2016–2017 Preliminary Summary of Finances

 Word Version

 August 15, 2016


Subject: 2016–2017 Preliminary Summary of Finances

A preliminary Summary of Finances (SOF) report for the 2016–2017 school year is available at the Texas Education Agency (TEA) School District State Aid Reports web page. Generally, formula funding elements for 2016–2017 remain the same as 2015–2016 with the following exceptions:

  • an increase to the guaranteed yield for Tier II Level 1 (from $74.28 to $77.53), and
  • a preliminary per capita rate of $388.00.

The following paragraphs provide information about the format and data we used in the 2016–2017 SOF report, including planned updates.

LPE vs. DPE:

The SOF report contains two columns. The legislative payment estimate is in the column labeled “LPE.” 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 Foundation School Program (FSP) payments that your school district receives throughout the state fiscal year. The district planning estimate is in the column labeled "DPE." This column is updated periodically throughout the fiscal year as data are reported to the TEA. This column is intended to provide your district with a more accurate indication of its actual FSP earnings for the fiscal year.

After the close of the fiscal year, the DPE column will be updated to reflect actual data, and we will determine final earnings for the fiscal year. There will be a “settle-up” process to correct any overpayments or underpayments that occurred during the fiscal year. It is important to monitor the differences between its FSP payments and its actual earnings by using a state aid template.

2016–2017 State Aid Template:

School Districts: Links to the 2016–2017 state aid templates developed by the TEA and the Region XIII Education Service Center are available under “Resources” on the FSP web page.

Charter Schools: A 2016–2017 Estimate of State Aid Template is available on the Charter School State Funding Worksheets web page.

As always, we strongly advise your school district or charter school to project state aid based on the best available information. Your district or charter school should complete a 2016–2017 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 and charter schools. Estimates of state aid earned can be significantly impacted by factors not known to the State Funding Division.

Payment Class:

School Districts: A school district’s schedule of payments is determined by statutory criteria that are based on which payment class the district falls into. There are three payment classes defined in statute that are based on wealth per pupil. Districts in payment class 1 have property wealth per pupil that is less than half the statewide average. Districts in payment class 2 have property wealth per pupil that is between half the statewide average and the statewide average. Districts in payment class 3 have property wealth per pupil that is greater than the statewide average.

Payment classes are calculated annually after the TEA receives state-certified property values from the Comptroller’s Property Tax Assistance Division (PTAD). Your district’s payment class has been updated and can be found at the top of the SOF. In addition, a listing of payment classes for all districts can be found on the TEA website under resources.

Charter Schools: Most charter schools’ schedule of payments is divided into 12 equal monthly payments. House Bill 2251, 84th Texas Legislature, 2015, provided charter schools that have experienced a growth in enrollment of 10% or more with the option of an accelerated FSP payment schedule. Requests for accelerated payment schedules should be submitted through the charter module of the FSP system in TEASE.

Student Counts:

All student counts (ADA, full-time equivalents [FTEs], and enrollment counts) shown in the LPE and DPE columns are based on the March 2015 student projections that were submitted and approved during the appropriations process. Please note that the payments made to your school district during the year are based on the estimated student counts shown in the LPE column. The TEA adjusts student counts in the DPE column when the fall 2016 Public Education Information Management System (PEIMS) enrollment data becomes available in March 2017.

Student counts in the DPE column are adjusted again in September 2017 with final attendance data and are used to recalculate funding for year-end settle-up. Your 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 as they may differ from actual earnings at year end and create an overpayment or underpayment.

Charter Schools: Because TEA has access to changing charter school attendance data during the school year through the FSP System, charter school allocations and the payments based on them are modified throughout the year based on the revised attendance data.

2015 State-Certified Property Value:

The state-certified property value used in the DPE column of this SOF is the final 2015 property value assigned by the Texas Comptroller’s Property Tax Assistance Division (PTAD). For the LPE column the TEA is required to use the greater of the 2015 comptroller value, or the 2014 value increased by 4.56%. This matches the assumptions used in the appropriations process for the current biennium. Final 2015 property values will ultimately be used for all districts in September 2017 for near final settle-up.

2016 tax year estimated M&O tax collections:

School Districts: To estimate the maintenance and operations (M&O) tax collection amounts that appear in both the LPE and DPE columns, the TEA used the current 2015–2016 DPE tax collections increased by 6.18%. This was the growth factor used in the appropriations process for the current biennium. Unless your school district has successfully completed a tax rollback election (TRE) and changed its M&O tax rate, the LPE column will not be updated again until the near final settle-up for the 2016–2017 school year occurs. If your district had a successful TRE, we will adjust your district's LPE M&O tax collections once data from the Texas Comptroller’s self-report are available in late January 2017.

Charter Schools: The estimated M&O tax collections used for school districts have been used to determine the statewide average variables for charter schools.

2016 tax year estimated I&S tax collections:

For this preliminary SOF, the 2016–2017 interest and sinking fund (I&S) tax collections figure is based on your district’s 2015–2016 budgeted I&S collections submitted to the PEIMS. These collections will be updated in fall 2016 with I&S collections submitted through the tax information survey.

Per Capita Rate:

A rate of $388.000 multiplied by the prior-year ADA is used to estimate the per capita allotment. The rate is subject to change during the fiscal year.

Transportation Allotment:

The transportation allotment is based on your school district’s current estimated 2015–2016 transportation allotment.

New Instructional Facilities Allotment (NIFA):

NIFA provides an allotment of $250 per student in average daily attendance (ADA) to eligible school districts and charter schools to pay for operational expenses associated with opening new instructional facilities. To qualify for awards this year, instructional facilities must be occupied for the first time during the 2016–2017 school year, or be in the second year of occupation for the 2016-2017 school year.

Districts are required to submit applications to the FSP system of the Texas Education Agency Secure Environment (TEASE). The deadline to submit applications this year was July 15. Program information can be found on the NIFA web page. The NIFA allotments will be incorporated into the SOF later this fall.

Adjustment to Compressed Tax Rate for Certain School Districts:

House Bill 7 allows the TEA to adjust compressed tax rates (CTRs) in school districts that had a 2005 M&O tax rate that was below $1.50 per $100 in valuation. Qualifying districts must request this adjustment by September 1, 2016 for the adjustment to affect the LPE funding cycle for the 2016–2017 school year. We recommend that districts use state aid templates to evaluate the impact of the adjustment before submitting a request.

More information about requesting an adjustment to the CTR is in a to the administrator addressed letter dated June 8, 2016, posted on our TEA Correspondence web page. An FAQ on this topic is also available on our School District Tax Policy and Reports web page.

Additional Homestead Exemption Hold Harmless:

Senate Bill 1 of the 84th legislature provided for an additional $10,000 homestead exemption. The state aid to compensate districts for this under chapter 42 (TEC) is largely flowing through the formulas based on lower property values. The hold-harmless provision requires the agency to compare state and local revenue based on the 2016 funding formulas using the smaller $15,000 homestead exemption property values to the state and local revenue using the $25,000 homestead exemption property values and 2017 funding elements. The increase in the guarantee level for Tier II, Level 1 has largely eliminated the hold harmless funding.

Additional State Aid for Homestead Exemption (ASAHE) for facilities:

The ASAHE for facilities allotment compensates districts for I&S tax collections lost due to the increase to the state mandated homestead exemption from $15,000 to $25,000. This allotment ensures that districts will have the revenue necessary to make payments on eligible bonds. Preliminary allotments will be calculated in September.

Existing Debt Allotment (EDA) and Instructional Facilities (IFA): If your district qualifies for the EDA or the IFA, the preliminary allotment based on 2015–2016 data appears on line 49 (EDA) or line 50 (IFA) of the SOF. The preliminary SOF does not yet include data regarding district debt for the 2016–2017 school year. These allotments will be updated later this fall with data from the Municipal Advisory Council (MAC) on bond payments for the 2016–2017 school year and payment details will be made available at that time.

Additional information regarding the calculations of allotments can be found on the EDA and IFA web pages. Please be aware that allotments under these programs will be reduced if I&S tax collections plus any remaining balance of un-equalized collections are insufficient to meet districts’ local share requirements under the programs.

IFA Lease Purchase and 2016 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.

If you have any questions about the SOF report, please contact a state funding consultant at (512) 463-9238. Additional contact information appears at the end of this letter.


Al McKenzie

Director of State Funding


State Funding Division Contact Information:

General SOF (Chapter 42) and TEASE (FSP Application) Questions

Nancy Kuhn                (512) 463-6313, nancy.kuhn@tea.state.tx.us

Additional Homestead Exemption Hold Harmless

Al McKenzie                (512) 463-9186, al.mckenzie@tea.state.tx.us

Adjustment to the Compressed Tax Rate for Certain School Districts

            Amy Copeland (512) 463-8732, amy.copeland@tea.state.tx.us

Bond Guarantee Program, NIFA

Cassie Huggins           (512) 463-9232, cassie.huggins@tea.state.tx.us

Chapter 41 Wealth Equalization

            Kim Wall                      (512) 463-4809, kim.wall@tea.state.tx.us

Charter School Funding

            Nora Rainey                (512) 463-7298, nora.rainey@tea.state.tx.us


             Jacqueline Pree         (512) 475-1217, jacqueline.pree@tea.state.tx.us  

Staff Salary Allotment, Tax Information Survey, Attendance Projections

            School Finance           (512) 463-9238, school.finance@tea.state.tx.us

State Compensatory Education, Optional Flexible Year, and Optional Flexible School Day Programs

            Ashley Behnke            (512) 463-4834, ashley.behnke@tea.state.tx.us

Tax Credit for Texas Tax Code, Chapter 313 Value Limitations, Supplemental Tax Increment Fund (TIF) Payments

            Nancy Kuhn                (512) 463-6313, nancy.kuhn@tea.state.tx.us

Transportation Funding

            Danny Sanchez           (512) 463-9266, danny.sanchez@tea.state.tx.us