According to the Texas Education Agency Office of School Finance, School Funding 101: Funding of Texas Public Schools, January 2011, funding for Texas’s public schools comes form three main sources: local school district property taxes, state funds, and federal funds. Schools are funded mainly by local property taxes and state funds administered through the state’s Foundation School Program (FSP). The FSP is revenue in the state budget earmarked for public schools in Texas. This revenue comes from tax collections transferred from other state accounts. The FSP establishes the amount of state and local funding due to school districts under Texas school finance law administered by the Texas Education Agency. The two main components of the FSP are operations funding and facilities funding. The operations funding component of the FSP provides school districts with assistance in financing their maintenance and operations based on Tier I, Tier II, and revenue at the compressed tax rate components. A district's revenue at the compressed tax rate is based on the state and local maintenance and operations (M&O) revenue. A school district's property tax rate is made up of an M&O tax rate and, if applicable, an interest and sinking tax rate (I&S). The M&O tax rate provides funds for the maintenance and operations costs of a school district. The M&O tax rate is the local district property tax rate that raises money to maintain and operate the district’s schools. The maximum M&O tax rate set by the state is $1.50 per $100.00 value.
For the Port Neches-Groves ISD the M&O for the 2010-2011 budget was set at $1.04 per $100.00 value based on a certified taxable value of $2,713,301,162. The revenue collected came from local and state funds. Projected local revenue was $32,146,529 and state revenue was $4,017,296. There are several categories from which the local revenue is generated including current year and prior years taxes, penalties and interest, ineligible transportation, summer school tuition and fees, interest in temporary investments, rent, gifts and bequests, other local revenue source, other revenue foreign trade zone, other revenue H.B. 1200, and athletic activities. The categories for state revenue are fewer and they are per capita apportionment, foundation school funds, state revenues distributed by TEA, and TRS/TRS Care on-behalf of payments. For the 2010-2011 budget these total $36,163,825 for M&O.
Expenditures for the Port Neches-Groves ISD for M&O 2010-2011 budget totaled $38,044,871 coming from several major categories. The categories are payroll costs, contracted services, supplies and materials, other operating expenses, and capital outlay. It is interesting to note that 79.1% of the expenditures came from payroll costs totaling $30,095,335.
When comparing revenue and expenditures for the projected 2010-2011 budget it is important to note that the district is spending approximately $1.9 million above the projected revenues. In other words we adopted a deficit budget. The difference in the revenue and expenditures will have to be made up from some other source, possibly from our fund balance. The other way to make up the difference is by cutting spending, which is what we are trying to do throughout the district. Continuing to operate under deficit budgets will ultimately bankrupt a school district. I believe many other school districts are having the same budgeting issues and we are hoping the state addresses the funding difficulties our school districts are facing.
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