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(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. The district must have made a payment on the bonds on or before August 31, 2003. Lease-purchase arrangements authorized by Local Government Code, §271.004, are not eligible. Payments demonstrating eligibility for the EDA must appear on the debt service schedule contained in the final official statement or bond order. (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)Eligible bond payments include regularly scheduled principal and interest payments that are made between September 1 and August 31 each year. (4)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)The commissioner of education will determine the amount of excess collections, if any, to be applied to the EDA local share requirement. (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 collected during a school year will be attributed first to satisfy the local share requirement of debts eligible for EDA state aid for that school year, second to satisfy the local share requirements of any IFA debts for that school year, 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 collected 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 on eligible bonds 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. (C)Adjustments to state assistance based on changes in the final counts of ADA or changes to a district's property value must be requested no later than three years following the close of the school year for which the adjustment is sought. (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, including payment schedules for the refunded debt that clearly identify the bonds being refunded and the debt service attributable to the refunded bonds, if available. State aid payments for EDA will not be processed until these documents have been received by the TEA division responsible for state funding. (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. The total debt service eligible for state assistance will be limited to the district's total debt service prior to January 1 of the last fiscal year of the preceding state fiscal biennium.
This agency hereby certifies that the adoption has been
reviewed
by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on August 16, 2004
TRD-200405174 Cristina De La Fuente-Valadez
Director, Policy Coordination
Texas Education Agency
Effective date: September 5, 2004
Proposal publication date: May 7, 2004
For further information, please call: (512) 475-1497
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