1. Piecing It All Together 82 nd Legislative Regular and Special Session Review Moak, Casey & Associates July 2011 1Moak, Casey & Associates

2. 1. Where We Started 2. School Finance 3. Other Education Issues 4. What the Future Holds 5. Questions July 2011 2Moak, Casey & Associates

3.  School Finance Study unsuccessful  2010 elections – the Conservative takeover  Assessment/accountability plan  Comptroller Efficiency study  Eissler/ERG efficiency model  Barrage of attacks over staffing, performance, cost increases and perceived inefficiency July 2011 3Moak, Casey & Associates

4.  Use of federal revenues for current operations  State fund balances not replaced  Recession impact on sales tax  Structural deficit  No new revenue policy—no new taxes  Limited leadership response  Initial $12 billion cut below current commitment July 2011 4Moak, Casey & Associates

6.  The 2010-11 state budget had a deficit of $4+ billion  Leadership instituted a series of agency cuts prior to the legislative session  The Legislature enacted those reductions and voted to use Rainy Day Fund to fill hole: ◦ HB 4 by Pitts: enacts agency cuts and reduces 2011 appropriations by almost $800 million, including $90+ million to public education  $550 million was appropriated in this bill to offset any additional FSP costs in the 2010-11 biennium ◦ HB 275 by Pitts appropriates $3.2 billion from the Economic Stabilization Fund July 2011 6Moak, Casey & Associates

7.  Created in 1988, RDF receives ◦ 75% of oil and gas revenue that exceeds 1987 level ◦ 50% of unencumbered GR fund balance at end of biennium  Projected amount in RDF by August 2013: $9.7 billion  82 nd Legislature used: $3.2 billion  Remaining amount: $6.5 billion  Medicaid commitment (informal) $4.8 billion  Howard amendment defeated July 2011 7Moak, Casey & Associates

8. Funding SourceAmount Rainy Day Fund$3.2 billion (2011) August Payment Delay$2.0 to $2.3 billion Change in Revenue Estimate$1.5 billion Tax Speed-Ups$700 million Unclaimed Property Provisions$700,000 Increase in ASF$200-300 million * *Mostly one-time measures that will not generate revenue in future years July 2011 8Moak, Casey & Associates

9.  When looking at just the funding level for the FSP (Operations and Facilities), the 2012-13 amount totals $35.4 billion, a $1.8 billion decrease compared to 2010-11  However, this amount is $4 billion below what is required to fund Current Law formulas *Takes into account the $800 million FSP adjustment in Article IX and the August payment delay July 2011 9Moak, Casey & Associates

10. In addition to underfunding the FSP, the Legislature made over $1.3 billion in cuts to programs and grant funding: 1.$271 million, Technology Allotment 2.$223.3 million, Pre-Kindergarten Grant Program 3.$269.7 million, SSI ($23.5m remains for 2012-13) 4.$345.1 million, DATE ($40m remains for 2012-13)  Up to $5m for implementing standards on educator quality  Up to $10m for an educator mentor program  Up to $1m for Humanities Texas 5.$50 million, New Instructional Facilities Allotment July 2011 10Moak, Casey & Associates

11. Other programs eliminated: 1.$35 million, Science Lab Grants 2.$20 million, Middle School PE Grants 3.$14.1 million, Optional Extended Year 4.$10 million, School Bus Seat Belt Program 5.New Round of Instructional Facilities Allotment 6.Property Value Decline Protections 7.ADA Decline Protections July 2011 11Moak, Casey & Associates

12.  $25 million, Service Centers ($40.7m in 2010-11) ◦ New funding system: two-thirds of funding most flow based on geographic considerations and districts serving less than 1,600 students ◦ Sunset in 2015  $3.5 million, Campus Intervention and Campus Turnaround Teams ($1.5 million in 2010-11) ◦ Up to $1.5 million of which is for the development of financial and productivity tools July 2011 12Moak, Casey & Associates

13.  $20m, Communities in Schools ($32m-2010-11)  $13.8m, AP Incentives ($19.7m-2010-11)  $17m, JJAEPs ($22.9m in 2010-11)  $8m, Teach for America ($8m in 2010-11)  $8m, Virtual Schools ($20.3m in 2010-11)  $6m, Early College High School and TSTEM  $1.3m, Steroid Testing ($2m in 2010-11) July 2011 13Moak, Casey & Associates

14.  For the first time in 60 years, the legislature failed to finance current law  Foundation Program current services state aid was decreased by $4 billion  Special Program financing was decreased by $1.3 billion  The total decrease was $5.3 billion when the cost of enrollment growth, property value decline, and other factors is taken into account June 26-28, 2011 Moak, Casey & Associates14

15. There is an approximately $22 million reduction in state funds (from current law) for 2011-12; For 2012-13—a reduction of $32 million July 2011 Moak, Casey & Associates15

16.  About 85% of the LISD Operating budget is in personnel;  To achieve a balanced budget for 2012-13 the district will need to reduce staff even more.  Class sizes could go up and other programs redirected or restructured. July 2011 Moak, Casey & Associates16

17.  Directs the SBOE to adjust special program spending requirements to align with overall reductions in FSP revenue for special education, compensatory education, bilingual education, career and technology July 2011 17Moak, Casey & Associates

18.  $830 million  SB 1 states TRS may not consider salaries of personnel paid wholly or partly from the Education Jobs Fund distributed to school districts as being paid from federal funds  Legislature used funding to portray offset to cuts in first year of biennium  LISD used the Jobs monies to reduce the deficit for 2010-11. July 2011 18Moak, Casey & Associates

19.  What didn’t happen  Tax rate elections  Debt service issues for high I&S tax rate school districts July 2011 19Moak, Casey & Associates

20.  Not affected by any school finance bills (so far)  Secretary of State rules Election Code trumps Tax Code unless a special exception exists July 2011 20Moak, Casey & Associates