COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 1604-03
Bill No.: SB 480
Subject: Education, Elementary and Secondary: Teachers
Type: Original
Date: February 26, 2001
FISCAL SUMMARY
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| General Revenue | $0 | ($0 to $31,027,000) | ($0 to $17,303,750) |
| Excellence in Education | $0 | $0 | $0 |
| Total Estimated
Net Effect on All State Funds* |
$0 | ($0 to $31,027,000) | ($0 to $17,303,750) |
*Does not include possible increase in cot to fully fund Foundation Formula.
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| School Districts | $0 | ($0 to $5,694,700) | ($0 to $3,178,010) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 6 pages.
ASSUMPTION
Officials of the Department of Elementary and Secondary Education provided estimates of salary supplement which would have been required had the proposal been in effect for the 2000-01 school year.
Baccalaureate
0-5 yrs $25,000 $9,413,270 (5,088 FTE)
6-19 yrs $30,000 $15,168,703 (5,552 FTE)
greater than 19 yrs $35,000 $9,464,661 (2,267 FTE)
Masters or equivalent
greater than 10 yrs $35,000 $7,269,512 (2,167 FTE)
greater than 19 yrs $40,000 $11,823,965 (1,083 FTE)
greater than 29 yrs $45,000 $3,541,418 ( 517 FTE)
Total State Supplements would have been $56,681,529.
Approximate local costs would have been $522,000,000
2001-02 School Year Estimate
Assuming average increases in teachers' salaries of 2.5% per year, then the cost to school districts would increase about $13,000,000 and the state supplement would decrease a similar amount, to about $44,000,000.
2002-03 School Year Estimate
Assuming average increases in teachers' salaries of 2.5% per year, then the cost to school districts would increase about $13,000,000 and the state supplement would decrease a similar amount, to about $31,000,000.
2003-04 School Year Estimate
Assuming average increases in teachers' salaries of 2.5% per year, then the cost to school districts would increase about $13,700,000 and the state supplement would decrease a similar amount, to about $17,300,000.
It should be noted that actual dollars needed for all years beyond 2000-01 would change because:
ASSUMPTION (continued)
a) the number of teachers in each bracket will change due to retirements and resignations;
b) teachers gaining additional experience will qualify for different brackets;
c) replacement teachers may be in different brackets from the teachers replaced; and
d) individual school boards may agree to increase salaries more or less than the assumed 2.5% per year, which would affect the state salary supplement.
Proposed 163.172.6 seems to make participation in the minimum salary levels (and the state supplements) optional. Increases Public School Retirement System contributions would be a local cost:
FY 2001 $57,000,000 x .105 = $5,985,000
FY 2002 $44,000,000 x .105 = $4,620,000
FY 2003 $31,000,000 x .105 = $3,255,000
FY 2004 $17,300,000 x .105 = $1,816,500
A condition for receiving the state supplement is that school boards give new employees (teachers) of the district credit for previous years of public school teaching experience. Currently, school boards set policy on the amount of previous experience which would be granted.
DES officials assume the increase in minimum salary requirements would not increase the Career Ladder cost. However, the Career Ladder supplement a teacher may receive cannot be used to meet the minimum salary requirement for that teacher.
Officials also noted that there could be other costs incurred by school districts to qualify for the minimum salary supplement.
A program would need to be written to identify the teachers in each category, the amount of salary supplement required, and the eligibility criteria for receiving the money. Therefore, DESE would incur an IT impact estimated to be $25,000 in its first year, and 15% estimated maintenance costs for FY 2003 and 2004. Additionally, OIT requires an 8% project development fee for the first year.
The Oversight Division calculated fringe benefits at 18.37% to include retirement, FICA, unemployment and worker's compensation on the salary increases. Therefore, school districts' cost for fringe benefits would have been $57,000,000 x .1837 = $10,470,900 had the proposal been in effect in FY 2001. Oversight included the net salary increase due to this proposal as an annual cost to school districts beginning in the 2002-03 school year. Costs are ranged because districts do not have to participate in the program.
ASSUMPTION (continued)
Oversight notes that the proposal allows appropriation of increased lottery and gaming proceeds compared to FY 2001 to fund the proposal or appropriations from any other funds. For purposes of this fiscal note, it is assumed that General Revenue funds would be used to fund the proposal.
DES officials note that the revisions to 165.001.4 could result in increases costs to fully fund the Foundation Formula because districts could reduce the Capital Projects Fund tax levy and increase the Incidental Fund tax levy. The Incidental Fund levy is part of the Formula calculation, and increases in those levies increases the cost to maintain a proration factor of 1.0. However, the amount of increase would depend upon actions of school districts and can not be predicted.
| FISCAL IMPACT - State Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| GENERAL REVENUE FUND | |||
| Cost - Department of Elementary and Secondary Education | |||
| Expense and Equipment | $0 | ($27,000) | ($3,750) |
| Cost - Transfers to Excellence in Education Fund | $0 | ($0 to $31,000,000) | ($0 to $17,300,000) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE FUND* | $0 | ($27,000 to $31,027,000) | ($3,750 to $17,303,750) |
| *Does not include possible increase in costs to fully fund the Foundation Formula. | |||
| EXCELLENCE IN EDUCATION FUND | |||
| Income - Transfers from General Revenue Fund | $0 | $0 to $31,000,000 | $0 to $17,300,000 |
| Cost - Distributions to School Districts | $0 | ($0 to $31,000,000) | ($0 to $17,300,000) |
| ESTIMATED NET EFFECT ON EXCELLENCE IN EDUCATION FUND | $0 | $0 | $0 |
| FISCAL IMPACT - Local Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| SCHOOL DISTRICTS | |||
| Income - Aid from Excellence in Education Fund | $0 | $0 to $31,000,000 | $0 to $17,300,000 |
| Cost - Increased Salaries | $0 | ($0 to $31,000,000) | ($0 to $17,300,000) |
| Cost - Fringe Benefits | $0 | ($0 to $5,694,700) | ($0 to $3,178,010) |
| ESTIMATED NET EFFECT ON SCHOOL DISTRICTS* | $0 | ($0 to $5,694,700) | ($0 to $3,178,010) |
| *Does not include possible increase Foundation Formula distributions. | |||
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
The Commissioner of Education would present to the General Assembly a history of the cost to the state for teachers' minimum salary.
Beginning with the 2002-2003 school year, for districts choosing to participate in the program, the minimum salary for a full-time teacher would be at least $25,000, for a full-time teacher with at least five years experience - $30,000, for a full-time teacher with nineteen years experience or a full-time teacher with a master's degree and ten years experience - $35,000, for a full-time teacher with a master's degree and at least nineteen years experience - $40,000, and the minimum salary for a full-time teacher with a master's degree and at least twenty-nine years experience - $45,000.
State minimum salary supplements would be paid to school districts from the Excellence in Education Fund.
State minimum salary supplements paid to school districts from the Excellence in Education Fund could be funded from increases in state revenues from taxation of riverboat gaming operations, including boarding fees and lottery proceeds, compared to these revenues appropriated in FY 2001 and from any other funds appropriated for that purpose.
The proposal would also eliminate the ".18" and ".06" transfers from a school district's Incidental Fund to its Capital Projects Fund and replace them with a new transfer. The new transfer would be the greater of one-half the guaranteed tax base or .0873 times the district's Foundation Formula Line 1 entitlement for the second preceding year.
This legislation is not federally mandated, would not duplicate any other program and would not DESCRIPTION (continued)
require additional capital improvements or rental space. The proposal would not affect Total State Revenue.
SOURCES OF INFORMATION
Department of Elementary and Secondary Education
Jeanne Jarrett, CPA
Director
February 26, 2001