This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0795 - School Aid; School Taxes on Railroads; Career Ladder
L.R. NO. 2900-09
BILL NO. Truly Agreed To And Finally Passed HCS For SS For SCS For SBs 795,
542 & 563
SUBJECT: Schools: Distribution of state aid and taxes
TYPE: Original
DATE: May 17, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
General Revenue (UNKNOWN to UNKNOWN to UNKNOWN to
(UNKNOWN) (UNKNOWN) (UNKNOWN)
Total Estimated
Net Effect on All UNKNOWN to UNKNOWN to UNKNOWN to
State Funds (UNKNOWN) (UNKNOWN) (UNKNOWN)
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
None $0 $0 $0
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government UNKNOWN to UNKNOWN to UNKNOWN to
(UNKNOWN) (UNKNOWN) (UNKNOWN)
FISCAL ANALYSIS
ASSUMPTION
Based on responses to similar proposals, officials from the State Auditors
Office (SAU) and Public School Retirement System (PSR) assume the proposal
would result in no fiscal impact to the office.
The Department of Natural Resources (DNR) officials assume the proposal would
have no fiscal impact on the department.
Officials from the State Tax Commission (TAX) assume the proposal would
result in no fiscal impact to the commission. They state that applying the
average operating rate in 1994 of $3.10 to the state-assessed valuation of
$3.059 billion, indicates the revenues involved totalled $94.8 million in
1994. They stated this amount would increase in subsequent years as
operating tax rates and valuations increased. Based on growth from 1988 to
1994, the State Tax Commission estimates average growth in tax rates and
valuations to be approximately 6.2% per year.
Officials from the Department of Elementary and Secondary Education (DESE)
assume the tax rate changes would tend to lower the cost of the foundation
formula, but they do not have sufficient data to predict the reduction in
cost. They assume changing the definition of the "district income factor"
would increase the cost of the formula, but sufficient data are not available
to estimate the impact. DESE states the change in the definition of a
"guaranteed tax base" would decrease the cost of the formula by $168.9
million when compared to the current definition. DESE states the net impact
of the provisions cannot be estimated. At the local level, DESE states some
districts could receive more or less state aid through a fully funded
foundation formula.
The Oversight Division assumes that based on a response from DESE to
previous, similar legislation, the portion of the proposal related to
state-assessed railroads and utilities (SARRU) would result in $11,666,608 of
SARRU revenues being redistributed among school districts.
Based on a response to previous, similar legislation, officials from the
Department of Elementary and Secondary Education (DESE) assume if current law
continues, 52 school districts will lose $11,666,608 in State-Assessed
Railroad and Utility (SARRU) revenues. This amount was determined by DESE by
recalculating the November, 1995 state aid formula payment with the SARRU
taxes received into the Teacher's and Incidental Funds removed as a deduction
in the formula. In addition, DESE assumes that the total SARRU revenue would
be added to the formula distribution. No other changes were assumed. The
other districts of the state would gain this amount through the formula
provided that the $94,916,875 removed from the deductions would be
appropriated for the formula. The proration on line one of the formula would
have to be slightly higher than 1.0 in order to send the $11,666,608 lost by
the 52 districts to the remaining school districts. If the proration were
not slightly above 1.0, in all likelihood the General Revenue money necessary
to fund the formula would have been supplanted by SARRU money, and the
districts would have a net loss of the shortfall. DESE states the amounts
per district are only estimates and are subject to change due to individual
district circumstances.
The minimum salary provision would extend this program for certain districts
for three years. The following assumptions were made:
No district would receive more than it received in 1995-96 plus the
amount needed for the masters degreed teachers requirement in 1996-97.
Only Schell City R-I would be eligible.
There are only two teachers qualifying for the $24,000 in 1996-97.
The following state cost is estimated:
Schell City R-I = $46,828
Masters degree + 10 years exp. - 2 teachers = $12,000
+ 1995-96 amount 34,828
$46,828
This cost would be incurred in each year FY97, FY98, and FY99. A
supplemental appropriation would be needed for FY97.
DESE assumes that amending the school foundation formula by excluding from
the deduction for state assessed railroad and utility tax any penalty paid
after July 1, 1995, by a concentrated animal feeding operation would affect
six school districts in Mercer, Putnam and Sullivan counties. These
districts would receive increased formula aid, totalling $300,000 to $400,000
(to fully fund the formula).
DESE assumes the provision related to increasing the amount that can be
transferred from the incidental fund to the capital projects fund, based on
dollars per assessed valuation, would increase the cost to fully fund the
foundation formula by increasing the levy on line one of the formula. DESE
estimates this cost to be $4 million to $8 million.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
GENERAL REVENUE FUND
Savings-DESE
Fully-Funded Foundation Formula UNKNOWN UNKNOWN UNKNOWN
Cost-DESE
Fully-Funded Foundation Formula (UNKNOWN) (UNKNOWN) (UNKNOWN)
Minimum Salary ($46,828) ($46,828) ($46,828)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND UNKNOWN UNKNOWN UNKNOWN
to to to
(UNKNOWN) (UNKNOWN) (UNKNOWN)
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
Income-School Districts
State-Assessed Railroad and Utilities
Camden R-III 95,246 101,151 107,422
Camdenton R-III 570,425 605,791 643,350
Climax Springs 39,568 42,021 44,626
Cape Girardeau 63 653,721 694,252 737,296
Nell Holcomb R-IV 62,861 66,758 70,897
Luray 33 14,717 15,629 16,598
Cole County R-II 4,656 4,945 5,252
Washington 770,638 818,417 869,159
Grundy County R-V 14,171 15,050 15,983
S. Iron County R-I 77,876 82,704 87,832
Iron County C-4 89,842 95,412 101,327
Center 58 209,976 222,994 236,820
Joplin R-VIII 680,200 722,372 767,159
Income-School Districts
State-Assessed Railroad and Utilities
Jefferson County R-VII 45,771 48,609 51,623
Crystal City 47 67,439 71,620 76,060
School of the Osage R-II 323,665 343,732 365,043
High Point R-III 31,281 33,220 35,280
Moniteau County R-V 20,583 21,859 23,214
Morgan County R-I 5,906 6,272 6,661
Risco R-II 23,518 24,976 26,524
New Madrid County R-I 409,538 434,929 461,895
Couch R-I 14,832 15,751 16,727
Cooter R-IV 32,667 34,692 36,843
Pettis County R-XII 15,011 15,942 16,930
Boncl R-X 9,986 10,605 11,262
Westran R-I 151,783 161,193 171,187
Centerville R-I 16,173 17,176 18,241
Bunker R-III 29,246 31,059 32,985
Lesterville R-IV 33,357 35,425 37,621
St. Charles R-VI 709,379 753,360 800,068
St. Charles R-V 123,206 130,845 138,957
Ferguson Florissant R-II 605,172 642,693 682,540
Pattonville R-III 560,694 595,457 632,375
Kirkwood R-VII 470,912 500,108 531,115
Lindbergh R-VIII 417,654 443,548 471,048
Mehlville 1,036,296 1,100,546 1,168,780
Parkway C-2 1,846,064 1,960,520 2,082,072
Affton 101 214,955 228,282 242,435
Bayless 111,504 118,417 125,759
Brentwood 71,730 76,177 80,900
Clayton 206,150 218,931 232,505
Ladue School District 275,522 292,604 310,745
Maplewood-Richmond H 114,147 121,224 128,740
University City 378,060 401,500 426,393
Valley Park 67,608 71,800 76,252
Webster Groves 369,948 392,885 417,244
Scott County R-V 53,228 56,528 60,033
Income-School Districts
State-Assessed Railroad and Utilities
Kelso C-7 4,751 5,045 5,358
Bell City R-II 46,773 49,673 52,753
Newton Harris R-III 24,703 26,234 27,860
Branson R-IV 139,158 147,786 156,949
Schell City R-I 27,666 29,381 31,203
12,389,933 13,158,100 13,973,901
Foundation Formula UNKNOWN UNKNOWN UNKNOWN
Minimum Salary Reimbursement $46,828 $46,828 $46,828
Total Income-School Districts UNKNOWN UNKNOWN UNKNOWN
Cost-School Districts
Minimum Salary ($46,828) ($46,828) ($46,828)
Loss-School Districts
SARRU-All other Districts ($12,389,933) ($13,158,100) ($13,973,901)
Foundation Formula (UNKNOWN) (UNKNOWN) (UNKNOWN)
Total Loss-School Districts (UNKNOWN) (UNKNOWN) (UNKNOWN)
ESTIMATED NET EFFECT ON
LOCAL GOVERNMENT UNKNOWN UNKNOWN UNKNOWN
to to to
(UNKNOWN) (UNKNOWN) (UNKNOWN)
DESCRIPTION
The proposal would add to the definition of a "tax rate ceiling" that school
districts could levy for school purposes less all adjustments required
pursuant to Article X, Section 22 of the Constitution of Missouri.
The proposal would remove the provision that no school districts would be
required to revise operating levies for school purposes below the rate
required for the current year if the tax rate does not exceed the highest tax
rate in effect subsequent to the 1980 tax year.
The proposal would remove the provision that school districts could modify
tax rate ceilings to recapture any loss in state school aid from establishing
tax rate ceilings required by Section 22 of Article X of the Constitution of
Missouri.
The proposal would remove the language that requires taxes on state-assessed
properties be distributed pursuant to Section 163.031, RSMo (the foundation
formula), beginning with the 1996-97 school year.
The proposal would expand the definition of the "district income factor" to
state that the district income factor applied to the portion of the assessed
valuation corresponding to any increase in assessed valuation above the
assessed valuation of a district as of December 31, 1994, would not exceed a
value of one.
The proposal would modify the definition of the "guaranteed tax base" to
state it would correspond to the amount of equalized assessed valuation per
pupil of the school district in which the ninety-fifth percentile of the
state aggregate number of pupils falls during the third preceding year and
would equal the state average equalized assessed valuation per eligible pupil
for the third preceding year times two and one hundred and sixty-seven
thousandths. The average equalized assessed valuation per pupil would be the
quotient of the total equalized assessed valuation of the state divided by
the number of eligible pupils.
The proposal would require that for any district which has neither enacted a
voluntary tax rollback nor increased the amount of a voluntary tax rollback
from the previous year's amount, the tax rate used to determine a district's
entitlement would be adjusted so that any decrease in entitlement due to a
decrease in the tax rate resulting from reassessment would equal the decrease
in the deduction for the assessed valuation of the district as a result of
the change in the tax rate due to reassessment. The tax rate adjustments due
to reassessment would be cumulative and applied each year to determine the
tax rate used to calculate the entitlement.
The proposal states that, beginning in the 1997-98 school year, any school
district required to reduce its operating levy below the minimum tax rate
otherwise required would not be construed to be in violation of the law.
The provisions of subsection 2 to section 163.025 would expire on July 1,
1997.
The proposal would exclude from the school foundation formula deduction for
the state assessed railroad and utility tax any penalty paid after July 1,
1995, by a concentrated animal feeding operation as defined by the Department
of Natural Resources rule.
Beginning with the 1996-97 school year, the General Assembly would make an
annual appropriation to the Excellence in Education Fund for fulfilling
minimum salary requirements for public school teachers in qualifying
districts.
The proposal would set criteria for setting the tax rate in the capital
projects fund, after all transfers allowed from the incidental fund.
The proposal would allow a school district to transfer from the capital
projects fund to the incidental fund the interest earned from the
undesignated balances in the capital projects fund, after making all
placements of interest otherwise provided by law.
The proposal would remove the requirement that prior to making transfers from
the incidental fund to the capital projects fund a school district would have
to change the total compensation in the preceding year compared to the
1992-93 school year by a percentage equal to or greater than the percentage
change in revenue credited to the teacher's and incidental funds for the same
year.
The proposal would require a school district to expend as a percentage of
current operating costs, for tuition, teacher retirement and compensation of
certificated staff, a percentage that is for the 1994-95 and 1995-96 school
years, no less than three percentage points less than the base school year
certificated salary percentage and for the 1996-97 school year, no less than
two percentage points less than the base school year certificated salary
percentage. Beginning with the 1997-98 school year, a school district would
expend no less than two percentage points less than the base school year
certificated salary percentage. The State Board could exempt a school
district from the requirements. Any school district in violation would
compensate the building level administrative staff and nonadministrative
certificated staff by an additional amount of one hundred ten percent of the
amount necessary to bring the district in compliance.
The proposal would create the Career Ladder Forward Funding Fund. Beginning
with fiscal year 1998, the General Assembly would appropriate funds to the
fund. All funds deposited in the fund would be maintained in the fund until
the balance would be equal to or greater than the appropriation for the
career ladder program for the following year, at which time all revenues
would be used to fund, in advance, the career ladder program for the
following year, and the career ladder forward funding fund would thereafter
be terminated.
Teachers could be denied career pay for failing to complete professional
responsibilities required for the attainment of each career stage.
The state would reimburse districts for salary supplements based on the
equalized assessed valuation of the district for the second preceding school
year. The bonus provision would be excluded. School districts would be
ranked into three groups based on the adjusted equalized assessed valuation
for distributing matching funds.
School districts would not be able to use state funds received from the
career ladder program or local revenue generated from a tax established for
the program to comply with minimum salary requirements.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Elementary and Secondary Education
State Tax Commission
State Auditor's Office
Public School Retirement System