these changes.

Major Budget Changes from 2004-05 YTD Appropriations:	FY 2004-05 (Current Law)	House Change From Current Law
*1. Proposal A Obligation Payment* Recommends reducing the appropriation from the current law for FY 2005 to reflect changes in taxable values and pupil membership blends.	Gross Restricted	$6,678,977,800 $6,678,977,800	($63,977,800) ($63,977,800)
*2. Discretionary Payment* Recommends increasing the appropriation from the current law for FY 2005 to reflect changes in taxable values and pupil membership blends.	Gross Restricted	$2,910,300,000 $2,910,300,000	$12,900,000 $12,900,000
*3. School Bond Redemption Fund* Incorporates the restructuring of the school bond loan fund by creating a revolving loan fund starting in FY 2005. By creating a revolving fund, all future borrowing for bonds and all new debt service from those bonds would be incorporated within the revolving fund. A payment of $41.1 million in FY 2005 is made from the new revolving fund.	Gross Restricted GF/GP	$41,100,000 0 $41,100,000	$0 41,100,000 ($41,100,000)
*4. Special Education Funding* Recommends a decrease of $9.3 million in restricted funds to reflect estimated costs associated with special education services.	Gross Federal Restricted	$1,300,533,000 394,850,000 $905,683,000	($9,300,000) 0 ($9,300,000)

Major Budget Changes from 2004-05 YTD Appropriations:

FY 2004-05

(Current Law)

House Change

From

Current Law

1. Proposal A Obligation Payment

Recommends reducing the appropriation from the current law for FY 2005 to reflect changes in taxable values and pupil membership blends.

Gross

Restricted

$6,678,977,800

$6,678,977,800

($63,977,800)

($63,977,800)

2. Discretionary Payment

Recommends increasing the appropriation from the current law for FY 2005 to reflect changes in taxable values and pupil membership blends.

Gross

Restricted

$2,910,300,000

$2,910,300,000

$12,900,000

$12,900,000

3. School Bond Redemption Fund

Incorporates the restructuring of the school bond loan fund by creating a revolving loan fund starting in FY 2005. By creating a revolving fund, all future borrowing for bonds and all new debt service from those bonds would be incorporated within the revolving fund. A payment of $41.1 million in FY 2005 is made from the new revolving fund.

Gross

Restricted

GF/GP

$41,100,000

$41,100,000

41,100,000

($41,100,000)

4. Special Education Funding

Recommends a decrease of $9.3 million in restricted funds to reflect estimated costs associated with special education services.

Gross

Federal

Restricted

$1,300,533,000

394,850,000

$905,683,000

($9,300,000)

($9,300,000)

Major Boilerplate Changes:
*Sec. 11(1). Revenue Sources* – MODIFIED Assumes school aid revenue of $10.9 billion and $41.1 million in revenue from the revisions to the school bond loan program. This is an increase in revenue of $39.1 million from current law.
**Sec. 51a. Special Education Itinerant Staff –MODIFIED** Amends current language to restrict districts and PSAs from shifting their itinerant employees (speech therapists, physical therapists, school psychologists, etc.) to the ISD for purposes of claiming the special education reimbursement when there was no actual change in the delivery of service being provided within the district or PSA.

Major Boilerplate Changes:

Sec. 11(1). Revenue Sources – MODIFIED

Assumes school aid revenue of $10.9 billion and $41.1 million in revenue from the revisions to the school bond loan program. This is an increase in revenue of $39.1 million from current law.

Sec. 51a. Special Education Itinerant Staff –MODIFIED

Amends current language to restrict districts and PSAs from shifting their itinerant employees (speech therapists, physical therapists, school psychologists, etc.) to the ISD for purposes of claiming the special education reimbursement when there was no actual change in the delivery of service being provided within the district or PSA.