001Hello everybody, welcome. Today we are covering local school district revenue including local options to increase funding in support of academic strategic plans. My name is Andrew Hajj. I am the associate commissioner of system innovation. >> And I'm David Marx, the director of financial compliance. And today the purpose of our conversation is to increase district awareness of state funding sources including those inside and outside of district control and how those supports along uh align with researchbacked student sports. We also want to provide you all with a suite of tools including this webinar uh the recording and a slide deck but also kind of a district decisions funding tool that you can tinker with to see the impact of different decisions on the funds that are available to your district. With that, let's jump in. You can
002see that district funding has increased in the last 10 years. this uh last year which is the most recent year that we have from audited and PES data the amount was $16,219 per student in the 2526 year um from the the most recent legislation legislative session they increased that by $750 per student and overall that'll be an increase of approximately 4 billion per year which is the largest increase in history. But first, let's start by reviewing your own district's total revenue. School systems most recent year that was audited was that 2324 school year. And we are reflecting on the the total statewide PI's financial standard report, the actual numbers, and we're going to show you how we came up with that $16,219 number. First in state funding you had the state operating funds. You have
003the state assistance for debt service which is EDA and IFA. And then you also included in that number is the TRS contributions that this state makes directly to TRS on behalf of school districts and charter schools. The next amount that we're looking at is the local property taxes from M. So that's your your property taxes that you're collecting locally. The next amount is the federal funds. So that's the the green bar up at the top. That includes title one idea B career and tech and other miscellaneous federal funds. And then also um for local other funding, that's the two that are highlighted in the the very light shade of gray, that that includes mostly interest income fees that you may charge or facility rentals. And then lastly is the local local property taxes from INS.
004You can see that of the $16,219 uh funding per student that approximately $10,651 is made up of M funding of that uh that includes the basic aotment. It includes the the new teacher and staff retention allotments, the allotment for basic cost, tier 2 enrichments, and then some of the traditional aotments that you're more used to, career and tech, sped, compensatory early education, and then the small and midsize district aotment. Um, as well as it includes the TRS on behalf, the school safety funds, and then the other aotments, which uh does include TIA as well. An interesting thing to note is that uh the basic aotment is approximately 31% of the $16,219 funding per student. The school finance system is complex. Much of it is a function of state statutory formulas including the basic aotment. It
005is commonly understood that local school boards and district leaders have significant local control over how the total funding they receive is spent. What is less commonly understood is that there are also components of that statute that give school boards and district leaders some local control over how much total funding is generated by a local district. This presentation is intended to highlight the policy levers available to local leaders that impact the size of the total funding for a school system. Generally you can think of maintenance and operations funding is driven by the basic aotment and then four large categories. Students taxes for ISDS only certain district characteristics and district priorities and student opportunities. But within those categories there is some level of control demographic makeup of your students. the collection rates, the tier one tax rates,
006reducing your local exemptions, the ISD year-over-year growth levels, small and midsize ISD or charter, the number of campuses and teachers, and then where the the district is located are typically outside the district's control. There are some items that a district has some influence over and those are total enrollment, the attendance rates and the appraisal the appraisal accuracy. The items highlighted in green can be impacted by district decisions and generate additional revenue. The tier 2 rates, teacher supports, both TIA and PREP, instructional models, ADZ and dual language, school models, resource campuses, 1882 campuses, dropout recovery, day placement, and hybrid learning, CCM readiness, CTE sequences, rural CTE partnerships, PEK, also academic supports, so SBOE and OEER, HQIM, learning materials, blended learning, and and K3 reading interventions, summer school, homeschool UIL, and three and four year old prek
007programs. HB2 increased funding in many ways beyond the basic aotment. Some of these funding streams require explicit district actions to access. Taken together, factors under district control can increase M funding by well over 15%. The items highlighted in green will make up the other district action dependent. Um, so that's that green box right in the middle. Um, if you were to uh immediately start implementing these programs, you could earn roughly $750 for the 2526 school year. However, if you add in the other elements, the the elements that were added at the bottom, you could substantially increase your M funding by $2,16. So, now we will dive deeper into each of the categories and look at at them uh in in more detail. So, we will look at students tax rates, district priorities, and student opportunities
008as they uh have an impact on your overall funding. Total enrollment um across the state has increased over time. Um, a district can control uh somewhat the the enrollment by providing specialized school models that appeal to certain non-enrolled families. Districts and charters can expand their open enrollment policies within their own district boundaries. They can expand open enrollment policies outside of district boundaries. They can do targeted marketing and they can add hybrid or virtual programs. dropout recovery programs and pre-K programs. With each new student enrolled, a district could earn on average of $10,500 per student. Attendance rates are a key driver of funding, and they present an opportunity for many school districts. A 1% increase in your M funding is roughly $106 per enrolled student. We will now look at tax rates and its impact on
009your overall funding. Tax rates are a decision that ISDs only have the ability to do and generally are impacted by a board's decision. The M tax rate is made up of three components. Districts determine what rate to set for tier one, but it is compressed by the state. Also, within the tax rate, there are tier two types of tier 2 pennies, golden pennies and copper pennies. The copper pennies are subject to recapture. If a district goes from five tier 2 pennies to all eight golden pennies, they could increase their M funding by approximately 5%. Or if they went from eight golden pennies to all nine golden pennies, they could increase their M funding for a district by 5.6%. Reducing tax rates provides tax relief to taxpayers. Increasing tax rates increases the size of the district
010budget. Beyond the 140,000 homestead exemption that's adopted statewide, districts can adopt a local percentage homestead as well. The key factor on this that is if a district does adopt a uh local homestead option, they will see a reduction in their um funding by approximately 6% on average. However, if you're a recapture district, you uh the state allows the district to keep the amount of M recapture that would have otherwise been spent sent to the state and an amount to the value loss from those collections. So, no net loss. districts can also have an impact on the appraisal districts because they get to elect a portion of the the board of members uh which could um play in the accuracy of the district's appraisals. Next, we'll turn it over to Andrew to talk about district priorities
011and student opportun opportunities. >> Thanks, David. So next we want to talk through different district priorities, student opportunities, and the impact of those decisions on local budgets. The way that we've broken this down is into the six categories that you see on your screen. There's teacher supports, academic supports, college career and military readiness, instructional models, school models, and other state supports. First, we'll start with teacher supports. And the first thing that we want to highlight with teacher supports is the teacher incentive aotment and enhanced TIA. The teacher incentive aotment is designed to reward and retain our best teachers in our classroom. The teacher incentive aotment includes two different components. Teacher student growth results but also teacher uh teacher observation results. What local districts will do? Well, they'll determine the rules of their teacher incentive aotment
012system locally and they will get those approved by the Texas education agency and then they will rate their teachers according to that system and according to how teach how local districts designate. Texas education agency will send a districts in the form of the teacher incentive aotments for districts to pay those teachers additional funds. Additionally, through House Bill Two, the Texas legislature created the enhanced teacher incentive a lotment designation, which allows local school systems to really redesign their salary schedule to fully align with teacher performance to align all salaries within the district to the quality of teacher in the classroom. While the teacher incentive aotment is designed to recruit and retain the best teachers in our classrooms, the prep aotment, the preparing and retaining educators through partnership aotment is designed to strengthen the quality of teacher
013recruitment, preparation, and mentorship across the state. This allotment is divided into five components which you see on your screen. The PREP grow your own program provides funding through which participating school systems can support employees not holding a teaching certificate in completing a bachelor's degree um to do so. It also supports local school systems in supporting high school students to complete career and technical education courses to put those students on a track to becoming classroom teachers. for pre-ervice preparation. The prep aotment empowers local school systems to fund paid residencies uh to support those aspiring teachers. Uh it does that within the context of pre-ervice residencies, but also in supporting traditional pre-ervice programs and alternative pre-ervice programs. I will note that the traditional pre-ervice program and the alternative pre-ervice program take effect in the 2728 school year.
014Lastly, the PREP mentorship program provides districts with districts interested in implementing high-quality new teacher mentorship programs with funds to provide up to $1,000 to mentor teachers, to train those mentor teachers, and to provide release time to those teachers to support their aspiring teachers. Again, the top row that you see here is available starting in the 2627 school year. and the traditional and pre uh traditional pres-ervice and alternative pres-ervice programs available in 2728. Lastly, funding with the prep aotment is designed so that teachers that are serving in high needs areas um or more rural areas actually uh the aotment grows. The a lotment is worth more money in those areas and that is similar that is actually the same approach as the teacher incentive aotment. Next, we'll dig into academic supports and align funding sources for
015those supports. High-quality instruction materials ensure that students are provided access to grade level content throughout their educational journey. When districts purchase state board of education approved textbooks, those are textbooks that are approved through the IMRA process. The district gets access to an extra $40 per student. If districts are printing state board of education approved um sorry state board of education approved open education resources, they get an additional $20 per student. These are our blue bonnet learning materials that are provided by the Texas Education Agency. In addition, there are implementation supports provided by the state in the form of the Lyft leadership and instructional foundations for Texas grant program that are designed to provide districts with the implementation supports to implement highquality instructional materials and that is a that is a grant um that is a
016grant support that is available annually through the lasso unified grant application. In addition to those supports, the state offers a blended learning grant program. Blended learning is a combination of online and teacher-led instruction. And the blended learning grant program is an annual grant program available through Lasso if a district is seeking supports to implement a highquality blended learning grant program in one of their campuses. In addition, early literacy intervention allotment is such that eleas can receive $250 for students that indicate they are at risk of not reading on grade level by the third grade. Um these are based upon low scores on two consecutive kindergarten through third grade beginning middle year and or end of year assessments. This is also applicable for students that are not meeting grade level on third grade star. Um and
017these are uh u early literacy um early literacy assessments that are approved will be approved by the agency coming soon. Additionally, if students do not if students indicate that they are at risk of not reading on grade level, they are also eligible and the districts are eligible for K3 reading summer school. What this is is a similar initiative to the additional day school year program uh which we'll discuss here in a minute. But in this case, you do not need to hit a base number of days, which you do need to hit in adsy. Um for this, any student that is in K3 that is not drawing down ads funds, that does indicate they are at risk on one of those uh beginning, middle, and end of year assessments. those students are eligible for quarter
018day funding for additional time. So essentially each each individual day they attend uh beyond the district base calendar those students will earn a quarter day ADA for their district. Next want to talk through college career and military readiness supports available from the state. CTE funding is available such that it encourages students and districts to set up system where those kids are engaging with career and technical education throughout their learning journey. They are also cascaded such that the weights of the funding increase as students go further into a CTE progression. So as students attend um an advancing CTE uh CT an advanced CTE course, they generate more funds uh per uh per ADA. Students can also start participating in those courses as early as the seventh grade. And a student participating in a single one hour
019per day level three or level four generates on average about $520. Next, rural CTE partnerships. This is something that is called the rural pathways and excellence partnership. We know that rural districts sometimes struggle to offer the full array of career and technical education courses that they would like. Um the rural pathways and excellence partnership allows an option where rural school districts can essentially share those CTE programs and earn additional funds for students that are engaged in that model. So if two districts have different CTE courses, a student from district A could actually attend the CTE course from district B and additional funding can be generated for for that. Um in one of these pathways, a student could generate on average of upwards of almost $3,000 per ADA for the district. In addition, as the RPEP
020aotment funds the current state of students that are included in that model, CCMR outcomes bonus funding will also increase for students that are in the RPEP model that ultimately generate back CCMR outcomes bonuses to the district. Next, PEK high school models. Any high school campus that adopts a PEK model will generate additional funding. This was increased in the in-house bill 2 of the 89th legislative session. In addition, TEA offers PEK startup grants. Those are available through lasso on an annual basis. Additionally, the state funds the cost of college career military readiness exams up to two industrybased certification exams per eligible student. And the state will also cover the cost of reimbursement of a college entrance exam, an SAT or an ACT or career readiness exam for each student enrolled in high school. The college career
021and military readiness outcomes bonus is designed to make sure that all kids are college and career military ready. What happens in this bonus is that additional money flows back to districts based on outcomes that students achieve. And so actually most of the data with this comes after graduation. School systems receive additional funding for preparing students for college career in military when they take that next step. When the students take that next step in their career by enrolling in post-secary institutions, completing an industry approved credential or even enlisting in the military. As more students graduate ready for college career in the military, outcomes bonuses of $4,000, $3,000, and $5,000 depending on the student are provided back to the district. Additionally, with dual credit, community colleges receive formula funding for low-income students who enrolled in dual credit
022programs. As a result, school systems should actually be able to expand the availability of dual credit courses to low-income students without any additional cost from their higher education partner. Next, various instructional models can provide additional state funding to school districts. The first we'd like to discuss is the additional day school year initiative. Additional day school years combats the problem of short school year calendars and summer slide to incentivize districts to increase the length of their calendar year. The base calendar in an adsy model is required to be at least 175 days. But after that those days then turn into additional day school year days adsy days from day 176 all the way up to day 205. If a district chooses to offer ads days, they get additional half-day formula funding for every student that attends
023that is a part of that ads model. If a school district or campus decides to offer 205 days, the half-day formula funding with adsy turns into three quarter day formula funding where a district could earn even more money upwards of an average of $650,000 per campus. In this model, you may see a district's Mino increase by upwards of 6%. With dual language, additional state funding is provided for emergent bilingual and English learner students. Additional funding is provided for eleas that offer a dual language instructional model, which could result in an extra $311 per student in ADA. The extra funding is provided for both native spa Spanish speakers learning English in a one-way or dual language model and also for native English speakers learning Spanish in a two-way model. Next, different school models have a different
024impact on local funding. First, we'd like to discuss the resource campuses and 1882 campuses. Resource campuses are a school model that is designed off the ACE school model, accelerating campus excellence, and has been shown to have a significant impact in a school turnaround situation. With resource campuses, a campus will adopt a resource campus plan which includes at least 50% of core subject teachers designated as teacher incentive development teachers, an adsy calendar if they're elementary or middle, so over 100, in this case 181 days, a high quality instructional materials plan and an ACE plan with related staffing requirements. Campuses that are eligible for resource campus designation must have had at least three DF or not rated ratings in the last 10 years. And also the campus has to have at least 5,000 students in ADA. Additional
025funding from a resource designation is roughly about 1,300 per year although or per ADA per year although that fluctuates depending on district size. When stacking aotments that we discussed above, teacher and sen allotment, additional day school year, the IMRA all aotment with high quality instructional materials, the total funding that may go to a resource campus could be upwards of $3,000 per ADA per year. An additional strategy that a district may take is an 1882 Texas partnership strategy. In that model, certain school districts, typically those without a small or mid-size aotment, can generate about $1,300 per student, which is the average small and midsize amount, for operating a campus in an 1882 partnership under a performance contract. Funding for dropout recovery programs. Texas law allows school systems to draw down funding for students who've not yet
026graduated all the way up to age 25. In the A throughF accountability system, there's an alternative design for specialized dropout recovery schools, but these schools can be run by district or they can also be run through a partner with a specialized school operator. For reference, in 2023 2024, there were about 233,000 individuals statewide aged from 19 to 25 that did not possess a high school diploma. Every new student in this model generates funding consistent with that student which is on average about $10,000 extra. It's going to be a significant impact to M funding upwards of about three and a half%. Countywide day placement campuses. A single school system in each county can volunteer to launch a day placement campus to support students with very significant behavioral or other needs in a specialized learning environment. Per
027pupil revenue is provided under the foundational school program typically with significant levels of additional revenue given the students that are typically included in a day placement. Base funding in this model in addition to the per pupil funding is provided which is $250,000 upfront and an additional $100,000 to $150,000 per year. Next, hybrid and virtual campuses. Full-time hybrid campuses are established by school systems which have an irregular in-person attendance pattern. An example of this is an elementary school where a set of students comes for a full day on Monday and Wednesday. On Tuesday and Thursday, those students are in a different location. Those students are getting support from the school system and parents typically commit to providing instruction at home with that support from the school. Extracurricular activities might be scheduled for Friday. In this model,
028full-time camp full-time hybrid campuses convert to an enrollmentbased funding model for the purposes of the basic allotment and for all other allotments otherwise based on ADA using the average rate of attendance for the district. This doesn't inherently increase M, but it can lead to an increase of enrollment with potentially higher level of achievement at a lower cost. Virtual campuses operate off the same funding basis as hybrid campuses with an enrollmentbased funding model. In addition to those, there are other state supports that are available. There's funding for early childhood education. The state of Texas provides for eligible three-year-old students half-day formula funding and for eligible four-year-old students full day formula funding. If districts enroll those students, funding is automatically provided. HP2 from the 89th legislature also made part of the early education aotment dependent on the
029provision of full day prek for four-year-olds. In the 2024 2025 school year, roughly 18% of eligible three-year-old students were enrolled. So this leaves a significant amount of opportunity for districts to increase funding for early childhood. Additionally, there's extracurricular funding for UIL participation for homeschool students. So for non-enrolled students that are participating in UIL activities at your district, those students can result in your district earning additional funding for their participation. That funding can be upwards of $1,500 per activity. And lastly, beyond these funding sources, there are other local funds that are outside of M formulas where school systems have authority to generate revenue. Some examples of this, although this list is not exhaustive, are earnings from deposit and investments, charging for transportation, charging for student activities, charging for food outside of the school lunch program, fee
030for service, which includes charging fees under the education savings accounts, and other enterprise services. That was a lot of information. The information was provided to help you be more aware of the state resources that are available for your districts, but we wanted to provide additional resources that are available for you to be able to understand, share, and communicate uh this information. The first resource that we've made available for you is this webinar recording and the accompanying slide deck for you to be able to review on your own, share with relevant staff, your cabinet, or your board members. Additionally, TA has developed a district funding decision template to identify the impact of local decisions on district funding. This allows you to input a set of decisions that you are contemplating making on your own and see
031the impact on your specific district. In addition, we're here to help. You're always welcome to reach out to TEA or your ESC to get more information, support, and guidance on these topics. And lastly, we discussed a lot of different funding sources today, including some aotments and grant programs and other other sources of funds available to you all. There is additional information about each of those funding sources that is available on the TEA website for you to review on your own and discuss with your team. With that, those are the resources that we've been able to make available to you all. We appreciate your attention, your time today, and appreciate being able to discuss with you all more ways that you can maximize the maximize the resources that are available to you from the state to
032support student achievement.