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2005 Texas Education Code CHAPTER 42. FOUNDATION SCHOOL PROGRAM
TITLE 2. PUBLIC EDUCATION SUBTITLE I. SCHOOL FINANCE AND FISCAL MANAGEMENT CHAPTER 42. FOUNDATION SCHOOL PROGRAM SUBCHAPTER A. GENERAL PROVISIONS § 42.001. STATE POLICY. (a) It is the policy of this state that the provision of public education is a state responsibility and that a thorough and efficient system be provided and substantially financed through state revenue sources so that each student enrolled in the public school system shall have access to programs and services that are appropriate to the student's educational needs and that are substantially equal to those available to any similar student, notwithstanding varying local economic factors. (b) The public school finance system of this state shall adhere to a standard of neutrality that provides for substantially equal access to similar revenue per student at similar tax effort, considering all state and local tax revenues of districts after acknowledging all legitimate student and district cost differences. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.002. PURPOSES OF FOUNDATION SCHOOL PROGRAM. (a) The purposes of the Foundation School Program set forth in this chapter are to guarantee that each school district in the state has: (1) adequate resources to provide each eligible student a basic instructional program and facilities suitable to the student's educational needs; and (2) access to a substantially equalized program of financing in excess of basic costs for certain services, as provided by this chapter. (b) The Foundation School Program consists of: (1) two tiers that in combination provide for: (A) sufficient financing for all school districts to provide a basic program of education that is rated academically acceptable or higher under Section 39.072 and meets other applicable legal standards; and (B) substantially equal access to funds to provide an enriched program; and (2) a facilities component as provided by Chapter 46. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1999, 76th Leg., ch. 396, § 1.09, eff. Sept. 1, 1999. § 42.003. STUDENT ELIGIBILITY. (a) A student is entitled to the benefits of the Foundation School Program if the student is 5 years of age or older and under 21 years of age on September 1 of the school year and has not graduated from high school. (b) A student to whom Subsection (a) does not apply is entitled to the benefits of the Foundation School Program if the student is enrolled in a prekindergarten class under Section 29.153. (c) A child may be enrolled in the first grade if the child is at least six years of age at the beginning of the school year of the district or has been enrolled in the first grade or has completed kindergarten in the public schools in another state before transferring to a public school in this state. (d) Notwithstanding Subsection (a), a student younger than five years of age is entitled to the benefits of the Foundation School Program if: (1) the student performs satisfactorily on the assessment instrument administered under Section 39.023(a) to students in the third grade; and (2) the district has adopted a policy for admitting students younger than five years of age. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.004. ADMINISTRATION OF THE PROGRAM. The commissioner, in accordance with the rules of the State Board of Education, shall take such action and require such reports consistent with this chapter as may be necessary to implement and administer the Foundation School Program. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.005. AVERAGE DAILY ATTENDANCE. (a) In this chapter, average daily attendance is: (1) the quotient of the sum of attendance for each day of the minimum number of days of instruction as described under Section 25.081(a) divided by the minimum number of days of instruction; or (2) for a district that operates under a flexible year program under Section 29.0821, the quotient of the sum of attendance for each actual day of instruction as permitted by Section 29.0821(b)(1) divided by the number of actual days of instruction as permitted by Section 29.0821(b)(1). (a-1) Expired. (b) A school district that experiences a decline of two percent or more in average daily attendance shall be funded on the basis of: (1) the actual average daily attendance of the preceding school year, if the decline is the result of the closing or reduction in personnel of a military base; or (2) subject to Subsection (e), an average daily attendance not to exceed 98 percent of the actual average daily attendance of the preceding school year, if the decline is not the result of the closing or reduction in personnel of a military base. (c) The commissioner shall adjust the average daily attendance of a school district that has a significant percentage of students who are migratory children as defined by 20 U.S.C. Section 6399. (d) The commissioner may adjust the average daily attendance of a school district in which a disaster, flood, extreme weather condition, fuel curtailment, or other calamity has a significant effect on the district's attendance. (e) For each school year, the commissioner shall adjust the average daily attendance of school districts that are entitled to funding on the basis of an adjusted average daily attendance under Subsection (b)(2) so that: (1) all districts are funded on the basis of the same percentage of the preceding year's actual average daily attendance; and (2) the total cost to the state does not exceed the amount specifically appropriated for that year for purposes of Subsection (b)(2). (f) An open-enrollment charter school is not entitled to funding based on an adjustment under Subsection (b)(2). (g) If a student may receive course credit toward the student's high school academic requirements and toward the student's higher education academic requirements for a single course, the time during which the student attends the course shall be counted as part of the minimum number of instructional hours required for a student to be considered a full-time student in average daily attendance for purposes of this section. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 12, eff. Sept. 1, 1997; Acts 2001, 77th Leg., ch. 924, § 1, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1156, § 3, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 220, § 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 824, § 3, eff. June 20, 2003; Acts 2005, 79th Leg., ch. 1339, § 4, eff. June 18, 2005. § 42.006. PUBLIC EDUCATION INFORMATION MANAGEMENT SYSTEM (PEIMS). (a) Each school district shall participate in the Public Education Information Management System (PEIMS) and shall provide through that system information required for the administration of this chapter and of other appropriate provisions of this code. (b) Each school district shall use a uniform accounting system adopted by the commissioner for the data required to be reported for the Public Education Information Management System. (c) Annually, the commissioner shall review the Public Education Information Management System and shall repeal or amend rules that require school districts to provide information through the Public Education Information Management System that is not necessary. In reviewing and revising the Public Education Information Management System, the commissioner shall develop rules to ensure that the system: (1) provides useful, accurate, and timely information on student demographics and academic performance, personnel, and school district finances; (2) contains only the data necessary for the legislature and the agency to perform their legally authorized functions in overseeing the public education system; and (3) does not contain any information related to instructional methods, except as required by federal law. (d) The commissioner's rules must ensure that the Public Education Information Management System links student performance data to other related information for purposes of efficient and effective allocation of scarce school resources, to the extent practicable using existing agency resources and appropriations. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 2003, 78th Leg., ch. 903, § 2, eff. Sept. 1, 2003. § 42.007. EQUALIZED FUNDING ELEMENTS. (a) The Legislative Budget Board shall adopt rules, subject to appropriate notice and opportunity for public comment, for the calculation for each year of a biennium of the qualified funding elements, in accordance with Subsection (c), necessary to achieve the state policy under Section 42.001. (b) Before each regular session of the legislature, the board shall, as determined by the board, report the equalized funding elements to the commissioner and the legislature. (c) The funding elements must include: (1) a basic allotment for the purposes of Section 42.101 that, when combined with the guaranteed yield component provided by Subchapter F, represents the cost per student of a regular education program that meets all mandates of law and regulation; (2) adjustments designed to reflect the variation in known resource costs and costs of education beyond the control of school districts; (3) appropriate program cost differentials and other funding elements for the programs authorized under Subchapter C, with the program funding level expressed as dollar amounts and as weights applied to the adjusted basic allotment for the appropriate year; (4) the maximum guaranteed level of qualified state and local funds per student for the purposes of Subchapter F; (5) the enrichment and facilities tax rate under Subchapter F; (6) the computation of students in weighted average daily attendance under Section 42.302; and (7) the amount to be appropriated for the school facilities assistance program under Chapter 46. (d) Repealed by Acts 2005, 79th Leg., ch. 741, § 10(b). Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 13, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 396, § 1.10, eff. Sept. 1, 1999; Acts 2005, 79th Leg., ch. 741, § 2, 10(b), eff. June 17, 2005.SUBCHAPTER B. BASIC ENTITLEMENT § 42.101. BASIC ALLOTMENT. For each student in average daily attendance, not including the time students spend each day in special education programs in an instructional arrangement other than mainstream or career and technology education programs, for which an additional allotment is made under Subchapter C, a district is entitled to an allotment of $2,537. A greater amount for any school year may be provided by appropriation. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 14, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 396, § 1.11, eff. Sept. 1, 1999. § 42.102. COST OF EDUCATION ADJUSTMENT. (a) The basic allotment for each district is adjusted to reflect the geographic variation in known resource costs and costs of education due to factors beyond the control of the school district. (b) The cost of education adjustment is the cost of education index adjustment adopted by the foundation school fund budget committee and contained in Chapter 203, Title 19, Texas Administrative Code, as that chapter existed on March 26, 1997. (c) Repealed by Acts 1997, 75th Leg., ch. 1071, § 30, eff. Sept. 1, 1997. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 15, 30, eff. Sept. 1, 1997. § 42.103. SMALL AND MID-SIZED DISTRICT ADJUSTMENT. (a) The basic allotment for certain small and mid-sized districts is adjusted in accordance with this section. In this section: (1) "AA" is the district's adjusted allotment per student; (2) "ADA" is the number of students in average daily attendance for which the district is entitled to an allotment under Section 42.101; and (3) "ABA" is the adjusted basic allotment determined under Section 42.102. (b) The basic allotment of a school district that contains at least 300 square miles and has not more than 1,600 students in average daily attendance is adjusted by applying the formula:AA = (1 + ((1,600 - ADA) X .0004)) X ABA (c) The basic allotment of a school district that contains less than 300 square miles and has not more than 1,600 students in average daily attendance is adjusted by applying the formula:AA = (1 + ((1,600 - ADA) X .00025)) X ABA (d) The basic allotment of a school district that offers a kindergarten through grade 12 program and has less than 5,000 students in average daily attendance is adjusted by applying the formula, of the following formulas, that results in the greatest adjusted allotment: (1) the formula in Subsection (b) or (c) for which the district is eligible; or (2) AA = (1 + ((5,000 - ADA) X .000025)) X ABA. (e) The commissioner may make the adjustment authorized by Subsection (d)(2) only if the district's wealth per student does not exceed the equalized wealth level under Section 41.002. For purposes of this subsection, a district's wealth per student is determined in the manner provided by Section 41.001, except that the adjustment provided by Subsection (d)(2) is not used in computing the number of students in weighted average daily attendance. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 2001, 77th Leg., ch. 553, § 1, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 1276, § 6.008, eff. Sept. 1, 2003. § 42.104. USE OF SMALL OR MID-SIZED DISTRICT ADJUSTMENT IN CALCULATING SPECIAL ALLOTMENTS. In determining the amount of a special allotment under Subchapter C for a district to which Section 42.103 applies, a district's adjusted basic allotment is considered to be the district's adjusted allotment determined under Section 42.103. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.105. SPARSITY ADJUSTMENT. Notwithstanding Sections 42.101, 42.102, and 42.103, a school district that has fewer than 130 students in average daily attendance shall be provided an adjusted basic allotment on the basis of 130 students in average daily attendance if it offers a kindergarten through grade 12 program and has preceding or current year's average daily attendance of at least 90 students or is 30 miles or more by bus route from the nearest high school district. A district offering a kindergarten through grade 8 program whose preceding or current year's average daily attendance was at least 50 students or which is 30 miles or more by bus route from the nearest high school district shall be provided an adjusted basic allotment on the basis of 75 students in average daily attendance. An average daily attendance of 60 students shall be the basis of providing the adjusted basic allotment if a district offers a kindergarten through grade 6 program and has preceding or current year's average daily attendance of at least 40 students or is 30 miles or more by bus route from the nearest high school district. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.106. ADJUSTED PROPERTY VALUE FOR DISTRICTS NOT OFFERING ALL GRADE LEVELS. For purposes of this chapter, the taxable value of property of a school district that contracts for students residing in the district to be educated in another district under Section 25.039(a) is adjusted by applying the formula:ADPV = DPV - (TN/.015) where: "ADPV" is the district's adjusted taxable value of property; "DPV" is the taxable value of property in the district for the preceding tax year determined under Subchapter M, Chapter 403, Government Code; and "TN" is the total amount of tuition required to be paid by the district under Section 25.039 for the school year for which the adjustment is made, not to exceed the amount specified by commissioner rule under Section 25.039(b). Added by Acts 1999, 76th Leg., ch. 396, § 1.12, eff. Sept. 1, 1999. Amended by Acts 2003, 78th Leg., ch. 1069, § 2, eff. Sept. 1, 2003.SUBCHAPTER C. SPECIAL ALLOTMENTS § 42.151. SPECIAL EDUCATION. (a) For each student in average daily attendance in a special education program under Subchapter A, Chapter 29, in a mainstream instructional arrangement, a school district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by 1.1. For each full-time equivalent student in average daily attendance in a special education program under Subchapter A, Chapter 29, in an instructional arrangement other than a mainstream instructional arrangement, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by a weight determined according to instructional arrangement as follows:Homebound 5.0 Hospital class 3.0 Speech therapy 5.0 Resource room 3.0 Self-contained, mild and 3.0 moderate, regular campus Self-contained, severe, 3.0 regular campus Off home campus 2.7 Nonpublic day school 1.7 Vocational adjustment class 2.3 (b) A special instructional arrangement for students with disabilities residing in care and treatment facilities, other than state schools, whose parents or guardians do not reside in the district providing education services shall be established under the rules of the State Board of Education. The funding weight for this arrangement shall be 4.0 for those students who receive their education service on a local school district campus. A special instructional arrangement for students with disabilities residing in state schools shall be established under the rules of the State Board of Education with a funding weight of 2.8. (c) For funding purposes, the number of contact hours credited per day for each student in the off home campus instructional arrangement may not exceed the contact hours credited per day for the multidistrict class instructional arrangement in the 1992-1993 school year. (d) For funding purposes the contact hours credited per day for each student in the resource room; self-contained, mild and moderate; and self-contained, severe, instructional arrangements may not exceed the average of the statewide total contact hours credited per day for those three instructional arrangements in the 1992-1993 school year. (e) The State Board of Education by rule shall prescribe the qualifications an instructional arrangement must meet in order to be funded as a particular instructional arrangement under this section. In prescribing the qualifications that a mainstream instructional arrangement must meet, the board shall establish requirements that students with disabilities and their teachers receive the direct, indirect, and support services that are necessary to enrich the regular classroom and enable student success. (f) In this section, "full-time equivalent student" means 30 hours of contact a week between a special education student and special education program personnel. (g) The State Board of Education shall adopt rules and procedures governing contracts for residential placement of special education students. The legislature shall provide by appropriation for the state's share of the costs of those placements. (h) Funds allocated under this section, other than an indirect cost allotment established under State Board of Education rule, must be used in the special education program under Subchapter A, Chapter 29. (i) The agency shall encourage the placement of students in special education programs, including students in residential instructional arrangements, in the least restrictive environment appropriate for their educational needs. (j) Each year, the agency shall make and disseminate to each school district a list of those districts that maintain for two successive years a ratio of full-time equivalent students placed in partially or totally self-contained classrooms to the number of full-time equivalent students placed in resource room or mainstream instructional arrangements that is 25 percent higher than the statewide average ratio. (k) A school district that provides an extended year program required by federal law for special education students who may regress is entitled to receive funds in an amount equal to 75 percent, or a lesser percentage determined by the commissioner, of the adjusted basic allotment or adjusted allotment, as applicable, for each full-time equivalent student in average daily attendance, multiplied by the amount designated for the student's instructional arrangement under this section, for each day the program is provided divided by the number of days in the minimum school year. The total amount of state funding for extended year services under this section may not exceed $10 million per year. A school district may use funds received under this section only in providing an extended year program. (l) From the total amount of funds appropriated for special education under this section, the commissioner shall withhold an amount specified in the General Appropriations Act, and distribute that amount to school districts for programs under Section 29.014. The program established under that section is required only in school districts in which the program is financed by funds distributed under this subsection and any other funds available for the program. After deducting the amount withheld under this subsection from the total amount appropriated for special education, the commissioner shall reduce each district's allotment proportionately and shall allocate funds to each district accordingly. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 2003, 78th Leg., ch. 545, § 1, eff. Sept. 1, 2003. § 42.152. COMPENSATORY EDUCATION ALLOTMENT. (a) For each student who is educationally disadvantaged or who is a student who does not have a disability and resides in a residential placement facility in a district in which the student's parent or legal guardian does not reside, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by 0.2, and by 2.41 for each full-time equivalent student who is in a remedial and support program under Section 29.081 because the student is pregnant. (b) For purposes of this section, the number of educationally disadvantaged students is determined: (1) by averaging the best six months' enrollment in the national school lunch program of free or reduced-price lunches for the preceding school year; or (2) in the manner provided by commissioner rule, if no campus in the district participated in the national school lunch program of free or reduced-price lunches during the preceding school year. (c) Funds allocated under this section shall be used to fund supplemental programs and services designed to eliminate any disparity in performance on assessment instruments administered under Subchapter B, Chapter 39, or disparity in the rates of high school completion between students at risk of dropping out of school, as defined by Section 29.081, and all other students. Specifically, the funds, other than an indirect cost allotment established under State Board of Education rule, which may not exceed 15 percent, may be used to meet the costs of providing a compensatory, intensive, or accelerated instruction program under Section 29.081 or an alternative education program established under Section 37.008 or to support a program eligible under Title I of the Elementary and Secondary Education Act of 1965, as provided by Pub. L. No. 103-382 and its subsequent amendments, and by federal regulations implementing that Act, at a campus at which at least 40 percent of the students are educationally disadvantaged. In meeting the costs of providing a compensatory, intensive, or accelerated instruction program under Section 29.081, a district's compensatory education allotment shall be used for costs supplementary to the regular education program, such as costs for program and student evaluation, instructional materials and equipment and other supplies required for quality instruction, supplemental staff expenses, salary for teachers of at-risk students, smaller class size, and individualized instruction. A home-rule school district or an open-enrollment charter school must use funds allocated under Subsection (a) for a purpose authorized in this subsection but is not otherwise subject to Subchapter C, Chapter 29. Notwithstanding any other provisions of this section: (1) to ensure that a sufficient amount of the funds allotted under this section are available to supplement instructional programs and services, no more than 18 percent of the funds allotted under this section may be used to fund disciplinary alternative education programs established under Section 37.008; (2) the commissioner may waive the limitations of Subdivision (1) upon an annual petition, by a district's board and a district's site-based decision making committee, presenting the reason for the need to spend supplemental compensatory education funds on disciplinary alternative education programs under Section 37.008, provided that: (A) the district in its petition reports the number of students in each grade level, by demographic subgroup, not making satisfactory progress under the state's assessment system; and (B) the commissioner makes the waiver request information available annually to the public on the agency's website; and (3) for purposes of this subsection, a program specifically designed to serve students at risk of dropping out of school, as defined by Section 29.081, is considered to be a program supplemental to the regular education program, and a district may use its compensatory education allotment for such a program. (c-1) Notwithstanding Subsection (c), funds allocated under this section may be used to fund in proportion to the percentage of students served by the program that meet the criteria in Section 29.081(d) or (g): (1) an accelerated reading instruction program under Section 28.006(g); or (2) a program for treatment of students who have dyslexia or a related disorder as required by Section 38.003. (c-2) Notwithstanding Subsection (c), funds allocated under this section may be used to fund a district's mentoring services program under Section 29.089. (d) The agency shall evaluate the effectiveness of accelerated instruction and support programs provided under Section 29.081 for students at risk of dropping out of school. (e) The commissioner may: (1) retain a portion of the total amount allotted under Subsection (a) that the commissioner considers appropriate to finance intensive accelerated instruction programs and study guides provided under Sections 39.024(b) and (c); and (2) reduce each district's tier one allotments in the same manner described for a reduction in allotments under Section 42.253. (f) From the total amount of funds appropriated for allotments under this section, the commissioner shall, each fiscal year, withhold an amount to be determined by the commissioner, but not less than $10,000,000, and distribute that amount for programs under Section 29.085. In distributing those funds, preference shall be given to a school district that received funds for a program under Section 29.085 for the preceding school year. The program established under that section is required only in school districts in which the program is financed by funds distributed under this section and any other funds available for the program. (g) The commissioner shall coordinate the funds withheld under Subsection (f) and any other funds available for the program and shall distribute those funds. To receive funds for the program, a school district must apply to the commissioner. The commissioner shall give a preference to the districts that apply that have the highest concentration of students who are pregnant or who are parents. (h) After deducting the amount withheld under Subsection (f) from the total amount appropriated for the allotment under Subsection (a), the commissioner shall reduce each district's tier one allotments in the same manner described for a reduction in allotments under Section 42.253 and shall allocate funds to each district accordingly. (i) From the total amount of funds appropriated for allotments under this section, the commissioner shall, each fiscal year, withhold $7,500,000 or a greater amount as determined in the General Appropriations Act and distribute that amount for programs under Subchapter A, Chapter 33. A program established under that subchapter is required only in school districts in which the program is financed by funds distributed under this section or other funds distributed by the commissioner for a program under that subchapter. In distributing those funds, preference shall be given to a school district that received funds for a program under this subsection for the preceding school year. (j) The commissioner shall coordinate the funds withheld under Subsection (i) and any other funds available for the program and shall distribute those funds. To receive funds for the program, a school district must apply to the commissioner. The commissioner shall give a preference to the districts that apply that have the highest concentration of at-risk students. For each school year that a school district receives funds under this section, the district shall allocate an amount of local funds for school guidance and counseling programs that is equal to or greater than the amount of local funds that the school district allocated for that purpose during the preceding school year. (k) After deducting the amount withheld under Subsection (i) from the total amount appropriated for the allotment under Subsection (a), the commissioner shall reduce each district's tier one allotments in the same manner described for a reduction in allotments under Section 42.253. (l) From the total amount of funds appropriated for allotments under this section, the commissioner shall, each fiscal year, withhold the amount of $2.5 million for transfer to the investment capital fund under Section 7.024. (m) From the total amount of funds appropriated for allotments under this section, the commissioner may withhold an amount not exceeding $1 million each fiscal year and distribute the funds to school districts that incur unanticipated expenditures resulting from a significant increase in the enrollment of students who do not have disabilities and who reside in residential placement facilities. (n) After deducting the amount withheld under Subsection (l) from the total amount appropriated for the allotment under Subsection (a), the commissioner shall reduce each district's allotment under Subsection (a) proportionately and shall allocate funds to each district accordingly. (o) After deducting the amount withheld under Subsection (m) from the total amount appropriated for the allotment under Subsection (a), the commissioner shall reduce each district's allotment under Subsection (a) proportionately. (p) The commissioner shall: (1) withhold, from the total amount of funds appropriated for allotments under this section, an amount sufficient to finance extended year programs under Section 29.082 not to exceed five percent of the amounts allocated under this section; and (2) give priority to applications for extended year programs to districts with high concentrations of educationally disadvantaged students. (q) The State Board of Education, with the assistance of the comptroller, shall develop and implement by rule reporting and auditing systems for district and campus expenditures of compensatory education funds to ensure that compensatory education funds, other than the indirect cost allotment, are spent only to supplement the regular education program as required by Subsection (c). The reporting requirements shall be managed electronically to minimize local administrative costs. A district shall submit the report required by this subsection not later than the 150th day after the last day permissible for resubmission of information required under Section 42.006. (q-1) The commissioner shall develop a system to identify school districts that are at high risk of having used compensatory education funds other than in compliance with Subsection (c) or of having inadequately reported compensatory education expenditures. If a review of the report submitted under Subsection (q), using the risk-based system, indicates that a district is not at high risk of having misused compensatory education funds or of having inadequately reported compensatory education expenditures, the district may not be required to perform a local audit of compensatory education expenditures and is not subject to on-site monitoring under this section. (q-2) If a review of the report submitted under Subsection (q), using the risk-based system, indicates that a district is at high risk of having misused compensatory education funds, the commissioner shall notify the district of that determination. The district must respond to the commissioner not later than the 30th day after the date the commissioner notifies the district of the commissioner's determination. If the district's response does not change the commissioner's determination that the district is at high risk of having misused compensatory education funds or if the district does not respond in a timely manner, the commissioner shall: (1) require the district to conduct a local audit of compensatory education expenditures for the current or preceding school year; (2) order agency staff to conduct on-site monitoring of the district's compensatory education expenditures; or (3) both require a local audit and order on-site monitoring. (q-3) If a review of the report submitted under Subsection (q), using the risk-based system, indicates that a district is at high risk of having inadequately reported compensatory education expenditures, the commissioner may require agency staff to assist the district in following the proper reporting methods or amending a district or campus improvement plan under Subchapter F, Chapter 11. If the district does not take appropriate corrective action before the 45th day after the date the agency staff notifies the district of the action the district is expected to take, the commissioner may: (1) require the district to conduct a local audit of the district's compensatory education expenditures; or (2) order agency staff to conduct on-site monitoring of the district's compensatory education expenditures. (q-4) The commissioner, in the year following a local audit of compensatory education expenditures, shall withhold from a district's foundation school fund payment an amount equal to the amount of compensatory education funds the agency determines were not used in compliance with Subsection (c). The commissioner shall release to a district funds withheld under this subsection when the district provides to the commissioner a detailed plan to spend those funds in compliance with Subsection (c). (r) The commissioner shall grant a one-year exemption from the requirements of Subsections (q)-(q-4) to a school district in which the group of students who have failed to perform satisfactorily in the preceding school year on an assessment instrument required under Section 39.023(a), (c), or (l) subsequently performs on those assessment instruments at a level that meets or exceeds a level prescribed by commissioner rule. Each year the commissioner, based on the most recent information available, shall determine if a school district is entitled to an exemption for the following school year and notify the district of that determination. (s) Expired. (t) A reduction made under this section or the General Appropriations Act in the allotment under this section does not affect the computation of students in weighted average daily attendance for purposes of Subchapter F. (u), (v) Expired. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 16, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 396, § 1.13, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 725, § 11, eff. June 13, 2001; Acts 2001, 77th Leg., ch. 1156, § 4, 12, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 201, § 30, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 253, § 1, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 783, § 2, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 785, § 57, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 903, § 3, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1276, § 6.009, eff. Sept. 1, 2003; Acts 2005, 79th Leg., ch. 728, § 23.001(17), eff. Sept. 1, 2005. § 42.153. BILINGUAL EDUCATION ALLOTMENT. (a) For each student in average daily attendance in a bilingual education or special language program under Subchapter B, Chapter 29, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by 0.1. (b) Funds allocated under this section, other than an indirect cost allotment established under State Board of Education rule, must be used in providing bilingual education or special language programs under Subchapter B, Chapter 29, and must be accounted for under existing agency reporting and auditing procedures. (c) A district's bilingual education or special language allocation may be used only for program and student evaluation, instructional materials and equipment, staff development, supplemental staff expenses, salary supplements for teachers, and other supplies required for quality instruction and smaller class size. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.154. CAREER AND TECHNOLOGY EDUCATION ALLOTMENT. (a) For each full-time equivalent student in average daily attendance in an approved career and technology education program in grades nine through 12 or in career and technology education programs for students with disabilities in grades seven through 12, a district is entitled to an annual allotment equal to the adjusted basic allotment multiplied by a weight of 1.35. (b) In this section, "full-time equivalent student" means 30 hours of contact a week between a student and career and technology education program personnel. (c) Funds allocated under this section, other than an indirect cost allotment established under State Board of Education rule, must be used in providing career and technology education programs in grades nine through 12 or career and technology education programs for students with disabilities in grades seven through 12 under Sections 29.182, 29.183, and 29.184. (d) The commissioner shall conduct a cost-benefit comparison between career and technology education programs and mathematics and science programs. (e) Out of the total statewide allotment for career and technology education under this section, the commissioner shall set aside an amount specified in the General Appropriations Act, which may not exceed an amount equal to one percent of the total amount appropriated, to support regional career and technology education planning. After deducting the amount set aside under this subsection from the total amount appropriated for career and technology education under this section, the commissioner shall reduce each district's tier one allotments in the same manner described for a reduction in allotments under Section 42.253. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 2003, 78th Leg., ch. 201, § 31, eff. Sept. 1, 2003. § 42.155. TRANSPORTATION ALLOTMENT. (a) Each district or county operating a transportation system is entitled to allotments for transportation costs as provided by this section. (b) As used in this section: (1) "Regular eligible student" means a student who resides two or more miles from the student's campus of regular attendance, measured along the shortest route that may be traveled on public roads, and who is not classified as a student eligible for special education services. (2) "Eligible special education student" means a student who is eligible for special education services under Section 29.003 and who would be unable to attend classes without special transportation services. (3) "Linear density" means the average number of regular eligible students transported daily, divided by the approved daily route miles traveled by the respective transportation system. (c) Each district or county operating a regular transportation system is entitled to an allotment based on the daily cost per regular eligible student of operating and maintaining the regular transportation system and the linear density of that system. In determining the cost, the commissioner shall give consideration to factors affecting the actual cost of providing these transportation services in each district or county. The average actual cost is to be computed by the commissioner and included for consideration by the legislature in the General Appropriations Act. The allotment per mile of approved route may not exceed the amount set by appropriation. (d) A district or county may apply for and on approval of the commissioner receive an additional amount of up to 10 percent of its regular transportation allotment to be used for the transportation of children living within two miles of the school they attend who would be subject to hazardous traffic conditions if they walked to school. Each board of trustees shall provide to the commissioner the definition of hazardous conditions applicable to that district and shall identify the specific hazardous areas for which the allocation is requested. A hazardous condition exists where no walkway is provided and children must walk along or cross a freeway or expressway, an underpass, an overpass or a bridge, an uncontrolled major traffic artery, an industrial or commercial area, or another comparable condition. (e) The commissioner may grant an amount set by appropriation for private or commercial transportation for eligible students from isolated areas. The need for this type of transportation grant shall be determined on an individual basis and the amount granted shall not exceed the actual cost. The grants may be made only in extreme hardship cases. A grant may not be made if the students live within two miles of an approved school bus route. (f) The cost of transporting career and technology education students from one campus to another inside a district or from a sending district to another secondary public school for a career and technology program or an area career and technology school or to an approved post-secondary institution under a contract for instruction approved by the agency shall be reimbursed based on the number of actual miles traveled times the district's official extracurricular travel per mile rate as set by the board of trustees and approved by the agency. (g) A school district or county that provides special transportation services for eligible special education students is entitled to a state allocation paid on a previous year's cost-per-mile basis. The maximum rate per mile allowable shall be set by appropriation based on data gathered from the first year of each preceding biennium. Districts may use a portion of their support allocation to pay transportation costs, if necessary. The commissioner may grant an amount set by appropriation for private transportation to reimburse parents or their agents for transporting eligible special education students. The mileage allowed shall be computed along the shortest public road from the student's home to school and back, morning and afternoon. The need for this type transportation shall be determined on an individual basis and shall be approved only in extreme hardship cases. (h) Funds allotted under this section must be used in providing transportation services. (i) In the case of a district belonging to a county transportation system, the district's transportation allotment for purposes of determining a district's foundation school program allocations is determined on the basis of the number of approved daily route miles in the district multiplied by the allotment per mile to which the county transportation system is entitled. (j) The Texas School for the Deaf is entitled to an allotment under this section. The commissioner shall determine the appropriate allotment. (k) Notwithstanding any other provision of this section, the commissioner may not reduce the allotment to which a district or county is entitled under this section because the district or county provides transportation for an eligible student to and from a child-care facility, as defined by Section 42. 002, Human Resources Code, or a grandparent's residence instead of the student's residence, as authorized by Section 34.007, if the transportation is provided within the approved routes of the district or county for the school the student attends. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 17, eff. Sept. 1, 1997; Acts 2001, 77th Leg., ch. 169, § 4, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 201, § 32, eff. Sept. 1, 2003. § 42.156. GIFTED AND TALENTED STUDENT ALLOTMENT. (a) For each identified student a school district serves in a program for gifted and talented students that the district certifies to the commissioner as complying with Subchapter D, Chapter 29, a district is entitled to an annual allotment equal to the district's adjusted basic allotment as determined under Section 42.102 or Section 42.103, as applicable, multiplied by .12 for each school year or a greater amount provided by appropriation. (b) Funds allocated under this section, other than the amount that represents the program's share of general administrative costs, must be used in providing programs for gifted and talented students under Subchapter D, Chapter 29, including programs sanctioned by International Baccalaureate and Advanced Placement, or in developing programs for gifted and talented students. Each district must account for the expenditure of state funds as provided by rule of the State Board of Education. If by the end of the 12th month after receiving an allotment for developing a program a district has failed to implement a program, the district must refund the amount of the allotment to the agency within 30 days. (c) Not more than five percent of a district's students in average daily attendance are eligible for funding under this section. (d) If the amount of state funds for which school districts are eligible under this section exceeds the amount of state funds appropriated in any year for the programs, the commissioner shall reduce each district's tier one allotments in the same manner described for a reduction in allotments under Section 42.253. (e) If the total amount of funds allotted under this section before a date set by rule of the State Board of Education is less than the total amount appropriated for a school year, the commissioner shall transfer the remainder to any program for which an allotment under Section 42.152 may be used. (f) After each district has received allotted funds for this program, the State Board of Education may use up to $500,000 of the funds allocated under this section for programs such as MATHCOUNTS, Future Problem Solving, Odyssey of the Mind, and Academic Decathlon, as long as these funds are used to train personnel and provide program services. To be eligible for funding under this subsection, a program must be determined by the State Board of Education to provide services that are effective and consistent with the state plan for gifted and talented education. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.157. PUBLIC EDUCATION GRANT ALLOTMENT. (a) Except as provided by Subsection (b), for each student in average daily attendance who is using a public education grant under Subchapter G, Chapter 29, to attend school in a district other than the district in which the student resides, the district in which the student attends school is entitled to an annual allotment equal to the adjusted basic allotment multiplied by a weight of 0.1. (b) The total number of allotments under this section to which a district is entitled may not exceed the number by which the number of students using public education grants to attend school in the district exceeds the number of students who reside in the district and use public education grants to attend school in another district. Added by Acts 1997, 75th Leg., ch. 722, § 5, eff. Sept. 1, 1997. § 42.158. NEW INSTRUCTIONAL FACILITY ALLOTMENT. (a) A school district is entitled to an additional allotment as provided by this section for operational expenses associated with opening a new instructional facility. (b) For the first school year in which students attend a new instructional facility, a school district is entitled to an allotment of $250 for each student in average daily attendance at the facility. For the second school year in which students attend that instructional facility, a school district is entitled to an allotment of $250 for each additional student in average daily attendance at the facility. (c) For purposes of this section, the number of additional students in average daily attendance at a facility is the difference between the number of students in average daily attendance in the current year at that facility and the number of students in average daily attendance at that facility in the preceding year. (d) The amount appropriated for allotments under this section may not exceed $25 million in a school year. If the total amount of allotments to which districts are entitled under this section for a school year exceeds the amount appropriated for allotments under this section, the commissioner shall reduce each district's allotment under this section in the manner provided by Section 42.253(h). (e) A school district that is required to take action under Chapter 41 to reduce its wealth per student to the equalized wealth level is entitled to a credit, in the amount of the allotments to which the district is entitled under this section, against the total amount required under Section 41.093 for the district to purchase attendance credits. A school district that is otherwise ineligible for state aid under this chapter is entitled to receive allotments under this section. (f) The commissioner may adopt rules necessary to implement this section. (g) In this section, "instructional facility" has the meaning assigned by Section 46.001. Added by Acts 1999, 76th Leg., ch. 396, § 1.14, eff. Sept. 1, 1999.SUBCHAPTER E. FINANCING THE PROGRAM § 42.251. FINANCING; GENERAL RULE. (a) The sum of the basic allotment under Subchapter B and the special allotments under Subchapter C, computed in accordance with this chapter, constitute the tier one allotments. The sum of the tier one allotments and the guaranteed yield allotments under Subchapter F, computed in accordance with this chapter, constitute the total cost of the Foundation School Program. (b) The program shall be financed by: (1) ad valorem tax revenue generated by an equalized uniform school district effort; (2) ad valorem tax revenue generated by local school district effort in excess of the equalized uniform school district effort; (3) state available school funds distributed in accordance with law; and (4) state funds appropriated for the purposes of public school education and allocated to each district in an amount sufficient to finance the cost of each district's Foundation School Program not covered by other funds specified in this subsection. (c) Repealed by Acts 1999, 76th Leg., ch. 396, § 3.01(a), eff. Sept. 1, 1999. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1999, 76th Leg., ch. 396, § 1.15, 3.01(a), eff. Sept. 1, 1999. § 42.2511. ADDITIONAL STATE AID FOR HOMESTEAD EXEMPTION. (a) Notwithstanding any other provision of this chapter, a school district is entitled to additional state aid to the extent that state aid under this chapter based on the determination of the school district's taxable value of property as provided under Subchapter M, Chapter 403, Government Code, does not fully compensate the district for ad valorem tax revenue lost due to the increase in the homestead exemption under Section 1-b(c), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997, and the additional limitation on tax increases under Section 1-b(d), Article VIII, Texas Constitution, as proposed by H.J.R. No. 4, 75th Legislature, Regular Session, 1997. (b) The commissioner, using information provided by the comptroller, shall compute the amount of additional state aid to which a district is entitled under this section. A determination by the commissioner under this section is final and may not be appealed. Added by Acts 1997, 75th Leg., ch. 592, § 1.03, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 396, § 1.16, eff. Sept. 1, 1999. § 42.2512. ADDITIONAL STATE AID FOR PROFESSIONAL STAFF SALARIES. (a) A school district, including a school district that is otherwise ineligible for state aid under this chapter, is entitled to state aid in an amount, as determined by the commissioner, equal to the difference, if any, between: (1) an amount equal to the product of $3,000 multiplied by the number of classroom teachers, full-time librarians, full-time counselors certified under Subchapter B, Chapter 21, and full-time school nurses employed by the district and entitled to a minimum salary under Section 21.402; and (2) an amount equal to 80 percent of the amount of additional funds to which the district is entitled due to the increases made by S.B. No. 4, Acts of the 76th Legislature, Regular Session, 1999, to: (A) the equalized wealth level under Section 41.002; (B) the basic allotment under Section 42.101; and (C) the guaranteed level of state and local funds per weighted student per cent of tax effort under Section 42.302. (b) A determination by the commissioner under this section is final and may not be appealed. (c) The commissioner may adopt rules to implement this section. Added by Acts 1999, 76th Leg., ch. 396, § 1.17, eff. Sept. 1, 1999. § 42.2514. ADDITIONAL STATE AID FOR SCHOOL EMPLOYEE BENEFITS. (a) In this section, "participating charter school" means an open-enrollment charter school that participates in the uniform group coverage program established under Article 3.50-7, Insurance Code. (b) For each school year, a school district, including a school district that is otherwise ineligible for state aid under this chapter, or a participating charter school is entitled to state aid in an amount, as determined by the commissioner, equal to the difference, if any, between: (1) the amount determined by multiplying the amount of $900 or the amount specified in the General Appropriations Act for that year for purposes of the state contribution under Section 9, Article 3.50-7, Insurance Code, by the number of district or school employees who participate in a group health coverage plan provided by or through the district or school; and (2) an amount equal to 75 percent of the amount of: (A) additional funds to which the district or school is entitled due to the increase made by H.B. No. 3343, Acts of the 77th Legislature, Regular Session, 2001, to: (i) the equalized wealth level under Section 41.002; and (ii) the guaranteed level of state and local funds per weighted student per cent of tax effort under Section 42.302; or (B) additional state aid to which the district is entitled under Section 42.2513. (c) A school district or participating charter school may use state aid received under this section only to pay contributions under a group health coverage plan for district or school employees. (d) A determination by the commissioner under this section is final and may not be appealed. (e) The commissioner may adopt rules to implement this section. Added by Acts 2001, 77th Leg., ch. 1187, § 2.05, eff. Sept. 1, 2002. § 42.2515. ADDITIONAL STATE AID FOR AD VALOREM TAX CREDITS UNDER TEXAS ECONOMIC DEVELOPMENT ACT. (a) For each school year, a school district, including a school district that is otherwise ineligible for state aid under this chapter, is entitled to state aid in an amount equal to the amount of all tax credits credited against ad valorem taxes of the district in that year under Subchapter D, Chapter 313, Tax Code. (b) The commissioner may adopt rules to implement and administer this section. Added by Acts 2001, 77th Leg., ch. 1505, § 6, eff. Jan. 1, 2002. § 42.2517. EXCESS FUNDS FOR COST OF EDUCATION ADJUSTMENT. (a) If the commissioner determines that the amount appropriated for purposes of the Foundation School Program exceeds the amount to which school districts are entitled under this chapter, the commissioner may: (1) adjust each district's cost of education adjustment under Section 42.102 to reflect current uncontrollable variations in the cost of education, particularly the cost of providing salaries and benefits to classroom teachers; and (2) provide funding under this chapter based on the cost of education index adjusted under Subdivision (1). (b) If the amount available under Subsection (a) is not sufficient to provide funding based on the cost of education index adjusted under Subsection (a)(1), the commissioner shall rank districts by the increase in the cost of education adjustment applicable to each district under this section and shall provide funding under this section to districts in descending order of the amount of increase in the cost of education adjustment applicable to districts under this section, beginning with the district that has the greatest increase in the cost of education adjustment, until no funds are available for purposes of this section. Added by Acts 2003, 78th Leg., ch. 201, § 33, eff. Sept. 1, 2003. § 42.252. LOCAL SHARE OF PROGRAM COST (TIER ONE). (a) Each school district's share of the Foundation School Program is determined by the following formula:LFA = TR X DPV where: "LFA" is the school district's local share; "TR" is a tax rate which for each hundred dollars of valuation is an effective tax rate of $0.86; and "DPV" is the taxable value of property in the school district for the preceding tax year determined under Subchapter M, Chapter 403, Government Code. (b) The commissioner shall adjust the values reported in the official report of the comptroller as required by Section 5.09(a), Tax Code, to reflect reductions in taxable value of property resulting from natural or economic disaster after January 1 in the year in which the valuations are determined. The decision of the commissioner is final. An adjustment does not affect the local fund assignment of any other school district. (c) Appeals of district values shall be held pursuant to Section 403.303, Government Code. (d) A school district must raise its total local share of the Foundation School Program to be eligible to receive foundation school fund payments. (e) Repealed by Acts 1999, 76th Leg., ch. 396, § 3.01(a), eff. Sept. 1, 1999. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 18, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 396, § 3.01(a), eff. Sept. 1, 1999. § 42.2521. ADJUSTMENT FOR RAPID DECLINE IN TAXABLE VALUE OF PROPERTY. (a) For purposes of Chapters 41 and 46 and this chapter, and to the extent money specifically authorized to be used under this section is available, the commissioner shall adjust the taxable value of property in a school district that, due to factors beyond the control of the board of trustees, experiences a rapid decline in the tax base used in calculating taxable values in excess of four percent of the tax base used in the preceding year. (b) To the extent that a sufficient amount of money is not available to fund all adjustments under this section, the commissioner shall reduce adjustments in the manner provided by Section 42.253(h) so that the total amount of adjustments equals the amount of money available to fund the adjustments. (c) A decision of the commissioner under this section is final and may not be appealed. Added by Acts 1999, 76th Leg., ch. 396, § 1.18, eff. Sept. 1, 1999. § 42.2522. ADJUSTMENT FOR OPTIONAL HOMESTEAD EXEMPTION. (a) In any school year, the commissioner may not provide funding under this chapter based on a school district's taxable value of property computed in accordance with Section 403.302(d)(2), Government Code, unless: (1) funds are specifically appropriated for purposes of this section; or (2) the commissioner determines that the total amount of state funds appropriated for purposes of the Foundation School Program for the school year exceeds the amount of state funds distributed to school districts in accordance with Section 42.253 based on the taxable values of property in school districts computed in accordance with Section 403.302(d), Government Code, without any deduction for residence homestead exemptions granted under Section 11.13(n), Tax Code. (b) In making a determination under Subsection (a)(2), the commissioner shall: (1) notwithstanding Section 42.253(b), reduce the entitlement under this chapter of a school district whose final taxable value of property is higher than the estimate under Section 42.254 and make payments to school districts accordingly; and (2) give priority to school districts that, due to factors beyond the control of the board of trustees, experience a rapid decline in the tax base used in calculating taxable values in excess of four percent of the tax base used in the preceding year. (c) In the first year of a state fiscal biennium, before providing funding as provided by Subsection (a)(2), the commissioner shall ensure that sufficient appropriated funds for purposes of the Foundation School Program are available for the second year of the biennium, including funds to be used for purposes of Section 42.2521. (d) If the commissioner determines that the amount of funds available under Subsection (a)(1) or (2) does not at least equal the total amount of state funding to which districts would be entitled if state funding under this chapter were based on the taxable values of property in school districts computed in accordance with Section 403.302(d)(2), Government Code, the commissioner may, to the extent necessary, provide state funding based on a uniform lesser fraction of the deduction under Section 403.302(d)(2), Government Code. (e) The commissioner shall notify school districts as soon as practicable as to the availability of funds under this section. For purposes of computing a rollback tax rate under Section 26.08, Tax Code, a district shall adjust the district's tax rate limit to reflect assistance received under this section. Added by Acts 1999, 76th Leg., ch. 396, § 1.18, eff. Sept. 1, 1999. Amended by Acts 2001, 77th Leg., ch. 1158, § 3, eff. Sept. 1, 2001. § 42.253. DISTRIBUTION OF FOUNDATION SCHOOL FUND. (a) For each school year the commissioner shall determine: (1) the amount of money to which a school district is entitled under Subchapters B and C; (2) the amount of money to which a school district is entitled under Subchapter F; (3) the amount of money allocated to the district from the available school fund; (4) the amount of each district's tier one local share under Section 42.252; and (5) the amount of each district's tier two local share under Section 42.302. (b) Except as provided by this subsection, the commissioner shall base the determinations under Subsection (a) on the estimates provided to the legislature under Section 42.254, or, if the General Appropriations Act provides estimates for that purpose, on the estimates provided under that Act, for each school district for each school year. The commissioner shall reduce the entitlement of each district that has a final taxable value of property for the second year of a state fiscal biennium that is higher than the estimate under Section 42.254 or the General Appropriations Act, as applicable. A reduction under this subsection may not reduce the district's entitlement below the amount to which it is entitled at its actual taxable value of property. (c) Each school district is entitled to an amount equal to the difference for that district between the sum of Subsections (a)(1) and (a)(2) and the sum of Subsections (a)(3), (a)(4), and (a)(5). (d) The commissioner shall approve warrants to each school district equaling the amount of its entitlement except as provided by this section. Warrants for all money expended according to this chapter shall be approved and transmitted to treasurers or depositories of school districts in the same manner that warrants for state payments are transmitted. The total amount of the warrants issued under this section may not exceed the total amount appropriated for Foundation School Program purposes for that fiscal year. (e) The commissioner shall recompute the amount to which the district is entitled under Subsection (c) if a school district's tax rate is less than the limit authorized under this subsection. The amount to which a district is entitled under this section may not exceed the amount to which the district would be entitled at the district's tax rate for the final year of the preceding biennium, or a different tax rate provided by appropriation. The commissioner shall recompute the amount to which a district is entitled to the extent necessary under this section. The commissioner shall approve warrants to the school in the amount that results from the new computation. An amount equal to the difference between the initial allocation and the amount of the warrants shall be transferred to a special account in the foundation school fund known as the reserve account.Text of subsec. (e-1) effective until September 1, 2009 (e-1) For the 2003-2004, 2004-2005, 2005-2006, 2006-2007, 2007-2008, or 2008-2009 school year, the limit authorized under Subsection (e) is increased by an amount equal to the portion of a school district's maintenance and operations tax for that year necessary for the district, when added to state funds received under this chapter for that portion of the tax, to comply with Section 3, Article 3.50-9, Insurance Code. For the 2005-2006 and 2007-2008 school years, the limit authorized under Subsection (e) does not include any portion of a school district's maintenance and operations tax rate for which the limit under Subsection (e) applicable to the district was increased under this subsection. The commissioner may adopt rules necessary to administer this subsection. A determination of the commissioner under this subsection is final and may not be appealed. This subsection expires September 1, 2009. (e-2) Expired September 1, 2001. (f) Amounts transferred to the reserve account under Subsection (e) shall be used in the succeeding fiscal year to finance increases in allocations to school districts under Subsection (i). If the amount in the reserve account is less than the amount of the increases under Subsection (i) for the second year of a state fiscal biennium, the commissioner shall certify the amount of the difference to the Legislative Budget Board not later than January 1 of the second year of the state fiscal biennium. The Legislative Budget Board shall propose to the legislature that the certified amount be transferred to the foundation school fund from the economic stabilization fund and appropriated for the purpose of increases in allocations under Subsection (h). (g) If a school district demonstrates to the satisfaction of the commissioner that the estimate of the district's tax rate, student enrollment, or taxable value of property used in determining the amount of state funds to which the district is entitled are so inaccurate as to result in undue financial hardship to the district, the commissioner may adjust funding to that district in that school year to the extent that funds are available for that year, including funds in the reserve account. Funds in the reserve account may not be used under this subsection until any reserve funds have been used for purposes of Subsection (f). (h) If the legislature fails during the regular session to enact the transfer and appropriation proposed under Subsection (f) and there are not funds available under Subsection (j), the commissioner shall reduce the total amount of state funds allocated to each district by an amount determined by a method under which the application of the same number of cents of increase in tax rate in all districts applied to the taxable value of property of each district, as determined under Subchapter M, Chapter 403, Government Code, results in a total levy equal to the total reduction. The following fiscal year, a district's entitlement under this section is increased by an amount equal to the reduction made under this subsection. (i) Not later than March 1 each year, the commissioner shall determine the actual amount of state funds to which each school district is entitled under the allocation formulas in this chapter for the current school year and shall compare that amount with the amount of the warrants issued to each district for that year. If the amount of the warrants differs from the amount to which a district is entitled because of variations in the district's tax rate, student enrollment, or taxable value of property, the commissioner shall adjust the district's entitlement for the next fiscal year accordingly. (j) The legislature may appropriate funds necessary for increases under Subsection (i) from funds that the comptroller, at any time during the fiscal year, finds are available. (k) The commissioner shall compute for each school district the total amount by which the district's allocation of state funds is increased or reduced under Subsection (i) and shall certify that amount to the district. (l) In this section, the number of students in weighted average daily attendance is calculated in the manner provided by Section 42.302. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 19, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 396, § 1.19, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1187, § 2.06, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 201, § 34, eff. Sept. 1, 2003. § 42.2531. ADJUSTMENT BY COMMISSIONER. (a) The commissioner may make adjustments to amounts due to a school district under this chapter or Chapter 46, or to amounts necessary for a district to comply with the requirements of Chapter 41, as provided by this section. (b) A school district that has a major taxpayer, as determined by the commissioner, that because of a protest of the valuation of the taxpayer's property fails to pay all or a portion of the ad valorem taxes due to the district may apply to the commissioner to have the district's taxable value of property or ad valorem tax collections adjusted for purposes of this chapter or Chapter 41 or 46. The commissioner may make the adjustment only to the extent the commissioner determines that making the adjustment will not: (1) in the fiscal year in which the adjustment is made, cause the amount to which school districts are entitled under this chapter to exceed the amount appropriated for purposes of the Foundation School Program for that year; and (2) if the adjustment is made in the first year of a state fiscal biennium, cause the amount to which school districts are entitled under this chapter for the second year of the biennium to exceed the amount appropriated for purposes of the Foundation School Program for that year. (c) The commissioner shall recover the benefit of any adjustment made under this section by making offsetting adjustments in the school district's taxable value of property or ad valorem tax collections for purposes of this chapter or Chapter 41 or 46 on a final determination of the taxable value of property that was the basis of the original adjustment, or in the second school year following the year in which the adjustment is made, whichever is earlier. (d) This section does not require the commissioner to make any requested adjustment. A determination by the commissioner under this section is final and may not be appealed. Added by Acts 2001, 77th Leg., ch. 1156, § 5, eff. Sept. 1, 2001. § 42.254. ESTIMATES REQUIRED. (a) Not later than October 1 of each even-numbered year: (1) the agency shall submit to the legislature an estimate of the tax rate and student enrollment of each school district for the following biennium; and (2) the comptroller shall submit to the legislature an estimate of the total taxable value of all property in the state as determined under Subchapter M, Chapter 403, Government Code, for the following biennium. (b) The agency and the comptroller shall update the information provided to the legislature under Subsection (a) not later than March 1 of each odd-numbered year. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 20, eff. Sept. 1, 1997. § 42.255. FALSIFICATION OF RECORDS; REPORT. When, in the opinion of the agency's director of school audits, audits or reviews of accounting, enrollment, or other records of a school district reveal deliberate falsification of the records, or violation of the provisions of this chapter, through which the district's share of state funds allocated under the authority of this chapter would be, or has been, illegally increased, the director shall promptly and fully report the fact to the State Board of Education, the state auditor, and the appropriate county attorney, district attorney, or criminal district attorney. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.257. EFFECT OF APPRAISAL APPEAL. (a) If the final determination of an appeal under Chapter 42, Tax Code, results in a reduction in the taxable value of property that exceeds five percent of the total taxable value of property in the school district for the same tax year determined under Subchapter M, Chapter 403, Government Code, the commissioner shall request the comptroller to adjust its taxable property value findings for that year consistent with the final determination of the appraisal appeal. (b) If the district would have received a greater amount from the foundation school fund for the applicable school year using the adjusted value, the commissioner shall add the difference to subsequent distributions to the district from the foundation school fund. An adjustment does not affect the local fund assignment of any other district. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.258. RECOVERY OF OVERALLOCATED FUNDS. (a) If a school district has received an overallocation of state funds, the agency shall, by withholding from subsequent allocations of state funds or by requesting and obtaining a refund, recover from the district an amount equal to the overallocation. (b) If a district fails to comply with a request for a refund under Subsection (a), the agency shall certify to the comptroller that the amount constitutes a debt for purposes of Section 403.055, Government Code. The agency shall provide to the comptroller the amount of the overallocation and any other information required by the comptroller. The comptroller may certify the amount of the debt to the attorney general for collection. (c) Any amounts recovered under this section shall be deposited in the foundation school fund. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.259. FOUNDATION SCHOOL FUND TRANSFERS. (a) In this section: (1) "Category 1 school district" means a school district having a wealth per student of less than one-half of the statewide average wealth per student. (2) "Category 2 school district" means a school district having a wealth per student of at least one-half of the statewide average wealth per student but not more than the statewide average wealth per student. (3) "Category 3 school district" means a school district having a wealth per student of more than the statewide average wealth per student. (4) "Wealth per student" means the taxable property values reported by the comptroller to the commissioner under Section 42.252 divided by the number of students in average daily attendance. (b) Payments from the foundation school fund to each category 1 school district shall be made as follows: (1) 15 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of September of a fiscal year; (2) 80 percent of the yearly entitlement of the district shall be paid in eight equal installments to be made on or before the 25th day of October, November, December, January, March, May, June, and July; and (3) five percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of February. (c) Payments from the foundation school fund to each category 2 school district shall be made as follows: (1) 22 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of September of a fiscal year; (2) 18 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of October; (3) 9.5 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of November; (4) 7.5 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of April; (5) five percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of May; (6) 10 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of June; (7) 13 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of July; and (8) 15 percent of the yearly entitlement of the district shall be paid in an installment to be made after the fifth day of September and not later than the 10th day of September of the calendar year following the calendar year of the payment made under Subdivision (1). (d) Payments from the foundation school fund to each category 3 school district shall be made as follows: (1) 45 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of September of a fiscal year; (2) 35 percent of the yearly entitlement of the district shall be paid in an installment to be made on or before the 25th day of October; and (3) 20 percent of the yearly entitlement of the district shall be paid in an installment to be made after the fifth day of September and not later than the 10th day of September of the calendar year following the calendar year of the payment made under Subdivision (1). (e) The amount of any installment required by this section may be modified to provide a school district with the proper amount to which the district may be entitled by law and to correct errors in the allocation or distribution of funds. If an installment under this section is required to be equal to other installments, the amount of other installments may be adjusted to provide for that equality. A payment under this section is not invalid because it is not equal to other installments. (f) Except as provided by Subsection (c)(8) or (d)(3), any previously unpaid additional funds from prior years owed to a district shall be paid to the district together with the September payment of the current year entitlement. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1995, 74th Leg., ch. 426, § 31, eff. June 9, 1995; Acts 1997, 75th Leg., ch. 165, § 6.03, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 201, § 35, eff. Sept. 1, 2003; Acts 2003, 78th Leg., ch. 1310, § 4, eff. June 20, 2003. § 42.260. USE OF CERTAIN FUNDS. (a) In this section, "participating charter school" has the meaning assigned by Section 42.2514. (b) For each year, the commissioner shall certify to each school district or participating charter school the amount of: (1) additional funds to which the district or school is entitled due to the increase made by H.B. No. 3343, Acts of the 77th Legislature, Regular Session, 2001, to: (A) the equalized wealth level under Section 41.002; or (B) the guaranteed level of state and local funds per weighted student per cent of tax effort under Section 42.302; or (2) additional state aid to which the district or school is entitled under Section 42.2513. (c) Notwithstanding any other provision of this code, a school district or participating charter school may use the following amount of funds only to pay contributions under a group health coverage plan for district or school employees: (1) an amount equal to 75 percent of the amount certified for the district or school under Subsection (b); or (2) if the following amount is less than the amount specified by Subdivision (1), the sum of: (A) the amount determined by multiplying the amount of $900 or the amount specified in the General Appropriations Act for that year for purposes of the state contribution under Section 9, Article 3.50-7, Insurance Code, by the number of district or school employees who participate in a group health coverage plan provided by or through the district or school; and (B) the difference between the amount necessary for the district or school to comply with Section 3, Article 3.50-9, Insurance Code, for the school year and the amount the district or school is required to use to provide health coverage under Section 2 of that article for that year. (d) A determination by the commissioner under this section is final and may not be appealed. (e) The commissioner may adopt rules to implement this section. Added by Acts 2001, 77th Leg., ch. 1187, § 2.08, eff. Sept. 1, 2002.SUBCHAPTER F. GUARANTEED YIELD PROGRAM § 42.301. PURPOSE. The purpose of the guaranteed yield component of the Foundation School Program is to provide each school district with the opportunity to provide the basic program and to supplement that program at a level of its own choice. An allotment under this subchapter may be used for any legal purpose other than capital outlay or debt service. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1999, 76th Leg., ch. 396, § 1.20, eff. Sept. 1, 1999. § 42.302. ALLOTMENT. (a) Each school district is guaranteed a specified amount per weighted student in state and local funds for each cent of tax effort over that required for the district's local fund assignment up to the maximum level specified in this subchapter. The amount of state support, subject only to the maximum amount under Section 42.303, is determined by the formula:GYA = (GL X WADA X DTR X 100) - LR where: "GYA" is the guaranteed yield amount of state funds to be allocated to the district; "GL" is the dollar amount guaranteed level of state and local funds per weighted student per cent of tax effort, which is $27.14 or a greater amount for any year provided by appropriation; "WADA" is the number of students in weighted average daily attendance, which is calculated by dividing the sum of the school district's allotments under Subchapters B and C, less any allotment to the district for transportation, any allotment under Section 42.158, and 50 percent of the adjustment under Section 42.102, by the basic allotment for the applicable year; "DTR" is the district enrichment tax rate of the school district, which is determined by subtracting the amounts specified by Subsection (b) from the total amount of maintenance and operations taxes collected by the school district for the applicable school year and dividing the difference by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521, divided by 100; and "LR" is the local revenue, which is determined by multiplying "DTR" by the quotient of the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521, divided by 100. (b) In computing the district enrichment tax rate of a school district, the total amount of maintenance and operations taxes collected by the school district does not include the amount of: (1) the district's local fund assignment under Section 42.252; or (2) taxes paid into a tax increment fund under Chapter 311, Tax Code. (c) For purposes of this section, school district taxes for which credit is granted under Section 31.035, 31.036, or 31.037, Tax Code, are considered taxes collected by the school district as if the taxes were paid when the credit for the taxes was granted. (d) For purposes of this section, the total amount of maintenance and operations taxes collected for an applicable school year by a school district with alternate tax dates, as authorized by Section 26.135, Tax Code, is the amount of taxes collected on or after January 1 of the year in which the school year begins and not later than December 31 of the same year. (e) For purposes of this section, school district taxes for which credit is granted under Subchapter D, Chapter 313, Tax Code, are considered taxes collected by the school district as if the taxes were paid when the credit for the taxes was granted. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 21, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 637, § 3, eff. Aug. 30, 1999; Acts 1999, 76th Leg., ch. 396, § 1.20, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 320, § 1, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1187, § 2.09, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1187, § 2.10, eff. Sept. 1, 2002; Acts 2001, 77th Leg., ch. 1505, § 8, eff. Jan. 1, 2002; Acts 2003, 78th Leg., ch. 1275, § 2(21), eff. Sept. 1, 2003. § 42.303. LIMITATION ON ENRICHMENT TAX RATE. The district enrichment tax rate ("DTR") under Section 42.302 may not exceed $0.64 per $100 of valuation, or a greater amount for any year provided by appropriation. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. Amended by Acts 1997, 75th Leg., ch. 1071, § 21, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 396, § 1.20, eff. Sept. 1, 1999. § 42.304. COMPUTATION OF AID FOR DISTRICT ON MILITARY RESERVATION OR AT STATE SCHOOL. State assistance under this subchapter for a school district located on a federal military installation or at Moody State School is computed using the average tax rate and property value per student of school districts in the county, as determined by the commissioner. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995.SUBCHAPTER G. SCHOOL FACILITIES INVENTORY AND STANDARDS § 42.352. STANDARDS. The State Board of Education shall establish standards for adequacy of school facilities. The standards shall include requirements related to space, educational adequacy, and construction quality. All facilities constructed after September 1, 1992, must meet the standards in order to be financed with state or local tax funds. Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995. § 42.4101. ADDITIONAL ASSISTANCE FOR DISTRICTS WITH STUDENTS USING PUBLIC EDUCATION GRANTS. (a) A district is entitled to additional assistance under this section as provided by Section 29.203(c). (b) The amount of additional assistance under this section is computed by subtracting the number of students residing in the district and using public education grants to attend school in another district for the year in which the assistance is granted from the number of students using public education grants to attend school in the district for that year and multiplying the difference by $266. (c) If a district to which this section applies is entitled to the maximum amount of assistance under Section 42.406, the maximum is increased by the amount of additional assistance to which the district is entitled under this section. Added by Acts 1997, 75th Leg., ch. 722, § 6, eff. Sept. 1, 1997.
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