SB 1811 – Summary and School Finance Agreement

May 28, 2011

SB 1811 – Summary and School Finance Agreement

Conferees have agreed on HB 1, the 2012-2013 general appropriations bill. The total $172 billion two-year budget in all funds is $15 billion less, 8 percent, than the 2010-11 budget; in general revenue the total is $80.4 billion, 2 percent less than the current budget. However, this conference report on HB 1 still needs to be voted on by each House.

In order to balance the budget, SB 1811, a critical fiscal matters bill which also now includes a recently agreed to school finance plan, must be approved in both chambers by lawmakers.  

The conference committee on SB 1811 have agreed to final language in the bill which now must be brought to the floor for lawmakers to vote on.

Summary of Provisions in SB 1811

• This session, SB 1811, in addition to being a Comptroller’s fiscal matter bill, also contains the statutory changes necessary to balance the state’s budget (HB 1).
• Passage of SB 1811 is essential to balance the budget for the next biennium.
  • HB 1 spends $80.6 billion in General Revenue, a 2% (or $1.6 billion) decrease from FY 2010-11
  • HB 1 spends $172.3 billion in All Funds, an 8.1% (or $15.1 billion) decrease from FY 2010-11
  • $3 billion added to HB 1 during the conference committee
  • $2 billion went to public education
  • $1 billion primarily spent on funding transportation projects, higher education, and prison capacity

• SB 1811 does NOT include:
  • any new fees
  • any new taxes
  • franchise tax speed-ups

• SB 1811 does include:
  • $1,000,000 small business tax exemption
  • public school finance plan
  • deferral of one month payment to school districts in August 2013 which saves an additional $ 2 billion

HB 1 funds schools approximately $4 billion below the current-law amount needed for schools. The school finance plan appropriates these reductions as follows:

• Year 1 (FY 2012):
  • $2 billion are taken by an across the board percentage cut (Eissler plan)
  • an additional $830 million (Edujobs) is distributed to the school districts minimizing these cuts

• Year 2 (FY 2013):
  • $500 million is taken by an across the board percentage cut
  • $1.5 billion is taken through a reduction of the target revenue hold harmless entitlement (Shapiro plan)

 Next steps for school finance under SB 1811

• A joint legislative committee will review all school finance options during the interim to decide the best way to fund public schools.

• SB 1811 does not change the weights or adjustments in formula funding.

• Next session, the Legislature will have an opportunity to change formula funding, if so desired, through the regular appropriations process.

• The bill repeals all target revenue hold harmless in 2018, unless the Members of the Legislature change the law in any session between now and then.

Additional school finance provisions under SB 1811

• Establishes an interim a joint legislative committee to evaluate the overall structure of public school finance.

• Repeals the funding gain limitation implemented last session with HB 3646.

• Modifies the proration statute to apply proportionate reductions to all districts. Districts are not entitled to prorated amounts in the subsequent biennium.

• Repeals the current statutory provision that raises the basic allotment when state property value increases.

• Allows districts to forego an additional public hearing if they set their I&S tax rate at a level lower than previously discussed publicly.

• Corrects the current minimum salary schedule by establishing dollar amounts and resets the factors off the basic allotment.

Attached you will find an analysis of the estimated revenue impact on school districts and charter schools of the school finance changes contained in Senate Bill 1811, as agreed to on May 27, 2011. Included in this analysis for fiscal year 2012 is the current allocation of federal funds under the Education Jobs Fund (Edujobs) grant.