OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 ↓ (860) 240-0200

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sSB-24

AN ACT CONCERNING EDUCATIONAL COMPETITIVENESS.

OFA Fiscal Note

State Impact:

Note: GF=General Fund

Municipal Impact:

Explanation

Summary:

The bill makes various changes to the education statutes that result in a significant cost to the State Department of Education (SDE). ¹ Of the changes contained within the bill, $97. 0 million is included in sHB 5014, the revised FY 13 budget, as favorably reported by the Appropriations Committee, and $10. 0 million in contained within sSB 25, the revised FY 13 bond package, as favorably reported by the Finance, Revenue and Bonding Committee. Table 1A, below, summarizes the state costs included in the bill that are funded in sHB 5014, and Table 1B summarizes the state costs supported in sSB 25. There are additional costs to the SDE that are not contained in sHB 5014. A summary of the unfunded state costs appear in Table 2. Additionally, the bill makes various changes to local and regional school districts that result in costs and savings. A section by section breakout of the bill appears below.

Table 1A: Summary of Costs Included in sHB 5014 ($ in millions)

Table 1B: Summary of Costs Included in sSB 25 ($ in millions)

Table 2: Summary of Unfunded State Costs

Section 1 increases the FY 13 Education Cost Sharing (ECS) grant by $50. 0 million. Of the 169 towns, 33 will not receive an ECS increase for FY 13. sHB 5014, the revised FY 13 budget, as favorably reported by the Appropriations Committee, appropriated $50. 0 million for this purpose.

Sections 2 - 3 establishes the minimum budget requirement (MBR) for FY 13, which could result in a potential revenue loss to various municipalities and potential revenue gain to the state. In FY 12, it is anticipated that one town, Columbia, will not meet their MBR and will be penalized $317,446. See Appendix A for a listing of approximate MBR's that towns will be required to meet in FY 13.

Additionally, the bill allows for an option to permit towns to reduce their MBR. In FY 12, approximately 105 districts were able to reduce their MBRs collectively by $11. 2 million (in aggregate). Adding an additional option for reduction (to reflect half of any new savings from regional collaboration or cooperative arrangements or increased efficiencies) could result in potential savings to various local and regional boards of education.

Section 3 establishes “alliance districts” and allows the education commissioner to conditionally hold back ECS grant increases for these towns and establishes conditions for releasing the funds. Of the $50. 0 million in new ECS funding, $39. 5 million is designated to the 30 alliance districts. The ability of the commissioner to retain the increased funds could result in a potential revenue loss to municipalities. Any funds that are not allotted to the districts will not lapse, but will be carried forward and remain available to the district for the following year.

Additionally, the bill requires alliance districts to maintain a minimum level of annual local funding for education. This could result in an additional cost to an alliance district, as they are now required to meet their MBR as well as the minimum local funding percentage. The minimum local funding percentages are 20% for FY 13, 22. 5% for FY 14, 25% for FY 15, and 30% for FY 16. See Appendix B for a listing of anticipated local funding percentages for FY 13. It is anticipated that only one of the designated alliance districts, Bridgeport, would be unable to meet their minimum local funding percentage, by approximately $3. 6 million. The bill allows the commissioner to remove a district from an alliance district designation if they are unable to meet their minimum local funding percentage. This could result in a revenue loss to a municipality, as they would no longer qualify for conditional ECS funding.

However, the bill allows an alliance district to reduce its FY 13 funding for education if it can demonstrate that its local contribution for education for FY 13 has increased compared to the local contribution used to determine its local funding percentage under the bill, thus resulting in a potential savings to a municipality.

Section 4 results in an additional cost of approximately $2. 25 million to the State Department of Education (SDE) associated with the creation of competitive grants for improving student performance. The grants range from $50,000 to $750,000 and are available to both alliance and non-alliance districts. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $2. 25 million for this purpose.

Charter School Funding

Sections 5 - 7 address issues related to charter school funding identified below.

State Charters:

The bill increases the state's annual per pupil grant to state charter schools, from $9,400 to $10,500. This results in an additional cost to SDE of approximately $7. 15 million. Table 3, below, provides detailed information on each state charter school, projected enrollment for the 2012-2012 school year, and the total per pupil grant increase per school.

Table 3: Charter School Enrollment and Increase per School

sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $67. 9 million for charter schools, an increase of $8. 1 million from the original FY 13 appropriation. ² The budget bill specifies that the state charter school appropriation is considered to be part of the ECS grant and transfers $59,839,400 (the original FY 13 appropriation) from the charter school account to the ECS account.

Additionally, the bill states that starting in FY 12, if a school district where a state charter is located, wishes to use student data to determine the district's performance, it must pay the charter school $1,000 annually for each resident student who attends the school. This could result in an additional cost to municipalities that have state charter schools and choose to use the data. Table 4, below, summarizes the potential cost to municipalities if they choose to use the data.

Table 4: Potential Costs for Using Charter School Data

Local Charters:

The bill establishes minimum per pupil support for local charter schools. The minimum is the net current expenditure per pupil of the preceding year. Under current law the per pupil support is specified within the school's charter. This potentially impacts the distribution of funds within the same district, but does not alter the total district expenditure. Currently, there are no local charter schools in operation.

The bill allows the State Board of Education (SBE), within available appropriations, to approve operating grants of up to $3,000 per student for eligible local charters. Additionally, the bill allows SBE to award grants of up to $500,000 for startup costs for an eligible local charter. However, based on sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, there is no funding within the charter school appropriation to support the addition of new local charters. If additional local charters are approved and SDE implemented the bill's provisions, they would incur additional costs. A new local charter with 100 students would result in an additional cost to SDE of $300,000 per year.

Section 8 makes various changes to the state and local charter school approval process. The bill limits the approval of new schools only to those located in low-achieving districts or Commissioner's Network schools. This could result in a savings to municipalities and the state.

Additionally, Section 8 requires that enrollment lotteries for state and local charter schools be conducted for the entire enrollment area of the school. This has no impact on the state, as the state charter school lotteries are handled by the individual schools. However, this could result in an additional cost to municipalities that opt to open new local charter schools as all students in the town or city would have to be entered into the lottery system. This could require additional staff, resources and outside auditing to ensure accuracy. The bill does allow municipalities to opt for a waiver to avoid the large scale lottery process.

Section 9 requires SDE to develop and implement a uniform system of accounting for school expenditures. sSB 25, the revised FY 13 bond package, as favorably reported by the Finance, Revenue and Bonding Committee, included $4. 0 million for this purpose. ³ It is not anticipated that SDE will require any additional operating funds for this purpose.

Section 10 requires SDE to study issues related to districts with fewer than 1,000 students. This is not anticipated to result in a fiscal impact as the agency currently has staff members with the expertise necessary to perform the study.

Magnet Schools:

Section 11 increases the per pupil grant amounts for various non-Sheff magnet schools. Table 5 below provides a summary of the increases.

Table 5: Non-Sheff Magnet Grants

sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $5. 0 million for this purpose.

Section 11 also increases the per pupil grants for the Edison magnet school, located in Meriden. The bill increases the grant to $8,180 for all students attending the school. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $2. 2 million for this purpose.

Vocational Agriculture Centers:

Section 12 prohibits local and regional boards of education operating vocational agriculture centers from using any increase in state funding to supplant local education funding. This precludes those municipalities from saving any potential funds that the state increase may have offset. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $2. 9 million to increase the per pupil base entitlement from $1,355 to $2,000.

Section 13 establishes a competitive grant program to increase overall enrollment, and enrollment by students from priority school districts, at vocational agriculture centers. The bill specifies that SDE implement this provision within available appropriations. However, if this section were to be implemented it would result in an additional cost to SDE ranging from $500,000 to $1. 0 million. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, did not include funding for this purpose.

Section 14 implements the transfer of Institutional Student Aid ($882,000) from the Department of Mental Health and Addiction Services to SDE. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, included this transfer.

Section 15 establishes a new “Attract the Best” teacher program. This would result in an additional cost ranging from $500,000 to $1. 0 million to the Office of Financial and Academic Affairs for Higher Education. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, did not include funding for this purpose.

Section 16 makes a number of changes to low performing schools, including:

● Proposed changes to the school accountability law and the creation of a school performance index (SPI), which does not result in a fiscal impact.

● A transition plan to switch from the current accountability plan to the new statewide management and support plan, which does not result in a fiscal impact.

● Imposing certain requirements on category three schools, which could result in an additional significant cost to local and regional boards of education that have category three schools.

● Imposing certain requirements on category four and five schools, which could result in an additional significant cost to local and regional boards of education that have category four and five schools.

● Proposed changes to reconstituted school boards, which does not result in a fiscal impact.

Currently, SDE uses approximately $4. 0 million of the federal Title I, school improvement, Part A funding for schools that are identified as in need of improvement. It is anticipated these funds will be used to support the initiatives described above for category 3, 4 and 5 schools. Additionally, $1. 8 million of School Accountability funds will also be used for this purpose. Going forward, SDE will require that certain schools set aside up to 20% of their Title I funds to target areas of need.

Commissioner's Network:

Section 17 requires the education commissioner to establish a commissioner's network plan for ten low-performing schools. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $7. 0 million for this purpose. The bill requires the plan to include a number of different variables that could impact student achievement. The plan must be implemented for the school year commencing July 1, 2012.

Section 18 requires the commissioner to annually establish a family resource center or a school-based health clinic in a category four or five school, located in an alliance district, not to exceed 20 across all districts. Each additional family resource center is anticipated to cost an additional $97,000 annually, and each school based health center is anticipated to cost an additional $123,803 annually. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $1. 94 million in SDE for new family resource centers. The budget bill also includes $1. 8 million in the Department of Public Health for competitive grants for up to 20 new school based health centers to be located in the districts.

Section 19 requires SDE to develop a plan to encourage exemplary teachers and administrators to work in the state's lowest performing schools. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $4. 0 million for purposes of professional development, recruitment of quality teachers, and talent development for teachers and administrators.

Sections 20 - 25 make conforming and technical changes that are not anticipated to result in a fiscal impact.

New Grant Programs:

Section 26 establishes a grant program to help students with college applications. This is anticipated to result in a cost to SDE of approximately $500,000. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $500,000 for this purpose.

Section 27 establishes a pilot grant program for a local or regional board of education operating an innovation school to help the state meet the desegregation goals of the 2008 Sheff v. O'Neill court order. In addition to providing per-pupil and operating grants, the innovation schools may also qualify for bonus school construction money.

It is anticipated that there would be two eligible programs that would qualify for this funding in FY 13. Funding for the two new schools would come from the Sheff appropriation and the Open Choice appropriation. It is anticipated that additional funding of up to $4. 0 million would be required in the Sheff account to fully fund the development of the two new programs. The funds would be used for (1) adding a full-time middle school language arts program, estimated to cost approximately $2. 0 million and (2) adding an early childhood reading lab and Science, Technology, Engineering and Mathematics (STEM) elementary program, estimated to cost approximately $5. 0 million. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, included $3. 0 million in new Sheff dollars. An additional $4. 0 million would be required to fully fund the innovation schools.

Section 28 establishes a program to provide grants to support school districts in developing plans to implement significant cost savings, while maintaining or improving educational quality. The grants must be used for technical assistance or regional cooperation. This is anticipated to result in a significant cost to SDE. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $300,000 for this purpose.

Open Choice:

Section 29 increases the out-of-district student grant for the Open Choice program. Districts with more than 4,000 students that have increased their Open Choice enrollment by at least 50% on October 1, 2012, will qualify for a state grant of $6,000 per out-of-district student. It is anticipated that only Hartford would qualify for any additional funding in FY 13 and the additional funding for the seats would be covered in the original FY 13 Open Choice appropriation of $22. 1 million.

Section 30 requires SDE to establish a Connecticut School Leadership Academy. This will result in a cost of approximately $750,000 to SDE and a minimal cost to local and regional school districts associated with tuition fees that SDE may charge participants.

It is estimated that $410,000 would be required to establish a leadership academy for aspiring principals and approximately $310,000 for current principals. This funding includes stakeholder engagement and current state analysis, curriculum design, implementation, and evaluation and support. ⁴ sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, did not include funding for this purpose.

Section 31 allows SDE to reward exemplary schools. It is anticipated that SDE will use existing funding in the School Accountability account to reward schools, and no additional funding is required.

Section 32 requires SDE, rather than the early childhood system, to develop a quality rating and improvement system. sSB 25, the revised FY 13 bond package, as favorably reported by the Finance, Revenue and Bonding Committee, included $6. 0 million for this purpose, $3. 0 million for a vendor to design and rollout a federated data system, $2. 0 million to redesign the data currently collected by various state agencies, and $1. 0 million for implementation, including training for parents.

Section 33 requires the education commissioner to create 1,000 new school readiness slots. Each school readiness slot costs the state $8,346, for a total of $8. 3 million. Of the total 1,000 new slots, 600 must be located in the 10 educational reform districts and 400 must be located in the competitive school districts. sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $8. 0 million for this purpose; $7. 0 million in the priority school district account, to fund approximately 875 slots and $1. 0 million in the Early Childhood Program account, to fund approximately 125 slots in the competitive districts⁵.

Section 34 extends, through FY 12, the Big Picture Magnet School's exemption from statutory student diversity requirements for interdistrict magnet schools. This exemption allows the school to continue to receive a state magnet school operating grant in FY 12. There are currently 105 students attending the school, which receives a state magnet grant of $542,530. This cost is included in the original FY 13 appropriation of $235. 4 million, no additional funding is required.

Section 35 makes technical changes to the reporting requirements of local or regional boards of education to post information about school choice programs on its website. It is anticipated this will result in no fiscal impact to local and regional boards of education as they routinely perform these functions.

Technical High School System:

Section 36 - 54 makes various changes to the technical high school system, which does not result in a fiscal impact.

Teacher Certification, Promotion, Tenure, and Termination:

Section 55 allows local and regional boards of education additional flexibility to appoint school superintendents who are not state certified; this does not result in a fiscal impact.

Section 56 expands the grounds for teacher termination to include ineffectiveness as well as for inefficiency or incompetence. The bill also makes changes to streamline the teacher termination process and timeline. This change is anticipated to result in an additional cost to municipalities as well as the technical high school system, since additional hearings could be held throughout the year. It is anticipated that the average cost of completing the dismissal process with a tenured teacher is approximately $100,000. ⁶

Section 57, which is not anticipated to result in a fiscal impact, directs the education commissioner to consult with the Performance Evaluation Advisory Council (PEAC) to develop a plan for linking teacher and administrator evaluation with attaining and maintaining tenure.

Section 58 makes various changes to teacher evaluation requirements and the requirements for guidelines for a model teacher evaluation program. These changes include periodic training on the program for teachers being evaluated and administrators performing evaluations, professional development, and validation procedures for SDE or an SDE-approved third party to audit ratings of below standard or exemplary for any teacher or administrator. It is anticipated this will result in minimal costs to local and regional boards of education as professional development and periodic training are routinely performed activities. It is anticipated that this would result in a cost of up to $2. 5 million for SDE. The cost includes piloting the evaluation system on 13-14 districts as well as: in-person courses, online materials, coach support and a qualification assessment, practice materials, and suggested district activities. ⁷ sHB 5014, the revised FY 13 budget bill, as favorably reported by the Appropriations Committee, appropriated $4. 0 million for talent development, to cover activities such as evaluation, but no specific funding was earmarked for the pilot program.

Section 59 requires UConn's Neag School of Education to study the implementation of teacher and administrator evaluation and support programs adopted by local and regional boards of education. It is anticipated it will cost UConn's Neag School $200,000 to perform this study, including: salaries and fringes for two postdoctoral fellows, travel expenses and transcription of interviews.

Sections 60 - 62 and 65 - 77 make a number of changes to Connecticut's teacher and school administrator certification system, including:

● Extending the duration of an initial certificate from three to eight years and allows provisions for SBE to renew or extend an initial certification.

● Requiring the applicant for a professional certificate to hold a master's degree and makes changes regarding the 3-year teaching period prior to applying for a professional certificate.

● Eliminating the 90 continuing education units (CEUs) in a 5-year period required for certificate renewal. The bill instead requires all certified employees to “participate” in professional development programs.

● Easing the process for out-of-state teachers to obtain Connecticut teaching certificates.

● Changes to the current program design for continuing education credit.

● Eliminate various professional development requirements for specific certificate holders.

There is no anticipated fiscal impact to SDE for these changes. There is a minimal fiscal impact for local and regional boards of education to redesign their CEU programs. Current law requires school districts to make available for continuing education credit at least 18 hours of professional development for certified employees at no cost. The bill does not alter that requirement.

The bill reduces the fee for a professional certificate from $375 to $200. This will result in a revenue loss to SDE. During calendar year 2011 approximately 8,413 professional certificates were issued. Based on the 2011 data, in the aggregate, this will result in a loss of revenue of approximately $1. 5 million over a five-year period beginning in FY 13.

Section 63 establishes a new distinguished educator designation. The SBE must renew the designation every 5 years. The bill establishes a fee of $200 for a distinguished educator designation and $50 for a duplicate copy of the designation. The commissioner may waive this due to extenuating circumstances. It is anticipated that this will result in a revenue gain to SDE, beginning no sooner than FY 17. The amount is unknown although is expected to be less than $200,000.

Section 64 authorizes local and regional boards of education to negotiate over new salary schedules that align compensation for teachers holding initial or professional teaching certificates and additional compensation for teachers holding the distinguished educator designation who are performing additional responsibilities associated with the designation. It is anticipated this will have no immediate fiscal impact on local and regional boards of education as negotiations may be conducted under standard bargaining conditions or the statutory provision regarding voluntary contract reopening.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation, number of grant recipients, expansion of pilot programs, available federal funding, and level of appropriated funding.

Sources: State Department of Education; State of Rhode Island (chart of accounts model); New York Leadership Academy; Connecticut Association of Boards of Education ; State of Illinois (teacher evaluation);

Appendix A: Estimated Minimum Budget Requirements ($)

Appendix B: Minimum Local Funding Percentages for FY 13