Relating to budget adjustments by school districts affected by a natural disaster

Description

House File 315 relates to budget adjustments (budget guarantee) by school districts affected by a natural disaster.

The Bill provides for an additional year of budget adjustment if, during the base year or the budget year preceding the base year, a natural disaster impacts the school district for which a major disaster has been declared to exist by the President of the United States or for which the Governor has proclaimed a state of disaster emergency. The amount of such additional year of budget adjustment must be equal to the amount of the school district’s budget adjustment for the base year.

Background

Currently, a school district is eligible for a budget adjustment equal to the difference between the regular program district cost for the budget year and 101.0% of the regular program district cost for the base year. Since April 2023, four major disasters have potentially impacted 243 school districts across 54 counties. The budget adjustment is funded 100.00% by property taxes. The State supplemental aid (SSA) that is determined by the enactment of a State percent of growth (SPG) will have an impact on which school districts will qualify for a budget adjustment.

Assumptions

• All 243 qualifying school districts may pass a resolution requesting a budget adjustment.
• It is not known how school districts will define being impacted by a qualifying natural disaster.
• It is not known how many of the school district facilities or operations were directly impacted by a qualifying natural disaster.
• All districts within these qualifying natural disaster areas will choose the option providing the greater budget adjustment amount.

Fiscal Impact

The fiscal impact of HF 315 is unknown since it is not possible to know which school districts were directly impacted by a qualifying natural disaster and which school districts will choose to use the budget adjustment.

The following examples demonstrate that a higher SPG will increase the fiscal impact of the proposed legislation.

Under current law (0.00% SPG), the budget adjustment in FY 2026 for the 243 potentially impacted school districts is estimated to be as high as $51.8 million. Under the proposed legislation, the FY 2026 budget adjustment for the impacted districts at 0.00% SPG may be up to $56.2 million, an increase of $4.4 million compared to current law. An estimated 53 districts may have a higher FY 2025 regular program district cost than the estimated FY 2026 budget adjustment.

If the SPG for FY 2026 is 1.00% under current law, the budget adjustment in FY 2026 for the 243 potentially impacted school districts is estimated to be $32.6 million. Under the proposed legislation, the FY 2026 budget adjustment for the impacted districts at 1.00% SPG would be an estimated $38.3 million, an increase of $5.7 million compared to the FY 2026 budget adjustment under current law with a 1.00% SPG. An estimated 62 districts may have a higher FY 2025 budget adjustment than the estimated FY 2026 budget adjustment.

If the SPG for FY 2026 is 2.00% under current law, the budget adjustment in FY 2026 for the 243 potentially impacted school districts is estimated to be $18.7 million. Under the proposed legislation, the FY 2026 budget adjustment for the impacted districts at 2.00% SPG would be an estimated $26.8 million, an increase of $8.1 million compared to the FY 2026 budget adjustment under current law with a 2.00% SPG. An estimated 76 districts may have a higher FY 2025 budget adjustment than the estimated FY 2026 budget adjustment.

If the SPG for FY 2026 is 3.00% under current law, the budget adjustment in FY 2026 for the 243 potentially impacted school districts is estimated to be $10.2 million. Under the proposed legislation, the FY 2026 budget adjustment for the impacted districts at 3.00% SPG would be an estimated $20.3 million, an increase of $10.1 million compared to the FY 2026 budget adjustment under current law with a 3.00% SPG. An estimated 82 districts may have a higher FY 2025 budget adjustment than the estimated FY 2026 budget adjustment.

Sources

• Department of Education, Certified Enrollment and Enrollment Projections File
• Department of Management, school aid file and valuation files
• Federal Emergency Management Agency (FEMA)
• LSA analysis and calculations