Action Requested

May 11, 2005

TO THE ADMINISTRATOR ADDRESSED:

Subject: Online Application for Funding for the New Instructional Facilities Allotment (NIFA)

The Texas Education Code (TEC) §42.158, enacted by Senate Bill 4 of the 76th Texas Legislature, 1999, created the New Instructional Facilities Allotment (NIFA) for public school districts. The 79th Legislature is currently in session and an appropriations bill has not yet been passed. In anticipation of the NIFA being funded, we have made the online application for funding available. We will post information on our website as soon as the Legislature takes action on the funding of NIFA for the next biennium. In the meantime, we recommend any district eligible for funding submit an application to avoid missing important deadlines. (The complete statutory reference for the NIFA is shown in Attachment I and the commissioner’s rules for the NIFA are shown in Attachment II.) Some important facts and common misconceptions about NIFA are addressed below:

• The NIFA and the IFA (Instructional Facilities Allotment) are NOT the same; but, are two different programs with different eligibility requirements, application processes, and application deadlines.

• NIFA is essentially a reimbursement program for startup costs of new campuses. Initial (first year) applications must be submitted during the summer prior to the expected opening of the new building. Follow-up (second-year) applications must be submitted during the summer after the first year of occupation. A special case of one year funding is available for facilities that were occupied for the first time in 2004-2005, but did not receive NIFA funds because of the district’s failure to apply for funding prior to opening the campus. Any such eligible campus will receive funds for one year of operation only.

• NIFA funding is based on the average daily attendance (ADA) earned on a new campus. Since many new campuses open during the middle of a year, funding for these campuses is prorated for the first year. For all eligible campuses, the second year funds any growth in ADA between the first year and the second. Second year funding is not automatic; all eligible districts must reapply for second year funds.

• The NIFA is part of the cost of the first tier of the Foundation School Program (FSP) but is not counted in the calculation of weighted average daily attendance (WADA) for the second tier. Districts not eligible for Tier I funding are eligible for NIFA.

Eligibility Criteria: NIFA is available to all public school districts that construct new buildings. Open enrollment charter schools are not eligible. Districts that must take action under TEC, Chapter 41 to reduce wealth per student to the equalized wealth level and school districts that do not otherwise qualify for state aid are eligible to receive the NIFA. Definitions and eligibility criteria for the NIFA are described below.

To be eligible for the NIFA:
• The facility must be a newly constructed instructional site (campus) used for teaching the curriculum required by TEC, Chapter 28.
• The new facility must have its own campus ID number as designated by the Texas Education Agency.
• The new facility must have its own principal or be eligible to receive an accountability rating through standard analysis as described in the most current Accountability Manual.
• The new facility must have its own assigned instructional staff and instructional program distinct from other facilities.
• The new facility must have its own record of expenditures that is not a sub-set of another school budget and attendance data that can be reported for those students assigned to its campus.
• The new facility must be physically separate from other existing school structures. However, a covered walkway may connect the new facility to another building.

Funds available:
• To qualify for initial (first year) funding, the campus will be occupied for the first time in the 2005-06 school year.
• To qualify for follow-up (second year) funding, the campus must have been occupied for the first time in 2004-05 and did receive NIFA funds for that (prior) year.
• To qualify for a special case of one-year funding, the instructional facility was occupied for the first time in 2004-05 but did not receive NIFA funds for this first year of operation.

Prohibitions and restrictions:
• It cannot be a program for students enrolled in another public school (summer school, evening school, etc.).
• It cannot be a renovated building. The building and the slab must be new from the ground up. The only exception would be a campus with newly constructed instructional facilities and renovated or retained non-instructional structures, such as a cafeteria or library.
• It cannot be an expansion of existing facilities.
• It cannot be a portable or temporary structure.

Allotment Amount: For an initial (first year) or special one year application, a school district is entitled to an allotment of $250 per ADA earned by students in attendance on an eligible new campus. Funding is prorated for a facility that opens after the beginning of the school year. For follow up (second year) applications, a campus is entitled to an allotment of $250 for each additional student in ADA. The number of additional students is the difference between the number of students in ADA in the second year at that facility and the number of students in ADA in the first year.

Allotment Proration: Funding for NIFA is limited by appropriation. If the total amount of allotments to which all districts are entitled for a school year exceeds the amount appropriated, the commissioner will reduce each district’s allotment so that the total amount to be distributed equals the total amount available. Reductions to allotments are made by applying the same number of cents of tax rate to each district’s taxable value of property. For each district, the taxable value of property is the property value certified by the Comptroller for the preceding school year as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, a reduced property value that reflects either a rapid decline pursuant to TEC §42.2521 or a grade-level adjustment pursuant to TEC §42.106.

Application Process: The NIFA application is available online. Applications must be entered, saved and sent through the online system. Applications must be sent electronically by July 15, 2005. Neither late applications nor paper applications will be accepted. Pictures and legal documentation must be postmarked no later than July 15, 2005, and must be sent by certified mail to the following address:

Texas Education Agency
State Funding Division
Attention: NIFA
1701 North Congress Avenue
Austin, TX 78701-1494

Foundation School Program (“FSP”): The online Foundation School Program (“FSP”) system requires a TEASE logon and assigned password. The FSP system will not process an application until the applicant agrees that certain required conditions apply to the newly constructed site. Moreover, the system assumes that the applicant is the superintendent or the superintendent’s authorized designee and is fully familiar with the pertinent facts. Please be cautious about who is granted online access since the information provided in the NIFA application is subject to audit. (The FSP System can be accessed from the TEA School Finance Website at: http://www.tea.state.tx.us/school.finance/fsp.html)

Upon FSP system access, the user should:

1. Choose “NIFA” from the menu options.
2. Change the year to 2006.
3. Review the announcements.
4. Select NIFA Application from the menu on the left.
5. Select the button for the appropriate NIFA application type.
6. Complete the application, save, and send the application.

Selecting the appropriate application type:

• An initial application applies to a facility not occupied prior to the 2005-06 school year and which has never before received NIFA funds. An initial application includes a verification of eligibility, a brief description and photograph of the newly-built instructional facility, and a copy of a legal document that clearly describes the nature and dates of construction. The documentation may be a copy of a contract, certification of project compliance, or certification of substantial completion.

• A one-year application is for a campus that was occupied for the first time in the 2004-05 school year, but did not receive funding because of the district’s failure to apply for funding prior to opening the campus. A one-year application includes a verification of eligibility, a brief description and photograph of the newly-built instructional facility, and a copy of a legal document that clearly describes the nature and dates of construction. The documentation may be a copy of a contract, certification of project compliance, or certification of substantial completion.

• A follow-up application is for a facility that was occupied for the first time in 2004-05 school year and received NIFA funding for that year. Funding for the second year is based on the number of students in ADA as compared to the first year.

Preliminary Payments: Since many NIFA applications are for a second year (follow-up), and the amount of funding to which districts are entitled depends in part on the ADA funded in the prior year, it is necessary to finalize allocations for the prior year before applications can be processed for the current year. Since the end of year 2004-05 ADA data from the Public Education Information Management System (PEIMS) are not available until October, preliminary NIFA award amounts will be announced in November or earlier if possible.

For all districts receiving the NIFA, a settle up amount is determined by the commissioner when final counts of ADA as reported through PEIMS are available for each campus. The amount of funds to be distributed for NIFA to a school district is in addition to any other state aid entitlements.

A separate NIFA payment will not be sent. Rather, preliminary payments will be incorporated into allocations for the Foundation School Program in accordance with the district’s payment class. NIFA payments are reflected on the Summary of Finance reports. For districts that are not subject to the requirements of TEC, Chapter 41 and do not receive payments from the Foundation School Fund, NIFA distributions will correspond to the schedule for payment class 3. For districts that are required to reduce wealth pursuant to TEC, Chapter 41, any NIFA funds for which the district is eligible are applied as credits to the amounts owed to equalize wealth.

Questions: If you have any questions related to this application or the NIFA, please contact Cassie Huggins in the State Funding Division at (512) 463-9238.

Sincerely,

Robert N. Jocius, Senior Director
State Funding Division

Attachment 1 - Complete Statutory Reference for the NIFA

Attachment 2 - Commissioner’s Rules for the NIFA

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