SB 0899 - Fiscal Note

Fiscal Note - SB 0899 - School Building Revolving Fund: Fund used for lease pur- chases by schools, forfeiture proceeds to be placed in fund

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3622-01

BILL NO. SB 899

SUBJECT: Education, Elementary and Secondary: School Building Revolving Fund

TYPE: Original

DATE: February 24, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($48,956)	($51,848)	($53,175)
School Building Revolving	$1,300,000	$1,300,000	$1,300,000
Total Estimated Net Effect on All State Funds	$1,251,044	$1,248,152	$1,246,825

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	($1,300,000)	($1,300,000)	($1,300,000)

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Elementary and Secondary Education (DESE) assume one FTE Director ($42,936) would be needed to administer the School Building Revolving Fund. The Director would implement the provisions of the School Building Lease Purchase Program and process paperwork for the lease purchase program funds. However, this FTE was requested as part of SB 380 in 1993. Since the fund received no appropriation, the FTE has not been funded. Based on DESE's response to SB 360 from 1997, the Oversight Division has included one FTE Supervisor in the fiscal impact.

Based on information from DESE, proceeds from forfeitures amounted to the following:

FY 1995: $1.8 million

FY 1996: $800,000

FY 1997: $1,410,270.

Because of the broad fluctuation in collections between years, Oversight averaged the forfeitures for the three years to include $1.3 million annually in the fiscal impact. Based on this average, the fund transfers would not exceed $440 million until after the fiscal note period.

Officials from the Office of Administration, State Treasurer's Office, Attorney General's Office and State Tax Commission assume the proposal would result in no fiscal impact on them.

The Oversight Division assumes this proposal could be in violation of Article IX, Section 7, Constitution of Missouri, which requires the forfeitures to be distributed annually to the schools.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Cost-Department of Elementary and
Secondary Education
Personal Service	($28,934)	($35,589)	($36,479)
Fringe Benefits	(8,110)	(9,976)	(10,225)
Expense and Equipment	(11,912)	(6,283)	(6,471)
Total Cost-DESE	($48,956)	($51,848)	($53,175)
FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
(Continued)	(10 Mo.)
SCHOOL BUILDING REVOLVING FUND
Income-Department of Elementary and
Secondary Education
Forfeitures	$1,300,000	$1,300,000	$1,300,000
Lease purchases would be entered into with schools from the School Building Revolving Fund for capital improvements. The lease purchases would be repaid with interest.
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
SCHOOL DISTRICTS
Loss-School Districts
Forfeitures	($1,300,000)	($1,300,000)	($1,300,000)
Lease purchases would be entered into with DESE from the School Building Revolving Fund for capital improvements. The lease purchases would be repaid with interest.
FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

The proposal would require all forfeitures of assets collected for breach of penal laws to be transferred to the School Building Revolving Fund. Total transfers would not exceed four hundred forty million dollars. School districts could submit applications for lease purchases from the fund (under current law, requests for loans and grants could be made). The proposal includes eligibility requirements for lease purchases and prioritizes the funding of the lease purchases.

School districts participating in a lease purchase would repay the lease purchase in no more than ten annual payments made on or before the thirtieth of June each year. Lease purchase payments would be deposited in the School Building Revolving Fund. Interest charged to the school district would not exceed three percent.

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 Treasurer's Office

State Tax Commission

Attorney General's Office

Office of Administration

Jeanne Jarrett, CPA

Director

February 24, 1998