Estimating Revenue under HB 3

Learn the changes in the state aid calculations for next year, some of which will require your district to access new data elements.

There are many changes in the state aid calculations for next year, some of which will require your district to access new data elements. If you haven't seen it, Omar has released a template here: As with any year in which there are changes as significant as these, we expect everyone may need to modify assumptions as clarity emerges with respect to all of the calculations. Below is our current, best understanding of an approach you might take to estimating revenue for next year as it relates to new data elements. As always, if we can help you as you work through this, please call on us.

2019 Comptroller's Property Value: One of the more significant changes in House Bill 3 involves moving to current-year property values for the calculation of state aid. This will mean districts will need to estimate the T2 property value that will eventually come out of the property value study prior to the adoption budgets. Typically, the comptroller certifies preliminary values in January and the final value in August after the close of the relevant school year, which would mean that this value will not officially be available until settle up. Assuming this timeline remains, districts will need to estimate this value for the completion of a state aid template.

The T2 property value certified by the comptroller should track reasonably closely with your locally certified taxable property value with a few exceptions. First, the property value study will not deduct value you lose as a function of granting certain optional exemptions. The largest example of this is the optional homestead exemption for those districts that offer one (this is the percentage local option exemption, not the mandatory dollar exemption that all districts give). Second, if your local appraisal district has certified values that are outside the confidence interval, you could have state values assigned. In most cases, you have warning that this is about to occur and you should know that the possibility exists.

One reasonable method for estimating the 2019 T2 value would be to go back 5 years and see whether the percentage increase in the T2 value tracks relatively closely to the percentage increase in the local taxable value. So if your local taxable value increased by 4.6 percent between tax year 2017 and 2018, did your T2 DPV grow by that same percentage. We think that in most cases, it will. If so, you can take the percentage increase in your local taxable value between tax years 2018 and 2019 and apply it to the T2 DPV from 2018 and get reasonably close. However, if there is significant variation, or if you think you are at risk of receiving state values, you may want to use a more conservative projection. Remember that the higher the T2 DPV you use, the higher your local share will be, and thus the lower your state aid estimate.

Compensatory Education: The law around compensatory education changed significantly. The state is moving from a system in which all low-income students drew the same weight to a system in which educationally disadvantaged students draw variable weights depending on where they live in relation to census data. House Bill 3 strikes current law language related to the count of students being based on the best six month average participation in the federal free and reduced-price lunch program and instead refers to "educationally disadvantaged" students. TEA will need to determine whether to move to a new count (like the PEIMS count of students who are low income) or to retain the current-law lunch-based approach. For districts that currently use the federal CEP program, these counts may be very different. Once this count is known, the process of determining which students fall into which census-based weights will begin. The weights for these programs vary from .225 to .275. It is not possible to know right now which students will draw which weights because the law directs the commissioner to appoint a committee to help make those determinations. One helpful thing included in the bill was the suspension of holding districts accountable for spending requirements related to compensatory education in this first year. You may want to compare your PEIMS low income count to your traditional FSP low income count and see how different they are for your district. You may also want to allocate that count of students across the spectrum of weights, or you may want to set students into the lowest-funded bucket as a starting place and wait for the Agency to provide additional guidance. To some degree, your approach will vary depending on the economic conditions in which you operate.

Early Education Weighted Funding: Districts are entitled to additional funding for the number of students in ADA who are in grade k - 3 and are low-income or ELL. The bill specifies that students who are in these grades and fall into both categories (low income and ELL) are eligible for funding under both portions of the program. Therefore, you should sum the ADA expected for k - 3 low income students with the count expected for k - 3 ELL. Note that to qualify as ELL, the student must be receiving bilingual or special language instruction. These students may also continue to draw down funding under the bilingual education or bilingual education program.

Dyslexia Funding: Districts will now be able to draw additional funding for students who are identified and receiving services under a dyslexia program. The bill does not specify ADA, so we assume this will be an enrollment count. The bill does specify that these students must be either identified through special education or a 504 program. They must also be receiving instruction in a program that meets applicable program criteria established by SBOE and is provided by a person with specific training in providing that instruction, or is permitted to use modifications in the classroom or accommodations in the administration of assessments under TEC 39.023.

Dual Language ADA: In addition to knowing your total count of students for the bilingual education program, you will need to know the count of students who are served in a dual language program, broken out by ELL and non-ELL students served in this way.

Career and Technology Education Funding: Weighted funding is extended to include students in grades 7 and 8. In addition to the weighted funding provided through the CTE allotment, the district will earn $50 for each CTE FTE at a campus that is designated either as a P-TECH school or a member of the New Tech Network.

Teacher Incentive Allotment: This is a new program that will allow districts to earn funds for the purpose of providing teachers who meet certain requirements with higher compensation. While we expect that many of the details for the three new teacher designations will become clearer over the next few months, the bill does clearly indicate that any teacher that holds a National Board Certification issued by the National Board for Professional Teaching Standards can be designated under the "recognized" category and should be able to draw down additional funds under the terms of the bill. Consequently, if you do not already track this information, you may wish to begin doing so. Be aware that 90% of funds earned under this allotment must be used to provide compensation at the campus where the teacher for whom the district received the allotment is employed. Based on bill language, we do anticipate that these funds would flow as part of the foundation school program.

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