19 TAC §105.1014
The Texas Education Agency (TEA) proposes new §105.1014,
concerning state aid entitlements. The new section describes the actions that
will be taken by the TEA to provide supplemental state assistance to school
districts that have a decline in taxable property values resulting from electric
utility restructuring. Under Texas Utilities Code, §39.901, school districts
would be held harmless for the effects that electric utility restructuring
might have on the ability of the districts to generate local revenue.
Senate Bill 7, 76th Texas Legislature, 1999, enacted major changes to the
marketplace of electric power that, in turn, will impact the taxable value
of electric generating facilities. The bill authorized fees to be collected
from utilities and created a fund that would receive those fees. The fee receipts
would be used to offset additional state expenses in the Foundation School
Program that can be attributed to declines in property values from a prior
year to the current year. The state expenses would result from higher state
aid requirements under Texas Education Code, Chapters 42 and 46, or reduced
recapture receipts under Texas Education Code, Chapter 41. In addition, any
loss of revenue incurred by school districts that would not be made up by
additional state aid or reduced recapture requirements would be paid to the
districts from funds transferred to the TEA.
Joe Wisnoski, coordinator for school finance and fiscal analysis, has determined
that for the first five-year period the section is in effect there will be
no fiscal implications for state government as a result of enforcing or administering
the new section. There will be fiscal implications for local government. However,
the impact of property value declines cannot be accurately estimated without
detailed value information that is currently not available. Early estimates
of impact indicate $50-$70 million per year in additional state cost or lost
revenue from recapture.
The treatment of state aid calculations is directed by statutes added by
Senate Bill 7, 76th Texas Legislature, 1999. The adjustments enacted by statute
would increase state aid to school districts that have property value declines
from one year to the next, but would fund the increases from the fees levied
by the Public Utility Commission that are to be deposited to the System Benefit
Fund. The adjustments would also reduce the amount of funds recaptured from
property wealthy school districts under Texas Education Code, Chapter 41,
and would transfer funds from the System Benefit Fund to the Foundation School
Fund to offset the loss of revenue to the state. The proposed new section
describes the calculations that will be made to determine increased assistance
from the state or reduced revenue owed to the state. Until an exact amount
of property value change is determined, the precise fiscal impact cannot be
determined for either the state or local school districts. From a local school
district perspective, the revenues available after adjustment from the state
should be the same as would have been available had there never been a change
in the taxable value of property. From the state's perspective, additional
revenue from the System Benefit Fund should completely fund the necessary
adjustments.
Mr. Wisnoski and Criss Cloudt, associate commissioner for policy planning
and research, have determined that for each year of the first five years the
section is in effect the public benefit anticipated as a result of enforcing
the section will be a uniform methodology for determining the benefits that
school districts can obtain from the structure established by Senate Bill
7, designed to implement adjustments to school district funding related to
electric utility restructuring. There will not be an effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the proposed new section.
Comments on the proposal may be submitted to Criss Cloudt, Policy Planning
and Research, 1701 North Congress Avenue, Austin, Texas 78701, (512) 463-9701.
Comments may also be submitted electronically to
rules@tmail.tea.state.tx.us
or faxed to (512) 475-3499. All requests
for a public hearing on the proposed section submitted under the Administrative
Procedure Act must be received by the commissioner of education not more than
15 calendar days after notice of a proposed change in the section has been
published in the
Texas Register
.
The new section is proposed under the Texas Utilities Code, §39.901,
as added by Senate Bill 7, 76th Texas Legislature, 1999, which authorizes
the commissioner of education to adopt rules necessary for the implementation
of a school funding loss mechanism.
The new section implements the Texas Utilities Code, §39.901, as added
by Senate Bill 7, 76th Texas Legislature, 1999.
§105.1014.Additional Assistance for Effects of Electric Utility Restructuring.
(a)
Each year, the commissioner of education shall determine
the effects on recaptured property taxes and local revenues from property
value reductions caused by electric utility restructuring, as authorized under
Texas Utilities Code, §39.901. The commissioner shall base the determination
of the effects on the difference in property values as determined by the comptroller
of public accounts for the current or preceding school year, as appropriate.
The commissioner shall provide the determination to the Public Utility Commission
no later than May 1 of each year.
(b)
For purposes of computing the effects of electric utility
restructuring on state aid under Texas Education Code Chapter 42, the commissioner
shall first compute the amount of state aid by using the prior year property
value as determined by the comptroller under Texas Government Code, §403.302,
using the budgeted maintenance tax collections for the current year as reported
through the Public Education Information Management System (PEIMS). The commissioner
shall also compute the amount of state aid using the prior year property value
adjusted to reflect the higher taxable value of property that would have been
available had there been no electric utility restructuring and the amount
of local maintenance taxes that would have been available with proportionately
higher property values. To determine the local taxes that would have been
available, the commissioner shall proportionately adjust the budgeted tax
collections reported through PEIMS for the current year by the ratio of the
adjusted prior year property values to the unadjusted prior year property
values. To determine whether the district is entitled to any supplemental
payment, the sum of state aid and local maintenance taxes shall be compared
between the scenario using prior year property values and budgeted PEIMS tax
collections and the scenario using the adjusted property values and adjusted
tax collections. If the scenario using adjusted property values and tax collections
produces more total revenue, the difference shall be paid in addition to any
other state aid.
(c)
For purposes of computing the effects of electric utility
restructuring on recaptured property taxes and local revenue under Texas Education
Code, Chapter 41, the commissioner shall compute the amount of recaptured
property taxes by first using the prior year property value as determined
by the comptroller under Texas Government Code, §403.302, using the budgeted
maintenance tax collections for the current year as reported through PEIMS.
The commissioner shall also compute the amount of recaptured property taxes
by using the prior year property value adjusted to reflect the higher taxable
value of property that would have been available had there been no electric
utility restructuring and the amount of local maintenance taxes that would
have been available with proportionately higher property values. To determine
the local taxes that would have been available, the commissioner shall proportionately
adjust the budgeted tax collections reported through PEIMS for the current
year by the ratio of the adjusted prior year property values to the unadjusted
prior year property values. To determine the reduction in recaptured property
taxes, the commissioner shall compare the amount of recapture, net of any
credits or discounts, in the two scenarios. To determine whether the district
is entitled to any supplemental payment for lost local revenue, the local
maintenance taxes remaining after net recapture shall be compared between
the scenario using prior year property values and budgeted PEIMS tax collections
and the scenario using the adjusted property values and adjusted tax collections.
(d)
For purposes of computing the effects of electric utility
restructuring on state aid under Texas Education Code, Chapter 46, the commissioner
shall first compute the amount of state aid by using the prior year property
value as determined by the comptroller under Texas Government Code, §403.302,
using the budgeted debt service tax collections for the current year as reported
through PEIMS. The commissioner shall also compute the amount of state aid
using the prior year property value adjusted to reflect the higher taxable
value of property that would have been available had there been no electric
utility restructuring and the amount of local debt service taxes that would
have been available with proportionately higher property values, up to the
limits of allotments for debt service in Texas Education Code, Chapter 46.
To determine the local taxes that would have been available, the commissioner
shall proportionately adjust the budgeted tax collections reported through
PEIMS for the current year proportionate to the ratio of the adjusted prior
year property values to the unadjusted prior year property values. To determine
whether the district is entitled to any supplemental payment, the sum of state
aid and local debt service taxes shall be compared between the scenario using
prior year property values and budgeted PEIMS tax collections and the scenario
using the adjusted property values and adjusted tax collections. If the scenario
using adjusted property values and tax collections produces more total revenue,
the difference shall be paid in addition to any other state aid.
(e)
If for any year the decline for a school district from
prior year property values to current year is greater than 4.0%, and the comptroller
certifies that there is a decline in property values due to electric utility
restructuring, the commissioner shall separately compute the additional state
aid under Texas Education Code, Chapters 42 and 46, and the reduction in recapture
under Texas Education Code, Chapter 41, that is related to restructuring in
order to award relief under Texas Education Code, §42.2521. For this
purpose, the commissioner shall also compute the amount of local taxes in
the current year that would have been available had there been no restructuring.
To determine the local taxes that would have been available, the commissioner
shall adjust the budgeted tax collections reported through PEIMS for the current
year proportionate to the ratio of the adjusted current year property values
to the unadjusted prior year property values. To determine whether the district
is entitled to any supplemental payment for the decline in current year property
values due to restructuring, the sum of state aid (or recapture as appropriate)
and local taxes shall be compared between the scenario using prior year property
values and budgeted PEIMS tax collections and the scenario using the adjusted
property values and adjusted tax collections. If the scenario using adjusted
property values and tax collections produces more total revenue, the difference
shall be paid in addition to any other state aid.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on June 12, 2000.
TRD-200004106
Criss Cloudt
Associate Commissioner, Policy Planning and Research
Texas Education Agency
Earliest possible date of adoption: July 23, 2000
For further information, please call: (512) 463-9701