A Microsoft Word version of this letter is available for download and PRINTING.
August 28, 2007
TO THE ADMINISTRATOR ADDRESSED:
Subject: 2007-2008 Preliminary Summary of Finances
A preliminary Summary of Finances (SOF) and other related reports for the 2007-2008 school year have been posted to the School Finance web site of the Texas Education Agency (TEA) at www.tea.state.tx.us/school.finance/. A summary of relevant information about the data used in this report, including planned updates, is provided below:
LPE v. DPE – The SOF report contains two columns. One is labeled LPE, which represents the Legislative Planning Estimate. This column includes the property values and student counts that were used by the legislature during the appropriations process, and these figures form the basis of the Foundation School Program (FSP) payments received by the school district. The other column on the SOF report is labeled DPE, which represents the District Planning Estimate. This column is updated periodically throughout the fiscal year as data are reported to TEA. This column is intended to provide school districts with a more accurate indication of their actual FSP earnings for the fiscal year. At the close of the fiscal year, the DPE column will be updated to reflect actual data and final earnings for the fiscal year will be determined. There will be a “settle-up” process to correct any over- or under-payments that occurred during the fiscal year. School districts are urged to monitor the differences between their FSP payments and their actual earnings by using the state funding template available from the Region XIII Education Service Center. A link to this template is provided on the School Finance website.
Student Counts – All student counts (ADA, FTEs, and enrollment counts) shown in the LPE and DPE columns for the Foundation School Program estimates are based on the March 2007 student projections that were submitted and approved during the appropriation process. Please note that payments distributed to districts during the year are based on the estimated student counts shown in the LPE column. Student counts in the DPE column are adjusted by the Agency when the 2008 Fall PEIMS enrollment data are available in March 2008 and again in August 2008. The August 2008 student counts in the DPE column will be used to recalculate funding for year-end settle-up. School district budgets should be based on the student enrollment and program participation that is expected to actually occur during the year. Districts should carefully monitor their state aid payments during the year, which may differ from actual earnings at year end, creating an overpayment or underpayment condition
2006 CPTD Value – The property value being used is the Comptroller’s Property Tax Division (CPTD) 2006 value certified to the Commissioner of Education, on July 1, 2007. The T2 value from this report is used for state funding calculations. This value will be updated in both the LPE and DPE columns later in the year when final values are certified by the comptroller. We currently expect final certified values to be available in early November.
Estimated M&O Tax Collections– In order to estimate the maintenance and operations (M&O) tax collection amounts that appear on both the LPE and DPE columns, estimated property values and tax rates were used. The 2007 local property values were estimated by increasing the local 2006 taxable values by 7.09 percent. The 2007 tax rate was estimated by multiplying the actual 2005 tax rate by the state compression rate, which is 66.67 percent for the 2007-08 school year. If the 2006 tax rate adopted by the district included pennies of tax effort above the 2006 compressed tax rate, those pennies are added to the 2007 estimated tax rate. This estimated rate is multiplied by the estimated local 2007 property value, and then multiplied by the average percentage collection for 2004, 2005, and 2006 years to produce estimated M&O tax collections. Districts will be asked to report their local values (including the local frozen levy and local tax increment financing amounts) and their 2007 proposed tax rates on the Tax and Student Data screen in the web-based FSP system during the fall. This information will be used to update both the LPE and DPE columns on the SOF in November 2007.
If a district was awarded an Instructional Facilities Allotment (IFA) for a lease-purchase agreement, the district’s share of the IFA allotment has NOT YET been subtracted from the M&O tax collections estimation.
Basic Allotment – For purposes of distributing the FSP Tier I funds in accordance with Texas Education Code (TEC) §42.101 and TEC §42.302(a-1)(1) , the basic allotment for 2007-08 is $3,135.
Guaranteed Yield (GL) – For purposes of distributing the FSP Tier II funds in accordance with TEC §42.102(a)(2) and TEC §42.302(a-1)(2), the GL for level I of Tier II for 2007-08 is $36.45. The GL for level II of Tier II is $46.94, and the GL for level III is $31.95.
Estimated I&S Tax Collections – For this preliminary SOF, the 2006-07 I&S tax collections used to calculate facilities state aid are those reported by the school district on the 2007 Tax Collection Certification that was due in July 2007. The 2006 I&S rate is used to estimate current year I&S tax rates and collections. Districts will report their actual I&S rates and estimated collections on the Tax and Student Data screen this fall, and this information will be updated on the SOF in November 2007.
Existing Debt Allotment (EDA) and Instructional Facilities Allotment (IFA) – If the district qualifies for EDA or IFA, the preliminary earned allotment appears on the first page of the SOF under the “Additional Aid” heading. The IFA allotment has not yet been adjusted for 2006-07 settle-up purposes. This adjustment will be made before 2007-08 IFA payments are issued. The agency is in the process of updating the information on EDA eligible debt from the State Information Depository, and the amount of the EDA allocation may change as a result of that update later this summer. Payment reports and instructions for updating debt information can be found on the IFA website http://www.tea.state.tx.us/school.finance/facilities/ifa.html and the EDA website http://www.tea.state.tx.us/school.finance/facilities/eda.html.
New Instructional Facilities Allotment (NIFA) – The NIFA amount for 2007-08 is shown as $0. The SOF will be updated when 2007-08 NIFA allocations are determined. The amount will be adjusted again, following the settle-up from 2006-07. This adjustment is scheduled for November 2007.
Transportation Allotment – The transportation allotment is based on the district’s 2005-2006 transportation allotment as calculated from data submitted on the 2005-2006 Route Services Report. This line item will be updated when the 2006‑07 near-final allotment amounts are determined next month.
Per Capita Rate – A rate of $290 multiplied by the prior-year ADA is used to estimate the per capita allotment. This rate is subject to change.
Technology Allotment – The technology allotment is based on a rate of $29.42 multiplied by the district’s 2007‑08 Estimated Refined ADA, and accounted for in the Special Revenue Fund 411. This rate is subject to change.
Per Pupil Allotment ($110 x WADA) – In accordance with Rider 82 (c) of the General Appropriations Act, districts will receive an allotment in the amount of $110 multiplied by their current year WADA. For districts that do not receive Tier I state aid, including Chapter 41 districts the additional aid from HB1 is reduced by the net gain from the Available School Fund and the increase in the recapture. A report entitled, “Worksheet for Determining the Reduction in Additional Aid from HB 1” is attached to the district’s SOF, showing how the “reduction” amount, if any, was derived.
Property Tax Relief as authorized by House Bill 1, 79th Legislature, Third Called Session (HB 1 (79-3)) – funds for property tax relief first authorized in 2006 are continued for 2007-08. The amount of Additional State Aid for Tax Reduction (ASATR) funds to which a district is entitled is determined by a revenue target per student in weighted average daily attendance (WADA) as prescribed by TEC §42.2516. This target is based upon a comparison of three scenarios:
Continuing hold harmless provisions from previous legislative sessions:
New Salary Transition – If the district qualifies for salary transition, the amount is shown on page 4 of the SOF under the “Additional Aid” category. If the district’s cost of the $3,000 raise authorized in 1999 is not entirely offset with 80 percent of the additional state aid resulting from the funding element increases made in 1999, the difference is made up with salary transition. A report is attached to the SOF showing how the amount for Salary Transition Entitlement, if any, was derived. The number of FTEs for teachers and full-time librarians, nurses, and counselors currently used in this calculation is based on the Fall 2006 report of staff data to the Public Education Information Management System (PEIMS). These data will be updated to reflect the staff reported to FSP Staff Salary Data screen in September 2007.
Additional Aid for School Employee Benefits – The preliminary SOF does not reflect any amounts for Additional Aid for School Employee Benefits that was authorized in 2001. These funds are intended to assist districts in meeting state requirements to provide health insurance benefits to school employees, if increases in the state funding formulas did not produce sufficient revenue for districts to meet this obligation. The data used in this calculation are also based on PEIMS reports and will be updated after the near-final figures for 2006‑07 school year become available next month.
Changes for the 2007-2008 school year:
2007-2008 State Aid Template and Rollback and Notice Worksheet – The 2007-2008 SOF template, which includes the Worksheet to Assist Districts in Calculating Rollback Rate, and Worksheet to Assist Districts in Completing the Notice of Public Meeting to Discuss Budget and Proposed Tax Rate are linked to our web page, (www.tea.state.tx.us/school.finance).
As always, school districts are strongly advised to project state aid based on the best available information. Each district should complete the 2007-2008 state aid template or an equivalent state aid estimation process. The greatest value of the SOF is in explaining the basis of cash distributions to districts. Estimation of state aid earned can be significantly impacted by factors not known to the Division of State Funding. If you have any questions concerning these reports, please contact a state funding consultant at (512) 463-9238.
Liz Caskey, Director
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