COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.: 0736-04

Bill No.: Perfected HCS for HB 288

Subject: Appropriations: Education, Elementary and Secondary; Elementary and Secondary Education Dept; Gambling

Type: Original

Date: February 12, 2003

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 6 pages.

ASSUMPTION

Officials from the Missouri Gaming Commission and the Office of the State Treasurer each assume this proposal would not fiscally impact their respective agencies.

Officials from the Missouri Lottery Commission (MLC) stated that Lottery unclaimed prizes on an annual basis are $5 - $6 million; however, MLC assumes the Missouri Constitution requires all lottery profits to be transferred to the Lottery Proceeds Fund, which would prohibit the transfer of unclaimed prizes to any other statutorily-created fund. Oversight assumes that although funds would initially be deposited in the Lottery Proceeds Fund, they would then be transferred from that fund to Classroom Trust Fund.

Officials of Department of Elementary and Secondary Education (DES) assume this proposal would take the gaming money currently used in funding the foundation formula and instead distribute that money on a per eligible pupil basis through a new fund labeled "Classroom Trust Fund" (CTF).

DES states that for FY2003, the gaming proceeds in the Gaming Proceeds for Education Fund transferred to the State School Moneys Fund (SSMF) is estimated to be $205,520,542. This amount divided by a projected average daily attendance number of 822,000 equals approximately

$250 per average daily attendance. This would be increased money to school districts IF the ASSUMPTION (continued)

legislature replaces this source of money for the foundation formula with General Revenue as required in the proposal in Section 160.534.3. The bill proposes the elimination of the transfer to the State School Moneys Fund over 5 years. The new General Revenue cost, holding constant the $205,520,542 is $205,520,542 the 5^th year. Below is a chart showing the estimated distribution based on a constant $205,520,542/year.

Gen Revenue

FY Gaming % Classroom Per % Transferred Replacement

Proceeds Trust Fund ADA* To SSMF Needed

'05 $205,520,542 20% $ 41,104,108 $ 50 80% $164,416,434 $ 41,104,108

'06 $205,520,542 40% $ 82,208,217 $100 60% $123,312,325 $ 82,208,217

'07 $205,520,542 60% $123,312,325 $150 40% $ 82,208,217 $123,312,325

'08 $205,520,542 80% $164,416,434 $200 20% $ 41,104,108 $164,416,434

'09 $205,520,542 100% $205,520,542 $250 0% $ 0 $205,520,542

*Per ADA = estimated amount to distribute per average daily attendance

The actual amount could be different from this example since distribution does not begin until FY 2005 and the amount transferred to State School Moneys Fund from Gaming Proceeds Fund could be a different figure.

Officials from the Office of Administration - Budget and Planning (BAP) responded with comments and technical changes but did not indicate a potential fiscal impact. Officials from BAP did indicate there is an approximate 4% annual growth in the moneys in the Gaming Proceeds for Education Fund.

Oversight notes that the proposal states that if the chairs of the house budget committee and senate appropriations committee determine that the appropriation for the school funding formula contained in Section 6 of Section 160.031, RSMo, is insufficient to provide a proration factor on lines 1a and 1b of 1.0, the transfers will not occur. Oversight has acknowledged this possibility by stating the fiscal impact as $0 or the amount of transfer if the proration factor is at least 1.0.

FISCAL IMPACT - Small Business

No direct fiscal impact to small businesses would be expected as a result of this proposal.

DESCRIPTION

Beginning in Fiscal Year 2005 and upon condition of the requisite proration level of the Foundation Formula Program for the distribution of state school aid, 20% of the moneys from the Gaming Proceeds for Education Fund will be redirected into the Classroom Trust Fund, created by the proposal. Each subsequent year for four years, an additional 20% of those moneys will be directed to the Classroom Trust Fund until 100% of the gaming moneys go to that fund. Currently, these funds are deposited in the State School Moneys Fund, which provides funds for

the foundation formula. The proposal directs that the gambling moneys must be replaced in the

State School Moneys Fund by general revenue. The funds will be distributed on a per-pupil basis

(keyed to attendance) and may be used for teacher recruitment and retention, construction and repair of buildings, technology enhancements or instructional materials, school safety, and for supplying additional funds for any required state or federal program.

The proposal also provides for the flow of funding to charter schools and to districts participating in the voluntary transfer program.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Elementary and Secondary Education

Missouri Gaming Commission

Office of State Treasurer

Missouri Lottery Commission

Office of Administration

Division of Budget and Planning

Mickey Wilson, CPA

Director

February 12, 2003