1. Texas School Finance Johnny W. Hill, CPA Asst
Texas School Finance Johnny W. Hill, CPA Asst. Superintendent of Business, Financial & Auxiliary Services Lake Travis ISD March 28, 2017

2. TEXAS- A Bird’s Eye View
Texas ranks second behind California in the number of students enrolled in public schools.
With a 15.7% increase over a 10 year period, Texas enrollment is the fastest growing among the 15 most populous states over the past decade.
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3. TEXAS- A Bird’s Eye View
Education funding in Texas will support more than 5.2 million students this year in public schools.
Texas is expected to continue to grow over the next ten years at a rate of 1.6% annually. This equates to between 82,000 and 87,000 students.
From these new students, 80% are enrolling in fewer than 10% of the Texas school districts. Over the past eight years, Lake Travis ISD has grown 60%.
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4. TEXAS- A Bird’s Eye View
There were 1,024 regular school districts and 177 charter school holders operating in Texas in fiscal year 2016.
The total 1,201 school districts and charter school operators in the state ranks Texas first among the 50 states in the number of operating school districts.
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5. TEXAS- A Bird’s Eye View
Texas is characterized by its large number of very small, primarily rural school districts, counterbalanced by a handful of very large urban and suburban districts.
# of Districts
# of Enrolled Students
Percent of Students
798
< 1,600 9% 18
> 50,000
29%
385
1,600-49,999
62%
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6. TEXAS- A Bird’s Eye View
Lake Travis ISD has a unique demographic composition.
Population Group
Lake Travis ISD
State of Texas
African American
1.1%
12.6%
Hispanic
20.1%
52.2%
White
69.2%
28.5%
Other Ethnicities
9.6%
6.7%
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7. TEXAS- A Bird’s Eye View
For the school year, school district property wealth averaged about $328,000 per student.
There were 172 school districts with wealth per student above $514,000 and therefore subject to recapture (“Robin Hood”).
School districts subject to Robin Hood at the $514,000 level serve about 10% of the state’s students.
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8. TEXAS- A Bird’s Eye View
In school year, Texas public schools employed 674,518 positions. Of these positions, about half were teachers.
The average salary for Texas teachers in the school year was $51,892-ranking nationally at 34th. The national average salary for the same year was $59,505.
Texas spent an estimated $8,681 per student in the school year, compared with a national average of $11,355 ranking the state 45th in the nation.
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9. Texas Foundation School Program
The Foundation School Program (FSP) is the principal vehicle for distributing state aid to school districts.
The FSP is a shared funding model, depending on contributions from both state and local tax revenue sources to fund the level of entitlement generated under the statutory formulas.
At an overall state level, the state share is currently at the 46% level, leaving the remaining 54% to be paid out of local property taxes.
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10. Texas Foundation School Program

11. Texas Foundation School Program
The FSP has two main components, operations funding and facilities funding, each of which is tied to the tax effort of school districts.
The operations funding component of the FSP provides school districts with assistance in financing their maintenance and operations based on the following three components:
Tier 1
Tier 2
Property Tax Relief
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12. Texas Foundation School Program-Tier 1
The basic allotment is the basis of funding for most of the allotments making up a district’s Tier 1 entitlement. The current basic allotment amount is $5,140 per student in average daily attendance (ADA). This basic allotment is then adjusted for district characteristics such as an index to account for differing cost of education across school districts and size of student enrollment across school districts.
Basic Allotment X
Cost of Education Index (CEI)
Small/Midsize Adjustment =
Adjusted Basic Allotment
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13. Texas Foundation School Program-Tier 1
The Adjusted Basic Allotment (ABA) is used to calculate the following Tier 1 Allotments:
Regular Program
Special Education
Career and Technical Education
Bilingual/ESL Program
State Compensatory Education
Gifted and Talented
Transportation
High School Allotment
New Instructional Facilities Allotment
The sum of the Tier 1 Allotment amounts represents a district’s Tier 1 entitlement.
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14. Texas Foundation School Program-Tier 1
A school district is responsible for funding a portion of its Tier 1 entitlement. This portion is called the Local Fund Assignment (LFA).
The LFA is the amount of tax collections generated at the tax rate of $1.00.
The total Tier 1 entitlement minus the LFA equals the state’s share of the Tier 1 entitlement.
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15. Texas Foundation School Program-Tier 1
If a district’s LFA exceeds its Tier 1 entitlement, the district is said to be “budget balanced.”
A district that is budget balanced is also necessarily subject to the provisions of the Texas Education Code (TEC), Chapter 41 (State Equalization).
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16. Texas Foundation School Program-Tier 1
Tier 1 Summary for Lake Travis ISD:
Basic Allotment-$5,140
Cost of Education Index (CEI)
Small/Midsize Adjustment-N/A
Adjusted Basic Allotment (ABA)-$5,432
Regular Program-$47,251,974
Special Education Program-$4,316,232
Career & Technology Allotment-$3,482,382
Gifted & Talented Allotment-$305,352
Compensatory Education Allotment-$1,171,139
Bilingual/ESL Allotment-$275,541
New Instructional Facilities Allotment-$0
Transportation Allotment-$948,840
High School Allotment-$747,390
Lake Travis ISD Tier 1 Entitlement=$58,498,850
Less: Local Fund Assignment-($96,393,947)
State’s Share of Tier 1=($37,895,097)*
*Since LFA exceeds its Tier 1, Lake Travis ISD is “budget balanced and subject to Chapter 41 provisions.
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17. Texas Foundation School Program-Tier 2
Tier 2 provides a “guaranteed yield” (GY), or guaranteed level of funding, to school districts to supplement the basic funding provided for by Tier 1.
The GY ensures that school districts generate a specified amount of state and local funds per student in weighted average daily attendance (WADA) for each cent of tax effort above the tax effort required to meet the LFA, up to an amount set by statute (17 cents).
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18. Texas Foundation School Program-Tier 2
WADA is the weighted average daily attendance figure used in several funding formulas to calculate the amount of state and local funds a district is entitled to.
How is WADA Calculated?
+ Tier 1 Entitlement
-Transportation Allotment
-New Instructional Facilities Allotment
-High School Allotment
-50% of CEI Adjustment
=Adjusted Tier 1 Entitlement
÷District’s Basic Allotment
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19. Texas Foundation School Program-Tier 2
The passage of HB 3646 (81st Legislature) in 2009 modified Tier 2 to provide for two levels of GY funding.
Level 1 (L1) equals an amount set by the General Appropriations Act that is the greater of :
Austin ISD’s property wealth per student ($77.53 per WADA) or
The amount of a district’s tax revenue per WADA per cent of tax effort generated for this level of GY funding (LT-$89.71 per WADA)
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20. Texas Foundation School Program-Tier 2
A district may generate L1 funding for only six pennies above the $1.00 tax rate. These pennies are called “golden pennies” because they are the pennies of tax effort for which a district is able to generate the highest level of enrichment funding.
Districts can access four of the six pennies at the discretion of the local school board. Because of restrictions in the Texas Tax Code, access to the fifth and sixth pennies of enrichment usually require voter approval. Because of this stipulation, I like to refer to these two pennies as “silver pennies.”
The passage of
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21. Texas Foundation School Program-Tier 2
Level 2 (L2) equals a fixed amount set by statute ($31.95 per WADA).
The L2 pennies of tax effort are sometimes called copper pennies because they generate a lower level of enrichment funding than the golden and silver pennies. Enrichment at this level requires voter approval. The district can access an additional eleven pennies at the L2 funding level.
The passage of
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22. Texas Foundation School Program-Tier 2
Tier 2 Summary for Lake Travis ISD: M & O Collections for Level 1 $3,859,053 M & O Collections for Level 2 $ 0 Lake Travis ISD Tier 2 Enrichment $3,859,053
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23. Texas Foundation School Program-Tier 1 & Tier 2
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24. Texas Foundation School Program-Property Tax Relief
In fiscal year 2006, when districts were required to compress their property tax rates by one-third over a two-year period, the state developed a “hold-harmless” mechanism to guarantee that districts would not lose revenue as a result.
Each district was guaranteed by the state the same amount of total revenue per WADA as they received in either the or school year, whichever amount was greater. This total revenue per WADA amount is commonly referred to as a district’s “Revenue Target.”
The passage of
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25. Texas Foundation School Program-Property Tax Relief
If a district’s (now compressed) local revenue and state aid through the Basic Allotment does not generate sufficient funding to meet this revenue target, the state provides hold harmless funding-termed Additional State Aid for Tax Reduction (ASATR).
Pursuant to legislation passed by the 82nd Legislature, ASATR will expire in statute at the end of fiscal year 2017 (LT-$2.1 million). The Legislature began phasing out this funding stream in fiscal year 2011.
The passage of at
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26. Texas Foundation School Program-Property Tax Relief
Property Tax Relief Summary for Lake Travis ISD:
Adjusted Minimum Revenue Target $ 61,952,515
State’s Share of Tier 1 $ 4,369,709
M&O Tax Rate of $1.00 $ 96,476,337
Compressed Tax Rate ($36,642,650)
State and Local Revenue $64,203,396
Additional State Aid for Tax Reduction (ASATR) $
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27. Texas Foundation School Program-Facilities Funding
The Facilities Funding component of the FSP consists of the Instructional Facilities Allotment (IFA) Program and the Existing Debt Allotment (EDA) Program. These programs assist school districts in funding facilities by equalizing Interest & Sinking (I&S) tax effort.
State aid under the IFA and EDA programs provide GY of $35 per penny of tax effort per ADA, within limitations prescribed for each program. Chapter 41 districts do not qualify for IFA or EDA program funding.
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28. Texas Foundation School Program-Facilities Funding
To receive IFA program assistance, a district must apply to the Texas Education Agency (TEA). IFA supported debt must support the construction of instructional facilities.
A school district does not need to apply to receive EDA funding. The TEA determines the EDA Funds to which a school district is entitled based on I&S tax collections and bond data that the agency receives through the Public Education Information Management System (PEIMS) reporting system.
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29. Texas Other State Aid Programs-Available School Fund
The Available School Fund (ASF) is a constitutionally dedicated fund for the support of the public education system. It is funded from distributions from returns on investment of the Permanent School Fund (PSF) and also receives 25% of the state’s motor fuels tax revenue.
The ASF funds the state’s instructional materials purchases (through a transfer to the state Instructional Materials Fund) and an annual per capita distribution to school districts.
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30. Texas Other State Aid Programs
Other State Aid Program Summary for Lake Travis ISD:
Available School Fund Allotment $ 3,424,609
High School Allotment $ ,390
Staff Allotment $ ,516
ASAHE $ ,194
Total Other State Aid Programs $ 4,369,709
*Instructional Materials Allotment is accounted for in a Special Revenue Fund and is approximately $650,000 per year.
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31. Chapter 41-State Equalization (“Robin Hood”)
Recapture, also known as “Robin Hood” Payments, is a mechanism in state funding formulas that ensures that a district’s property wealth per student does not exceed certain levels, known as equalized wealth levels (EWL).
A district that is subject to recapture is often referred to as a Chapter 41 district because the provisions governing recapture are found in the TEC, Chapter 41.
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32. Chapter 41-State Equalization (“Robin Hood”)
There are three equalized levels of property wealth per WADA that limit the access of school districts to the tax revenue generated by local Maintenance & Operations (M&O) tax effort.
Equalized Wealth Level
Tax Rate
Wealth per WADA
1st EWL
$1.00
$514,000
2nd EWL
$0.06
Unlimited
3rd EWL
$0.11
$319,500
Total Tax Effort
$1.17
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33. Chapter 41-State Equalization (“Robin Hood”)
A district has five options available to reduce its property wealth per WADA.
Option 1: Consolidate with another district.
Option 2: Detach property.
Option 3: Purchase attendance credits from the state.
Option 4: Contract to educate nonresident students from a partner district.
Option 5: Consolidate tax bases with another district.
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34. Chapter 41-State Equalization (“Robin Hood”)
State Equalization Summary for Lake Travis ISD:
Recapture at the $514,000 Level (1st EWL) $36,642,650
Recapture at the Unlimited Level (2nd EWL) $
Recapture at the $319,500 Level (3rd EWL) $
Total Recapture Payments to TEA $36,642,650
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35. Chapter 41-State Equalization (“Robin Hood”)
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36. Funding Changes Enacted by the 82nd thru 84th Legislation
In 2011 special legislative session, the state legislature passed Senate Bill 1(SB1) that reduced the FSP by $4 billion over the biennium. An additional $1.4 billion was cut in other state programs such as the Pre-K Program and the Technology Fund Allotment.
Lake Travis ISD incurred a net decrease in state and local revenues of $3.3 million (6.5%) in , $4.8 million (8.7%) in , $4.0 million (6.8%) in , $3.8 million (6.1%) in , $4.6 million (6.7%) in and $2.8 million (2.6%) in The overall financial impact to the District as a result of the last three legislative sessions is $23.3 million ($3.9 million/year).
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37. Lake Travis ISD General Fund Expenditures-by Function 2016-2017 Budget
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38. Lake Travis ISD General Fund Expenditures-by Object 2016-2017 Budget
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39. Lake Travis ISD Tax Rate History 2016-2017 Budget
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40. The Texas Education Code limits issuance of additional ad valorem tax bonds if the tax rate needed to pay aggregate principal and interest amounts of the District’s tax bond indebtedness exceeds $0.50 per $100 of assessed valuation of taxable property within the District. Lake Travis ISD has a debt service tax rate of $
General Obligation Bonds Series
Date of Issue
Maturity Date
Interest Rate
Bond Rating
Outstanding at 2/15/2017
2008
4.0%
AA+
$ ,000
2012 %
$127,395,000
2013 %
$ 94,975,000
TOTAL
$222,725,000
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41. Lake Travis ISD tax exemption saves the average homeowner $1,408
For LTISD taxpayers, their annual property tax expense is considerably smaller than it would be without the Local Optional Homestead Exemption (LOHE) provided by our School Board.
Here’s how the calculation works:
Average LTISD Residence $500,000
20% Exemption x %
Value Subject to Exemption $100,000
Per $100 Tax Value /
Adjusted Value for Exemption $ 1,000
LTISD Tax Rate x
LTISD Average LOHE $ 1,408
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