2023S0364-1 04/11/23

By: Hinojosa S.B. No. 2607

A BILL TO BE ENTITLED

AN ACT

relating to the use of tax collections in determining certain state and local responsibilities for school funding.

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

SECTION 1. Section 46.003(a), Education Code, is amended to read as follows:

(a) For each year, except as provided by Sections 46.005 and 46.006, a school district is guaranteed a specified amount per student in state and local funds for each cent of tax effort, up to the maximum rate under Subsection (b), to pay the principal of and interest on eligible bonds issued to construct, acquire, renovate, or improve an instructional facility. The amount of state support is determined by the formula:

FYA = (FYL X ADA X BTR X 100) - BTRC [(BTR X (DPV/100))]

where:

"FYA" is the guaranteed facilities yield amount of state funds allocated to the district for the year;

"FYL" is the dollar amount guaranteed level of state and local funds per student per cent of tax effort, which is $35 or a greater amount for any year provided by appropriation;

"ADA" is the greater of the number of students in average daily attendance, as determined under Section 48.005, in the district or 400;

"BTR" is the district's bond tax rate for the current year, 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, Section 48.258, divided by 100; and

"BTRC" is the collections at BTR tax rate ["DPV" is the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, Section 48.258].

SECTION 2. 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) - EDTRC [(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 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 48.005, 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 48.258, divided by 100; and

"EDTRC" is the collections at the EDTR tax rate ["DPV" is the district's taxable value of property as determined under Subchapter M, Chapter 403, Government Code, or, if applicable, under Section 48.258].

SECTION 3. Section 48.202(a), Education Code, is amended to read as follows:

(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 48.203, 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 an amount described by Subsection (a-1) 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 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 48.258 or by the quotient of the value of "DPV" as determined under Section 48.256(d) if that subsection applies to the district, divided by 100; and

"LR" is the local revenue, which is the collections at the DTR tax rate [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 48.258 or by the quotient of the value of "DPV" as determined under Section 48.256(d) if that subsection applies to the district, divided by 100].

SECTION 4. Section 48.256, Education Code, is amended to read as follows:

Sec. 48.256. LOCAL SHARE OF PROGRAM COST (TIER ONE). (a) Each school district's share of the Foundation School Program is the district's maintenance and operations tax collections for the current year at [determined by the following formula:

LFA = TR X DPV

[where:

["LFA" is the school district's local share;

["TR" is] the school district's adopted tier one maintenance and operations tax rate, as described by Section 45.0032(a) for each hundred dollars of valuation[; and

["DPV" is the taxable value of property in the school district for the current tax year determined under Subchapter M, Chapter 403, Government Code].

(b) The commissioner shall adjust the collections [values reported by the comptroller] to reflect reductions [in taxable value of property] resulting from natural or economic disaster in the year in which the taxes are due [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) This subsection applies to a school district in which the board of trustees entered into a written agreement with a property owner under Section 313.027, Tax Code, for the implementation of a limitation on appraised value under Subchapter B or C, Chapter 313, Tax Code. For purposes of determining "DPV" under Subsection (a) for a school district to which this subsection applies, the commissioner shall exclude a portion of the market value of property not otherwise fully taxable by the district under Subchapter B or C, Chapter 313, Tax Code, before the expiration of the subchapter. The comptroller shall provide information to the agency necessary for this subsection. A revenue protection payment required as part of an agreement for a limitation on appraised value shall be based on the district's taxable value of property for the preceding tax year.

[(e) Subsection (d) does not apply to property that was the subject of an application under Subchapter B or C, Chapter 313, Tax Code, made after May 1, 2009, that the comptroller recommended should be disapproved.]

SECTION 5. Section 48.266, Education Code, is amended by amending Subsections (a) and (e), to read as follows:

(a) For each school year the commissioner shall determine:

(1) the amount of money to which a school district is entitled under Subchapters B, C, and D;

(2) the amount of money to which a school district is entitled under Subchapter E;

(3) the amount of money allocated to the district from the available school fund;

(4) the amount of each district's collections of the district's tier one local share under Section 48.256; and

(5) the amount of each district's collections of the district's tier two local share under Section 48.202 for:

(A) the district's maintenance and operations tax effort described by Section 48.202(a-1)(1); and

(B) the district's maintenance and operations tax effort described by Section 48.202(a-1)(2).

(e) If a school district demonstrates to the satisfaction of the commissioner that the estimate of the district's tax rate, collections, 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.

SECTION 6. Section 48.258, Education Code, is amended to read as follows:

Sec. 48.258. FAILURE TO COLLECT DELINQUENT MAINTENANCE AND OPERATIONS TAXES. (a) The commissioner shall calculate an ongoing five-year average collection ratio for the state and for each district. The state average collection ratio is calculated by dividing the total maintenance and operations collections for the current year's taxes for all districts by the sum for all districts of the product of the district's tax rate times the district's taxable value of property for that year. The district collection ratio is calculated by dividing the total maintenance and operations collections for current and delinquent taxes, including penalties and interest, by the product of the district's tax rate times the district's taxable value of property for that year.

(b) If a district has a five-year average collection ratio that is below the state average collection ratio, the amount of the district's entitlement under this chapter is reduced by a percentage equal to the difference between the statewide average collection ratio and the district's average collection ratio.

(c) All taxes, penalties, and fees collected under this section are included in the district's collections under Section 48.256 in the year in which they are collected.

(d) The comptroller may contract with private attorneys for the collection of maintenance and operations taxes delinquent for more than five years, subject to the terms and limitations that apply to a school district contracting with private attorneys for that purpose. [ADJUSTMENT FOR RAPID DECLINE IN TAXABLE VALUE OF PROPERTY. (a) For purposes of Chapters 46 and 49 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 48.266(f) 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.]

SECTION 7. Section 48.259, Education Code, is amended to read as follows:

Sec. 48.259. DELINQUENT MAINTENANCE AND OPERATIONS TAX COLLECTION. (a) If the collection of delinquent maintenance and operations taxes of a district not previously required to take action under Chapter 49 results in the district being subject to Chapter 49 only for the year in which the delinquent taxes are collected, the commissioner shall permit the district to take action under this section in lieu of taking action under Chapter 49.

(b) The district shall deposit the amount of the district's excess revenue under Section 48.257 into a separate account that may be used only as provided by this section.

(c) For the school year following the year the deposit was made as provided by Subsection (b), the commissioner shall reduce the amount of state aid to which the district is entitled under this chapter by an amount equal to the excess revenue in the separate account and the district may withdraw the money from the account to replace the reduction in state aid.

(d) If the amount of state aid to which the district is entitled under this chapter is less than the amount in the separate account, the difference must remain in the separate account and the commissioner will again reduce the district's state aid in the subsequent school year.

(e) If money remains in the separate account after three school years, the remaining money in the account is considered part of the district's excess revenue under Section 48.257.

(f) If at any time money remains in the separate account and the commissioner makes a determination that the district is subject to Chapter 49, the remaining money in the separate account must be included in determining:

(1) the amount the district is required to pay under Section 48.257; or

(2) whether the district has taken sufficient action under Chapter 49. [ADJUSTMENT FOR OPTIONAL HOMESTEAD EXEMPTION. (a) In any school year, the commissioner may not provide funding under this chapter or Chapter 46 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 48.266 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 48.266(b), reduce the entitlement under this chapter of a school district whose final taxable value of property is higher than the estimate under Section 48.269 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 48.258.

[(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 voter-approval 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.]

SECTION 8. Section 48.260(a), Education Code, is amended to read as follows:

(a) For purposes of Chapters 46 and 49 and this chapter, the commissioner shall adjust the collections [taxable value of property] of a school district all or part of which is located in an area declared a disaster area by the governor under Chapter 418, Government Code, as necessary to ensure that the district receives funding based as soon as possible on collections [property values] as affected by the disaster.

SECTION 9. Section 48.257(b), Education Code, is repealed.

SECTION 10. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2023.