(a) Eligibility. Certain restrictions apply to debt and to
school districts eligible for the existing debt allotment (EDA).
(1) Debt eligible for the EDA is an existing obligation of
a school district made through the issuance of a bond for instructional or
non-instructional purposes pursuant to Texas Education Code (TEC), Chapter
45, Subchapter A, or through the refunding of bonds as defined in TEC, §46.007.
Lease-purchase arrangements authorized by Local Government Code, §271.004,
are not eligible.
(2) Eligible debt does not include any portion of an existing
obligation that has been approved for financial assistance with the Instructional
Facilities Allotment (IFA) as defined in §61.1032 of this title (relating
to Instructional Facilities Allotment), in accordance with TEC, Chapter 46.
(3) Certain other refinanced debt may be eligible for funding
under this subsection.
(A) A lease purchase refunded with a general obligation bond
shall be eligible for consideration for the EDA in future years based on the
date of payment on the new bond and the limits on tax rates that apply.
(B) Any portion of a bond issue that refinances a portion of
an original lease-purchase arrangement that was eligible for IFA consideration
but exceeded the IFA limit shall be eligible for consideration in future years
pursuant to this subsection based on the date of first payment on the new
bond and the limits on tax rates that apply.
(C) If a lease purchase that is not funded in the IFA program
is refinanced with a general obligation bonded debt, the bonded debt shall
gain eligibility for the EDA by the terms of the EDA program. Any Interest
and Sinking (I&S) fund tax effort associated with the bonded debt payments
may be counted for purposes of computing the EDA. Qualification pursuant to
this subsection shall be according to the terms of the program, including
the date of first payment on the bond and the relevant tax rate limitation.
(D) Debt that is refinanced in a manner that disqualifies it
for eligibility for funding within the IFA program shall be treated as new
bonded debt at the time of issuance for the purpose of funding consideration
pursuant to the EDA.
(b) Qualifying debt service. Certain district revenues may
qualify to meet the local share requirement of the EDA when computing state
assistance amounts.
(1) I&S fund taxes collected in the current school year
may qualify toward meeting the local share requirement of the EDA. In addition,
other district funds budgeted for the payment of bonds may qualify to meet
the EDA local share requirements.
(A) Funds budgeted by a district for payment of eligible bonds
may include I&S fund taxes collected in the 1999-2000 school year or later
school year in excess of the amount necessary to pay the district's local
share of debt service on bonds in that year, provided that the taxes were
not used to generate other state aid.
(B) Funds budgeted by a district for payment of eligible bonds
may include Maintenance and Operations (M&O) taxes collected in the current
or previous school year that are in excess of amounts used to generate other
state aid.
(C) The commissioner of education will provide each district
with information about what tax collections were not equalized by state assistance
in the preceding school year and worksheets to enable districts to calculate
tax collections that will not receive state assistance in a current school
year.
(D) Districts must inform the commissioner of education of
amounts, if any, to be applied to the EDA local share requirement, if such
contributions are derived from current or preceding year tax collections not
equalized by state assistance.
(2) If a district issues debt that requires the deposit of
payments into a mandatory I&S fund or debt service reserve fund, the deposits
will be considered debt payments for the purpose of the EDA if the district's
bond covenant calls for the deposit of payments into a mandatory and irrevocable
fund for the sole purpose of defeasing the bonds or if the final statement
stipulates the requirements of the I&S fund and the bond covenant.
(3) I&S fund taxes will be attributed first to satisfy
the local share requirement of eligible EDA debts, second to satisfy the local
share requirements of any IFA debts, and lastly to excess taxes that may raise
the limit for the EDA program in a subsequent biennium if collected in the
second year of a state fiscal biennium.
(4) Computation of state aid in the EDA program for a variable
rate bond shall be based on the minimum payment requirement. A district may
receive such state aid for payment on a variable rate bond in excess of the
minimum payment requirement as long as the additional amount meets certain
conditions.
(A) The payment is necessary to meet the computed interest
costs for the year.
(B) The amount shall not exceed the applicable limit for debt
established pursuant to TEC, §46.034(b).
(C) The district shall notify the commissioner of education
of its intent prior to the adoption of the district's tax rate for debt service
for the applicable year.
(5) A district may exercise its ability to make payments in
excess of the minimum payment required but the excess amount shall not be
used in determining the limit on the existing debt tax rate (EDTR) or in the
calculation of state assistance in that year.
(6) Computation for fixed-rate bonds shall be based on published
debt service schedules as contained in the official statement. Prepayment
of a bond, either through an early call provision or some other mechanism,
shall not increase the state's obligation or the computed state aid pursuant
to the EDA. To the extent that prepayments reduce future debt service requirements,
the computation of state aid shall also be appropriately adjusted.
(c) Limits on assistance. The amount of state assistance is
limited by the lesser of a calculated EDTR for eligible debt or an appropriated
debt tax limit.
(1) The calculated EDTR is a rate determined with the debt
limit resulting from the lesser of calculations specified in subparagraphs
(A) or (B) of this paragraph.
(A) EDTR may be calculated as the I&S fund taxes for eligible
bonds for the last fiscal year of the preceding state fiscal biennium divided
by the property value used for state funding purposes in that year, then multiplied
by 100.
(B) EDTR may be calculated as the current year debt service
payment divided by the product of the current year average daily attendance
(ADA) multiplied by $35, then divided by $100.
(2) The EDTR used in the funding formula cannot exceed the
appropriated limit ($.29).
(3) For purposes of computing EDTR, tax collections or payment
amounts associated with bonded debt in the IFA program shall be excluded from
the calculation.
(d) Data and payment cycles. The necessary data elements to
calculate state assistance for existing debt and the associated payment cycle
are determined by the commissioner of education.
(1) An initial, preliminary payment of state assistance will
be made as soon as practicable after September 1 of each year. This payment
will be based on an estimate of ADA; the taxable value of property certified
by the Comptroller of Public Accounts for the preceding school year as determined
in accordance with Government Code, Chapter 403, Subchapter M; and the amount
of taxes budgeted to be collected for payment of eligible bonds. Districts
will supply information about budgeted taxes in July on a data collection
survey.
(2) A final determination of assistance for a school year will
be made at the close of business for the current school year when final counts
of ADA and collection amounts for eligible debt are available. This determination
will also take into account, if applicable, a reduced property value that
reflects either a rapid decline pursuant to TEC, §42.2521, or a grade
level adjustment pursuant to TEC, §42.106.
(A) Any additional amounts owed will be paid as soon as practicable
after the final determination is made.
(B) Any overpayment will be subtracted from the EDA in the
subsequent year. If no such assistance is due in the subsequent school year,
the Foundation School Fund will be reduced accordingly. If no payments are
due from the Foundation School Fund, the district will be notified about the
overpayment and must remit that amount to the Texas Education Agency (TEA)
no later than three weeks after notification.
(e) Deposit and uses of funds.
(1) Funds received from the state for assistance with existing
debt must be deposited in the district's I&S fund and must be taken into
account before setting the I&S fund tax rate.
(2) State and local shares of the EDA must be used for the
exclusive purpose of making principal and interest payments on eligible debt.
(f) Refinancing of eligible debt.
(1) A district that refinances eligible debt in part or in
full must inform the TEA's division responsible for state funding in writing
and must provide appropriate documentation related to the refinancing.
(2) The portion of the debt eligible for state assistance on
refunded bonds is subject to the same limits as eligible debt that has not
been refinanced.
(3) If a refunding pricing of a district decreases the current
year bond payment requirement, the reduced payment amount shall be the basis
of determining the limit on funding.
(4) If a refunding pricing of a district increases the bond
payment requirement, the amount of increase shall not be used to determine
state aid unless the pricing took place prior to January 1 of the last fiscal
year of the preceding state fiscal biennium.
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