By: Huberty, et al. H.B. No. 21

(Senate Sponsor - Taylor of Galveston)

(In the Senate - Received from the House August 8, 2017; August 8, 2017, read first time and referred to Committee on Education; August 11, 2017, reported adversely, with favorable Committee Substitute by the following vote: Yeas 9, Nays 1; August 11, 2017, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR H.B. No. 21 By: Taylor of Galveston

A BILL TO BE ENTITLED

AN ACT

relating to the public school finance system.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Effective September 1, 2018, Section 12.106, Education Code, is amended by amending Subsection (a-1) and adding Subsections (d) and (e) to read as follows:

(a-1) In determining funding for an open-enrollment charter school under Subsection (a):

(1) [,] adjustments under Sections 42.102, [42.103,] 42.104, and 42.105 are based on the average adjustment for the state; and

(2) the adjustment under Section 42.103 is based on the average adjustment for the state that would have been provided under that section as it existed on January 1, 2018.

(d) Subject to Subsection (e), in addition to other amounts provided by this section, a charter holder is entitled to receive, for the open-enrollment charter school, funding per student in average daily attendance in an amount equal to the guaranteed level of state and local funds per student per cent of tax effort under Section 46.032(a) multiplied by the lesser of:

(1) the state average interest and sinking fund tax rate imposed by school districts for the current year; or

(2) a rate that would result in a total amount to which charter schools are entitled under this subsection for the current year equal to $60 million.

(e) A charter holder is entitled to receive funding under Subsection (d) only if the most recent overall performance rating assigned to the open-enrollment charter school under Subchapter C, Chapter 39, reflects at least acceptable performance.

SECTION 2. Effective September 1, 2023, Sections 42.103(b) and (d), Education Code, are amended to read as follows:

(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

(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), if [or (c) for which] the district is eligible for that formula; or

(2) AA = (1 + ((5,000 - ADA) X .000025)) X ABA.

SECTION 3. Effective September 1, 2018, Section 42.103(c), Education Code, is amended to read as follows:

(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 following formulas [formula]:

(1) for the fiscal year beginning September 1, 2018:

AA = (1 + ((1,600 - ADA) X .000275 [.00025])) X ABA

;

(2) for the fiscal year beginning September 1, 2019:

AA = (1 + ((1,600 - ADA) X .00030)) X ABA

;

(3) for the fiscal year beginning September 1, 2020:

AA = (1 + ((1,600 - ADA) X .000325)) X ABA

;

(4) for the fiscal year beginning September 1, 2021:

AA = (1 + ((1,600 - ADA) X .00035)) X ABA

; and

(5) for the fiscal year beginning September 1, 2022:

AA = (1 + ((1,600 - ADA) X .000375)) X ABA

SECTION 4. Chapter 42, Education Code, is amended by adding Subchapter H to read as follows:

SUBCHAPTER H. FINANCIAL HARDSHIP TRANSITION PROGRAM

Sec. 42.451. FINANCIAL HARDSHIP GRANTS. (a) From amounts appropriated for this subchapter, the commissioner may administer a grant program that provides grants to school districts to defray financial hardships resulting from changes made to Chapter 41 and this chapter that apply after the 2016-2017 school year.

(b) The commissioner shall award grants under this subchapter to districts as provided by Section 42.452.

(c) Except as provided by Subsection (d), funding provided to a district under this subchapter is in addition to all other funding provided under Chapter 41 and this chapter.

(d) A district is not eligible for funding under this subchapter for a school year if the district receives for that school year an adjustment of the district's taxable value of property under Section 42.2521. A district may decline an adjustment under Section 42.2521 to maintain eligibility for funding under this subchapter.

(e) The commissioner may obtain additional information as needed from a district or other state or local agency to make determinations in awarding grants under this subchapter.

Sec. 42.452. AWARD OF GRANTS; AMOUNT. (a) The commissioner shall award grants to school districts based on the following formula:

HG = (PL-CL) X (TR) X (TAHG/TEHG)

where:

"HG" is the amount of a district's hardship grant;

"PL" is the amount of funding under previous law to which a district would be entitled under Chapter 41 and this chapter as those chapters existed on January 1, 2017, determined using current school year data for the district;

"CL" is the amount of current law funding under Chapter 41 and this chapter to which a district is entitled;

"TR" is a district's maintenance and operations tax rate, as specified by the comptroller's most recent certified report;

"TAHG" is the total funding available for grants under Section 42.456 for a school year; and

"TEHG" is the sum of the combined amounts for all districts calculated by applying the formula (PL-CL) X (TR) for each district.

(b) A school district's hardship grant awarded under this subchapter for a school year may not exceed the lesser of:

(1) the amount equal to 10 percent of the total amount of funds available for grants under this subchapter for that school year; or

(2) the amount by which "PL" exceeds "CL" for that district for that school year.

(c) For purposes of calculating the formula under Subsection (a), the commissioner shall:

(1) in determining the values of "PL" and "CL" for a school district, exclude the amount of revenue received by the district as a result of Section 13.054 or an administrative rule related to that section;

(2) if the value of (PL-CL) for a school district results in a negative number, use zero for the value of (PL-CL);

(3) if a school district's maintenance and operations tax rate ("TR") is greater than $1, use $1 for the value of "TR";

(4) use a maintenance and operations tax rate ("TR") of $1 for each open-enrollment charter school, each special-purpose school district established under Subchapter H, Chapter 11, and the South Texas Independent School District; and

(5) if (TAHG/TEHG) equals a value greater than one, use a value of one for (TAHG/TEHG).

(d) If funds remain available under this subchapter for a school year after determining initial grant amounts under Subsection (a), as adjusted to reflect the limits imposed by Subsection (b), the commissioner shall reapply the formula as necessary to award all available funds.

(e) If the commissioner reapplies the formula in accordance with Subsection (d), a school district that was ineligible under Section 42.455 for a grant during the initial application of the formula for that school year is eligible to receive a grant as a result of the formula reapplication.

Sec. 42.453. ELIGIBILITY OF OPEN-ENROLLMENT CHARTER SCHOOL. An open-enrollment charter school is eligible for a grant under this subchapter in the same manner as a school district.

Sec. 42.454. REGIONAL EDUCATION SERVICE CENTERS AND COUNTY DEPARTMENTS OF EDUCATION NOT ELIGIBLE. A regional education service center or a county department of education is not eligible for a grant under this subchapter.

Sec. 42.455. CERTAIN SCHOOL DISTRICTS NOT ELIGIBLE. Except as provided by Section 42.452(e), a school district is not eligible for a grant under this subchapter if for the 2015-2016 school year the district's expenditures per student in weighted average daily attendance, excluding bond debt service payments, capital outlays, and facilities acquisition and construction costs, exceeded an amount that is equal to 120 percent of the state average amount for that school year of expenditures per student in weighted average daily attendance, excluding bond debt service payments, capital outlays, and facilities acquisition and construction costs, as those amounts are determined by the commissioner.

Sec. 42.456. FUNDING LIMIT. The amount of grants awarded by the commissioner under this subchapter may not exceed $100 million for the 2017-2018 school year or $50 million for the 2018-2019 school year.

Sec. 42.457. NO ADJUSTMENT BASED ON REVISED DATA. The commissioner may not adjust the amount of a school district's grant under this subchapter based on revisions to the district's data received after a grant has been awarded.

Sec. 42.458. RULES. The commissioner may adopt rules as necessary to administer this subchapter.

Sec. 42.459. DETERMINATION FINAL. A determination by the commissioner under this subchapter is final and may not be appealed.

Sec. 42.460. EXPIRATION. This subchapter expires September 1, 2019.

SECTION 5. Effective September 1, 2018, Section 46.032(a), Education Code, is amended to read as follows:

(a) Each school district is guaranteed a specified amount per student in state and local funds for each cent of tax effort to pay the principal of and interest on eligible bonds. The amount of state support, subject only to the maximum amount under Section 46.034, is determined by the formula:

EDA = (EDGL X ADA X EDTR X 100) - (EDTR X (DPV/100))

where:

"EDA" is the amount of state funds to be allocated to the district for assistance with existing debt;

"EDGL" is the dollar amount guaranteed level of state and local funds per student per cent of tax effort, which is the lesser of:

(1) $40 [$35] or a greater amount for any year provided by appropriation; or

(2) the amount that would result in a total additional amount of state funds under this subchapter for the current year equal to $60 million in excess of the state funds to which school districts would have been entitled under this section if the guaranteed level amount were $35;

"ADA" is the number of students in average daily attendance, as determined under Section 42.005, in the district;

"EDTR" is the existing debt tax rate of the district, which is determined by dividing the amount budgeted by the district for payment of eligible bonds 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

"DPV" is the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 42.2521.

SECTION 6. (a) The amount of $311,000,000 of the unencumbered appropriations from the general revenue fund for the state fiscal biennium ending August 31, 2019, made by S.B. 1, Acts of the 85th Legislature, Regular Session, 2017 (the General Appropriations Act), to the Health and Human Services Commission is transferred to the Texas Education Agency to be used by the agency during that state fiscal biennium as follows:

(1) $150,000,000 is allocated to fund financial hardship grants under Subchapter H, Chapter 42, Education Code, as added by this Act;

(2) $60,000,000 is allocated to fund payments to open-enrollment charter schools under Section 12.106(d), Education Code, as added by this Act;

(3) $60,000,000 is allocated for the existing debt allotment under Section 46.032, Education Code, as amended by this Act; and

(4) $41,000,000 is allocated for the small-sized district adjustment under Section 42.103, Education Code, as amended by this Act.

(b) The Health and Human Services Commission shall identify the strategies and objectives out of which the transfer under Subsection (a) of this section is to be made.

(c) Notwithstanding the sum-certain appropriations specified in Rider 3, Chapter 605 (S.B. 1), Acts of the 85th Legislature, Regular Session, 2017 (the General Appropriations Act), to the bill pattern of the appropriations to the Texas Education Agency, the Legislative Budget Board shall determine the sum-certain appropriation to the Foundation School Program for each year of the state fiscal biennium beginning September 1, 2017, based on the amount specified in that rider, the other provisions of the General Appropriations Act, and other law, including the provisions of this Act.

SECTION 7. Effective September 1, 2023, Section 42.103(c), Education Code, is repealed.

SECTION 8. Except as otherwise provided by this Act:

(1) this Act takes effect September 1, 2017, if this Act receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution; and

(2) if this Act does not receive the vote necessary for effect on that date, this Act takes effect on the 91st day after the last day of the legislative session.

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