House committee hears fiscal details

The House Education Committee was presented on Tuesday with the details of the fiscal impact caused by the repeal of the Students Come First laws.

Approximately $30.6 million is now unallocated because certain programs were cut by the repeal and so no longer need funding.

It’s a savings to the state, but a budget hole for Idaho school districts. Lawmakers will decide later this session what to do with the $30.6 million with options ranging from nothing to spending it on something entirely different than education.

“There will be no discussion today,” House Education Committee Chair Rep. Reed DeMordaunt told his committee.

Instead of committee discussion on Tuesday, the morning was reserved for a presentation by Paul Headlee, an experienced and articulate representative from the Legislative Services Office on Budget and Policy Analysis. He spelled out the financial implications of the Students Come First repeal and options on the table for lawmakers. He also took questions from committee members, most often Rep. Pete Nielsen.

A large portion of the morning was spent hearing about the $24.6 million problem created by the repeal of a provision nicknamed “Use It Or Lose It.” (Rep. DeMordaunt pointed out that the provision is actually the opposite of its nickname).

The “Use It Or Lose It” provision gave districts flexibility with $24.6 million in salary funding.

The state allocates by formula an amount for salaries based on the number of students enrolled.  The “Use It Or Lose It” provision allowed districts to take a percentage of the money allocated by the formula and spend it differently. Districts could spend it on something other than salaries or they could spend it by increasing salaries and hiring fewer teachers.

As Rep. Demordaunt explained to the committee: “Districts wanted some flexibility — we prefer you don’t tell us exactly how to hire but we still want the money. If a district was allowed 100 staff and chose to hire 95, you could use that difference in funding for other things.”

The Boise School District spent exactly what the state allocated from the salaries formula on salaries so it is unaffected by that part of the repeal. Meanwhile, the Meridian School District took $5.3 million and used it somewhere else. The Bonneville School District in Idaho Falls used $2.3 million in its salary money to launch a virtual school. Under current law, the millions that those two districts used for other purposes must now be put back into salaries.

Lawmakers have the power to restore that provision without a financial cost to the state. Budgets would not change.

For the $30.6 million in education savings to the state from the repeal, lawmakers have three obvious choices. They could do nothing and it transfers into an education savings account called the Public Education Stabilization Fund. That fund currently has about $49 million. Headlee explained that the account balance has bounced from $112 million down to $12 million over the last few years.

Lawmakers also could decide to give the $30.6 million to districts. Or, lawmakers could give the money to something other than education, but that would require a two-thirds majority vote from the budget committee.

Headlee gave House Education Committee members other budget information. He told them that about 48 percent of the general fund budget goes to education funding. He said that the education budget is a 4.6 percent increase from the previous year (FY 2012).  He also said that the governor’s budget recommends spending $33.9 million to fund recommendations made by the governor’s Education Task Force. The Task Force met for the first time last week and has two other meetings scheduled.

The House Education Committee will meet again on Wednesday at 9 a.m.

 

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