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Proposed SBOE Rules for Maximum Allowable Indirect Cost Under Foundation School Program

Proposed SBOE Rules for Maximum Allowable Indirect Cost Under Foundation School Program. Committee on School Finance/Permanent School Fund Workshop October 16, 2009 Thomas D. Canby, Jr. Director of Research and Technology Texas Association of School Business Officials.

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Proposed SBOE Rules for Maximum Allowable Indirect Cost Under Foundation School Program

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  1. Proposed SBOE Rules for Maximum Allowable Indirect Cost Under Foundation School Program Committee on School Finance/Permanent School Fund Workshop October 16, 2009 Thomas D. Canby, Jr. Director of Research and Technology Texas Association of School Business Officials

  2. Authority Change Indirect Cost Rate • House Bill 3646, 81st Texas Legislature, 2009 • TEC, §42.1541 • Directed SBOE • Increase by rule the indirect cost allotments • Special education, • Bilingual education, and • Career and technical education programs • Effective for School Year 2009-2010

  3. Special Program Spending Requirements • Pre-81st Legislative Session • School Year 2008-2009 • 100 % - 15 % Indirect Cost Rate = 85% Minimum Expenditure Requirement • Compensatory education program • Gifted and talented education, • Bilingual education, and • Special education programs • 90% Minimum Expenditure Requirement • Career and Technical Education • Unchanged for many years

  4. HB 3646 - SCE Allotment • HB 3646, §42.152(c), • Indirect Cost Rate State Compensatory Education increased • From up to 15% to 45%

  5. SCE Change Background • Late in 81st Legislative Session • HB 3636 Amended • Texas Education Code §42.152(c) • Statutory provisions for SCE indirect cost rate • Spending mandate increase for FSP Special Programs • Resulted from increase to FSP Basic Allotment • Unfunded mandate - significant • Legislative solution • Increase indirect cost rate from up to 15% to 45% • Necessary avoid unintended consequences to Regular Education

  6. Misnomer • Use of term indirect cost rate • Misnomer • Change to 45% • Necessary to free up resources to fund Regular Education Allotment

  7. Adjustments and Weights • Funding Weights • FSP Special Programs • Did not change – Have changed little since 1984

  8. Special Education Spending vs FSP Allotment

  9. G&T Spending vs FSP Allotment

  10. Bilingual Spending vs FSP Allotment

  11. Career Tech Ed Spending vs FSP Allotment

  12. SCE Spending vs FSP Allotment

  13. Spending Constraints • FSP Revenue Limits • Target Revenue Amounts per WADA • FSP State aid and Local Property Taxes • May vary $1,000 or more between similar districts

  14. Foundation School Program • Select Committee on Public School Finance Weights, Allotments, and Adjustments • HB 3646 • Comprehensive review of weights, • Allotments and • Adjustments under the public school finance system

  15. School Year 2009-2010 • Major changes • Funding instructional programs • Not practical • Disruptive

  16. There are numerous special provisions in the law that apply only to a few districts or students Simplified

  17. Equalized System • Combined state and local revenue add to target amount per student • Higher local property values • Higher tax collections • Lower state aid • Lower local property values • Lower tax collections • Higher state aid • Current year’s attendance

  18. Tier I • Basic Allotment • Starting place number set by legislature • 2008-2009 = $3,218 • 2009-2010 = $4,765 • ≈ 48 % • Exception: Districts with tax rate < $1.50 in 2005-2006 • Increase is smaller • Only a few significantly less

  19. Adjustments and Weights • Did not change – Have changed little since 1984 • Basic Allotment Adjustments • Environment • Cost of Education Index – Last updated 1990 • Small School • Mid-Sized School • Exception: Ch 41 Districts • Program Weights • Exception: New programs

  20. Environment Adjustments • Cross Roads ISD – 563 ADA

  21. Tier I Programs • Calculated from Adjusted Allotment • Regular Program • Special Education • Career and Technology • Gifted & Talented • Compensatory Education • Bilingual Education

  22. Tier I Programs • SCE = SCE Students * Program Weight * AA • Example: • 2008-2009 328.7 * .2 * $4,241 = $245,564 • 2009-2010 328.7 * .2 * $5,905 = $425,987

  23. Tier I • Programs Not calculated from AA • New Instructional Facilities • Transportation • High School Allotment

  24. Hold Harmless • Target Revenue Amounts per WADA • HB 1 • 2005-2006 • Old law 2006-2007 • HB 3646 • Old Law 2009-2010 + $120 • Old law includes HB 1 targets • $350 maximum • May vary $1,000 or more between similar districts • $60 per WADA minimum spending for salary increase

  25. HB1, HB 3646 Comparison • Cross Roads ISD @ 2008-2009 ADA

  26. Indirect Cost • Set at up to 45% in legislation for SCE • SBOE charged to: “…increase the indirect cost allotments … to reflect the increased total … funding reflected by the basic allotment….” • TEA Staff Recommendations will maintain spending near 2008-2009 levels

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