• Finance Bills Passed by the 2015 Legislature


    HB 1
    State Budget

    The total state budget for 2016-17 biennium was $209.43 billion, which is a 3.56 percent increase over 2014-15. It includes an increase of approximately $1.5 billion to the Foundation School Program (FSP) above $2.5 billion for enrollment growth.

    2016-17 budget highlights for the FSP include:

    • $1.2 billion for the basic allotment per ADA ($5,140 both years)
    • $200 million for fractional funding.
    • Guaranteed Yield increases to $74.28 (2016) and $77.53 (2017)
    • $55.5 million for IFA (FY 2017)
    • $47.5 million for NIFA

    Other budget items outside of FSP include: (*unchanged from 2014-15 budget)

    • $25 million for ESCs*
    • $31 million for Communities in Schools*
    • $12 million for Teach for America*
    • $8 million for Virtual Schools*
    • $16.3 million for Advanced Placement Initiative*
    • $6 million for Early College High School*
    • $3 million for T-STEM, down from $6 million
    • $1.04 billion for IMA, up from $838 million
    • $40.6 million for the newly created math and reading academies
    • $31.7 million for SSI, down from $60.5 million
    • $30 million for supplemental funding for pre-K*
    • $118 million for pre-K programs that meet certain requirements

    Also included in Article III is funding to pay for business and property tax relief:

    • $2.6 billion for a 25 percent reduction to the franchise tax
    • $1.2 billion to hold districts harmless for the $10,000 increase to the homestead exemption ($15,000 to $25,000).

    The annual school district contribution rate for TRS-Care remains at 0.55 percent of total payroll.

    Earliest effective date: September 1, 2015

    HB 7
    Fractional Funding

    Amends numerous statutes impacting various fiscal matters and contains changes related to “fractional funding.” Allows districts that had a compressed tax rate below $1 to voluntarily shift pennies at the $31.95 yield from Tier 2 into Tier 1. School boards wishing to shift these pennies must notify the commissioner in writing by September 1 of each of the affected school years. Applies only to the 2015-16 and 2016-17 school years. Shifting of these pennies will be mandatory for the 2017-18 school year for all districts that are not at the maximum the compressed tax rate.

    Earliest effective date: September 1, 2015

    HB 114
    Limits on Issuance of Capital Appreciation Bonds

    Prohibits political subdivisions, including school districts, from issuing capital appreciation bonds (CABs) unless certain criteria are met. CABs cannot be secured unless: (1) the bonds have a scheduled maturity date not later than 20 years after issuance; (2) the school district has received a written estimate of the cost of the issuance, which includes the amount of principal and interest to be paid until maturity, the amount of fees to be paid to outside vendors that sell products to be financed by the bond issuance, the amount of fees to be paid to each financing team member, and the projected tax impact of the bonds and the assumptions related to the calculation.

    Requires the school board to determine whether a personal or financial relationship exists between members of the board and any financial advisor, bond counsel, bond underwriter, or other professional associated with the bond issuance. Provides that school districts must submit a determination that a relationship exists to the Texas Ethics Commission.

    Provides that each school district must post prominently on its website the following information: (1) the total amount of the proposed bonds; (2) the length of the maturity of the bonds; (3) the projects to be financed with the bond proceeds; (4) the intended use of bond proceeds not spent after completion; (5) the total amount of the districts outstanding bonded indebtedness at the time of the election of the bond, including the amount of principal and interest to be paid to existing bond debt until maturity; and (6) the total amount of the district’s outstanding bonded indebtedness, including the amount of principal and interest to be paid if the bond passes. Requires school districts to regularly and accurately update debt information on the their websites.

    Prohibits CABs from being used for certain items unless the item has an expected useful life, as determined by the IRS, that exceeds the bond’s maturity date: (1) items regularly considered maintenance items such as HVAC replacement units, upgraded plumbing, etc.; or (2) transportation-related items, including buses.

    Allows unspent CAB bond proceeds to be used only for those uses specified by the board unless another use is approved by the voters in an election held for that purpose.

    The total amount of CABs may not exceed 25 percent of the school district’s total outstanding debt at the time of issuance, including the principal and interest to be paid on the outstanding bonds until maturity.

    Provides that a school district can extend the maturity date of the bond only if the extension will decrease the total amount of projected principal and interest or the maximum legally allowable tax rate for indebtedness has been adopted and TEA certifies in writing that the solvency of the Permanent School Fund’s bond guarantee program would be threatened without the extension.

    The requirements for issuance do not apply to certain refunding bonds or CABs used for the purpose of financing transportation projects.

    Earliest effective date: September 1, 2015

    HB 771
    Texas Academy of Leadership in the Humanities

    Provides that each student enrolled in the Texas Academy of Leadership in the Humanities at Lamar University is entitled to allotments under Chapter 42 as if it were a school district without a Tier 1 local share for the purposes of Texas Education Code 42.353.

    Applies beginning with the 2015-16 school year.

    Earliest effective date: September 1, 2015

    HB 870
    Investment Training for Treasurer, CFO

    Requires the treasurer or the chief financial officer (CFO) (if the treasurer is not the CFO) and the investment officer of a school district to attend an investment training session at least once in a two-year period that begins on the first day of the entity’s fiscal year and consists of the two consecutive fiscal years after that date. The training must include at least eight hours of instruction and be from an independent source approved by the board of trustees or by a designated investment committee advising the investment officer.

    Earliest effective date: September 1, 2015

    HB 1474
    Instructional Materials Allotment (IMA) Shift to Biennial

    Changes the IMA from an annual to a biennial allotment. Requires the comptroller, in connection with installment transfers of funds from the state’s general revenue fund, to permit TEA to make temporary transfers from the Foundation School Fund for the payment of IMA.

    Earliest effective date: September 1, 2015

    HB 1551
    Transfers to Permanent School Fund

    Requires the School Land Board to adopt rules to establish the procedure for that board to determine the date a transfer will be made and the amount to be transferred from the real estate special fund account of the Permanent School Fund to the Available School Fund or to the SBOE for investment in the Permanent School Fund. Requires the School Land Board, by September 1 of each even-numbered year, to submit to the Legislature, comptroller, SBOE, and Legislative Budget Board a report that specifies in detail the date a transfer will be made and the amount the School Land Board will transfer during the subsequent state fiscal biennium from the real estate special fund account.

    Earliest effective date: Immediately

    HB 2593
    Small Schools ADA Adjustment

    Provides that certain districts with fewer than 130 students in ADA shall be provided an adjusted basic allotment on the basis of 130 students in ADA if the district offers a K-4 program and has preceding or current year’s ADA of at least 75 students or is 30 miles or more by bus route from the nearest high school district. This applies only to a district that does not offer each grade level and that has prospective or former students who generally attend school in a bordering state for the grade levels the district does not offer, that serves both students residing in Texas and students residing in a bordering state who are subsequently eligible for in-state tuition rates at institutions of higher education in either state regardless of the state in which the students reside, and that shares students with an out-of-state district that does not offer competing instructional services.

    Earliest effective date: September 1, 2015

    HB 2660
    ADA for Flexible School Day Programs

    Requires the commissioner, in calculating ADA for students served by an optional flexible school day program, to ensure that funding for attendance in a course in that program is based on the same instructional hour requirement of the regular program rather than a full-time equivalent student basis that requires six hours of student conduct time to qualify for a full day of attendance. (Districts would be allowed to earn full-day attendance for students in optional flexible day programs based on 240 minutes of instruction rather than 360 minutes of instruction)

    Applies beginning with the 2015-16 school year.

    Earliest effective date: Immediately

    HB 2826
    Eligibility of Property in School Districts

    Adds Tax Code Section 313.0255 to the Texas Economic Development Act. Applies only to a single unified project located in more than one but not more than three school districts, each of which is contiguous to another district in which the project is located, and at least one of which is a district to which subchapter B applies. Provides direction on how the provisions of subchapter B apply to such a project and how the required minimum amount of qualified investment and minimum amount of limitation on appraised value are determined. In determining whether property on which a project is located meets the eligibility requirements for a limitation on appraised value, the comptroller must consider whether the project as a whole would meet the requirements if it were located at one site in a single school district. Adds Section 313.055 to address how Section 313.0255 applies when the districts involved are subject to subchapter C.

    Requires the comptroller to verify a random sample of the data submitted under that section. This section addresses the source of information, size of the sample, and confidentiality of any personal identifying information.

    Earliest effective date: September 1, 2015

    HB 3062
    Jobs and Education for Texans (JET) Grant Program

    Amends the Jobs and Education for Texans (JET) Grant Program. Transfers responsibility for administering the program to the Texas Workforce Commission. Allows the commission to award the grant to a school district if the district has entered into a partnership with a public junior college or public technical institute for the purpose of promoting CTE or offering dual-credit courses to the district’s students. Provides that a school district may be awarded a grant under this program beginning with the 2016-17 school year.

    Earliest effective date: Immediately

    SB 810
    Authority of a District to Contract with a Municipality on Facilities

    Allows a school district and a municipality located wholly or partially in the county in which the district is located to contract for the district to contribute resources to pay a portion of the costs of design, improvement, or construction of an instructional facility, stadium, or other athletic facility owned by, on the property of, or under the control of the municipality. Provides that districts can contribute resources only if the district and the municipality have a written agreement authorizing the district to use the facility.

    Earliest effective date: Immediately

    SB 1760
    Tax Rate Adoption Above the Effective Rate

    Provides that school districts setting a tax rate above the sum of the effective maintenance and operations tax rate as determined by Section 26.08(i), Tax Code, and the district’s current debt rate must take a record vote and have at least 60 percent of the full board voting favorably. This change becomes effective January 1, 2016.

    Requires notice of tax revenue increases to include a statement regarding the intended purpose of the increase and provides that tax refunds following an appeal have a set 9.5 percent interest rate.

    Changes made by this Act apply only to an ad valorem tax year that begins on or after the effective date of this Act.

    Earliest effective date: January 1, 2016