ESC 1 Finance Council IFA and EDA Update. September 20, 2013

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1 ESC 1 Finance Council IFA and EDA Update September 20, 2013

2 ESC 1 Finance Council Agenda Unequalized Local Tax Collections Ledger Balances Refunding Amendments Questions 9/19/2013 2

3 Unequalized Local Collections What are they? A record of tax collections that have not received state assistance I&S tax collections in a preceding year in excess of the amount needed to pay the district s local share of debt service under IFA and EDA M&O collections in the current year or a preceding year in excess of the amount eligible to generate other state assistance 9/19/2013 3

4 Unequalized Local Collections What are they? A record of tax collections that have not received state assistance I&S tax collections in a preceding year in excess of the amount needed to pay the district s local share of debt service under IFA and EDA M&O collections in the current year or a preceding year in excess of the amount eligible to generate other state assistance Not dollars available for spending, only a record of collections that can be used for meeting the local share requirement test 9/19/2013 4

5 Unequalized Local Collections What is the statutory basis for using unequalized local collections? TEC (d) for IFA and TEC (c) for EDA 9/19/2013 5

6 Unequalized Local Collections How are they generated? I&S taxes Each year, actual I&S taxes are compared to the local shares of IFA and EDA. Taxes over the amount needed to meet the local share are considered unequalized. McAllen ISD Example: I&S Tax Collections: $7,436,354 EDA Local Share: -$5,803,774 IFA Local Share -$1,143,224 Unequalized Collections $489,356 9/19/2013 6

7 Unequalized Local Collections M&O taxes Prior to tax compression in 2006, unequalized collections were earned in Tier II Unequalized collections are no longer generated in Tier II, but can be generated in Tier I For districts not receiving ASATR, collections at the CTR (net of recapture) must be greater than the LFA Mission ISD Example M&O Collections at CTR: $15,325,351 Local Fund Assignment: -$15,203,265 Unequalized Collections: $122,086 9/19/2013 7

8 Unequalized Local Collections How are they used? To receive full state assistance in EDA and IFA, a district must meet its local share requirement (a) for IFA and (a) for EDA If the district does not meet the local share of IFA or EDA in a given year, TEA will look to see if the district has remaining unequalized local collections built up over prior years They are applied first to EDA, then to IFA If a shortfall remains, state aid must be reduced proportionately 9/19/2013 8

9 Unequalized Local Collections How are they used? Donna ISD Example ( ): I&S Tax Collections: $873,267 EDA Local Share: - $0 IFA Local Share: - $1,696,575 Shortfall in Collections: -$823,308 Unequalized Available: $1,173,024 Unequalized Remaining: $349,716 Since there were sufficient unequalized collections available, the district receives full state funding 9/19/2013 9

10 Unequalized Local Collections What happens if a district runs out of unequalized collections? Back to the Donna example: I&S Tax Collections: $873,267 EDA Local Share: - $0 IFA Local Share: - $1,696,575 Shortfall in Collections: -$823,308 If Donna had no unequalized collections available, state aid would have been reduced proportionately. 9/19/

11 Unequalized Local Collections What happens if a district runs out of unequalized collections? Back to the Donna example (assuming no available unequalized collections): Shortfall in Collections -$823,308 Percentage Shortfall 48.53% IFA State Share $7,036,951 Reduction to State Share -$3,415,032 9/19/

12 Unequalized Local Collections Where can I find a record of Unequalized Local Collections? TEA will keep a record on the state funding website: School Finance/Facilities Funding and Standards / EDA or IFA The record will be updated now that the Near Final SOF has been published These data should be incorporated into payment reports and payment ledgers this fall The payment report will show the impact on the DPE, Near Final and Final sides only (to avoid potentially unnecessary LPE penalties) 9/19/

13 Unequalized Local Collections What should districts be doing? Monitor the unequalized local collections spreadsheet to see if you are draining the bank of unequalized collections If so, ensure a sufficient I&S tax rate to meet the local share requirement or plan for reduced state aid 9/19/

14 FSP PAYMENT LEDGERS How to locate and use the SOF payment ledgers 9/19/

15 FSP Payment Ledgers Payment ledgers can be accessed along with SOF reports. There are unique payment ledgers for: Foundation IFA EDA Chapter 41 9/19/

16 FSP Payment Ledgers Negative balances from prior years are generally rolled to the current year Positive balances from a prior year are generally paid when they are generated Negative balances on the EDA ledger can be transferred to the FSP when there is no EDA anticipated in the next year We can accept payments from school districts for programs other than chapter 41, but we need careful instructions to ensure that you receive proper credit for the payment 9/19/

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18 IFA AMENDMENTS 9/19/

19 IFA Amendments TEA has set up an automated procedure for processing amendments This process uses electronic submission from the districts which can be approved at TEA 9/19/

20 IFA Amendments 9/19/

21 IFA Amendments 9/19/

22 Process for Submitting Amendments Log in to TEASE Select Bond Programs from the Programs Menu Select Refund and IFA Bond (do not select amend and IFA bond if it is a refunding) Select the refunded bond from the dropdown menu Select the refunding bond from the instrument menu Fill in the appropriate information and submit to TEA (requires 2 layers of approval in the district) 9/19/

23 Questions? 9/19/