LIMIT STATE FUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONES

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1 LIMIT STATE FUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONES Tax increment FACTS AND FINDINGS zones are quasi-governmental entities in the state of Texas established to implement tax increment financing. These zones rely on tax increment financing to fund infrastructure designated area. Tax increment improvements in a property zones. financing is a process in which the taxing entities supporting the zone's development deposit In Texas, 33 public independent school districts participate with other taxing entities in tax increment tax revenue associated with increasing property value into a tax increment fund. The difference between the base-year property value when the zone is established and each year's higher property value is referred Taxing entities participating in a zone are authorized to change the geographic boundaries (size) of the zone, as well as the term (duration) of the zone. Tax increment zones in which school to as the captured appraised value. The tax increment is the districts participate would not experience a financial product of the captured appraised value multiplied by each hardship entities' tax rate, or an alternative formula that may include districts to contribute to tax increment the tax rate multiplied by the captured appraised value. This zones an additional increment districts' 2005 tax rate, and the related supplement funds the debt service and/or ongoing project if the statutory requirement amount for school based on the school costs associated with development of the zone. provided by the Texas Education Agency to school Cities can establish and administer these zones, and establish districts, were both suspended during the agreements with public independent biennium. school districts and other taxing entities to jointly finance their development. Certain school districts benefit from an offset, authorized by state law, that deducts the captured appraised value from a CONCERNS Certain school districts participate in tax increment district's total property value, and reduces maintenance and zones in which more than half of the operations tax collections, such that districts receive more school district's contribution state funding or pay lower recapture amounts to the state. In or renovate school district educational facilities. In fiscal year 2011, this offset benefitted 33 school districts at a cost of approximately $139.4 million in General Revenue these cases, a supplement based on 2005 tax rates is unnecessary because their tax increment contributions Funds. primarily benefic these school districts. In addition to the property value and tax rate offset, certain school districts also receive a supplement from the state is used to construct The supplement provided to certain school districts associated with tax increment zone related to the tax rate reduction legislation of In fiscal participation year 2011, 19 school districts received the supplement, at a Fund cost which is unnecessary during the $32.5 million in General Revenue biennium in light of the current financial condition cost of approximately of these tax increment zones. Funds. 1he supplement represents a biennial General Revenue is an open-ended cost to the state, which current state law does not adequately control. Amending The Comptroller of Public Accounts does not adequately monitor changes in the size or duration state law to limit this cost would save the General Revenue of tax increment Fund $64.0 million in the biennium. Also, given result in an inaccurate the complex nature of state statutes governing the effect of district property values used to calculate state aid and tax increment recapture payments. zone participation on state funding for school districts, specific information should be provided to the districts so they can understand how their zone agreements will impact their state support. LEGISLATIVE BUDGET BOARD STAFF - JANUARY 2013 zones that determination could of school A 2011 Legislative Budget Board staff survey found that some school districts are uncertain if changes to [he zone boundaries TEXAS STATE GOVERNMENT EFFECTIVENESS AND or duration EFFICIENCY affect their - ID: S

2 LIMIT STATE FUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONES Foundation School Program funding. The state does not regularly notify school districts about state law governing the property value offset and supplemental funding related to tax increment zones. RECOMMENDATIONS Recommendation 1: Amend statute to eliminate the state supplement to public independent school districts participating in tax increment zones for whom more than half of their tax increment contribution supports school district facility development, and suspend the supplement for all other eligible school districts during the biennium. To ensure school districts are not adversely affected and can contribute to a zone based on their current tax rates, the statutory provision requiring districts to contribute at the 2005 tax rate would be removed for those districts that would no longer receive the supplement. The requirement would also be suspended during the biennium for all other school districts participating in tax increment zones that have received the supplement. Recommendation 2: Amend statute to prohibit school districts that have not received the supplement as of calendar year 2012 from applying for and receiving the funding in the future. Recommendation 3: Include a contingency rider in the General Appropriations Bill to require the Texas Education Agency to withhold the state funding for the tax increment zonerelated supplement from Foundation School Program appropriations for the biennium. Recommendation 4: Amend statute to require the Comptroller of Public Accounts to review local agreements, financing plans, and amendments to those documents, of the tax increment zones in which school districts participate to identify the zone boundaries and durations that were in place before September 1, 1999, and take any other steps necessary to ensure that school districts are receiving only the amount of tax zone property value deductions specified by state statutes. Recommendation 5: Amend statute to require the Comptroller of Public Accounts to inform all affected school districts of state law provisions related to the zone agreement property value offset and supplemental funding. This information, provided at the beginning of each biennium, should emphasize if changes to the size or duration of a zone implemented by its governing body will affect those financial DISCUSSION benefits. Tax increment zones (TIRZs) are quasigovernmental entities in the state of Texas established to implement tax increment financing. TIRZs use tax increment financing to pay for infrastructure improvements in a designated area. Tax increment financing is a mechanism through which taxing entities contribute property tax revenue associated with increasing property value into a tax increment fund. The captured appraised value is the difference between the base-year property value, when the zone is established, and each year's higher property value. Typically, the tax increment is determined by multiplying the captured appraised value multiplied by each entity's tax rate. However, taxing entities may agree to an alternative formula, such as contributing an amount based on some percentage of the tax rate. This increment pays for the debt service and/or ongoing project costs associated with developing the zone. TIRZs often include a city and one or more taxing entities, such as a school district, in order to pool resources for the development of a zone. Certain public independent school districts (ISDs) participating in TIRZs benefit from statutory provisions that subtract their captured appraised value from their total property value, and reduce their maintenance and operations (M&O) tax collections. The districts can then receive more state funding or pay lower recapture amounts to the state, effectively holding district revenue harmless for participation in TIRZs. State law was amended in 1997 so that after fiscal year 1999, ISDs entering into TIRZ agreements would not receive either of these two adjustments. In fiscal year 2011, 33 ISDs benefitted from these adjustments, at a cost of approximately $139.4 million in General Revenue Funds. Some ISDs, in addition to property value and tax collection adjustments, receive a supplement related to the tax-rate reduction legislation of To minimize the impact on TIRZ financing, the legislation required certain ISDs to continue basing their tax increment contribution on 2005 tax rates. This requirement does not apply to school districts for which their TIRZ contribution is based on a specific tax rate indicated in their TIRZ agreement. To hold ISDs harmless, the state provides a supplement based on the 446 TEXAS STATE GOVERNMENT EFFECTIVENESS AND EFFICIENCY - ID: 183 LEGISLATIVE BUDGET BOARD STAFF - JANUARY 2013

3 LIMIT STATEFUNDING OF SCHOOL DISTRICT PARTICIPATION INTAX INCREMENT REINVESTMENTZONES difference between the 2005 tax rates and their current tax rate. In fiscal year 2011, 19 ISDs received a supplement, at a cost of approximately $32.5 million in General Revenue Funds. HISTORY AND PURPOSE OF TlRZS Local governments in California became the first entities to use tax increment financing when its legislature authorized this funding mechanism in TIRZs in Texas rely on this approach to pay for economic development within their zones. Tax increment financing is a mechanism used by local governments to finance needed improvements to infrastructure and buildings within a TIRZ. The cost of improvements to the zone is repaid by the tax revenues of each taxing entity that levies taxes on the property. Figure 1 shows how tax increment financing is intended to work. When a city establishes a TIRZ, sometimes in conjunction with other taxing entities, a base tax year is determined by the participating taxing entities. Tax revenue generated from assessments on the base-year appraised value continues to flow to the taxing entities. To the extent property values rise, the additional tax revenue associated with the higher values, referred to as the captured appraised value, is deposited into a tax increment fund (TIF). In other words, the captured appraised value is each year's appraised value minus the base-year appraised value when the zone was established. In this standard financing model, the captured appraised value, multiplied by each taxing entities tax rate, goes into the TIF to pay for the bond debt service and/or ongoing project costs that finance the development. This contribution is referred to as the tax increment. Upon expiration or termination of the TIRZ agreement, the participating taxing entities regain access to the entire appraised value. ESTABLISHMENT AND ORGANIZATION OF A TIRZ A TIRZ is a quasi-governmental entity administered by the city that establishes the zone. A board of directors representing FIGURE 1 TAX INCREMENT FINANCING MODEL ASSESSED VALUE CAPTURED APPRAISED VALUE TOTAL AV NOW BELONGS TO ALL TAXING ENTITIES IN ZONE INCREMENTAL PROPERTY TAX TO THE TlRZ TO FUND BOND DEBT SERVICE AND OR ON GOING PROJECT COSTS PRE-TIRZ AV BASE AV AV BELONGS TO ALL TAXING ENTITIES IN TIRZ POST-TlRZ AV o YEAR TlRZ PROJECT ~i DURATION INITIATED (BASE YEAR) COMPLETED NOTE: Tax Increment Reinvestment Zone (TIRZ) ; Appraised Value (AV). SOURCES: Legislative Budget Board; Indiana University. LEGISLATIVEBUDGET BOARD STAFF- JANUARY 2013 TEXAS STATEGOVERNMENT EFFECTIVENESSAND EFFICIENCY-ID:

4 LIMIT STATE FUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONES the taxing entities that are parties to the zone's agreement governs the zone, but the city that established the zone typically administers it. The Tax Increment Financing Act, of the Texas Tax Code, Chapter 311, sets forth specific procedures cities are required to follow to establish thetirz. Cities initially make a series of decisions related to the zone's territory, its mission and goals, development projects, financing, and governance. A key step is working with other taxing entities, including ISDs that may be interested in participating in the zone. ISDs participate in TIRZs to promote economic development, to increase property tax revenue, and finance the construction or modifications of educational facilities located within the zone. Certain ISDs that participate in TIRZs receive a supplement related to property tax-rate reduction legislation passed in Because many ISD deposits into TIFs are a function of the captured appraised value multiplied by a district's current tax rate, legislators were concerned that the new lower tax rates would result in significantly decreased school district contributions to TIRZ funding-which sometimes finances bond and other forms of debt service. To address this concern, the Texas Legislature required ISDs to contribute to their TIRZs at their 2005 tax rates, if their TIRZ contributions are based solely on their current tax rates as specified in their TIRZ agreements. Also, to ensure this requirement did not result in a major cost to ISDs, a state supplement was authorized to hold the districts harmless. The supplement is calculated by taking the difference between the M&O tax rate and the 2005 tax rate, and multiplying it by the TIRZ captured appraised value. In fiscal year 2011, 19 ISDs received the supplement at a cost of $32.5 million in General Revenue Funds. The concern leading to the requirement that ISDs contribute to their TIRZs at 2005 tax rates, and the related hold harmless supplement, may be re-evaluated in light of current conditions. Figure 2 shows the TIRZ financial status and state supplements associated with ISDs receiving the supplement in fiscal year 2011, and an estimate of the biennial supplement funding. TIRZs in which 10 ISDs participate experienced ending balances greater than the fiscal year 2011 school district supplement, as well as the estimated biennial supplement. Figure 3 shows that some ISDs benefit from TIRZ agreements in which more than half of the school district's contribution is returned to the district to finance facility construction and/or modifications, or is used to support school facilities development through a TIRZ. These range from the Carrollton-Farmers Branch school district TIRZ #1, in which 65 percent of the district's TIRZ contribution reverted back to the district for education facility funding, to the 100 percent that benefitted primarily the Kary and Humble ISDs. Contribution amounts returned to or benefiting ISDs are, generally, much greater than the district's supplement. In these cases, a supplement associated with the 2005 tax rates is unnecessary because their tax increment contributions primarily benefit the ISDs. Recommendation 1 would amend the Texas Education Code, Section , to eliminate the supplement for ISDs that use more than half of their TIRZ contributions for facility development, and suspend it for all other districts during the biennium. As a result, the state would not provide an unnecessary funding stream to ISDs that represents a significant cost to the General Revenue Fund. The Keller, Southside, Houston Mesquite #2 TIRZs the estimated biennial supplement. #9, Farmers Branch #2, and showed ending fund balances less than In these cases, the loss is less than 17 percent of their zone's annual revenue, indicating that suspending the supplement for two years would not cause a financial hardship. By amending their TIRZ agreements, the four ISDs could offset the loss, or the other taxing entities could do so to provide more funding for zone projects. The City of Tyler's zone also showed a fiscal year 2011 ending balance that is less than the biennial supplement; however, the City of Tyler has indicated that the TIRZ will terminate in August 2013 under its current project plan, so after that point supplemental funding will no longer be needed. To ensure that the suspension of the supplement does not adversely affect ISDs, the Texas Tax Code, Section (n), requiring districts to contribute to their TIRZs at the 2005 tax rate, would be removed for those ISDs that would no longer receive the supplement. Also, the requirement would be suspended for the biennium for all other ISDs whose supplement would be suspended during that period. Changing these requirements would allow ISDs to base their contributions on their current tax rates, or some other TIRZ contribution arrangement agreed to by the city and school district. Recommendation 2 would amend Texas Education Code, Section , to prevent ISDs that have not received the supplement as of calendar year 2012 from claiming it in the future. Doing so would prevent districts that have not received a TIRZ-related supplement from 448 TEXAS STATE GOVERNMENT EFFECTIVENESS AND EFFICIENCY - ID: 183 LEGISLATIVE BUDGET BOARD STAFF - JANUARY 2013

5 LIMIT STATEFUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENTZONES FIGURE 2 TAX INCREMENT REINVESTMENT ZONE FINANCIAL DATA AND SCHOOL DISTRICT TAX INCREMENT FINANCE SUPPLEMENT FISCAL YEAR 2011 IN THOUSANDS ESTIMATED TIRZ BEGINNING ENDING BIENNIAL SCHOOL DISTRICT CITY NUMBER BALANCE REVENUE EXPENDITURE BALANCE SUPPLEMENT Arlington Arlington 1 $6,561.9 $1,300.6 $1,915.7 $5,946.8 $450.2 Arlington Grand Prairie 2 $2,308.6 $6,762.5 $2,252.8 $6,818.3 $1,379.5 Alvin Pearland 2 $6,884.6 $14,736.0 $17,346.9 $4,273.7 $10,176.6 Birdville North Richland Hills 1 $944.4 $218.7 $152.9 $1,010.2 $73.1 Carrollton-Farmers Branch Farmers Branch 1 $(85.2) $1,784.6 $1,719.3 ($41.0) $503.5 Carrollton-Farmers Branch Farmers Branch 2 $(45.6) $95.2 $86.6 ($32.9) $29.7 Carrollton-Farmers Branch Irving 1 $2,420.7 $17,485.6 $16,713.3 $3,192.9 $6,446,5 Frisco Frisco 1 $2,817.4 $24, ,396.7 $2,552,5 $5,773.9 Grapevine-Colleyville Colleyville 1 $12,498.4 $4,941.6 $5,076.6 $12,363.5 $2,053.9 Grapevine-Colleyville Grapevine 1 $31,137.3 $6,048.9 $5,135.7 $32,050.5 $2,102.5 Grapevine-Colleyville Grapevine 2 $6,846.1 $4,308.3 $3,409.6 $7,744.8 $2,087.6 Houston Houston 1 $1,895.9 $3,602.7 $3,789.5 $1,709.1 $845.4 Houston Houston 2 $25,984.0 $24,777.8 $27,108.5 $23,653.2 $4,657.7 Houston Houston 3 $14,444.2 $11,333.7 $9,545.5 $16,232.4 $3,658.2 Houston Houston 4 $0.0 $23,598.0 $23,598.0 $0.0 $6,159.2 Houston Houston 5 $3,817.7 $4,095.7 $6,718.0 $1,195.4 $689.7 Houston Houston 7 $11,811.1 $29,300.6 $6,284.7 $34,827.0 $1,232.6 Houston Houston 8 $1,400.7 $3,247.1 $3,732.3 $915.5 $260.1 Houston Houston 9 $827.2 $1,652.5 $2,243.4 $236.3 $406.8 Houston Houston 12 $450.3 $1,163.9 $1,167.9 $446.3 $312.7 Houston Houston 13 $2,443.4 $4,333.6 $2,271.1 $4,505.6 $226.3 Humble Houston 10 $9,990.6 $15,814.1 $23,027.8 $2,686.0 $3,161.0 Katy Katy 1 $2,604,8 $2,497.5 $2,530.8 $2,571.4 $1,414.7 Keller Keller 1 $39.8 $3,212.6 $3,178.6 $73.8 $961.4 Mesquite Mesquite 1 $0.0 $296.9 $296.9 $0.0 $102.1 Mesquite Mesquite 2 $6,952.2 $2,814.9 $1,543.4 $8,223.7 $1,062.9 Midlothian Midlothian 1 $16,622.7 $8,653.4 $6,699.1 $18,577.0 $3,806.0 Northwest Fort Worth 2a $1,122.4 $1,055.9 $691.9 $1,487.0 $364.5 Northwest Fort Worth 2b $154.2 $305.2 $301.8 $157.7 $186.1 Plano Plano 2 $9,092.9 $5,100.8 $3,643.8 $10,549.9 $1,272.4 Southside San Antonio 6 $605.3 $1,207.3 $1,232.0 $38.9 $336.3 Temple Temple 1 $9,783.9 $5,729.1 $3,350 $12,163.0 $1,498.8 Troy Temple 1 $9,783.9 $5,729.1 $3,350 $12,163.0 $25.9 Tyler Tyler 1 $2,234.2 $790.5 $3,021.8 $2.9 $312.8 Waco Waco 1 $8,561.7 $4, $2,462.5 $11,028.5 $1,527.0 Waco Waco 2 $1,355.3 $87.7 $0.0 $1,443.1 $23.6 Waco Waco 3 $63.0 less than $0.0 $63.5 less than $0.5 $0.0 NOTES:Amounts for Katy reflect the Katy Development Authority's School District Debt Fund, which receives all but $30,000 of the school district's annual tax increment zone (TIRZ) contribution. Biennial supplement estimates for Temple ISO and waco ISO are based on the projected fiscal year 2012 supplements, which Texas Education Agency indicates are 15 percent more than their fiscal year 2011 supplements. Shown above are those school districts that benefited from both the supplement and the TIRZ property value deduction. Another 14 districts benefited only from the property value deduction. SOURCE: Legislative Budget Board. LEGISLATIVEBUDGET BOARD STAFF- JANUARY 2013 TEXAS STATEGOVERNMENT EFFECTIVENESSAND EFFICIENCY-ID:

6 LIMIT STATEFUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENTZONES FIGURE 3 TAX INCREMENT CONTRIBUTIONS USED TO BENEFIT SCHOOL DISTRICTS, FISCAL YEAR 2011 IN THOUSANDS DISTRICT PERCENTAGE OF TIRZ CONTRIBUTION TIRZ CONTRIBUTION BENEFITTING ANNUAL SCHOOL DISTRICT CITY NUMBER BENEFITTING DISTRICT DISTRICT SUPPLEMENT Alvin Pearland 2 75% $11,783.9 $5,088.3 Carrollton-Farmers Branch Farmers Branch 65% $1,096.3 $251.7 Carrollton-Farmers Branch Irving 67% $8,969.2 $3,223.2 Frisco Frisco 75% $9,396.9 $2,867.0 Houston Houston 4 67% $15,717.4 $3,079.6 Humble Houston % $9,262.9 $1,580.5 Katy Katy 100% $2,497.5 $707.4 Northwest Fort Worth 2a 67% $396.2 $182.3 Northwest Fort Worth 2b 67% $202.3 $93.1 Plano Plano 2 88% $3,615.1 $636.2 NOTES: Tax increment zone (TIRZ). Amounts for Katy reflect the Katy Development Authority's School District Debt Fund, which receives all but $30,000 of the school district's annual tax increment zone (TIRZ) contribution. SOURCe:Legislative Budget Board. taking advantage of the opportunity implemented under Recommendation 1. before changes in statute Recommendation 3 would include a contingency rider in the General Appropriations Bill directing the Texas Education Agency (TEA) to withhold the state supplement for two years and deduct an amount equal to the supplement from Foundation School Program payments to the affected ISDs. TlRZ-RELATED PROPERTY VALUE ADJUSTMENTS Another state-provided in TIRZs benefit accrues to ISDs participating established before fiscal year These districts either receive increased state funding, or pay lower recapture payments, because participation in a TIRZ established at that time results in an adjustment to property value and M&O tax revenue used to calculate state school finance formulas. The first adjustment is based on subtracting the school district's captured value from its total taxable property value determined by the Comptroller's Property Value Study. The Study is the Comptroller of Public Accounts (CPA) determination of a school district's property value after analyzing locally appraised values and real estate market data. The second adjustment results from subtracting a school district's M&O tax collections into a TIRZ from the M&O tax collection amount used to calculate recapture payments to the state from ISDs. The Texas Government Code, Section , stipulates limits related to the size and duration of the TIRZs under which ISDs can get the property value adjustment. The statute limits the number of years for which the ISD may receive the deduction to the duration specified in the TIRZ's financing plan in place before September 1, CPA requires ISDs to submit a form that identifies the property value adjustment that a school district should receive due to parricipation in a TIRZ. The form checks for property value adjustment eligibility by asking if the TIRZ boundaries are those that existed on September 1, However, it does not ask if the duration is the one specified in the financing plan approved before that date. Also, CPA does not have a thorough system to check if the zone's duration was changed by modifications in TIRZ financing plans or agreements occurring after September 1, As a result, CPA could certify inaccurate TIRZ property value adjustments to TEA-which uses those certifications to determine state funding to ISDs, or the amounts that should be recaptured from the districts. Recommendation 4 would amend Texas Government Code, Chapter 403, to require CPA to review TIRZ local agreements, financing plans, and amendments to those documents, for those TIRZs in which ISDs participate in order to identify zone sizes and durations that were in place before September 1, Also, the TIRZ property value adjustment form should indicate if the duration of the zone 450 TEXAS STATEGOVERNMENT EFFECTIVENESSAND EFFICIENCY- ID: 183 LEGISLATIVEBUDGET BOARD STAFF- JANUARY 2013

7 LIMIT STATE FUNDING OF SCHOOL DISTRICT PARTICIPATION IN TAX INCREMENT REINVESTMENT ZONES was extended after September 1, In addition, the recommendation would require CPA to take any other steps necessary to ensure ISDs are receiving only the property value deductions to which they are entitled. For example, CPA could contact the entities administering TIRZs for information on TIRZ boundary changes and early expirations. CPA should use this information to verify if ISDs are receiving only the amount of zone property value deductions allowed by state law. If a TIRZ property value adjustment form inaccurately identifies the amount to be deducted from a school district's total property value, CPA should notify the school district of the inaccuracy and of any adjusted amount that will be deducted and certified to TEA. INFORMATION PROVIDED TO SCHOOL DISTRICT A 2011 Legislative Budget Board survey of ISDs receiving the TIRZ-related property value offset found that some school district officials do not understand state law provisions regarding changes in the size or duration of the zones. Two ISDs indicated that the size and duration of the TIRZs in which they participate were enlarged and extended after fiscal year They had agreed to changes made by the governing body oftirz, providing it had no adverse effect on their state education funding. This indicates an uncertainty about the effect that size and duration amendments have on property value offsets or on the state supplement. Also, school finance statutes related to TIRZs are complex and difficult to interpret. One factor contributing to this uncertainty is that the state does not inform ISDs about all of the statutory provisions governing TIRZs, and the extent that changes to a TIRZ boundary or term affect their state education funding. Recommendation 5 would amend the Texas Tax Code, Section 311, to require CPA, by October 1 of the first year of each biennium, to inform all ISDs receiving TIRZ-related financial benefits of the state law provisions governing those benefits. This information would help make districts aware of those provisions as they relate to changes in the size or duration oftirzs so that ISDs have a clear understanding of the extent to which such changes affect their TIRZ-related property value and M&O tax collections adjustments, and the state supplement. FISCAL IMPACT OF THE RECOMMENDATIONS Implementation of Recommendation 1, related to ending the state supplemental funding, would result in a savings of $64.0 million in General Revenue Funds for the biennium. The estimate is based on the fiscal year 2011 supplement of $32.5 million. Also, the $17.7 million estimated savings in fiscal year 2016 and thereafter is based on the fiscal year 2011 supplement paid to ISDs that apply more than half of their TIRZ contribution to financing their educational facility development. Recommendation 2 would result in savings to the General Revenue Fund to the extent that ISDs that have not received the supplement so far would be prevented from doing so in the future; however this potential savings cannot be estimated. Savings associated with Recommendation 3, to include a TEA contingency rider that withholds payment of the supplement for the biennium, is reflected in the $64.0 million cost avoidance by implementing Recommendation 1. Recommendations 4 and 5, requiring CPA to review TIRZ agreements and inform ISDs about statutory provisions governing TIRZs, can be implemented with the agency's current FIGURE 4 appropriations. FIVE-YEAR FISCAL IMPACT FISCAL YEARS 2014 TO 2018 FISCAL YEAR PROBABLE SOURCE: Legislative Budget Board. SAVINGs/(eOST) IN GENERAL REVENUE FUNDS $32,000,000 $32,000,000 $17,700,000 $17,700,000 $17,700,000 The introduced General Appropriations Bill does not include any adjustments as a result of these recommendations. LEGISLATIVE BUDGET BOARD STAFF - JANUARY 2013 TEXAS STATE GOVERNMENT EFFECTIVENESS AND EFFICIENCY -ID: