2012–2013 Preliminary Summary of Finances

Word Document

November 7, 2012

Subject: 2012–2013 Preliminary Summary of Finances


A preliminary Summary of Finances (SOF) for the 2012–2013 school year is available at the Texas Education Agency (TEA) School District State Aid Reports web page. This letter explains the changes to funding formulas authorized with the passage of Senate Bill 1, 82nd Legislature, First Called Session, 2011, (SB 1 [82-1]) and provides information about the SOF report. Bulleted information that applies only to school districts and not to charter schools is marked with an asterisk (*). 

SB 1 (82-1)– This bill authorized several significant changes to the formulas used to deliver Foundation School Program (FSP) funding. These include changes to the regular program allotment and to the calculation of revenue at the compressed tax rate, which is used in determining a district's Additional State Aid for Tax Reduction (ASATR). Following is a summary of changes to the formulas.

  • Regular Program Allotment – SB 1 (82-1) codified the calculation of the regular program allotment, which is equal to a district's number of students in average daily attendance1 multiplied by the adjusted basic allotment and then by what is known as the regular program adjustment factor (RPAF). The RPAF has the effect of reducing the amount of funding school districts receive. The RPAF was set at 0.9239 for the 2011–2012 school year and is set at 0.98 for the 2012–2013 school year—unless a district took advantage of statutory provisions allowing certain districts to request that the percentage reduction in funding be made the same for both years ("smoothed") by having the RPAF changed to 0.95195 for both years, subject to a biennial limit on total funding. 

    1 not including the time students spend each day in special education programs in an instructional arrangement other than mainstream or career and technology education programs 

  • Revenue at the Compressed Tax Rate (RACR) – For 2012–2013, RACR is based on 92.35 percent of the funding a school district would have received in 2009–2010 had House Bill 3646, 81st Legislature, 2009, (HB 3646 [81-R]) not passed. The guaranteed increase in revenue of at least $120 per WADA that districts received in each year of the 2010–2011 biennium is maintained in 2012–2013, but the total amount due to a district under this provision is then reduced by 7.65 percent. The limit requiring that any increase in revenue be no greater than $350 per WADA more than what the district actually received the preceding year was repealed effective with the 2011–2012 school year. Also effective with the 2011–2012 school year, compensation for tax increment financing payments was removed as a component of a school district's RACR and made a direct allocation under the TEC, §42.2514. 
  • Texas Virtual School Network (TxVSN) Allotment – SB 1 repealed the allotment providing for $400 per successfully completed course for a provider district and $80 per successfully completed course for the district in which the student taking the course resides. Instruction provided through TxVSN courses is now considered instructional time for purposes of determining a student's eligibility for average daily attendance (ADA), provided the courses are successfully completed. Provider districts are compensated for the cost of providing TxVSN courses through payment from districts in which students taking the courses reside, as outlined in contractual agreements. 

A summary of relevant information about the data used in the 2012–2013 SOF report, including planned updates, is provided in the following paragraphs.

  • LPE vs. DPE – The SOF report contains two columns. One is labeled "LPE," which stands for legislative payment 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 each 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 districts with a more accurate indication of their 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 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 districts 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 TEA  FSP  web page. Charter Schools: Because charter school attendance is less stable than school district attendance, charter school attendance information is updated in both the LPE and DPE columns of the SOF report throughout the school year based on information submitted through the FSP System, and a charter school's current-year FSP payments are adjusted accordingly throughout the year.  
  • 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 2011 student projections that were submitted and approved during the appropriations process. Please note that payments distributed to each school 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 2012 fall Public Education Information Management System (PEIMS) enrollment data are available in March 2013 and again in September 2013. The TEA will use the September 2013 student counts in the DPE column to recalculate funding for year-end settle-up. Each district's budget should be based on the student enrollment and program participation that are expected to actually occur during the year. Each 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. Charter Schools: Again, because charter school attendance is less stable than school district attendance, charter school attendance information is updated in both the LPE and DPE columns of the SOF report throughout the school year based on information submitted through the FSP System. A charter school's current-year FSP payments are adjusted accordingly throughout the year.
  • *2011 State Certified Property Value – As provided by the Texas Education Code (TEC), §42.253(b), and Rider 3 of the 2011 General Appropriations Act, the state-certified property value being used in the LPE column of this SOF is the greater of (a) the school district's final 2011 property value assigned by the Texas Comptroller's Property Tax Assistance Division (PTAD) in August 2012 or (b) the final 2010 value decreased by 0.97 percent.  
  • Estimated M&O Tax Collections 
    •  School Districts: To estimate the M&O tax collection amounts that appear in both the LPE and DPE columns, the TEA used the greater of (a) the 2011 tax year collections increased by 0.52 percent or (b) the 2010 tax year collections decreased by 0.97 percent and then increased by 0.52 percent. These were the growth factors used in the appropriations process for the current biennium. Unless a school district has successfully completed a tax rollback election (TRE) and changed its M&O tax rate, the LPE column will not be updated until the year-end settle-up for the 2012–2013 school year occurs. As a result, payments to school districts will not reflect updates in tax collections. Districts with successful TREs will have their LPE collections adjusted once data from the Texas Comptroller's PTAD are available in late January 2013.
    • Charter Schools: The estimated M&O tax collections used for school districts have been used to determine the statewide average variables for charter schools. 
  • *Instructional Facilities Allotment (IFA) and Estimated M&O Tax Collections – If a  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. 
  • *Estimated I&S Tax Collections – For this preliminary SOF, the 2012–2013 interest and sinking fund (I&S) tax collections figure is based on the district's 2011–2012 budgeted I&S collections submitted to the PEIMS. These collections will be updated later this fall. 
  • *EDA and IFA – If your district qualifies for the EDA or the IFA, the preliminary earned allotment appears on line 49 (EDA) or line 50 (IFA) of the SOF. IFA payment details will be made available later this fall. Program information can be found on the EDA web page and the IFA web page. 
  • New Instructional Facility Allotment (NIFA) – The TEC, §42.158, provides for NIFA funding to eligible school districts and charter schools to pay for operational expenses associated with opening new instructional facilities, contingent on appropriations for the allotment. However, the 2011 General Appropriations Act did not provide appropriations for NIFA awards. Therefore, no awards will be made. 
  • Transportation Allotment – The transportation allotment is based on each school district's current estimated 2011–2012 transportation allotment.  
  • Per Capita Rate – A rate of $373.878 multiplied by the prior-year ADA is used to estimate the per capita allotment. A revision in the rate used, to $390.743, is expected later this month, and the rate is subject to further change later in the fiscal year. 
  • 2012–2013 State Aid Template
    •  School Districts: A link to the 2012–2013 SOF template   developed by the Region XIII Education Service Center is available on the TEA  FSP  web page.
    • Charter Schools: A 2012–2013 Estimate of State Aid Template is available on the TEA Charter School State Funding Worksheets web page. 

      As always, the TEA strongly advises each school district and charter school to project state aid based on the best available information. Every district and charter school should complete the 2012–2013 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.

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



    Lisa Dawn-Fisher, Ph.D.

    Associate Commissioner for School Finance/ Chief School Finance Officer




      State Funding Division Contact Information:

      General SOF Questions, Chapter 42

                  Al Johnson                   (512) 463-9260, al.johnson@tea.texas.gov

                  Kim Wall                       (512) 463-4809, kim.wall@tea.texas.gov

      General SOF Questions, Chapter 41

                  Nadia Bobb                  (512) 463-9214, nadia.bobb@tea.texas.gov

      Charter School Funding

                  Nora Rainey                 (512) 463-7298, nora.rainey@tea.texas.gov

      Facilities Funding

                  Cassie Huggins            (512) 463-9232, cassie.huggins@tea.texas.gov

                  Gary Marek                  (512) 463-9190, gary.marek@tea.texas.gov

      Transportation Funding

                  Gary Marek                  (512) 463-9190, gary.marek@tea.texas.gov

                  Danny Sanchez           (512) 463-9266, danny.sanchez@tea.texas.gov

      Staff Salary Allotment

                  Al Johnson                   (512) 463-9260, al.johnson@tea.texas.gov

      State Compensatory Education, Optional Flexible Year Program, Optional Flexible School Day Program

                  Kim Wall                       (512) 463-4809, kim.wall@tea.texas.gov

      Texas Tax Code, Chapter 313, Agreements

                  Nancy Kuhn                 (512) 463-6313, nancy.kuhn@tea.texas.gov