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TEA Correspondence

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

August 10, 2009

Subject: 2009–10 Preliminary Summary of Finances


A preliminary Summary of Finances (SOF) for the 2009–10 school year has been posted to the School Finance website of the Texas Education Agency (TEA) at This letter explains the changes to funding formulas authorized with the passage of House Bill 3646 and provides information about the SOF report.

House Bill 3646 (HB 3646)– This bill authorized a number of significant changes to the formulas used to deliver Foundation School Program (FSP) funding. Changes were made to the basic allotment, guaranteed yield, and equalized wealth levels. Most hold harmless provisions were repealed, and the calculation of additional state aid for tax reduction (ASATR) was modified. Following is a summary of changes to the formulas.

  • Basic AllotmentThe basic allotment is set at $4,765 for 2009–10. The local fund assignment (LFA) is now calculated with a school district’s compressed tax rate (2005 adopted maintenance and operations [M&O] rate multiplied by 0.6667) rather than $0.86. The basic allotment is prorated for districts with an LFA below $1.00.

  • Tier II– The first level of Tier II was collapsed into the basic allotment so that the guaranteed yield for enrichment is paid on the tax effort that exceeds the compressed tax rate. The guaranteed yield for the first six cents of tax effort will be equalized to the same yield generated by the Austin Independent School District. The pennies of tax effort that exceed the compressed tax rate plus six cents continue to generate a yield of $31.95 per student in weighted average daily attendance (WADA).

  • Revenue Targets– New revenue targets are based on the funding a school district would have received in 2009–10 had HB 3646 not passed. The bill guarantees a school district will receive an increase in revenue of at least $120 per WADA more than the district would have received under old law.  No district may receive an increase in revenue greater than $350 per WADA.

  • High School Allotment – The high school allotment was moved to Chapter 42, Subchapter C, where the other program authorizations are found. The fund code for this allotment has changed from 428 to 199. The new program intent code is 31.

  • Teacher Salary Allotment– The authorization for the teacher salary allotment was repealed, but the funding received by districts for this allotment becomes part of the new revenue target beginning with the 2009–10 school year.

  • Texas Virtual School Network Allotment (TxVSN)A new allotment for virtual school attendance was added. School districts that offer approved TxVSN courses may receive an allotment of $400 per course completed by a student. The school district in which the student resides is eligible to receive $80 for each successful course completion.

  • Military Dependent Allotment – A new allotment for students who are dependents of a member of the military service was authorized. Districts with students whose parents are on active duty and students whose families have been relocated because of an action related to the Defense Base Closure and Realignment Act of 1990 are eligible to receive an allotment of $650 per eligible student in average daily attendance (ADA). Funding for this allotment is contingent on a direct appropriation or the identification of an FSP surplus. This allotment did not receive a direct appropriation this biennium. The commissioner will determine whether there is an FSP surplus during the last half of the 2009–10 school year.

  • Existing Debt Allotment (EDA) – The eligibility date for the EDA program was modified to accommodate a permanent roll-forward provision. This change ensures that bonds issued and paid on during a biennium will become EDA eligible in the following biennium. Access to EDA funding will be determined by the debt service taxes collected in the final year of the preceding biennium. For the 2009–10 and 2010–11 school years, bonds that have been sold and for which the first payment is made no later than August 31, 2009, will be EDA eligible. Actual EDA funding will be based on the district’s debt service collections in 2008–09.

  • Penalty for Tax Rate Below Compressed RateThe subsection that previously authorized an explicit penalty for levying a tax rate below the compressed rate was repealed. Please note that the revised basic allotment provides for proportional reduction of Tier I funding for compressed tax rates that fall below $1.00.

  • Hold Harmless Provisions RepealedA number of hold harmless provisions were repealed.

      • Hold harmless additional state aid ($15K homestead exemption)
      • Salary transition
      • Additional aid for school employee benefits 

    Other Provisions Repealed

      • Per pupil allotment – provided $110 per WADA
      • Educator pay increase (Rider 86) – provided $23.63 per WADA
      • Note: The funding provided by the repealed provisions becomes part of districts’ new revenue targets.

  • American Recovery and Reinvestment Act of 2009 (ARRA)Funds available to the state through the ARRA will be used to fund two components of the formula funding received by school districts during the 2009–10 and 2010–11 school years. First, the increases in FSP formula funding generated by the changes in the formula yields authorized in HB 3646 will be financed by the State Fiscal Stabilization Funds (SFSF) available through the ARRA. SFSF will also be used to fund a portion of districts’ per capita allotments. The SOF identifies the dollar amounts that will be funded with the SFSF. Districts will be required to make an application for these funds through the TEA eGrants system. Additional information about the application process and federal requirements regarding the use of these funds is available at the following web page:

  • Pay Increase – HB 3646 provides for a pay increase for employees who are subject to the minimum salary schedule (MSS employees). These employees include classroom teachers, full-time nurses, full-time counselors, and full-time librarians. Full-time speech pathologists have been added to the definition of MSS employees. The pay increase must be the greater of 1) $80 per month, or $800 per year for the standard ten-month contract; or 2) the amount that can be delivered using $60 per WADA, considering the increased contributions for social security and retirement. In addition to the mandated pay increase, a district is required to provide any increases to which an employee would have been entitled under the district’s 2008–09 salary schedule.

A summary of relevant information about the data used in the 2009–10 SOF report, including planned updates, is provided in the following paragraphs.

  • LPE v. DPE – The SOF report contains two columns. One is labeled "LPE," which stands for legislative planning estimate. This column includes the property values and student counts that the legislature used during the appropriations process, and these figures form the basis of the FSP payments your school district receives throughout the state fiscal year. The other column in the SOF report is labeled "DPE," which stands for district planning estimate. This column is updated periodically throughout the fiscal year as data are reported to the 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 the TEA will determine final earnings for the fiscal year. There will be a “settle-up” process to correct any over- or underpayments that occurred during the fiscal year. The TEA urges your school district to monitor the differences between its FSP payments and its 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 State Funding Worksheets web page at

  • Student Counts– All student counts (ADA, full-time equivalents [FTEs], and enrollment counts) shown in the LPE and DPE columns for the FSP estimates are based on the March 2009 student projections that were submitted and approved during the appropriations process. Please note that payments distributed to your district during the year are based on the estimated student counts shown in the LPE column. The TEA adjusts the student counts in the DPE column when the 2009 fall Public Education Information Management System (PEIMS) enrollment data are available in March 2010 and again in September 2010. The TEA will use the September 2010 student counts in the DPE column to recalculate funding for year-end settle-up. Your school district's budget should be based on the student enrollment and program participation that are expected to actually occur during the year. Your district should carefully monitor its state aid payments during the year, which may differ from actual earnings at year end, creating an overpayment or underpayment condition.

  • 2008 State Certified Property Value – As provided by the Texas Education Code (TEC), §42.253(b), (Rider 3 of the 2009 General Appropriations Act), the state certified property value being used in the LPE column of this SOF is the district’s 2008 property value assigned by the comptroller’s Property Tax Assistance Division (PTAD) as of July 31, 2009. This value will be updated in the DPE column when final assigned values are received from the PTAD.

  • Estimated M&O Tax Collections– To estimate the M&O tax collection amounts that appear in both the LPE and DPE columns, the TEA used estimated property values and tax rates. The 2009 local property values were estimated by increasing the local 2008 taxable values by 2.98 percent and adjusted for district average collection rates. The 2008 adopted tax rates were used to estimate tax collections. The tax collection estimates will be updated in the DPE column to reflect the budgeted tax collections reported to the PEIMS in March 2010. The LPE column will not be updated until the year-end settle-up occurs for the 2009–10 school year. As a result, payments to school districts will not reflect the update in tax collections. This represents a change in the schedule for updating school district entitlements from what has occurred in the past.

  • Instructional Facilities Allotment (IFA) and Estimated M&O Tax Collections – If your district was awarded an IFA for a lease-purchase agreement, the district’s current share of the IFA allotment has not yet been subtracted from the estimate of M&O tax collections. In this release, the 2008–09 amounts have been used as an estimate.

  • Estimated I&S Tax Collections – For this preliminary SOF, the 2009–10 interest and sinking fund (I&S) tax collections used to calculate facilities state aid are estimated by increasing the local 2008 taxable values by 2.98 percent and adjusted for district average collection rates. The 2008–09 I&S tax rates will be used until better information is available. These estimated collections will be updated in the DPE column in March 2010 when budgeted collections submitted to the PEIMS become available.

  • EDA and IFA – If your district qualifies for the EDA or IFA, the preliminary earned allotment appears on the first page of the SOF under the “State Aid by Funding Source” heading. IFA payment details will be made available later this fall. The TEA 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 fall. Program information can be found on the IFA website at and the EDA website at

  • New Instructional Facility Allotment (NIFA) – The preliminary NIFA awards for 2009–10 are not reflected on this preliminary SOF. This preliminary SOF reflects the NIFA amounts received by districts in 2008–09. These amounts will be updated after the 2009–10 NIFA awards are determined.

  • Transportation Allotment – The transportation allotment is based on your district’s 2008–09 transportation allotment as calculated from data submitted on the 2008–09 Route Services Report. This allotment will be updated in March 2010.

  • Per Capita Rate– A rate of $262 multiplied by the prior-year ADA is used to estimate the per capita allotment. This rate is subject to change.

  • Technology AllotmentThe technology allotment is based on a rate of $29.43 multiplied by your district’s 2009–10 estimated refined ADA, and accounted for in the special revenue fund 11. This rate is subject to change.

  • 2009–10 State Aid Template – A link to the 2009–10 SOF template developed by Education Service Center XIII is available on the School Finance State Funding Worksheets web page at

As always, the TEA strongly advises your school district to project state aid based on the best available information. Your district should complete the 2009–10 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 State Funding Division. If you have any questions concerning these reports, please contact a state funding consultant at (512) 463-9238.


Helen Daniels
Director, State Funding Division


For general questions about the SOF:             
Leo Lopez – Chapter 42                                    
Al Johnson – Chapter 42                                   
Kim Rife – State compensatory education         
Victoria Drewy – Chapter 41


For questions about facilities funding:
Lawrence Crockett – IFA
Sam Lester – EDA
Cynthia Hegemier-Boggs – IFA, NIFA
Gary Marek – IFA
Cassie Huggins – NIFA, IFA


For questions about transportation:
Randy Boatman
Danny Sanchez


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