1. School Finance and Small Schools
How current law impacts small schools in Texas
Presented by the
Texas Association of Rural Schools

2. Basic terms you will need to know
ADA (Average Daily Attendance)
The number of students in attendance on average each day of the school year
BA (Basic Allotment)
Amount the state sets for the basic program costs for a “regular” child
The BA is adjusted to account for the higher cost for districts in certain areas (CEI)
ABA (Adjusted Basic Allotment)
The ABA is adjusted by the small and mid-size district adjustments
AA (Adjusted Allotment)
The amount the state uses to calculate each district’s revenue
Texas Association of Rural Schools

3. Chapter 42.103 Small Schools Formulas
At least 300 square miles
AA = (1+((1,600-ADA) x .0004)) x (ABA)
Less than 300 square miles
AA = (1+((1,600-ADA) x )) x (ABA)
Texas Association of Rural Schools

4. Small Schools Formula’s Impact
In our example, let’s assume
400 ADA
Less than 300 square miles
Texas Association of Rural Schools

5. Texas Association of Rural Schools
Example 1
AA = 1+((1600-ADA) x ) x ABA
AA = 1+(( ) x ) x ABA
AA = 1+(1200) x ) x ABA
AA = 1+(.30) x ABA
AA = 1.30 x ABA
Texas Association of Rural Schools

6. Texas Association of Rural Schools
A school with 400 ADA and less than 300 sq. miles gets a 30% increase in weights for all students
Texas Association of Rural Schools

7. Texas Association of Rural Schools
Example 2
AA = 1+((1600-ADA) x .0004) x ABA
AA = 1+(( ) x .0004) x ABA
AA = 1+(1200) x .0004) x ABA
AA = 1+(.48) x ABA
AA = 1.48 x ABA
Texas Association of Rural Schools

8. Texas Association of Rural Schools
A school with 400 ADA and at least 300 sq. miles gets a 48% increase in weights for all students
Texas Association of Rural Schools

9. Texas Association of Rural Schools
An increase of 30% or 48% is truly significant for small schools regardless of wealth.
Texas Association of Rural Schools

10. This is the life-blood of rural education in Texas
Texas Association of Rural Schools

11. Chapter 42.104—Requires use of AA in determining Special Allotments
The Adjusted Allotment—which includes the impact of the small schools formula—is used in calculating five special allotments
Special Education
Career and Technology (Vocational Education)
Compensatory Education
Bilingual/ESL Education
Gifted and Talented
Texas Association of Rural Schools

12. Importance of using AA in calculating special allotments
TEA originally tried to use ABA instead of AA in the calculation of these five special allotments
This would have resulted in a significant DECREASE in funding in ALL special programs…
…and would have ignored the extra cost to small districts
We must always maintain vigilance to protect the articles we fought for.
Texas Association of Rural Schools

13. Chapter 42.105—Sparsity Adjustment for very small schools
HB 1126 in 1975 session
Intent was to guarantee at least one teacher for each grade taught
HB 72 in 1984 special session
Switched to a pupil-centered approach to finance that guaranteed credit of 10 ADA per grade
Same effect—one teacher for each grade
Texas Association of Rural Schools

14. How the sparsity adjustment works
First example—K-12 district
Credited with 130 ADA…if
Have at least 90 ADA in current or preceding school year…or
Is 30 miles from the nearest neighboring high school
Texas Association of Rural Schools

15. How the sparsity adjustment works
First example—K-12 district
Credited with 130 ADA…if
Have at least 90 ADA in current or preceding school year…or
Is 30 miles from the nearest neighboring high school
Texas Association of Rural Schools

16. How the sparsity adjustment works
Second example—K-8 district
Credited with 75 ADA…if
Have at least 50 ADA in current or preceding school year…or
Is 30 miles from the nearest neighboring high school
Texas Association of Rural Schools

17. How the sparsity adjustment works
Final example—K-6 district
Credited with 60 ADA…if
Have at least 40 ADA in current or preceding school year…or
Is 30 miles from the nearest neighboring high school
Texas Association of Rural Schools

18. Texas Association of Rural Schools
Chapter —Adjusted Property Value for Districts Not Offering All Grade Levels
K-6 and K-8 districts send their secondary students to neighboring high schools
The loss of the “count” of these students increases the sending school’s wealth
Decreases state funding
Increases recapture for wealthy districts
But, these receiving districts often charge tuition
Sending school retains costs
Purpose—Recognizes this tuition cost by adjusting property value of the sending district
Texas Association of Rural Schools

19. Texas Association of Rural Schools
The formula…
ADPV = DPV – (TN/.015)
where:
ADPV is the district’s adjusted taxable value
DPV is the district’s actual property value before adjustments
TN is the total tuition paid
Texas Association of Rural Schools

20. Texas Association of Rural Schools
The TN/.015 is the taxable value necessary to pay the tuition. By reducing the district’s value by this amount, state revenue goes up (or recapture goes down) by an amount necessary to pay the tuition.
Texas Association of Rural Schools

21. An Example of How it Works
Let’s assume our district in this example
…has a property value of $20 million and
…pays a tuition of $500 for each 30 pupils
$500 x 30 students = $15,000 tuition paid
Texas Association of Rural Schools

22. An Example of How it Works
ADPV = DPV – (TN/.015)
ADPV = $20,000,000 – ($15,000/.015)
ADPV = $20,000,000 – ($1,000,000)
ADPV = $19,000,000
This represents a recovery of 5% of the total tax roll of this district.
Texas Association of Rural Schools

23. An Example of How it Works
ADPV = DPV – (TN/.015)
ADPV = $20,000,000 – ($15,000/.015)
ADPV = $20,000,000 – ($1,000,000)
ADPV = $19,000,000
This represents a recovery of 5% of the total tax roll of this district.
$30,000
$2,000,000
$18,000,000
10%
Texas Association of Rural Schools

24. Texas Association of Rural Schools
Chapter 41.21—Wealth per Student in Certain Districts Not Serving All Grades
Expires 9/1/2004, but is a current hold-harmless based on local and state revenue for wealthy districts
In , Chapter 41 districts were allowed to retain the ADA of students begin taught in a neighboring district.
This was allowed regardless of whether tuition was charged
Texas Association of Rural Schools

25. Chapter 46.003—School Facilities Allotment
FYA = (FYL x ADA x BTR x 100) – (BTR x DPV/100))
Not less than 400
Texas Association of Rural Schools

26. Chapter 46.005—Limitation on Amount of Facilities Allotment
Greater of:
$100,000; or
ADA times $250
Impact: 400 ADA x $250 = $100,000
Texas Association of Rural Schools

27. Chapter 46.010 Projects by More Than One District
Two or more districts may “co-op” to build a shared facility at a single location
Each district is entitled to a 20% higher amount than otherwise entitled to under Ch
Purpose: Encourage efficiencies by sharing new construction without having to consolidate districts
Texas Association of Rural Schools

28. Defending what we have fought for
Each of these provisions is a reflection of a specific need unique to small schools
These needs have not gone away.
If anything, with the new, increased demands, they are greater now than ever before
Texas Association of Rural Schools

29. Texas Association of Rural Schools
Summary
Small Schools Adjustments
Recognizes small classes and a need for more teachers
Use of small schools adjustments to calculate special allotments
Diseconomy of scale extends into special programs
Sparsity Allotment
Ensures revenue for minimum staffing
Adjustment for tuition paid by K-6 and K-8 districts
Recognizes actual expenses incurred by these districts in educating their students
Facilities Adjustments
Minimum of 400 ADA to achieve $100,000 project
Coop Incentive
Districts are allowed (even rewarded) to share new facility cost—without consolidating districts
Texas Association of Rural Schools

30. Texas Association of Rural Schools
Summary
Small Schools Adjustments
Use of small schools adjustments to calculate special allotments
Sparsity Allotment
Adjustment for tuition paid by K-6 and K-8 districts
Facilities Adjustments
Coop Incentive
Texas Association of Rural Schools