FISCAL NOTE

Date Requested: June 04, 2019
Time Requested: 08:47 AM
Agency: Education, WV Department of
CBD Number: Version: Bill Number: Resolution Number:
4153 Engrossed SB1039
CBD Subject:


FUND(S):

0313 and 0317

Sources of Revenue:

General Fund

Legislation creates:

Creates New Program



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 $127,407,516. 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, and the annual attendance bonus for teachers. We were unable to quantify cost or cost savings related to certain portions of the proposed legislation and the fiscal implications for other portions will be determined by other state agencies. The cost estimate provided does not take into account any amounts already appropriated by the Legislature during the regular 2019 legislative session.



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 0 127,407,516 127,407,516
Personal Services 0 0 0
Current Expenses 0 127,407,516 127,407,516
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 $127,407,516. The estimated cost includes the following and has not been reduced by any amounts already appropriated by the Legislature during the regular session:
    
    $125,350,799 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 and special education teachers a three step increase on the salary tables, a provision to provide an additional 10% in student enrollment for counties with less than 1400 in enrollment, 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 reduction in the local share percentage from 90% to 85%. The increase by step of the funding formula is as follows:
    
    Step 1 - Allowance for Professional Educators - $51,070,348;
    Step 2 - Allowance for Service Personnel - $14,795,224;
    Step 3 - Allowance for Fixed Charges - $7,377,221;
    Step 5 - Allowance for Professional Student Support Personnel - $20,823,259;
    Step 6a - Allowance for Current Expense - $1,720,256;
    Step 6b - Allowance for Professional Substitutes - $1,797,192;
    Step 6c - Allowance for Service Substitutes - $396,880;
    Step 7a - Allowance for the Improvement of Instructional Programs - ($1,982,728);
    Step 7b - Allowance for the 21st Century Technology Systems - ($3,965,457);
    Step 7d - Allowance for Teacher and Leader Induction - ($3,965,457);
    Step 9 - Local Share - $26,530,458;
    Retirement - $7,046,228
    PEIA - $3,734,375.
    
    $2,056,717 for the annual $500 bonus for classroom teachers who utilize 4 for fewer personal days during the school year. This assumes 3,791 individuals will be eligible for the bonus for the 2019-20 year and includes both the additional salary and related fringe benefits.



Memorandum


    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 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 proposed changes to WVC 15-1B-24 would expand the capacity of the Mountaineer Challenge Academy (MCA) location in Preston County to allow for a total of 600 cadets a year and to expand the MCA to a second location in Fayette County. Any cost to the State for this proposed change would need to be provided by the MCA.
    
    County boards of education would incur an additional cost if the number of students attending MCA would increase to 600 at the Preston MCA location and additional students attended the Fayette County location. County boards of education are required to pay tuition to the MCA in the amount of 75% of the statewide average basic state aid funding per pupil. The amount per pupil varies annually, but the 2018-19 MCA tuition rate per pupil is $3,172.63. During the 2017-18 school year, county boards of education paid tuition for 243 students to attend MCA. If an additional 357 students attended MCA annually to reach the 600 students now allowed, the estimated additional cost to the county boards of education would be $1,132,629. Please note that there would be some offsetting cost savings for the county boards of education since they are not directly educating the students who attend MCA, but we are unable to estimate those cost savings. It is unlikely that any one school would be able to reduce staffing or other fixed costs due to a limited number of students attending MCA.
    
    • The proposed change to WVC 18-2E-12 requires the State Board to implement a pilot Mountain State Digital Literacy Project and to submit a report to LOCEA providing information on the development, structure and fiscal estimate of the project. While WVDE believes the likely cost estimate is in the range of $100,000 to $200,000, a more definitive cost estimate will be provided to the Legislature in the report due to LOCEA on or before January 1, 2020.
    
    • There are multiple changes being proposed in WVC 18-21-4. First, the legislation requires state board policy to be updated to require that all professional development provided to classroom teachers should be individualized at the school level based on the needs of the students and employees of the school, the recommendations of the classroom teachers and appropriate data where a need for school improvement has been identified. There is no estimated cost to the State for the proposed change. Any additional costs related to providing individualized professional development would be incurred by the county boards of education. We are unable to predict the additional cost to the county boards of education as many counties already attempt to provide tailored professional development to their staff.
    
    Second, the legislation requires that every teacher in the state receive professional development on addressing social, emotional and behavioral needs of students prior to July 1, 2020. There is no estimated cost to the State for this proposal, as the professional development would be provided at the local level. County boards of education would incur an additional cost to provide this training but we are unable to determine a cost estimate since county boards of education could elect different methods for providing the training to their staff.
    
    Third, the legislation requires the State Board to establish the Principal Academy to provide certain training to principals. The WVDE already operates a Principal Academy and does not believe additional appropriations will be necessary to comply with the proposed legislation.
    
    • 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 between 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 proposed statutory changes are generally clean-up in nature and maintain the current statutory requirements for class size limits. There is no additional cost to the State for the WVDE to survey the county boards of education regarding class overcrowding and to develop a tailored plan to reduce class overcrowding in such areas.
    
    • The proposed change to WVC 18-5-18b increases the percentage of a counselor’s time working in a direct counseling relationship with students from 75% to 80%. There is no estimated cost to the State because this change does not impact PSSP. However, there could be a potential minimal increased cost to county boards of education because counselors will no longer be able to assist with administrative activities to the extent they do currently, resulting in the need for additional employees in other capacities to assist with those administrative activities. Since the reduction in counselor time on administrative duties is only 5%, the number of additional staff hired in other capacities is expected to be minimal.
    
    • There is no estimated cost to the State or to the county boards of education for the proposed school calendar changes in WVC 18-5-45 since there will be no change in the employment term. County boards of education may experience limited cost savings related to the addition of the option of displaying notices for school calendar public hearings on the county’s website in lieu of a legal advertisement in the newspaper.
    
    • There is no estimated cost to the State for the provisions of WVC 18-5-45a regarding work stoppages or strikes and the prohibition of extracurricular activities during work stoppages. We are unable to estimate any potential costs 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.
    
    • There is no anticipated cost to the State related to the provisions of WVC 18-5-48 which permits county boards of education to establish an exceptional needs fund from surpluses. County boards of education would only incur costs to the extent that any county elected to establish the fund now permitted by the statute. The establishment of the fund is not required.
    
    • There is no estimated cost to the State for the proposed changes to 18-5E-1, et. seq. regarding the Innovation in Education Act.
    
    • The provisions of WVC 18-5G-11 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 making appropriate adjustments to those allowances to account for student transportation and current expense related funding a school district loses in situations where it pays money to a charter school without a corresponding decrease in the county’s expenses. 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. 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, the makeup of those schools (new or converted), 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 and who address chronic absenteeism. 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) would fund all county boards of education with less than 1400 students under the existing methodology plus an additional 10%, capped at 1400 students. 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 based on existing statute. After the proposed change, the number of additional students increases to 2,640.52. 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 $5.3 million.
    
    • The change in the definition of “levies for general current expense purposes” from 90% to 85% is projected to have a cost to the State under the PSSP of approximately $17,772,837. The local share for the county boards of education is projected to decrease by $27,686,479 (which is an additional cost to the State due to the inverse relationship between local share and basic state aid funding). The additional cost due to the local share change is offset by a $9,913,642 reduction in Step 7 funding to the county boards of education since there would no longer be growth in local share to add to the prior year appropriation amount. The local share change for Doddridge and Tyler County Boards of Education, which currently receive no state aid funding for FY20 under current statute due to high property values in the county, will be impacted slightly by other provisions of the proposed legislation impacting PSSP.
    
    • 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 funding calculation 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.
    
    • There is no additional cost to the State for the proposed addition of WVC 18-9A-19 that would send the state aid funding to the county boards of education in the form of block grants and exempts them from expenditure requirements contained in Chapter 18, Article 9A. The amount of funding under the PSSP would not change. This would provide additional flexibility to the county boards of education with regards to the following portions of state aid funding that are restricted to a specific purpose: Bus Replacement funding, Step 7a – Improvement of Instructional Programs, Step 7b – Improvement of Instructional Technology, Step 7c – Advanced Placement, Step 7d – Teacher and Leader Induction, and Academic Classroom Curriculum Trips. Please note that Bus Replacement, Step 7a and Step 7b already have some flexibility built into existing statute.
    
    There are some areas of “restricted” state aid where the restrictions come from other articles of the code and thus would still be in place for the county boards of education. Faculty senate restrictions are contained in 18-5A-5, professional staff development council restrictions are contained in WVC 18A-3-8 and service staff development council restrictions are contained in WVC 18A-3-9.
    
    • The proposed addition of WVC 18-9B-22 that requires the State Superintendent to provide county board of education financial data for the State Auditor’s searchable budget data website would not result in an increased cost to WVDE. Existing staff resources would be utilized to complete the required data submissions to the State Auditor. The State Auditor should be consulted for any increased costs that his Office would incur as the result of having additional financial data in the searchable data website system.
    
    • 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.
    
    • 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 enrollment changes Step 5 changes).
    
    • The proposed change to WVC 18A-4-2(d) to provide math teachers meeting certain eligibility criteria 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. The cost estimate includes the increases to Step 1 – Allowance for Professional Educators, Step 3 – Allowance for Fixed Charges, Step 6b – Allowance for Substitutes, and Retirement. Each eligible teacher, currently estimated at 1,089.40 FTE, will receive an additional $588 per year, for a total of $1,764 per teacher.
    
    • The proposed change to WVC 18A-4-2(e) to provide fully certified teachers teaching special education three additional years of experience on the salary schedule will have an additional cost to the State under PSSP of an estimated $5.5 million. The cost estimate includes the increases to Step 1 – Allowance for Professional Educators, Step 3 – Allowance for Fixed Charges, Step 6b – Allowance for Substitutes, and Retirement. Each eligible teacher, currently estimated at 2600.64 FTE, will receive an additional $588 per year, for a total of $1,764 per teacher.
    
    • 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 under the Public School Support Plan for the proposed changes to WVC 18A-4-5a regarding county salary supplements for teachers. Such salary increases would be paid with local funds.
    
    • 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-4-10 to allow employees to utilize 4 (previously 3) of their 15 days of personal leave without regard to the cause for the absence. We are unable to predict the impact of this change on employee absence rates, so we are unable to determine any possible substitute cost increases for the county boards of education.
    
    • The estimated cost to the State for the proposed addition of WVC 18A-4-10(c), which provides a $500 bonus annually for any classroom teacher who has not utilized more than 4 personal leave days during the 200-day employment term, is $2,056,717. Based on 2017-18 attendance data for classroom teachers, 3,277 classroom teachers would have been eligible for the bonus if it had been in existence. Using data from Upshur and Mingo County boards of education and the average 15.68% improvement they experienced in employee attendance after the implementation of a county-paid attendance incentive of a comparable amount, WVDE estimates that 3,791 individuals will be eligible for the $500 bonus. The estimated cost to the State for the bonus of $2,056,717 includes both the salary and employer share of fringe benefits. The bonus is not subject to retirement.
    
    The implementation of the proposed attendance incentive may reduce the actual substitute costs incurred by the county boards of education but we are unable to estimate the potential cost savings.
    
    • 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 these proposed changes, as the increased coverage requirements could result in higher costs to BRIM that could result in higher premiums for the county boards of education.
    
    
    
    
    
    
    



    Person submitting Fiscal Note: Brenda Freed
    Email Address: bfreed@k12.wv.us