SCHOOL FINANCE FUNDAMENTALS

SCHOOL FINANCE FUNDAMENTALS An overview that determines the state and local revenue of a typical small/rural school Texas Association Of Rural Schools

Student Information Required • Total Refined ADA 295.000 • Sp Ed FTE 3.860 • Sp Ed WFTE 12.240 • Career & Technology FTE 10.260 • Comp Ed Students 108.000 • Biling/ESL ADA 2.930 • Gifted Ed ADA 14.750 • Regular ADA (1-2&4 above) 280.880 Texas Association Of Rural Schools

STATE ALLOTMENT CALCULATIONS • The first calculation is the Cost of Education Index (CEI). The CEI adjusts the Basic Allotment, a per pupil cost as set by the state, to account for personnel cost due to the cost of doing business in any given school district. • In our example the district has an index of 1.04 (a 4% add on) that is applied to 71% of the BA. It’s estimated that 71% of a district’s cost is for salaries. • Let’s see how the formula works ! Texas Association Of Rural Schools

THE ADJUSTED BASIC ALLOTMENT Basic Allotment @$4,765 ABA = ((BA *.71) * CEI) + (BA *.29) ABA = (($4,765 *.71) * 1.04) + ($4,765 *.29) ABA = ($3,383 * 1.04) + $1,382 ABA = $3,518 + $1,382 ABA = $4,900 This represents an increase of $135 per pupil over the original Basic Allotment. Texas Association Of Rural Schools

State Allotment Calculations(Continued) • The next step is the Small or Mid-size school calculation. • This adjustment recognizes the high cost of small classes. • The mid-size adjustment is for districts under 5000 pupils and the small adjustment is for districts under 1600 pupils. Both work the same way. • The small district adjustment has two factors: .0004 for districts over 300 sq miles and .00025 for districts under 300 sq miles and presumed to be small by choice. Mid-Size uses .000025. • In our next example we will assume our typical small school has less than 300 sq miles. Texas Association Of Rural Schools

THE ADJUSTED ALLOTMENTThe Adjusted Basic Allotment@ $4,900 AA = (1+((1600-ADA)*.00025)) * ABA AA = (1+((1600-280.88)*.00025)) * $4,900 AA = (1+(1319.12*.00025)) * $4,900 AA = (1 + .32978) * $4,900 AA = I.32978 * $4,900 AA = $6,516 This represents an $1,616 per pupil increase over the original Adjusted Basic Allotment and $1,761 per pupil over the original Basic Allotment. Texas Association Of Rural Schools

STATE ALLOTMENT CALCULATION(Continued) • We are now ready to calculate the Foundation School Program cost for our typical small school. • The pupil or student counts from our first slide x their appropriate weights x the Adjusted Allotment of $6,516. Texas Association Of Rural Schools

FOUNDATION PROGRAM COSTTypical Small / Rural School Reg. Program (280.88 X $6,516) $1,830,214 Sp Ed (12.240 X $6,516) 79,756 Career& Tech (10.26 X1 .35 X $6,516) 90,253 Comp Ed (108 X .20 X $6.516) 140,746 Biling/ESL (2.930 X .10 X $6,516) 1,909 Gifted (14.75 X .12 X $6,516) 11,533 Transportation (Separate Calculation) 31,597 New Facilities Allotment (Campus ADA X $250) 0 High School Allotment (80 ADA x $275) 22,000 Total FSP Cost $2,208,008 Texas Association Of Rural Schools

FOUNDATION SCHOOL PROGRAMLocal Share Calculation Our District Has a Wealth of $28,529,448 State Requires an $1.00 per $100 Local Share Therefore The local Share is: $28,529,448 X .0100 = $285,294 Now let’s summarize where we are… Texas Association Of Rural Schools

A SUMMARY OF STATE AID TO THIS POINT ALSO CALLED TIER 1 Reg program $1,830,214 Sp Ed 79,765 Career & Tech 90,253 Comp Ed 140,746 Biling/ESL 1,909 Gifted 11,533 Transportation 31,597 New Facilities 0 High School_____________________22,000 Total FSP $2,208,008 Less LFA - 285,294 Net State (Tier 1) $1,922,714 Texas Association Of Rural Schools

STATE ALLOTMENT CALCULATIONS CON’TGuaranteed Yield Allotment( GYA) • A district’s GYA is partly based on Weighted ADA so we must calculate the district WADA. • WADA equals the Total FSP less the transportation, the new facilities and high school allottments divided by the original BA less one half the effect of the ABA. • Thus : WADA = ( FSP – TRANS, FAC ,HS ) / ((( ABA – BA ) *.5 ) + BA ) WADA = (2,208,008- 53,597 ) / ((( 4,900 – 4,765 ) *.5 ) + 4,765 ) WADA = 2,154,411 / (( 135 *.5 ) + 4,765 ) WADA = 2,154411/ ( 67.5 + 4,765 ) WADA = 2,154,411 / 4,832.5 WADA = 445.82 Remember Refined ADA for the district was 280.88,therefore the use of WADA becomes an extreme issue for small/rural schools. Texas Association Of Rural Schools

GUARANTEED ALLOTMENT GYA(Continued) • The GYA or Tier 2 (The Golden Pennies) is calculated using the following: 1. WADA ( Calculated @ 445.82 ) 2. District Wealth ( $ 28,529,448 ) 3. District M&O Tax Rate above the Local Share of Tier 1(DTR) The Total M&O Tax Rate ($1.00), plus the GYA Pennies currently aloud by the State is $.06 ; therefore the DTR is $.06 4. Local Revenue (LR) is the amount raised by the DTR times District Wealth, therefore LR is $17,118 ($28,529,448*.0006) 5.State Guaranteed Level of wealth (GL) of $590,200 per WADA (Austin ISD) is stated as $59.02 per $.01 of tax effort • The GYA formula is as follows: GYA = ( G L * WADA * ( DTR * 100 ) – LR We will examine the formula on the next slide Texas Association Of Rural Schools

CALCULATING THE GYA • GYA = (GL * WADA * (DTR * 100) – LR GYA = ($59.02 * 445.82 * ($.06*100)) - $17,118) GYA = ($59.02 * 445.82 * 6) - $17,118) GYA = $157,874 - $17,118 GYA = $140,756 • Therefore the 2nd Tier (The Discretionary Tier) revenue for our typical small district is $ 140,756. Now we will Summarize Tier 1 and Tier 2. Texas Association Of Rural Schools

A SUMMARY OF REVENUE TYPICAL ISD • TIER 1 (FSP) $2,208,008 Less Local Share - 285,294 Net Tier 1 1,922,714 TIER 2 (GYA Discretionary Tier) 140,756 Technology @ $30 per ADA 8,850 • TOTAL STATE AID $2,072,320 $ 2,072,320 • LOCAL REVENUE Tier 1 Local Share $ 285,294 Tier 2 Local Share 17,118 • TOTAL LOCAL $ 302,412 $ 302,412 • GRAND TOTAL $ 2,374,732 Texas Association Of Rural Schools

SCHOOL FINANCE FUNDAMENTALS