Committee: Education PolicySponsor: Johnson (K)
Analyst: Shonda StallworthDate: 03/09/2016

FISCAL NOTE

House Bill 84 as substituted and reported by the Committee on Education Policy creates the Education Savings Account (ESA) program which would allow parents of eligible students to establish ESAs and use funds in the ESAs for an education program of the parentsí choosing, beginning with the 2016-17 school year. This bill limits participation in the program to 1,000 new eligible students each academic year (cumulative) and requires the Department of Revenue to deposit into the ESA of each participating eligible student an amount equal to 90% of the calculated amount a school district would have received for an eligible student that would have been assigned to the school district.

Based upon the state-funded average cost per student for fiscal year 2016, assuming that 1,000 students will participate in the first year, this will increase the obligations of the ETF and decrease the amount of funds received by local boards of education from the ETF by an estimated maximum of $4.7 million in fiscal year 2017 (year 1). Beginning with fiscal year 2018 (year 2) and each year thereafter, students that participated in the program in the previous school year will be counted in the enrollment figures for his or her resident school district for the purpose of calculating state aid to the resident school districts, which will: (1) increase the obligations of the ETF by an estimated maximum of $4.7 million for every 1,000 students that participated in the program in the previous year; and (2) increase the obligations of the ETF and decrease the amount of funds received by local boards of education from the ETF by an estimated maximum of $4.7 million for new (maximum of 1,000) participating students.

In addition, this bill: (1) will increase the administrative obligations of the Department of Revenue by requiring the Department to adopt rules for the administration of the ESA program and to carry out the provisions of this bill, which include conducting or contracting for the auditing of ESAs annually; however, the increased obligations may be offset by any fees established by the Department for private financial management firms authorized to manage ESAs and/or the administrative fees, totaling 3% of total program funds for the first three years and 1% of total program funds in subsequent years, that the Department is authorized to retain annually; and (2) will increase the obligations of the State Department of Education (SDE) by requiring the SDE to cooperate fully with the Department of Revenue for the proper administration of the provisions of this bill.


Terri Collins, Chair
Education Policy