121st Maine Legislature
		Office of Fiscal and Program Review
		LD 1924
		An Act to Reduce the Cost of Local Government through Increased State Education Funding and Provide Property Tax Relief
		LR 2783(02)
		Fiscal Note for Bill as Amended by Committee Amendment " "
		Committee: Taxation
		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	$ 55,339,199	$ 54,232,466
Appropriations/Allocations
	General Fund		$0	$0	$ 55,339,199	$ 54,232,466
Fiscal Detail and Notes
	This bill requires the State's share of funding K-12 public education to increase to 55% by fiscal year 2009-10 versus the 50% requirement that was approved by the Legislature in Public Law 2003, c. 504, An Act to Implement School Funding Based on Essential Programs and Services.  This bill also provides for the calculation of a full-value education mill rate that is required to raise the total of the local cost share expectation and requires that this rate decline over the fiscal year 2004-06 to fiscal year 2009-10 time period.  This bill also specifies that the full-value education mill rate may not exceed 9.0 mills in fiscal year 2005-06.  The Department of Education estimates the mill rate expectation to be 7.98 mills in fiscal year 2005-06.
	This bill also provides for the Commissioner of Education to establish a transition adjustment through fiscal year 2009-10 for municipalities that experience an adverse fiscal impact as a result of the phase-in of the essential programs and services model and the local cost share expectation method of determining the local contribution of funding essential programs and services.  This bill requires the transition adjustment amount to decline in each successive year through fiscal year 2009-10.  Since this legislation does not specify the transition amounts for fiscal year 2005-06 through fiscal year 2009-10, this fiscal note assumes that the transition adjustment declines evenly over the 5-year period.  This fiscal note also assumes that the transition adjustment amounts are included in the estimated General Fund appropriation amounts needed to fund K-12 education based on the Essential Programs and Services model in this measure, thereby affecting the distribution among individual school units.  The impact to each local school unit can not be determined at this time.
	Additional costs to the Department of Education, the State Planning Office, the Bureau of the Budget and Maine Revenue Services to serve on the Municipal Budget Analysis Committee and to prepare the required report can be absorbed utilizing existing budgeted resources.
	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 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 based on the State's contribution reaching 50% in fiscal year 2009-10, as approved in Public Law 2003, c. 504, versus the 55% State contribution by fiscal year 2009-10 proposed in this legislation.
			State and Local Cost to Fund K-12 Public Education
			Utilizing the Essential Programs and Services Model
			Comparison of 50% State Contribution vs. 55% by FY 2009-10
			Base Year		Projections	Projections
			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 approved in P.L. 2003, c. 504		1,015,819,375	1,033,413,982	1,066,905,558	1,131,428,894
	Total State & Local cost based on EPS funding model approved in P.L. 2003, c. 504 (includes program costs, debt service and adjustments)		1,467,408,432	1,518,173,106	1,537,199,970	1,618,879,589
	State Share Targets to fund K-12 education based on EPS model approved in P.L. 2003, c. 504		49.89%	47.81%	49.00%	49.25%
	State Share Targets to fund K-12 education based on EPS model in LD 1924		49.89%	47.81%	52.60%	52.60%
	Estimated General Fund appropriation needed to fund K-12 education based on EPS model approved in P.L. 2003, c. 504				753,227,985	797,298,197
	Estimated General Fund appropriation needed to fund K-12 education based on LD 1924				808,567,184	851,530,664
	Additional General Fund Appropriation required to fund EPS model in LD 1924 vs. P.L. 2003, c. 504				55,339,199	54,232,466
	* No adjustment in fiscal year 2003-04 and fiscal year 2004-05