Equity Center School Finance 101

9.13.24

Maintenance & Operation (M&O)

Generally, the costs of running the school district

The Foundation School Program—HB 3

Interest & Sinking (I&S)

Generally, to make bond payments

*CCMR Outcomes, School Safety, College Prep assessment & Certification reimbursements, Teacher incentive, Mentor program, Dropout recovery, Tuition allotment for those not offering all grades

How ISD Funding is Calculated: Formula Funding

• Basic Allotment ($6,160)

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• Small and Midsize Allotment
• Compensatory Education Allotment
• Special Education Allotment / Dyslexia
• Career and Technology Allotment
• Bilingual Allotment
• PEG
• Gifted and Talented Allotment
• Early Education Allotment
• Teacher Incentive Allotment
• CCMR
• Fast Growth Allotment
• Mentor Program Allotment

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• Transportation Allotment
• New Instructional Facilities Allotment
• Dropout Recovery School Allotment
• Tuition Allotment

Basic allotment drives everything

BASIC ALLOTMENT

Compensatory Education Allotment

Special Education Allotment

Career and Technology Allotment

Bilingual Allotment

Small and Midsize Allotment

CCMR

Where do we stand?

$6,160 isn’t what it used to be

Basic Allotment adjusted for inflation: $6,160

An Equity Center Production

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1/29/23

An Equity Center Production

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1/29/23

HB 882/SB 88

Determining ISD Entitlement Funding –Tier 1

• District Funding Amount--Tier 1

Basic Allotment

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District Characteristics

- Sparsity Adjustment

- Small or Midsize Allotment

- Fast Growth Allotment -

Make-up of student population

- Economically Disadvantaged

- Bilingual

- Special Education

- Career and Technology

- Dyslexia

- Gifted and Talented

- CCMR

Additional Allotments

- School Safety Allotment

- Teacher Incentive Allotment

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*Average Daily Attendance (number of students/Used in Tier 1/

Refer to slide two for full list of allotments in Tier 1)

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Tier II: Enrichment Funding

• 17 Total Pennies Available (Funding Calculated on WADA—Weighted Students in Average Daily Attendance)
• Golden Pennies (8) – no recapture
• Copper Pennies (9) – recapture above yield

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Golden Pennies (8):

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For FY 23 it was $98.56

For FY 24 it will be $126.21

For FY 25 it will be $129.52

The Increase is driving $2.4 billion in new funding to School Districts.

Copper Pennies (9):

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80% of the Basic Allotment:

For FY 23 $49.28

For FY 24 and FY 25 depends on what happens with the BA

Statewide Average Tier 2 Tax Rate for FY 2023 = 9.356 Pennies

Determining State/Local Funding for M&O�Funding Based on Students—Not District Property Wealth

Equity Center

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1/16/2020

ASF Per Capita

Local Tax Collections for the School Year

State Funding

The State provides whatever is lacking after applying the Available School Fund Per Capita payment and the M&O tax collections (both current and delinquent) for the school year.

Local M&O taxes collected during the school year constitute a district’s local share.

The first payment to fund a district’s M&O funding amount comes from its Available School Fund Per Capita distribution.

District Funding Amount (Tier 1 and 2)

Determining M&O “Excess” for Property Wealthy Districts�Funding Based on Students—Not District Property Wealth

Equity Center

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1/16/2020

ASF Per Capita

Local Tax Collections for the School Year

Local M&O taxes collected during the school year constitute a district’s local share. In some very wealthy districts, ASF Per Capita plus collections will exceed the district funding amount.

The first payment to fund a district’s M&O funding amount comes from its Available School Fund Per Capita distribution.

District Funding Amount (Tier 1 and 2)

Local Revenue in Excess of Entitlement

TEA

Revenue in Excess to Entitlement: Recapture

• Revenue in excess to entitlement (recapture) payments to the state does not decrease funding for a school district.
• Recapture revenue is required by law to be used as a method of finance for the Foundation School Program.
• On average, lower tax rates.
• Districts subject to Tier I revenue in excess to entitlement are given a funding guarantee. TX Education Code 48.257(b)

How Can You Increase Your Revenue?

• Increase your tax rate

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• Increase the number of students in your district

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• Have the legislature increase formula funding

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• *Adopt a Teacher Incentive Allotment plan

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School Safety

• House Bill 3 (2023)
• School Safety Allotment increase of over $180 million per year
• (Previously was $50 million per year - $9.72 per ADA)
• $15,000 per campus and $10 per ADA
• Armed security guard required on every campus*

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• $1.1 Billion for School Safety Facilities Grants
• (Still over $600 million short of Facilities Standards Rules Cost)

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Property Tax Compression/Reduction

• 2005: $1.50 per $100 of valuation
• 2008: $1.17 per $100 of valuation ($7.1 billion cost)
• 2016: $15k homestead exemption increased to $25k ($615.9 million/year)
• 2020: $106.83 per $100 of valuation, created ongoing yearly rate compression. ($5 billion per year initial cost)
• 2021: $25k homestead exemption increased to $45k ($355 million/year)
• 2022: Ranging from $1.0324 to $0.8546
• 2023: Ranging from $0.688 to $0.6192
• 2023: $45k homestead exemption increased to $100k (Total 2023 cost: Approximately $9.35 billion/year)
• 2024: $
• 2025: ? Promises by state leadership to further accelerate rate reduction.

State/Local Share

Equity Center 2024

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Equity Center 2024

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In FY 2000, the State Covered

34% Of Bonded Debt Cost

What Do We Expect From the 89^th Legislature?

• Governor and Lt. Governor:

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• Further property tax reduction
• $30 Billion since 2019

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• Education Savings Accounts (vouchers)
• $4 billion per year by years three and four
• $21 billion per biennium if no public school students leaves their public school

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• Perspective:
• The entire budget for the Department of Corrections is $4 billion per year
• The entire budget for the Department of Public Safety is $3 billion per year

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What to Expect From the 89^th Legislature?

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