School Finance and Small Schools

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# School Finance and Small Schools - PowerPoint PPT Presentation

School Finance and Small Schools. How current law impacts small schools in Texas Presented by the Texas Association of Rural Schools. Basic terms you will need to know. ADA (Average Daily Attendance) The number of students in attendance on average each day of the school year

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### School Finance and Small Schools

How current law impacts small schools in Texas

Presented by the

Texas Association of Rural Schools

Basic terms you will need to know
• The number of students in attendance on average each day of the school year
• BA (Basic Allotment)
• Amount the state sets for the basic program costs for a “regular” child
• The BA is adjusted to account for the higher cost for districts in certain areas (CEI)
• The ABA is adjusted by the small and mid-size district adjustments
• The amount the state uses to calculate each district’s revenue

Texas Association of Rural Schools

Chapter 42.103 Small Schools Formulas
• At least 300 square miles
• AA = (1+((1,600-ADA) x .0004)) x (ABA)
• Less than 300 square miles
• AA = (1+((1,600-ADA) x .00025)) x (ABA)

Texas Association of Rural Schools

Small Schools Formula’s Impact
• In our example, let’s assume
• Less than 300 square miles

Texas Association of Rural Schools

Example 1

AA = 1+((1600-ADA) x .00025) x ABA

AA = 1+((1600-400) x .00025) x ABA

AA = 1+(1200) x .00025) x ABA

AA = 1+(.30) x ABA

AA = 1.30 x ABA

Texas Association of Rural Schools

A school with 400 ADA and less than 300 sq. miles gets a 30% increase in weights for all students

Texas Association of Rural Schools

Example 2

AA = 1+((1600-ADA) x .0004) x ABA

AA = 1+((1600-400) x .0004) x ABA

AA = 1+(1200) x .0004) x ABA

AA = 1+(.48) x ABA

AA = 1.48 x ABA

Texas Association of Rural Schools

A school with 400 ADA and at least 300 sq. miles gets a 48% increase in weights for all students

Texas Association of Rural Schools

An increase of 30% or 48% is truly significant for small schools regardless of wealth.

Texas Association of Rural Schools

This is the life-blood of rural education in Texas

Texas Association of Rural Schools

• The Adjusted Allotment—which includes the impact of the small schools formula—is used in calculating five special allotments
• Special Education
• Career and Technology (Vocational Education)
• Compensatory Education
• Bilingual/ESL Education

Texas Association of Rural Schools

Importance of using AA in calculating special allotments
• TEA originally tried to use ABA instead of AA in the calculation of these five special allotments
• This would have resulted in a significant DECREASE in funding in ALL special programs…
• …and would have ignored the extra cost to small districts
• We must always maintain vigilance to protect the articles we fought for.

Texas Association of Rural Schools

Chapter 42.105—Sparsity Adjustment for very small schools
• HB 1126 in 1975 session
• Intent was to guarantee at least one teacher for each grade taught
• HB 72 in 1984 special session
• Switched to a pupil-centered approach to finance that guaranteed credit of 10 ADA per grade
• Same effect—one teacher for each grade

Texas Association of Rural Schools

• First example—K-12 district
• Have at least 90 ADA in current or preceding school year…or
• Is 30 miles from the nearest neighboring high school

Texas Association of Rural Schools

• First example—K-12 district
• Have at least 90 ADA in current or preceding school year…or
• Is 30 miles from the nearest neighboring high school

Texas Association of Rural Schools

• Second example—K-8 district
• Have at least 50 ADA in current or preceding school year…or
• Is 30 miles from the nearest neighboring high school

Texas Association of Rural Schools

• Final example—K-6 district
• Have at least 40 ADA in current or preceding school year…or
• Is 30 miles from the nearest neighboring high school

Texas Association of Rural Schools

• K-6 and K-8 districts send their secondary students to neighboring high schools
• The loss of the “count” of these students increases the sending school’s wealth
• Decreases state funding
• Increases recapture for wealthy districts
• But, these receiving districts often charge tuition
• Sending school retains costs
• Purpose—Recognizes this tuition cost by adjusting property value of the sending district

Texas Association of Rural Schools

The formula…

where:

• DPV is the district’s actual property value before adjustments
• TN is the total tuition paid

Texas Association of Rural Schools

The TN/.015 is the taxable value necessary to pay the tuition. By reducing the district’s value by this amount, state revenue goes up (or recapture goes down) by an amount necessary to pay the tuition.

Texas Association of Rural Schools

An Example of How it Works

Let’s assume our district in this example

…has a property value of \$20 million and

…pays a tuition of \$500 for each 30 pupils

\$500 x 30 students = \$15,000 tuition paid

Texas Association of Rural Schools

An Example of How it Works

This represents a recovery of 5% of the total tax roll of this district.

Texas Association of Rural Schools

An Example of How it Works

This represents a recovery of 5% of the total tax roll of this district.

\$30,000

\$2,000,000

\$18,000,000

10%

Texas Association of Rural Schools

Chapter 41.21—Wealth per Student in Certain Districts Not Serving All Grades
• Expires 9/1/2004, but is a current hold-harmless based on 1999-2000 local and state revenue for wealthy districts
• In 1999-2000, Chapter 41 districts were allowed to retain the ADA of students begin taught in a neighboring district.
• This was allowed regardless of whether tuition was charged

Texas Association of Rural Schools

Chapter 46.003—School Facilities Allotment

FYA = (FYL x ADA x BTR x 100) – (BTR x DPV/100))

Not less than 400

Texas Association of Rural Schools

• Greater of:
• \$100,000; or
• Impact: 400 ADA x \$250 = \$100,000

Texas Association of Rural Schools

Chapter 46.010 Projects by More Than One District
• Two or more districts may “co-op” to build a shared facility at a single location
• Each district is entitled to a 20% higher amount than otherwise entitled to under Ch. 46.005
• Purpose: Encourage efficiencies by sharing new construction without having to consolidate districts

Texas Association of Rural Schools

Defending what we have fought for
• Each of these provisions is a reflection of a specific need unique to small schools
• These needs have not gone away.
• If anything, with the new, increased demands, they are greater now than ever before

Texas Association of Rural Schools

Summary
• Recognizes small classes and a need for more teachers
• Use of small schools adjustments to calculate special allotments
• Diseconomy of scale extends into special programs
• Sparsity Allotment
• Ensures revenue for minimum staffing
• Adjustment for tuition paid by K-6 and K-8 districts
• Recognizes actual expenses incurred by these districts in educating their students
• Minimum of 400 ADA to achieve \$100,000 project
• Coop Incentive
• Districts are allowed (even rewarded) to share new facility cost—without consolidating districts

Texas Association of Rural Schools

Summary