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F I S C A L I M P A C T R E P O R T
SPONSOR Nava
ORIGINAL DATE
LAST UPDATED
2/13/07
HB
SHORT TITLE High-Needs Schools Teacher Tax Credit
SB 927
ANALYST Francis
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
$100.0 Nonrecurring
General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
REVENUE (dollars in thousands)
Estimated Revenue
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
FY09
($4,200.0)
($5,600.0) Recurring General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates HB 1138
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department (TRD)
Responses Received From
Public Education Department (PED)
SUMMARY
Synopsis of Bill
Senate Bill 927 creates a tax credit for licensed teachers who teach at schools identified by the
Public Education Department as “high-needs." The credit is against personal income tax liability
pg_0002
Senate Bill 927 – Page
2
and can be carried forward for up to three years. The credit is $1,500 for teachers who have held
a level 2 license at least half of the taxable year and $2,000 for teachers who have held a level 3
license for at least half of the taxable year. A teacher must have taught at the school for at least
half of the taxable year. The maximum credit goes to teachers who taught for the entire school
year and half of the credit goes to teachers who have taught at least half of the full school year.
PED will develop criteria for determining high-needs schools based on academic proficiency,
poverty indicators, and other factors to be identified. No more than 4,300 teachers shall be
eligible in a tax year.
An appropriation of $100 thousand is made to PED to implement the certification and develop
criteria.
FISCAL IMPLICATIONS
PED estimates that they will be able to identify 4,300 teachers who would receive the credit.
Assuming half are Level 2 and half are Level 3, the full credit will reduce personal income tax
collections by $7.5 million per year. Assuming an average salary of $43,000, the tax liability is
approximately $980 so for most taxpayers they will carry the credit forward. In FY08, the credit
is expected to reduce revenues by $4.2 million. In FY09, the impact is a $5.6 million reduction.
By FY10, the credit reaches the maximum $7.5 million.
SIGNIFICANT ISSUES
PED:
One significant issue is the determination of criteria identifying a “High Needs School."
PED will utilize data that address academic proficiency, the percent of poverty in the
school population and other factors that will help prioritize the schools and teachers
eligible for the tax credit within the maximum number that can be selected.
Academic proficiency would be determined by the percent of students in the school that
are proficient in reading and mathematics as evidenced by standardized assessments.
Poverty would be identified by the percent of students who are eligible for free-and-
reduced lunch. Other factors could be considered.
A system of collecting data from public K- 12 schools, including charter schools, tribal,
Bureau of Indian Affairs (BIA) schools or BIA contract schools, identified by the PED
will be developed.
The PED’s Educator Quality Division will be responsible for administering the PED roles
and responsibilities related to this bill.
ADMINISTRATIVE IMPLICATIONS
PED:
The PED would work in collaboration with the Taxation and Revenue Department by
annually providing the department with the list of qualifying teachers by name and social
security number. The processes for identifying and verifying the qualifying teachers do
not currently exist and will have to be developed and maintained. Current PED staff
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Senate Bill 927 – Page
3
cannot absorb this work. The $100.0 appropriation in the bill will be utilized for contract
services to develop and maintain a database and reporting system that utilizes STARS
information along with information from the Bureau of Indian Affairs schools and
contract schools’ data systems. Any unexpended or unencumbered balance of the $100.0
remaining at the end fiscal year 2008 shall revert to the general fund.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB1138 is a duplicate.
TECHNICAL ISSUES
On page 3, line 1, it refers to “personal income liability" and that should be changed to “personal
income tax liability."
OTHER SUBSTANTIVE ISSUES
PED reports that this would be a significant recruiting tool to attract teachers to high-needs
schools.
NF/nt