1. Business Manager and CFO Roundtable Discussion
October 17, 2018
Hank Johnson
Consultant

2. Agenda Introductions Update on FIRST Changes
Update on Texas Commission on Public School Finance
Updates on Recent TEA Correspondence
Questions and Comments

3. FIRST Rating Changes (Update)
New Ratings (Based on FY 2020 data)
Adopted July 27, 2018 (See Texas Register)
Point scales and ratings are different with these new rules
School FIRST: 20 indicators (Proposed 21)
Charter FIRST: 21 indicators
New: “Ceiling Indicators”

4. SCHOOL FIRST RATINGS 2020–2021 RATING YEAR (BASED ON FY 2020 DATA)
A = Superior Achievement
Points
B = Above Standard Achievement
80-89 Points
C = Meets Standard Achievement
60-79 Points
70-79 Points
F = Substandard Achievement
0-59 Points
0-69 Points

5. FIRST Rating Changes Considerations to address the changes:
Compare current financial position and practices to new indicators
Identify areas of strengths and weaknesses
Develop policies and practices to improve areas that need improvement
Provide an update to the Board and Management Team on changes and where your LEA may need improvement
Provide action plan
Don’t wait

6. FIRST Rating Changes Link to Texas Register
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7. Texas Commission on Public School Finance - Update
Property tax levy out pacing taxpayers ability to pay
Improving outcomes
Class size – 21
Teacher Quality
Improved Pay
Increasing pay for some
Other than just years of experience

8. Texas Commission on Public School Finance

9. Texas Commission on Public School Finance – State and Local
Year 1
Year 2
Year 3
Students
1,000
Tier 1 Guaranteed Yield
$ ,140
Guaranteed/Maximum
$ ,140,000
Tax 6% Growth
$ ,570,000
$ ,724,200
$ ,887,652
State Equalization
$ ,415,800
$ ,252,348
Partner - Local Taxpayer
50%
53%
56%
Partner - State
47%
44%

10. Funding Elements – 2016 & 2019 Basic Allotment $5,140 EWL Tier 1
Basic Allotment
$5,140
EWL Tier 1
$514,000
EWL Tier 2 Level 2
$319,500
Tier 2 -Guaranteed Yield Level 1
$74.28
$106.28
Tier 2 - Guaranteed Yield Level 2
$31.95
Regular Program Adjustment Factor (RPAF)
1.0

11. Texas Commission on Public School Finance – Outcomes Working Group
Restructure and/or adjust funding formula
Fund through formula vs grants for targeted outcomes
Add incentives to formula for achieved outcomes
Realign Compensatory Ed funding
Fund full day PreK
Incentivize dual language programs
Target funding for blended and/or personalized learning

12. Texas Commission on Public School Finance – Outcomes Working Group
Costs
$1.0 billion per year ($2.0 billion per biennium)
$200 per student
Increasing to an ultimate $2.5 billion per year ($5.0 billion per biennium)
$450 per student

13. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Reallocate Cost of Education Index (CEI) Funds
Annual savings: $2.9 billion
Reallocate Chapter 41 Hold Harmless Funds
Annual savings: $30 million
Reallocate Chapter 41 Early Agreement Credit Funds
Annual savings: $50 million

14. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Reallocate Gifted and Talented Allotment Funds
Annual savings: $165 million
Reallocate High School Allotment Funds
Annual savings: $400 million
Move from Prior Year Property Values to Current Year
FY 2020 Savings: $1.8 billion

15. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Base Compensatory Education Funding on a Campus Specific Spectrum
Annual cost: $1.1 billion
Base Transportation Funding on Mileage (80 cents)
Annual cost: Neutral
Provide Transportation Funding to Chapter 41 Districts
Annual cost: $60 million

16. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Recreate Small/Mid-Size District Adjustments as a Stand-Alone Allotment
Annual cost: $0 to 400 million
Increase New Instructional Facility Allotment (NIFA) Appropriation to $100 Million per Year
Annual cost: $76.3 million
Expand Career and Technology Allotment to Include Courses in 6th – 8th Grade
Annual cost: $20 million

17. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Create New Dual Language Allotment
Annual cost: $15 to $50 million
Create New Dyslexia Allotment
Annual cost: $100 million
Create New Early Childhood Support Allotment
Annual cost: $780 million

18. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Create a New Grade 3 Reading Incentive Program
Annual cost: $400 million
Create a New College, Career & Military Readiness Incentive Program
Create a New Teacher Compensation Incentive Program
Annual cost: $100 million

19. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Create an Extended Year Incentive Program
Annual cost: $50 million
Utilize Remaining Funds from Reallocations to Increase the Basic Allotment
Annual cost: TBD
Link Tier II Copper Penny Yield to a Percentage of the Basic Allotment
Annual cost: $TBD

20. Texas Commission on Public School Finance – Expenditures Working Group
Recommendations
Link Tier II Golden Penny Yield to a Set Percentile of the Wealth per Student
Annual cost: $TBD

21. Upcoming Legislative Session
Questions?
Will the Legislature address funding for outcomes?
Formula change
Will the Legislature increase funding?
On top of increased property tax
Will the Legislature cap the guaranteed yield on tier 2 golden pennies?
Will the Legislature continue to use Grants vs formula change for targeted programs?

22. Upcoming Legislative Session
Copied from the Texas Tribune:
“Education Commissioner Mike Morath told state leaders TEA would require $3.8 billion less in state funds for the coming biennium–even to meet ever-growing enrollment–because previous legislation automatically pegged property tax growth at percent. That then leaves the state needing less to make up the total projection of what’s needed to fund schools at the level they are at now.”

23. Upcoming Legislative Session
Where do we go from here?

24. Recent TEA Correspondence: Final 2017–2018 School FIRST and Charter FIRST Ratings
Anticipated availability in the online School FIRST and Charter FIRST systems
Late October
Will be available to the public
Based the LEA’s financial data for fiscal year 2017
Financial indicators specified in 19 Texas Administrative Code (Changes have been approved for future years)
Final rating are considered for LEAs accreditation

25. Recent TEA Correspondence: Final 2017–2018 School and Charter FIRST Rating 
Reporting requirements
Public meeting to discuss and distribute
Within 2 months
Advertised once in newspaper
No more than 30 days before meeting
No fewer than 14 days before meeting
Can be included in regular Board meeting
Template for report available at: FIRST web page or FIRST Rating for Charter Schools web page

26. Recent TEA Correspondence: Validations of Fiscal Data Reported by LEAs for Federal Grants 
The Federal Fiscal Compliance and Reporting Division will conduct random validations of the self-reported data related to federal grants programs
Reports subject to validation this school year:
SC5050 Request for Federal Funding and Indirect Cost Rate for Charter Schools
Title I, Part A Comparability Computation Form
SC9000 Annual Survey of Children in Local Residential Facilities for the Neglected/Delinquent

27. Recent TEA Correspondence: Validations of Fiscal Data Reported by LEAs for Federal Grants 
Reports subject to validation this school year (Continued):
SC9010 Survey of Children in Stage Agency Facilities
Substitute System of Time and Effort Management Certification, Teacher Certifications, and Teacher Schedules
Special Education Consolidated Federal Grant Application, Schedule BS Fiscal Compliance Requirements
“Other data if needed”

28. Recent TEA Correspondence: Validations of Fiscal Data Reported by LEAs for Federal Grants 
Purpose - To ensure that LEAs provide reasonable assurance that grant objectives have been met through:
LEA’s system of accountability for federal grant funds
LEA’s system of internal controls.
Timeline for validations: Dependent on due date of reports and/or data submission
Can occur anytime after data submission is due
Any LEA can reasonably expect to be selected

29. Recent TEA Correspondence: 2018–2019 Significant Expansion of Enrollment—Open-Enrollment Charter Schools
Open-enrollment charter schools awarded 2018–2019
Every Student Succeeds Act (ESSA), and/or
Individual with Disabilities Education Act, Part B (IDEA-B)
May qualify for additional funding under those grants if:
They meet specific criteria defining significant expansion of enrollment.
Significant Expansion of Enrollment Criteria for ESSA
A minimum total student enrollment of 300
At least a 50% increase in the ages 5–17 student enrollment

30. Recent TEA Correspondence: 2018–2019 Significant Expansion of Enrollment—Open-Enrollment Charter Schools
Significant expansion of enrollment for IDEA-B, must meet both of the following criteria:
A minimum total student enrollment of 50
At least a 50% increase in the total student enrollment from previously reported student counts

31. Recent TEA Correspondence: School Health and Related Services (SHARS) Reporting Requirement
LEAs must submit the SHARS Reimbursement Report if:
Received IDEA-B grant funding in the 2017–2018 school year
Regardless of whether they received SHARS
The form is available from the GFFC Reports and Data Collections application
Deadline for submitting the form is October 31, 2018.

32. Recent TEA Correspondence: Micro-Purchase Threshold - EDGAR
Increases to the thresholds for micro-purchases and small purchases under the procurement rules in EDGAR:
Effective as of July 1, 2018, for all federal grant recipients
Micro-purchase threshold was increased from $3,500 to $10,000. The $10,000 is the maximum allowed in aggregate over the entire period of applicable grants

33. Recent TEA Correspondence: Micro-Purchase Threshold - EDGAR
Increases to the thresholds for micro-purchases and small purchases under the procurement rules in EDGAR:
Small purchase “simplified acquisition” threshold was increased from $150,000 to $250,000
but does not apply to ISDs/Charters in the State of Texas
More restrictive Texas Education Code (TEC)  requiring competitive procurement methods be used for purchases valued at $50,000 or more.

34. Recent TEA Correspondence: Financial Hardship Transition Program and the Adjustment for Rapid Decline in Taxable Value of Property
Districts do not need to apply to TEA to receive the payment from either program. 
Payments are scheduled for this month, October 2018. 
LEAs that are eligible for both programs, will receives funds for only the program that provides the greater amount. 

35. Recent TEA Correspondence: Attendance Projections for the 2019-2020 and 2020-2021
System opened on October 15, 2018.
Deadline: Midnight on December 14, 2018.
If submitted, your ADA and FTE estimates will be used in state aid calculations for school years 2019–2020 and 2020–2021.
If not submitted, TEA will use the ADA and FTE estimates established in the Attendance Projections subsystem in state aid calculations for school years 2019–2020 and 2020–2021.
Affects payments

36. Recent TEA Correspondence: Comparability of Service
Upcoming LEA Deadline: Title I, Part A Comparability of Services Requirement for the School Year:
Each year, LEAs that receive Title I, Part A funding are required to document their compliance with the Title I, Part A comparability of services requirement under the Every Student Succeeds Act (ESSA).
The deadline for submitting the CAD, and CCF if applicable, is November 16, 2018.

37. Recent TEA Correspondence: Comparability of Service
All LEAs that receive Title I, Part A funding must complete and submit to TEA the Comparability Assurance Document (CAD).
The CAD is now available for completion and submission electronically through an online survey.

38. Recent TEA Correspondence: Comparability of Service
LEAs that do not meet one of the defined exemption criteria must also complete and submit to TEA the Comparability Computation Form (CCF).
The CCF and instructions are available on the Title I, Part A Comparability of Services page of the TEA website and through the Grants and Federal Fiscal Compliance (GFFC) Reports and Data Collections secure application, accessible through TEAL.

39. Recent TEA Correspondence: Comparability of Service
Potential Consequences of Failing to Comply
Temporarily withhold cash payments pending correction of the deficiency or more severe enforcement action.
Disallow all or part of the cost of an activity or action not in compliance.
Wholly or partly suspend or terminate the federal award.
Initiate suspension or debarment proceedings.
Withhold further federal awards for the program.
Take other remedies that may be legally available.

40. Update: SOF Template New Template August 17, 2018
Loads final 2017 values
Adjusts NIFA

41. Reminder: AFR Due Dates
Fiscal Year End June 30: November 27, 2018
Fiscal Year End August 31: January 28, 2019

42. Questions and Comments