TEA School Finance Update

Transcription

1 TEA School Finance Update Fall Superintendents Leadership Conference October 25, 2016 LEO LOPEZ, RTSBA ASSOCIATE COMMISSIONER / CHIEF SCHOOL FINANCE OFFICER TEXAS EDUCATION AGENCY 1 Agenda TEA Organizational Changes Financial Compliance Update State Funding Update Questions 2 1

2 Organization Chart 3 Organization Chart Kara Belew Deputy Commissioner of Finance Chief School Finance Officer (Leo Lopez) Chief Financial Officer (Shirley Beaulieu) Chief Investment Officer (Holland Timmons) Associate Commissioner for Grants and Federal Fiscal Compliance (Dr. Nora Hancock) Director of Financial Compliance (David Marx) Director of State Funding (Al McKenzie) 4 2

3 Department of School Finance State Funding Foundation School Program (Chapter 42) Wealth Equalization (Chapter 41) EDA and IFA facilities funding (Chapter 46) Permanent School Fund (PSF) Bond Guarantee Program (BGP) Financial Compliance Financial Integrity Rating System of Texas (FIRST) Financial Accountability System Resource Guide (FASRG) Student Attendance Accounting (SAAH) Annual Financial and Compliance Report (AFR) 5 Financial Compliance Update RECENT UPDATES, HOT TOPICS AND WHAT S ON THE HORIZON FROM THE FINANCIAL COMPLIANCE DIVISION 6 3

4 House Bill 2610 (the minutes bill) A TAA letter went out on August 19, 2016 Rules regarding student eligibility for half day and full day funding/attendance have not changed (i.e. the 120 / 240 classroom minute requirements remain in place) In order to avoid a proportional reduction in FSP funding, districts must meet or exceed 75,600 minutes of operation on each campus (including any approved waiver minutes) 7 House Bill 2610 (the minutes bill) An operational day with less than 420 minutes will not have funding reduced, as long as the minimum 75,600 minutes of operation are met by the end of the year. Full day pre kindergarten have an automatic one year waiver in but will need to have at least 37,800 minutes of operation in in order to avoid a reduction in FSP. Dropout recovery programs and charters previously operating with less than 75,600 minutes will need to apply for a one year waiver in but will need to get up to the 75,600 minutes of operation in to avoid a reduction in FSP. 8 4

5 School FIRST Final Ratings for school districts Ratings Count % of Total Enrollment % of Total Enrollment A = Superior 1, % 4,857, % B = Above Standard % 67, % F = Substandard Achievement % 60, % Total 1, % 4,985, % School FIRST Final Ratings for charter schools Ratings Count % of Total Enrollment % of Total Enrollment A = Superior % 191, % B = Above Standard % 16, % F = Substandard Achievement % 1, % Total % 209, % 10 5

6 School FIRST rating scale becomes more rigorous next year Ratings Rating Scale Rating Scale A = Superior points points B = Above Standard points points C = Meets Standard points points F = Substandard Achievement (or automatic failure on critical indicator) 0 30 points 0 59 points 11 Charter Depository Contract Request In order to ensure that the TEA has up to date records for all charter schools, a TAA letter dated August 24, 2016 requested that all charter schools respond with a copy of the signed and completed depository contract. The contracts should be current with the board president as the authorized bank officer. The contract submission is due electronically by December 1,

7 Depository Contracts Update Financial Compliance Division is undertaking an update to the depository contract language and associated forms. The goal is to increase flexibility for school districts as well as banks. The changes must go before the State Board of Education (SBOE) so the changes will require three SBOE meetings. 13 Depository Contracts Update Changes to the bid/proposal form The ability to change rates in contract extension years The ability to use other banking institutions that are insured or collateralized outside of the banking services bank The ability to change from a compensating basis to a fee basis or vice versa The ability to use a letter of credit but with a preference of pledged securities to insure public funds Update references of outdated technological changes 14 7

8 Changes to financial reporting for districts with Chapter 313 Projects Refer to previous To The Administrator Addressed letter, dated January 13, 2015 (listed under 1/12/2016) Changes to procedures for the school year apply to districts that have active agreements under Chapter 313 of the Texas Property Tax Code and that have companies subject to tax credits. This change in methodology is the result of a State Auditor s report on the Chapter 313 agreements. 15 Changes to financial reporting for districts with Chapter 313 Projects Affected districts must net those credits against taxes paid (rather than requiring the company to pay full taxes and then issuing a reimbursement to the company in the amount of the tax credit). Because tax collections on the Schedule J 1 of Delinquent Taxes Receivable will now be net of these credits, districts should budget estimates of state aid and recapture accordingly. 16 8

9 Annual Financial Report Per Texas Education Code (TEC) , a copy of the annual financial report (approved by the board of trustees) is due to TEA by the 150 th day after the end of the fiscal year. AFR is due by November 27 for districts whose fiscal years end on June 30 AFR is due by January 28 for districts whose fiscal years end on August 30 Statute does not provide for an extension due to holiday or weekends 17 Annual Financial Report There are two components of the AFR submission: PDF of the signed and approved report Electronic data feed (or excel template for charters) In order for the AFR submission to be considered complete, both components must be submitted by the deadline. Common oversights include uploading the PDF without the proper signatures and failing to click submit on the electronic submission of the financial data. 18 9

10 Special Allotment Expenditure Monitoring Supplemental state allotment direct expenditure requirements are as follows for each supplemental state allotment area. Special Education = 52% Compensatory Education= 52% Bilingual Education= 52% Career and Technology Education= 58% Gifted and Talented Education = 55% High School Education = 100% 19 Special Allotment Expenditure Monitoring Assessment & Analysis School districts, open enrollment charter schools and full time virtual schools are all subject to review. The monitoring program s risk assessment process is based on three consecutive state fiscal years of the LEA financial data reported in the Foundation School Program (FSP) System and the Public Education Information Management System (PEIMS). The risk assessment is designed to analyze the LEA s special allotment spending and reporting requirements for the purpose of identifying potential non compliance issues

11 Special Allotment Monitoring Flowchart Step1 Step 2 Step 3 Using a 3 year Average Calculation over a period of three fiscal years. The TEA identifies LEAs with underutilized supplemental state allotment program funds. The TEA notifies LEAs by letter that they have underutilized funds and must come into compliance with mandated supplemental state allotment expenditure requirements. Based on the level of underutilization, the TEA will provide corrective action plans or conduct further monitoring review activities to seek LEA statutory compliance. 21 Special Allotment Monitoring Source Data The TEA Special Allotment Variance Report. This report analyzes the LEA s special allotment program expenditure totals averaged over three fiscal years The Summary of Finance Report: Near Final, September. This report identifies the state revenue for each of the allotted programs. The PEIMS EDIT PLUS +: PRF1D007, Midyear Collection Actual Compliance Report General Fund Allocated. This report breaks down direct costs versus indirect costs within each program intent code (PIC) and Function code. The PEIMS EDIT PLUS +: PRF1D003, Midyear Collection Actual Allocated Expenditures by Program and Object code within Function General Fund. This report identifies expenditures amounts within each PIC by Object code

12 TEA Special Allotment Variance Report Program Intent Code (PIC) PIC 23, 33 PIC 24, 26, 28, 29, 30, 34 PIC 25, 35 PIC 22 PIC 21 PIC 31 Supplemental State Allotment Area Special Education Compensatory Education Bilingual Education Career and Technology Education Gifted and Talented High School Education Required Level of Spending 52% 52% 52% 58% 55% 100% Make up the difference in the next year following the compliance review In Compliance In Compliance In Compliance In Compliance In Compliance In Compliance Summary of Finance 3 year average $ 52,078,287 $ 57,653,723 $ 10,561,978 $ 16,719,925 $ 2,438,024 $ 5,127,039 Actual Expenditures 3 year average $ 107,992,731 $ 47,077,146 $ 92,979,131 $ 11,730,138 $ 2,528,362 $ 5,122,318 Percent of funds Expended 3 year average 207% 82% 880% 70% 104% 100% Fiscal Year (FY) 12 Summary of Finance $ 52,225,457 $ 57,035,746 $ 10,566,369 $ 16,332,931 $ 2,416,282 $ 5,057,232 PEIMS Report $ 105,242,023 $ 45,579,816 $ 115,367,553 $ 11,801,107 $ 2,443,877 $ 5,342,529 Actual Percent of funds Expended 202% 80% 1092% 72% 101% 106% Fiscal Year (FY) 13 Summary of Finance $ 51,851,756 $ 57,470,710 $ 10,509,754 $ 16,475,647 $ 2,417,734 $ 5,149,291 PEIMS Report $ 108,481,524 $ 49,655,606 $ 135,436,557 $ 11,600,182 $ 2,129,832 $ 4,688,930 Actual Percent of funds Expended 209% 86% 1289% 70% 88% 91% Fiscal Year (FY) 14 Summary of Finance $ 52,157,649 $ 58,454,713 $ 10,609,812 $ 17,351,197 $ 2,480,057 $ 5,174,595 PEIMS Report $ 110,254,646 $ 45,996,017 $ 28,133,284 $ 11,789,126 $ 3,011,376 $ 5,335,496 Actual Percent of funds Expended 211% 79% 265% 68% 121% 103% 23 State Funding Update RECENT UPDATES, HOT TOPICS AND WHAT S ON THE HORIZON FROM THE STATE FUNDING DIVISION 24 12

13 Near Final Summary of Finances (SOF) The near final SOF was published in September and includes PEIMS Attendance (including Advanced CTE) Staff Salary data Tax collection data Transportation data Updated debt information for EDA and IFA Near Final Summary of Finances (SOF) Below are the statewide trends from the near final settle up Legislative Payment Estimate District Planning Estimate Difference Average Daily Attendance 4,945,468 4,924,588 (20,888) WADA 6,668,676 6,673,490 4,814 M&O Tax Collections $21,349,705,139 $21,982,630,859 $632,925,720 FSP (M&O) State Aid $19,672,773,347 $19,842,828,359 $170,055,

14 Near Final Summary of Finances (SOF) October 12, 2016 To The Administrator Addressed (TAA) letter informs of correction to special education mainstream average daily attendance for some districts. If your district submitted data through the Texas Student Data System (TSDS) Summer Collection, it is likely your district is affected. Approximately 560 districts were affected, with the correction totaling about 2,650 mainstream ADA Near Final Summary of Finances (SOF) The statewide dollar amounts total: $452 million in payments made to school districts and charters in September $318 million in balances owed back to the state have been transferred to for repayment Balances owed due to the mainstream correction will be transferred to for repayment in October 28 14

15 Summary of Finances (SOF) Basic allotment and equalized wealth level stay the same as ($5,140 and $514,000) The guaranteed yield for the golden pennies increases from $74.28 to $77.53 Revised Available School Fund rate ($390) Attendance projections used in LPE submitted by districts in the Fall of Summary of Finances (SOF) LPE property values used to calculate state share of FSP are the greater of the tax year 2015 T2 value from the comptroller or the 2014 T2 value increased by 4.56% M&O Tax Collections for LPE are the greater of the 2015 collections * 4.56% * 6.18% or 2016 PEIMS budgeted * 6.18% TEC (b) requires TEA to make payments based on the estimates used at the time of the appropriation 30 15

16 Summary of Finances (SOF) The latest SOF now incorporates compressed tax rate conversions, IFA and EDA allotments and payment classes Updates to come later on in the fiscal year include New Instructional Facility Allotments (NIFA), M&O tax rates, state compensatory education (SCE) and Chapter 41 data Payments for IFA and EDA are currently on track for November Fast growth charters / payment schedule Charter schools with more than 10 percent growth in enrollment when compared with the prior year may request an accelerated payment schedule Once approved, the accelerated schedule is automatic for three years Requests for accelerated payment schedules must be submitted via the charter school module in TEASE 32 16

17 IFA and EDA Instructional Facilities Allotment amounts have been calculated for , including $55.5 million for the latest round (Round 11) Facilities funding payments will exceed $500 million and are close to an even split (IFA = $241 million, and EDA = $264 million) Payments are on track for a November 2016 distribution. 33 TEA State Aid Template Version 7 The state aid template has been revised with updated information for It auto populates with LPE data from the Summary of Finances The excel template does not create a funding entitlement, only the SOF is the official source for generating a state aid payment 34 17

18 TEA State Aid Template Version 7: Where can I find it? 35 TEA State Aid Template Version

19 Attendance Projections Attendance projections module opened October 15th Initial projections are made using a four year average growth rate. Districts can accept projections or make changes. If making revisions, final submissions are due December 15 th These projections will impact cash flow (LPE) for the next biennium 37 Attendance Projections Don t leave them in Submitted to Superintendent status 38 19

20 Additional State Aid for Tax Reduction (ASATR) Statutory provisions for ASATR expire September 1, 2017 Unless the Legislature takes action, there will be no ASATR funds beginning with the school year. ASATR is estimated to deliver $220 million in state aid to 180 districts in the school year 39 The State will have paid over $22 billion in ASATR by the end of the 2017 fiscal year $6,000 (IN MILLIONS) $5,000 $4,000 $3,000 $2,000 $1,000 Increases to the Basic Allotment coupled with local property value growth has led to a shift from hold harmless to formula funding for most school districts. $ Total ASATR $2,248.1 $5,675.2 $5,388.4 $2,175.5 $2,481.7 $2,110.9 $609.9 $439.1 $234.9 $339.9 $220.3 $

21 Funding for Reimbursement of Disaster Remediation Costs 19 TAC (Foundation School Program Funding) and 19 TAC (Credit Against Chapter 41 Recapture) Reimbursement for Chapter 42 districts requires a surplus in the FSP while reimbursement for Chapter 41 districts does not. Application form will be available on the state funding website in November Property Value Decline Many districts have recently experienced a loss of property value due to the decline in the price of crude oil. Although there is a provision in the TEC (a) that provides for assistance for rapid property value decline, this provision requires an appropriation and a projected surplus in the FSP is also required. In the biennium, there was no appropriation for this provision in the General Appropriations Act

22 Property value decline, a statewide perspective: 1.Districts marked in Blue have declining property values 2.Districts in red and orange still have rapidly increasing values and include the major urban areas of the state 3.Overall the state still has increasing value 43 Questions Leo Lopez, RTSBA Chief School Finance Officer Leo.Lopez@tea.texas.gov (512) David Marx, CPA Director of Financial Compliance David.Marx@tea.texas.gov (512) Al McKenzie Director of State Funding Al.McKenzie@tea.texas.gov (512)