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TEA Correspondence

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

August 16, 2005

TO THE ADMINISTRATOR ADDRESSED:

Subject: 2005-2006 Preliminary Summary of Finances (BASED ON THE CURRENT LAW)

A preliminary Summary of Finances (SOF) and other related reports for the 2005-2006 school year have been posted to the TEA school finance web site, and include important information noted below:

  • 2004 CPTD Value – The property value being used in the Legislative Planning Estimate (LPE) and District Planning Estimate (DPE) columns of the SOF is the Comptroller's Property Tax Division (CPTD) value certified to the Commissioner of Education for tax year 2004 (T2). At this time, it does not appear that sufficient appropriation authority exists to adopt T4 values for state aid purposes.
  • Student Counts – Al l student counts (ADA, FTEs, and enrollment counts) shown in the LPE and DPE columns of the SOF are initially based on the March 2005 student projections adopted by the Legislative Budget Board for 2005-06 . 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 2005 Fall PEIMS enrollment data are av ailable in March 2006 and again in August 2006. The August 2006 student counts in the DPE column will be used to recalculate funding for year-end settle-up, which is paid in September 2006.

School district budgets should be based on the student enrollment and program participation that is expected to actually occur during the year. Districts and open-enrollment charter schools should carefully monitor their state aid payments during the year, which may differ from actual operations at year end, creating an overpayment or underpayment condition that must be recorded properly in the accounting records of the districts and charter schools.

  • Tax Collections – For Tier II purposes, the M&O tax collection amount on both the LPE and DPE columns has been set to the tax collection limit for DTR (found on page 4 of the SOF). Both LPE and DPE limits use actual 2003 CPTD and data from the 2004-05 Budgeted Tax Collections from PEIMS to compute the DTR for Tier 2 purposes. Statute and the appropriations act require that cash be distributed on this tax rate, although the district's actual limit for earning Tier II funding may be different. A report entitled Worksheet for Calculating of Tax Collection Limit for DTR is also available on our web page.
  • “Hold Harmless” - Additional State Aid – If the district qualifies for “hold harmless” additional state aid, the amount is shown on page 4 of the SOF under the Additional Aid category. Districts are held harmless if their loss in local revenue resulting from the additional $10,000 homestead exemption is not entirely offset by additional state aid. In such cases, the difference is made up with additional “hold harmless” state aid. A report is available on our web page showing how the “hold harmless” amount, if any, was derived.
  • Salary Transition Entitlement – If the district qualifies for salary transition, the amount is show on page 4 of the SOF under the “Additional Aid” category. Districts qualify for salary transition entitlement funds if the district's cost to maintain the $3,000 pay raise authorized in 1999 is not entirely offset by 80 percent of the additional state aid generated by the funding element increases made in 1999. A report is available on our web site showing how the “hold harmless” amount, if any, was derived. The number of FTEs for teachers and full-time librarians, nurses, and counselors used in this calculation will be updated when the PEIMS Fall staff data become available.
  • 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 2004-05 settle up purposes. The EDA allotment shown does not yet include bonds issued on or after September 1, 2003 , but does include the estimated FY 05-06 payments on bonds paid on as of August 31, 2003. 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. NOTE: State aid payments on IFA or EDA debt that has been refunded will be withheld until all updates have been received. 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.
  • Transportation Allocation – The allocation is based on the district's 2003-04 transportation allotment as calculated from data submitted on the 2003-04 Route Services Report.
  • Projected Settle-up - The preliminary projected 2004-05 settle-up amount is indicated on page 5 of the SOF in the DPE column. This amount is an estimate only, and will be adjusted when PEIMS data for the year-ending 2004-05 is updated. If the district is currently projected to be overpaid for the 2004-05 school year, that projected overpayment (signified by a “credit” balance) is shown as the Adjustments-to-Date amount. If the district is currently projected to be underpaid for the 2004-05 school year, the Adjustments-to-Date amount will be zero, since the underpayment will be paid in a lump sum.

For a district that has a credit balance because of WADA sold, this settle-up amount will be adjusted after the district remits the refund to the state. For 2004-05, this refund is due on or before August 16, 2005 . Please keep in mind that the projected settle-up may change as new data become available.

  • Others – This SOF does not include the New Instructional Facilities Allotment (NIFA) funds. The SOF will be updated when these allocations are determined. Also, the SOF does not include any amounts that would be paid for the Hold Harmless for State Aid Gains related to the public school employee health insurance requirements. Beginning with 2005-06, payments for the Pre-K Expansion Grant will no longer be issued through the Summary of Finances. School districts and open-enrollment charter schools will be required to use TEA's online Expenditure Reporting System (ER) to record expenditures and request payment. The Pre-K Expansion Grant is administered by the Division of Formula Funding. Contact Karyn Gukeisen at 512-463-8525 for more information.
  • 2005-2006 State Aid Template and Rollback and Notice Worksheet – The 2005-06 SOF Template, 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 also available through our web page, (www.tea.state.tx.us/school.finance).
  • Additional Aid from HB 1
    Rider 69 of the General Appropriations Act authorized by the 79 th Texas Legislature, First Called Session, provides for the maintenance of revenue created by Rider 82 (c) of the General Appropriations Act, 2003, which delivered $110 per weighted student during the 2004-05 biennium.
    • For the “budget balanced” districts , the additional aid from HB 1 ($110 per WADA) is reduced by the gain in the increase in the Available School Fund.
    • For the Hold Harmless Chapter 41 districts , the additional aid from HB 1 is reduced by the net gain from the Available School Fund and the increase in the equalized wealth level amount.
    • For those districts that do not receive Tier I state aid from the foundation School Fund, a report entitled Worksheet for Determining the Reduction in Additional Aid from HB 1 is also posted in the TEA website attached to the district's Summary of Finances, showing how the “reduction” amount, if any, was derived.
  • Per Capita Rate – A rate of $242 multiplied by the prior-year ADA is used to estimate the per capita allotment. This estimated rate reflects anticipated action to provide additional appropriations for textbooks in fiscal 2006. Depending on the terms of either new legislation or a budget execution order, the rate is still subject to change.
  • Technology Allotment
    The technology allotment is based on a rate of $27.42 multiplied by the district's 2005-06 Refined ADA, and accounted for in the Special Revenue Fund 411. The rate is based on the amount appropriated ($115 million for 2005-06) divided by the projected statewide average daily attendance.

As always, school districts are strongly advised to project state aid based on the best av ailable information. Each district should complete the 2005-2006 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 State Funding . If you h av e any questions concerning these reports, please contact State Funding at (512) 463-9238.

Sincerely,

Robert N. Jocius, Senior Director
Division of State Funding

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