A Guide To Texas School Finance

1
A Guide To Texas School Finance

• Module 2

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Sources of Revenue

• Funding for Texas public school district budgets
  comes from 3 sources local funds, primarily
  local property tax revenues state funds from a
  variety of revenue sources, and federal funds.

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For the 1999-2000 school year

• 24.9 billion was used for public education.
• 12.6 billion or 50.5 came from local sources

4
For the 1999-2000 school year

• 11.5 billion or 46.1 came from state funds
• 850 million or 0.3 came from federal sources.

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Biennial Appropriation2002-2003 32.16 Billion

• Foundation School Fund 17.89 billion
• Available School Fund 2.37 billion
• State Textbook Fund 806 million

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Biennial appropriations (contd)

• Lottery Proceeds 1.61 billion
• Appropriated Receipts 1.47 billion
• Additional State Funds 2.08 billion

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Biennial Appropriations (contd)

• TIF 37.80 million
• General Revenue 424 million
• Federal Funds 5.40 billion
• Total 32.16 billion

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Determination of School District Funding

• Structure of the Foundation School Program (FSP)
  State and local funds for public ed. In Texas are
  distributed through a system of formulas known as
  the FSP.

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(contd)

• TEA uses FSP formulas to calculate the foundation
  program allotment for each of the 1,041 school
  districts that levy a property tax.

10
contd

• The school funding system consists of two tiers
  to fund M O, including a number of adjustments
  and weights designed to distribute funding
  according to the characteristics of the school
  district and its students.

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Tier 1

• Tier 1 is the base or foundation funding level
  in the Texas FSP. This funding begins with the
  Basis Allotment, (The base level of funding for
  each student in average daily attendance (ADA).

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Tier 1

• The lower the district property values, the
  greater the amount of state aid in Tier 1. The
  combination of state and local funds provides
  access to the same level of educational resources
  at the same tax rate.

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Tier 1

• Adjusting the Basic Allotment by the district
  adjustments results in the Adjusted Allotment.
  Instructional program weights are applied to the
  Adjusted Allotment, based on the numbers of
  students enrolled in or served by various special
  programs.

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Tier 1Instructional Program Weights in FSP

• Regular Education no weight
• Special Ed. weight ranges from 1.1 for
  mainstreaming to 5.0 for certain restrictive
  settings.
• Comp. Ed. 0.20 and 2.41 for pregnant students

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Tier 1Weights (contd)

• Career and Technology 0.37
• Bilingual 0.10
• Gifted and Talented 0.12
• PEG 0.10

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Tier 2

• Tier 2 provides additional funds to school
  districts beyond the base funding level in Tier
  1. Districts may levy a tax rate up to 0.64 in
  Tier 2, but they are not required by law to do so.

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Tier 2

• Tier 2 tax rate generates resources for education
  in the form of a guaranteed yield.

18
Tier 2

• Tier 2 provides substantially equal access to
  resources at substantially equal tax rates. In
  other words, the state provides additional
  funding to school districts with low property
  values to equalize the revenue per WADA available
  at a given tax rate.

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Chapter 41 Wealth Sharing

• Districts with wealth above 300,000 per WADA in
  2002 and 305,000 per WADA in 2003 are subject to
  wealth reduction provisions of Chapter 41 of the
  Texas Education Code.

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Options for Wealth Equalization(Chapter 41)

• To equalize district ability to generate revenue,
  the FSP requires Chapter 41 districts to reduce
  their wealth by choosing one of the five
  wealth-sharing options. The options are as
  follows and are laid out in Chapter 41 of the TEC.

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Option 1

• Consolidation by Agreement The school boards of
  two or more districts may agree to consolidate in
  order to create a new district with wealth per
  pupil of less than the statutory wealth threshold.

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Option 2

• Detachment and Annexation by Agreement The
  school boards of two or more districts may agree
  to detach property from one school district and
  attach it to one or more school districts

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Option 3

• Purchase of Attendance Credits A district with
  wealth per WADA above the statutory threshold may
  purchase attendance credits from the state. One
  attendance credit is equal to one student in
  WADA. In effect, the district sends a check to
  the state.

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Option 4

• Contract for Education of Non-resident Students
  A district with wealth above the equalized level
  may enter into an agreement with a qualifying
  district to pay the cost of educating students in
  that district.

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Option 5

• Tax Base Consolidation The school boards if two
  or more districts may agree to conduct an
  election to create a consolidated taxing district
  for the Maintenance and Operations of the two
  school districts.

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Chapter 41

• Option 3, the purchase of attendance credits and
  Option 4, education of non-resident students are
  the options chosen by the 101 school districts
  that are identified as Chapter 41 districts.
  Some people refer to this as the Robin Hood
  Plan.

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Facilities Funding

• Since 1997-1998, districts have been able to
  receive funds from a guaranteed yield program for
  facilities.

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Contd

• Funds may be used either for construction or
  lease-purchase of new instructional facilities
  under the Instructional Facilities Allotment
  (IFA).

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Contd

• For the 2002-2003 biennium, 1.09 billion has
  been appropriated for this program.

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School Property Taxes

• Districts must collect maintenance taxes at an M
  O tax rate of 0.86 per 100 valuation in Tier
  1.

31
School Property Taxes

• Districts may levy M O taxes up to an
  additional 0.64 (For a tax rate not exceeding
  1.50 for M O) in Tier 2.

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School Property Taxes

• School districts may also adopt a debt service
  fund tax rate (the I S rate). These taxes must
  be used only to pay for debt service.

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Lagged Tax Rates

• A confusing aspect of tax rates used in FSP
  calculations of state aid is the use of tax rates
  from a prior year (also called lagged tax
  rates).

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Lagged Tax Rates

• FSP calculations for each state fiscal biennium
  are based on the district tax rate in the second
  year of the preceding biennium.

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Property Tax Rollback

• Rollback is a taxpayer relief mechanism that
  permits local voters within each school district
  to overrule the decision of the school board in
  setting the tax rate.

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Property Tax Rollback

• If the board adopts a tax rate that exceeds the
  rollback tax rate, the district must call an
  election so that voters can determine whether or
  not to ratify the adopted tax rate.