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Texas Association of School Business Officials 2011 Budget Academy

Texas Association of School Business Officials 2011 Budget Academy. January 14, 2011 San Marcos, TX. Agenda. House Bill 3 (HB 3) Financial solvency review Financial Allocation Study for Texas (FAST) School Bus Seat Belt Grant Program Texas Economic Development Act (TEDA) reports

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Texas Association of School Business Officials 2011 Budget Academy

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  1. Texas Association of School Business Officials 2011 Budget Academy January 14, 2011 San Marcos, TX

  2. Agenda • House Bill 3 (HB 3) • Financial solvency review • Financial Allocation Study for Texas (FAST) • School Bus Seat Belt Grant Program • Texas Economic Development Act (TEDA) reports • Dual credit • Foundation School Program (FSP) • Payment system • Advanced career and technical education allotment • Funding issues • Budget outlook • Looking ahead • Questions?

  3. House Bill 3 (HB 3): Financial Solvency Review • Mandated by HB 3, 81st Legislature • Requires survey of actual first-quarter expenditures • Current survey closes today (January 14, 2011) • Review includes • Analysis of data reported to Public Education Information Management System (PEIMS) • Annual financial audit

  4. HB 3: Financial Solvency Review • Indicators (see Appendix) • Student-to-staff ratios • WADA:all staff • Enrollment:teachers • General fund expenditures exceeding revenues—current year or recurring problems • Declining or low fund balance

  5. HB 3: Financial Solvency Review • Two-step identification process • Model will flag districts based on indicators • TEA audit staff will request additional information before final determination • Financial solvency plan • Plan required of districts that are identified as having financial solvency problems • Failure to adopt and follow plan can lead to sanctions under the Texas Education Code, Chapter 39

  6. HB 3: Financial Solvency Review • Rules effective December 22, 2010 • Current survey covers two years • Need to make determinations for 2009–2010 and 2010–2011 • Future surveys will cover current year only • Results anticipated by midspring

  7. HB 3: Financial Allocation Study for Texas (FAST) • Study conducted by the Comptroller of Public Accounts (CPA) • Created rating system for school districts and charter schools based on performance of students and expenditures • May be issues with analysis of expenditures related to retirement contributions

  8. School Bus Seat Belt Grant Program • Grant program is open for second round of funding • New deadline: February 28, 2011 • Total appropriation: $10 million • Remaining available funds: ≈$8.8 million • Covers costs of seat belts only, not the cost of the bus itself

  9. Dual Credit • Reminder: Funding exception expires at the end of this fiscal year • Attendance accounting issues • Attendance-taking problems • Sign-in sheets are not acceptable • Cooperation of college staff is crucial • Alternate time is allowed if properly documented • Schedule conflicts • Minutes of daily instruction • Mismatches between college and school district schedules

  10. Dual Credit • Limitation on the number of courses • Two courses per semester in junior and senior years • Programs must seek/receive permission to exceed the cap • Early College High Schools • May exceed limit • Must be designated by the Texas Education Agency (TEA)

  11. Texas Economic Development Act (TEDA) Reports • CPA report recommendations: • Eliminate supplemental payments to districts • Modify requirements related to renewable energy • 64% of active projects • 7% of jobs created • Supplemental payments 2X rate of manufacturing projects • Eliminate local districts’ authority to waive job creation requirements • Evaluate program

  12. TEDA Reports • Legislative Budget Board (LBB) report recommendations: • Realign responsibilities of state and school districts with regard to abatements • Expand economic impact analysis to include impact on state • Make separate provisions for renewable energy projects • Strengthen job creation requirements and clarify oversight responsibilities of CPA • Make funds for administration contingent on adoption of recommendations above

  13. Foundation School Program (FSP): Payment System • Retired mainframe application in July 2010 • New system is functional, but • Processing times have slowed significantly • Issues with migration have delayed updates to prior year allocations • Payments for facilities programs will be made by the end of January in time for February bond payments

  14. FSP: Advanced Career and Technical Education Allotment • New funding source in 2009–2010 • Paid for the first time at the 2009–2010 settle-up • Allotments calculated incorrectly: • Used fall snapshot instead of summer PEIMS submission • Used head count instead of FTE count • Corrections reflected on current Summary of Finances in near future

  15. FSP: Funding Issues • LPE vs. DPE • Legislative payment estimate (LPE) • Established during appropriations process • Used to calculate FSP payments • District planning estimate (DPE) • Based on actual data as they become available • Used to establish FSP earnings • Differences are reconciled at settle-up • "Near-final" occurs after close of fiscal year • "Final" occurs after audit data are released

  16. FSP: Funding Issues • Value growth assumptions • Tax year 2009 (2009–2010) = 2.98% • Tax year 2010 (2010–2011) = 3.34% • Will result in large settle-up amounts –currently estimated at $791 million • Scheduled for payment in September

  17. Budget Outlook • Legislative Appropriations Request (LAR) • No longer valid because of changes in property value, tax collection, and enrollment assumptions • Significant growth in general revenue costs for FSP over current biennium • Costs for current biennium exceed appropriation • Need to replace $3.2 billion in revenue provided by State Fiscal Stabilization Fund (SFSF)

  18. Budget Outlook • Anticipated critical dates: • January 15 – revenue estimate • January 16 – legislative budget estimates • January 17 – appropriations bill, introduced • January 18 – LBB/agency briefing • March 1 – update on property value projections and student enrollment • May 30 – last day of regular session

  19. Budget Outlook • Expect changes at TEA • Substantial reductions in force • Potential outsourcing of functions • Reorganization due to the departure of Associate Commissioner Jerel Booker • Expect cuts in funding to schools • FSP • State-funded grant programs

  20. Budget Outlook • Questions we can’t answer yet: • What is the size of the budget shortfall? • Will the current year FSP shortfall of more than $700 million be covered by a supplemental appropriation? • Which programs will be cut? • How much will FSP and other state funding be cut over the next biennium? • How will cuts to funding be implemented?

  21. Looking Ahead • Keep close watch on budget process at Texas Legislature Online http://www.capitol.state.tx.us • Budget VERY conservatively for the coming biennium • Plan for cuts • Provide for flexibility when possible • Be sure to subscribe to the State Funding Listserv for announcements at http://miller.tea.state.tx.us/list/

  22. Questions? Lisa Dawn-Fisher, Ph.D. Deputy Associate Commissioner for School Finance Texas Education Agency 512.463.9179 phone 512.305.9165 fax Lisa.Dawn-Fisher@tea.state.tx.us Office of School Finance home page: http://www.tea.state.tx.us/index2.aspx?id=6957&menu_id=645&menu_id2=789

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