Download - Module # 1
Module # 1
Basic Orientation to
Texas School Finance
TEC Chapter 42
It is the policy of this state that the provision of public education is a state responsibility, and that a thorough and efficient system be provided and substantially financed through state revenue sources…
Cont’d
so that each student enrolled in the public school system shall have access to programs and services, …
Cont’d
that are appropriate to the student’s educational needs, and that are substantially equal to those available to any similar student, notwithstanding varying local economic factors.
Three main sources of revenue are:
StateFederalLocal
Local RevenueLocal revenues are derived
from taxation, school organization fund raising, investments, gifts and bequests, extra-curricular gate receipts, and other sources.
State RevenueState: The state public
school finance system is a very complex set of formulas designed by the state to allow equal access to programs and services…
Cont’dthat are appropriate to the
student’s needs, in all school districts throughout the state, despite different taxable values.
Federal RevenueFederal: Districts may apply for funds from the federal government that are categorical in nature and must be spent exclusively for the purposes intended.
Revenue by Source (for Texas)
Billions and PercentState: $11.5 46.1%Federal $ 0.9 3.4%Local $12.6 50.5%Source TEA Snapshot(This data should be taken as
approximations because the data is based on 1999-2000 data.)
RevenueFactors Driving State
FundingAverage Daily Attendance
(ADA)Property WealthTax Effort
(The Texas School Foundation Program state aid is determined by these three major factors)
Federal Revenue
All federal funds are categorical in nature and must be spent for designated programs.
Examples Are:
Title I, II, IV, VICareer and TechnologySpecial Education (IDEA B)School Lunch Program
Local RevenueTaxation
Categories of Taxes include:
Maintenance and Operations (M&O) (TEC Chapter 45)
(TEC Chapter 45) Interest and Sinking (I&S)
Maintenance and Operations
(M & O)According to (TEC Chapter 45)
districts may levy, assess, and collect annual ad valorem taxes for the further maintenance of public schools in the district.
(The limit is $1.50 for M & O taxes)
Interest and Sinking (I & S)
According to (TEC Chapter 45) districts may issue bonds for the construction of school buildings in the districts and the purchase of the necessary sites for the school buildings…
Cont’dand may levy, pledge,
assess, and collect annual ad valorem taxes sufficient to pay principal of and interest on the bonds. (Generally the limit is $.50 for the I & S taxes)
Taxation
Process and legal requirements for taxation:
Publication (Tax Code)Hearing (Tax Code)Rollback (Tax Code)Adoption (TEC Chapter 11)
Budget
In Chapter 44 of the TEC, the requirements of the budget process set forth are:
1. Preparation of budget by the superintendent
2. Hearing of proposed budget by the board
3. Adoption of a budget by the board
Budget
Budget must be balanced
District may not operate a deficit budget
Financing Educational Excellence Budget
The budget is the district’s plan to produce educational excellence expressed in terms of dollars.
The budget addresses three important functions:
1. Planning (present and future operations)
2. Monitoring (expenditures)3. Communicating (to staff
and public about resources)
Budget Expenditure Analysis
Payroll 73.8% Other Operating 14.6% Non-Operating 10.5%
(includes construction and I & S debt payments)
(Please note that the three object expenses and percentages are statewide averages based on data from 1999-2000)
Financial Vital Signs
Declining ADA (Loss of student enrollment)
Declining Fund Balance
Cont’d
Payroll Cost (salaries plus benefits increasing or staying the same while student enrollment is declining)
Tax Effort
Key Terms in Finance
Available School Fund (ASF): created by the Texas Constitution of 1876, the ASF is made up on earnings from the Permanent School Fund and constitutionally dedicated motor fuel taxes and other miscellaneous revenue sources.
Key Terms
ASF cont’d:
The bulk of ASF revenue is distributed on a per capita basis to school districts. The annual amount has ranged between $275 and $300 per student in recent years. A portion provides funding for textbooks and technology.
Key Terms (cont’d)Average Daily Attendance (ADA): ADA is a method of counting students for the purpose of providing state aid to school districts.
Key Terms (cont’d) Basic Allotment: Basic
allotment is the initial or starting number that after adjustment, is used to calculate foundation program costs and state aid to school districts. The basic allotment is currently $2,537.
Key Terms (cont’d)Chapter 41 District: A school
district that has property wealth in excess of $300,000 per weighted student in 2002 and $305,000 per weighted student in 2003 and is subject to recapture provisions.
Key Terms (cont’d)Compensatory Education:
allotment that provides additional financial support to school districts to teach educationally disadvantaged pupils and underachieving students.
Key Terms (cont’d)Comptroller’s Property Tax Division (CPTD): department responsible for conducting an annual property value study that determines the taxable wealth of each Texas school district.
Key Terms (cont’d)Cost of Education Index (CEI) or Adjustment: an index the state uses to adjust the basic allotment to account for geographic or other cost differences beyond local school district control.
Key Terms (cont’d)County Appraisal District (CAD): an appraisal district office responsible for maintaining taxable real and personal property records and placing a value on all property for taxation purposes.
Key Terms (cont’d)Equity: refers to fair or
equal distribution of resources for schooling, taking into account student differences and school district characteristics.
Key Terms (cont’d)Existing Debt Allotment (EDA): provides assistance to school districts in making debt service payments on qualifying debt for which taxes were levied prior to the 2000-2001 school year.
Key Terms (cont’d)Foundation School Fund:
is a dedicated stream of revenue in the state budget used exclusively to fund public education.
Key Terms (cont’d)Foundation School Program (FSP): a program for the support of a basic instructional program for all Texas school children.
Key Terms (cont’d)General Revenue (GR) Fund: is the state’s main funding source.
Key Terms (cont’d)Guaranteed Yield: is a
finance plan in which the state specifies a revenue yield that is will guarantee in terms of revenue per student per penny of local tax effort.
Key Terms (cont’d)Hold Harmless: term used
to describe a provision in new law that is designed to protect a school district from a loss of local revenue or state aid.
Key Terms (cont’d) Instructional Facilities
Allotment (IFA): program that was initially authorized by the 75th legislature in 1997 to provide assistance to districts in making debt service payments on qualifying bonds and lease-purchase agreements.
Key Terms (cont’d)Interest and Sinking Fund (I & S) Tax Rate: Also called the debt service tax rate, I & S taxes pay for bonded indebtedness, facilities, and other capital needs.
Key Terms (cont’d)Local Fund Assignment (LFA): is the tax rate that a district is required to levy in order to participate in the FSP.
Key Terms (cont’d)Maintenance and Operations
(M & O) Tax Rate: is a local school district property tax rate that raises revenue to operate and maintain the district’s schools. (Maximum of $1.50)
Key Terms (cont’d) Permanent School Fund (PSF): a
fund created by the TX. Constitution where earnings go into the ASF, which the state must apportion on a per capita basis to counties for students enrolled in TX public schools after funding state textbook purchases.
Key Terms (cont’d)Public Education Grant (PEG): permits students in low-performing schools to attend a public school in the student’s home district or in another district.
Key Terms (cont’d)Recapture: a feature of
school finance where local districts give the state locally collected property tax revenue for the redistribution through the FSP.
Key Terms (cont’d)Rollback Rate: is a tax rate
that would provide more than the same local taxes and state aid per WADA as was available the previous year, plus debt service taxes, and $0.06.
Key Terms (cont’d)State Board of Education (SBOE): 15 member body elected by general election from various districts statewide to provide leadership and to adopt rules and policies for public education.
Key Terms (cont’d)Telecommunications Infrastructure Fund (TIF): Will fund up to $1.5 billion over 10 years to link Texas schools, hospitals, and libraries for distance learning and information sharing.
Key Terms (cont’d)Wealth: is measured in
taxable value of property per WADA.
Key Terms (cont’d) Weighted Average Daily
Attendance (WADA): In Texas, students with special education needs are weighted for funding purposes to help recognize the additional costs of educating those students.
Yes, Texas School Finance
Will ChangeThere may be major changes
ahead. The keys to success are:
1. Understanding the current finance structure
2. Keeping up with the proposed changes before they become law
3. Knowing that everything will not change
4. Adapt to new legislation from a perspective of experience
It is worth the effort to know what to do and why it is done
from a standpoint of the status of law that creates the systems
used in public schools.
A cookbook for public school finance is a way to learn, not a way to
survive!!