A Microsoft Word version of this letter is available for download and PRINTING.

April 3, 2008

SUBJECT: Expenditure Targets

TO THE ADMINISTRATOR ADDRESSED:

House Bill 1, Section 2.09, 79th Texas Legislature, Third Called Session, added Texas Education Code, § 44.011, directing the Texas Education Agency (TEA) to establish and publish proposed expenditure targets for each school district annually. The agency will publish projected expenditure target reports for the 2008–2009 school year and related tools to its website on April 3, 2008. School districts that will not meet a proposed target will be required to adopt and publish a board resolution with an explanation and a justification for not meeting the defined target. One of the tools provided on the TEA website is a sample board resolution.

How the TEA Establishes Expenditure Targets
The TEA establishes expenditure targets by spending category and school district type. The spending categories are:

• instruction
• leadership
• support services—student-based
• support services—non-student-based
• administrative

The school district types are defined as:

• major urban
• major suburban
• other central city
• other central city suburban
• independent town
• nonmetro fast growing
• nonmetro stable
• rural

Please see the attachment to this email for definitions for each of the spending categories and school district types.

Executive Order RP47 (http://www.governor.state.tx.us/divisions/press/exorders/rp47) requires school districts to spend 65% of school district funds on instruction expenditures, as that term is defined by the National Center for Education Statistics. The 65% instruction expenditure target applies to all school district types and includes all funds. The TEA has determined expenditure targets for all other spending categories based on all fund expenditures for the two most recent years of actual Public Education Information Management System data available per spending category and district type.

Expenditure Target Reports
Reports will use color coding to show how closely projected district expenditures match target expenditures.

• Green will indicate that a projected expenditure is within 25% above or below the expenditure target percentage.
• Yellow will indicate that a projected expenditure is between 25% and 50% above or below the expenditure target percentage.
• Red will indicate that a projected expenditure is over 50% above or below the expenditure target percentage.

(Note that for the instruction expenditure target, which has been set at a designated minimum percentage by executive order, a district will either meet or not meet the target.)

Instruction Expenditure Target

Target Not Met

Meets Target

(Target) 65%

100%

Example of Other Expenditure Target

Target Not Met

Caution

Meets Target

Meets Target

Caution

Target not met

-50%

-25%

(Target)

+25%

+50%

If Your District Does Not Meet an Expenditure Target
If your school district does not meet an established target, it must adopt and publish a board resolution with a justification of why the target has not been met. Your school district is not required to submit the resulting budget or resolution to the TEA but should keep these documents as part of its financial records.

For additional information and tools, please visit the expenditure targets page of the TEA website at http://www.tea.state.tx.us/school.finance/forecasting/expend_targets/exptargets.html, or contact David Cohen by phone at (512) 463-9238 or by email at david.cohen@tea.state.tx.us.
Sincerely,

Lisa Dawn-Fisher, Ph.D.
Deputy Associate Commissioner
School Finance