Subject: 2001-2002 Preliminary Summary of Finances

July 6, 2001

TO THE ADMINISTRATOR ADDRESSED:

Enclosed are a preliminary Summary of Finances (SOF) and other related materials for the 2001-2002 school year. Please note the following concerning these materials:

· 2000 CPTD Value - The CPTD value being used in the both the LPE and DPE columns of this SOF is the district’s final value for tax year 2000 (the “T2” value), as was certified by the Comptroller on June 29, 2001.

For districts that experience a decline in tax base exceeding four percent from tax year 2000 to 2001, there is no specific appropriation available in the 2001-2002 school year that will enable the commissioner to adjust the 2000 CPTD value to recognize the loss in excess of four percent. House Bill 2879, as passed by the 77th Legislative Session, allows the adjustment to be made only if excess funds are available for the 2001-02 school year. At this time, a determination has not been made as to whether any excess funds will be available. Districts that would be eligible for this adjustment should complete the enclosed Estimated Property Value For Tax Year 2001 form in case it is determined that excess funds will be available for this purpose.

For districts that have granted an optional homestead exemption, House Bill 2879 allows an adjustment to be made (the use of the “T4” value instead of the “T2” value) only if excess funds are available for the 2001-2002 school year and only after the adjustment for property value declines exceeding four percent have been recognized. It is unlikely that there will be any excess funds available for this purpose.

· Student Counts - All student counts (ADA, FTEs, and enrollment counts) used in the LPE column are the counts on which the appropriation for the Foundation School Program was based. The student counts were originally reported to the agency in the fall of 2000 by the district on the Pupil Projection for the Next Biennium survey. Please keep in mind that the student counts in the LPE column are the basis for the district’s cash flow during the year. The student counts in the DPE column are agency projections based on the estimates currently being used for the 2000-2001 school year. The DPE estimates will be updated in September 2001 after actual 2000-2001 ADA is known.

For those districts that experience a decline in ADA of at least two percent between the 2000-2001 and 2001-2002 school years, House Bill 2879 contains a provision that would permit the use of 98 percent of the district’s 2000-2001 ADA for funding purposes in the 2001-2002 school year. The Legislature has appropriated $22 million for the biennium for this purpose ($11 million for 2001-2002 adjustments and another $11 million for 2002-2003 adjustments). If the $11 million appropriation for each year is not sufficient, the 98 percent adjustment rate will be reduced to a percentage that will match the available appropriation. This adjustment has not been incorporated on this preliminary SOF. Enclosed is a form entitled Worksheet for Determining ADA Adjustment Under House Bill 2879 that must be used by eligible districts to initially apply for this adjustment.

· Tax Collections - For Tier II purposes, the M&O tax collection amounts on both the LPE and DPE columns have been set to the tax collection limit for DTR (found on page 4 of the SOF). The LPE and DPE tax collection limits for DTR are different, and they do not necessarily represent the district’s actual DTR limit. The LPE limit was calculated using budgeted 2000-2001 M&O tax collections, while the DPE limit was calculated using the 2000-2001 M&O tax collections reported on the Tax Collection Certification survey recently submitted. The district’s actual DTR limit will be based on audited 2000-2001 M&O tax

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collections, which will not be known until March 2002. At that time, the actual DTR limit will appear on the DPE column of an updated SOF.

· “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. If the district’s loss in local revenue resulting from the additional $10,000 homestead exemption is not entirely offset with additional state aid, the difference is made up with additional “hold harmless” state aid. A printout is enclosed showing how the “hold harmless” amount, if any, was derived.

· Salary Transition Entitlement - If the district qualifies for salary transition, the amount is shown on page 4 of the SOF under the Additional Aid category. If the district’s 2001-2002 cost of the $3,000 raise enacted by the 76th Legislative Session in 1999 is not entirely offset with 80 percent of the additional state aid resulting from the funding element increases enacted by the 76th Legislative Session (the basic allotment increasing from $2,396 to $2,537, Tier II being computed at a $23.10 yield versus the actual $24.70 yield, and the equalized wealth level increasing from $280,000 to $295,000), the difference is made up with salary transition. A printout is enclosed showing how the salary transition amount, if any, was derived. The number of FTEs for teachers and full-time librarians, nurses, and counselors will be updated when 2001-2002 PEIMS fall submission staff data become available.

· Existing Debt Allotment (EDA) and Instructional Facilities Allotment (IFA) - If the district is eligible for EDA assistance, the state share of EDA appears on the first page of the SOF under the Additional Aid heading (on both the LPE and DPE columns). A printout detailing the EDA calculations, which use the ADA from the DPE column, is also enclosed. Bonds are eligible for EDA assistance if the district made a payment on the bonds during the 2000-2001 school year. The funding limit for EDA assistance is based on I&S taxes collected by the district during the 2000-2001 school year. The amount of I&S taxes being used to determine the limit on the enclosed printout is the I&S taxes reported on the Tax Collection Certification survey recently submitted. The district’s actual EDA limit will be based on audited 2000-2001 I&S tax collections, which will not be known until March 2002. At that time, the EDA calculations will be revised and the revised state share will appear on an updated SOF.

If the district has been awarded IFA assistance prior to the June 15, 2001 application cycle, the state share of IFA also appears on the first page of the SOF under the Additional Aid heading (on both the LPE and DPE columns). The state share is based on the estimated ADA from the DPE column. The state share for those districts that are awarded an IFA from the June 15, 2001 application cycle will appear on an updated SOF in September 2001.

· Projected Settle-up - The preliminary projected settle-up amount is indicated on page 5 of the SOF in the DPE column. If the district is currently projected to be overpaid for the 2000-2001 school year, that projected overpayment is shown as the Adjustments-to-Date amount. If the district is currently projected to be underpaid for the 2000-2001 school year, the Adjustments-to-Date amount will be zero, since the underpayment is paid in a lump sum. Please keep in mind that the projected settle-up will change after the 2000-2001 “near final” SOF is generated in August 2001.

· Other - This SOF does not yet include the New Instructional Facilities Allotment (NIFA) or the Pre-K Expansion Program grant funds. When those allotments are determined, an updated SOF will be sent to the district. Another printout entitled Worksheet for Determining Additional State Aid for Certain School Districts is enclosed that calculates “gap aid” for a few districts.

Also enclosed is a revised Worksheet for Determining Tuition Limit for the 2001-2002 school year. This revised worksheet reflects changes in the rounding sequence that was being used in calculating the cost of one additional student. In addition, please be advised that the Worksheet to Assist Districts in Calculating Rollback Rate and the Worksheet to Assist Districts in Completing the Notice of Public Meeting To Discuss Budget and Proposed Tax Rate will only be available through our web page (www.tea.state.tx.us/school.finance).

If you have any questions concerning this mailing, please contact us at (512) 463-9238.

Sincerely,

Omar Garcia, Senior Director

Division of State Funding