121st Maine Legislature
		Office of Fiscal and Program Review
		LD 1623
		An Act to Implement School Funding Based on Essential Programs and Services
		LR 2124(01)
		Fiscal Note for Original Bill
		Sponsor: Sen. Douglass of Androscoggin
		Committee: Education and Cultural Affairs
		Fiscal Note Required: Yes
Fiscal Note
					Projections	Projections
			2003-04	2004-05	2005-06	2006-07
Net Cost (Savings)
	General Fund		$0	$0	$    (17,017,327)	$      4,198,058
Appropriations/Allocations
	General Fund		$0	$0	$    (17,017,327)	$      4,198,058
Fiscal Detail and Notes
	This bill replaces the School Finance Act of 1995, the current method used to determine individual school units' operating cost subsidy, with the Essential Programs and Services Funding Act, which uses specific key components to determine the operating cost subsidy for each local school unit.  Although the method used to calculate each school unit's operating subsidy is replaced, the current distribution method for the operating cost allocation established in the School Finance Act of 1995 is maintained.  The School Finance Act of 1985, the current method used to determine program costs, debt service and all adjustments, is also maintained.  However, the estimates provided by the Department assume the transition of program costs to the Essential Programs and Services model beginning in fiscal year 2005-06.
	Since the operating cost allocation for each school administrative unit will be determined based on a different set of factors than what is used in the current school funding formula, the subsidy amount for each local unit may change as well.  The impact to each individual school unit cannot be determined at this time.  A key component of operating cost allocation is the additional per pupil funding targeted at K-2 students, assessments and technology resources.  Local school units will only receive this additional funding if it is in compliance with certain requirements or meets certain eligibility criteria.  The impact on the local school units' funding associated with this key component can not be determined at this time.
	The following table provides estimates for the total State and Local Operating cost of funding education based on the Essential Programs and Services model and compares the total State and Local cost of funding K-12 education based on the EPS model, adjusted for the transition percentage, with the total State and Local cost of funding education based on the current model.  The table also provides a comparison of the General Fund appropriations that are estimated to be needed to fund the state's share of the cost of funding K-12 education.  It is important to note that Sec. A-3 (B) of the original bill provides annual targets for the state share of the cost of transitioning to the essential programs and services method of funding K-12 public education that are in error.  This fiscal note assumes that the percentages will be corrected and bases its estimates on those corrected percentages.
			Base Year
			2003-04*	2004-05*	2005-06	2006-07
	Total State & Local Operating Cost allocation based on EPS model (100%)		$ 1,256,951,694	$ 1,260,260,954	$ 1,270,125,664	$1,285,714,652
	EPS Transition Percentage		80.82%	82.00%	84.00%	88.00%
	Adjusted Total Operating Allocation based on EPS model		$ 1,015,868,359	$ 1,033,413,982	$ 1,066,905,558	$1,131,428,894
	Total State & Local cost based on EPS funding model (includes program costs, debt service and adjustments)		$ 1,467,457,416	$ 1,518,173,106	$ 1,537,199,970	$1,618,879,589
	Total State & Local cost based on current funding formula (includes program costs, debt service and adjustments)		$ 1,467,408,432	$ 1,503,862,194	$ 1,543,887,175	$1,589,694,612
	Net Increase (Decrease) in Allocation		$           48,984	$     14,310,912	$      (6,687,205)	$     29,184,977
	State Share Targets to fund K-12 education based on EPS model		49.89%	47.81%	49.00%	49.25%
	Estimated General Fund appropriation needed to fund K-12 education based on EPS model				$    753,227,985	$   797,298,197
	Estimated General Fund appropriation needed to fund K-12 education based on current funding model				$    770,245,312	$   793,100,139
	Net General Fund Appropriation (Deappropriation) required to fund EPS model vs.current funding formula				$    (17,017,327)	$      4,198,058
	* No adjustment in fiscal year 2003-04 and fiscal year 2004-05