1. The 85th Legislative Session
Equity Center Testimony
Senate Finance Working Group
on School Finance
Equity Center

2. Highlights of this Plan
Less complicated, more innovative
Simplifies school finance to a 1-sentence formula
Reduces number of recaptured schools
Local districts & taxpayers determine the local tax rate
Stabilizes school district funding
Eliminates inefficiencies
Eliminates penalties to districts facing property value declines
Provides schools with a steady, reliable revenue source
Addresses student needs
Increases the Basic Allotment
All revenue is based on state-recognized costs of education
Works within available funding
Equity Center

3. A Plan for Fixing Texas’ M&O Funding Problem Simple – Fair – Efficient

4. Efficient Funding for Special Needs and Costs
All districts are guaranteed access to the full allotment to which they are entitled for the categories below. This plan does not change current student and district weights for these categories, but does fix the small district and CEI penalties. Changes to weights are determined by the Legislature, but should be based on unbiased and objective studies to reflect actual costs.
Regular Program Allotment
Special Education Allotment
Career and Technology Allotment
Compensatory Education Allotment
Bilingual Education Allotment
Transportation Allotment
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5. A formula so simple we really don’t even need one
Sum of Instructional Allotments X M&O Tax Rate + Transportation = Funding
Transportation
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
X $ =
Transportation
Equity Center

6. A formula so simple we really don’t even need one
Sum of Instructional Allotments X M&O Tax Rate + Transportation = Funding
Transportation
4% Enrichment
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
X $ =
Transportation
Equity Center

7. A formula so simple we really don’t even need one
Sum of Instructional Allotments X M&O Tax Rate + Transportation = Funding
Transportation
17% Enrichment
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
X $ =
Transportation
Equity Center

8. A formula so simple we really don’t even need one
Sum of Instructional Allotments X M&O Tax Rate + Transportation = Funding
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
Transportation
90% of
Reg Program
+ Sp Ed
+ Comp Ed
+ Bilingual
+ Career &Tech
X $ =
Transportation
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9. Determining District Program Funding (Another view )
Examples: Assume a district’s 5 instructional program allotments (not including transportation) total $1 million.
If its ATR = $1.00, its funding equals $1,000,000 x 1.00, or $1,000,000
If its ATR = $0.90, its funding equals $1,000,000 x 0.90, or $ 900,000
If its ATR = $1.04, its funding equals $1,000,000 x 1.04, or $1,040,000
If its ATR = $1.17, its funding equals $1,000,000 x 1.17, or $1,170,000
(ATR = the district’s adopted M&O tax rate)
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10. Determining State/Local Funding for M&O
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.
District Funding Amount (including transportation)
State Funding
Local Tax Collections 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.
ASF Per Capita
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11. Determining M&O Recapture for Property Wealthy Districts
Local Tax Collections for the School Year
Excess to Formula Funding
District Funding Amount (including transportation)
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.
ASF Per Capita
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12. Determining M&O Recapture for Property Wealthy Districts
Local Tax Collections for the School Year
M&O collections in excess of the M&O funding level are recaptured and are used to increase the Basic Allotment, enriching the total system for all districts, taxpayers, and children.
District Funding Amount (including transportation)
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.
ASF Per Capita
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13. It is essential that we spend public education taxes on public education
100% of taxes collected for public education must be spent on public education—usually through the Basic Allotment
100% of recaptured funds must be spent on public education— with any increase used to increase the Basic Allotment, to the benefit of the entire system
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14. A Transition Plan – Should the Legislature Determine it is Appropriate
Should the Legislature decide a transition plan is warranted, we suggest the transition be done differently to avoid the problems created by current hold harmless funding methods.
Establish a dollar amount (not an amount per student or based on a formula)
Separate it completely from the new funding as a separate line item in the budget for simplicity and transparency
Phase funding down each year, beginning in the first year
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15. A Transition Plan – Should the Legislature Determine it is Appropriate
Six years of fair warning has already been given for ASATR—it should not be re-adopted.
There are no free lunches. Other districts and taxpayers pay for ASATR through a lower-than-necessary Basic Allotment and higher taxes.
The current budget does not include funding for a new ASATR hold harmless. The Senate is correct in doing this and creating efficiencies to benefit the whole system.
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16. The Foundation School Program
Per Capita Funding
Outside the System
ASAHE
Double Dipping
Early Agreement Credits
Maintenance & Operation (M&O)
Generally, the costs of running the school district
Interest & Sinking (I&S)
Generally, to make bond payments
Fractional Funding
Local Funding
State Funding
Ad valorem or Property tax collections generated by a locally-adopted I&S tax rate
Instructional Facilities Allotment (IFA)
& Existing Debt Allotment (EDA)
Tier 1 Basic
Instructional Program
Regular Program Allotment
- Special Education
- Compensatory Education
Bilingual Education
Career & Technology Education
Transportation
New Instructional Facility (NIFA)
- Public Education Grant
High School Allotment
Gifted & Talented
9 Special Purpose Allotments
Tier 2 Enrichment
Tier 2, Level 1 Golden Pennies
First 6 pennies of adopted M&O tax rate above the compressed tax rate; called “golden” because high funding level and no recapture
All pennies of M&O tax rate above the golden pennies (at least 11); called “copper” because low funding level and recaptured
Tier 2, Level 2 Copper Pennies
High School Allotment
CEI Penalty
Compressed Tax Rates
Outside the System
NIFA Funding
Staff Allotment
Prior Year Values
Small Schools Penalty
Wealth Hold Harmless

17. Terms No Longer Needed to Calculate Funding
Tier 1
Compressed Tax Rates
Tier 1 Equalized Wealth Level
Tier 2, Level 1 Guaranteed Level
Tier 1 Collections
Tier 2
DTRs
Multiple Basic Allotments
Tier 2, Level 2
Copper Pennies
Austin Level
Tier 1 Local Fund Assignment
Prior Year Values
ASATR
Tier 2, Level 2 Guaranteed Level
Tier 2 Level 2
Collections
Tier 2, Level 2 Equalized Wealth Level
Tier 2, Level 1
Golden Pennies
Tier 1 Local Fund Assignment
Target Revenue
WADA
Wealth Hold-Harmless
Tier 2 Level 1 Collections
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18. The New School Finance System
Maintenance & Operation (M&O)
Generally, the costs of running the school district
Interest & Sinking (I&S)
To make bond payments
Local Funding
State Funding
Ad valorem or Property tax collections generated by a locally-adopted I&S tax rate
Instructional Facilities Allotment (IFA)
& Existing Debt Allotment (EDA)
Instructional Program
Regular Program Allotment
5 Special Purpose Allotments
- Special Education
- Compensatory Education
Bilingual Education
Career & Technology Education
Transportation

19. Final Thoughts
Funding for Texas’ students needs to make sense for everyone. It cannot be based on one district’s crisis or even on a set of runs.
Funding decisions must be based on actual costs to educate students…holding to the TEC § promise to provide substantially equal access to a similar education at a similar tax rate.
Funding Texas’ schools should be fair to Texas’ taxpayers. Your dollar should generate the same level of funding for your children as my dollar does for mine.
When?
Equity Center

20. Summary: Highlights of this Plan
Less complicated, more innovative
Simplifies school finance to a 1-sentence formula
Reduces number of recaptured schools
Local districts & taxpayers determine the local tax rate
Stabilizes school district funding
Eliminates inefficiencies
Eliminates penalties to districts facing property value declines
Provides schools with a steady, reliable revenue source
Addresses student needs
Increases the Basic Allotment
All revenue is based on state-recognized costs of education
Works within available funding
Equity Center