1. (a) Definitions. The following terms have the following meanings when used in this section.

   1. (1) Annual financial report--The annual financial report that a school district is required to submit to the Texas Education Agency (TEA) under the Texas Education Code (TEC), §44.008.
   2. (2) Average daily attendance (ADA)--Average daily attendance as defined by the TEC, §42.005(a).
   3. (3) Chapter 313 tax credit aid--Additional State Aid for Ad Valorem Tax Credits Under the Texas Economic Development Act, as authorized by the TEC, §42.2515, for the purposes of reimbursing school districts for tax credits issued under the Texas Tax Code, Chapter 313.

   4. (4) Compressed tax rate (CTR)--

      1. (A) For the 2006-2007 fiscal year, the CTR is calculated by multiplying the 2005 adopted maintenance and operations (M&O) tax rate by 0.8867.
      2. (B) For the 2007-2008 fiscal year and each subsequent fiscal year, the CTR is calculated by multiplying the 2005 adopted M&O tax rate by the state compression percentage specified in the TEC, §42.2516(a), as that section existed for that fiscal year.

   5. (5) District planning estimates (DPEs)--The figures on the Summary of Finances report that reflect:

      1. (A) the data submitted to the TEA by school districts and by the comptroller of public accounts during a given fiscal year; and
      2. (B) the estimated Foundation School Program entitlements of school districts for the year and data specified in subparagraph (A) of this paragraph.
   6. (6) Fiscal year--The state fiscal year, which begins on September 1 of a given year and ends on August 31 of the subsequent year.
   7. (7) Foundation School Program (FSP)--The program established under the TEC, Chapters 41, 42, and 46, or any successor program of state-appropriated funding for school districts in this state.
   8. (8) General Appropriations Act (GAA)--The bill passed by the Texas Legislature that provides funding for state government.
   9. (9) House Bill (HB) 1 weighted average daily attendance--A calculation of weighted average daily attendance based on the TEC, Chapter 42, funding elements as they existed between September 1, 2006, and August 31, 2009, under the provisions of HB 1, 79th Texas Legislature, Third Called Session, 2005.
   10. (10) HB 3646 weighted average daily attendance--A calculation of weighted average daily attendance based on the TEC, Chapter 42, funding elements as they existed between September 1, 2009, and August 31, 2011, under the provisions of HB 3646, 81st Texas Legislature, 2009.

   11. (11) Legislative payment estimates (LPEs)--The figures on the Summary of Finances report that reflect:

       1. (A) the data submitted to the Texas Legislature by the TEA and the comptroller of public accounts in accordance with the TEC, §42.254, for use in establishing the FSP appropriation specified in the GAA for a given biennium; and
       2. (B) the FSP entitlements of school districts for each fiscal year of the biennium based on the data specified in subparagraph (A) of this paragraph.

   12. (12) Local maintenance and operations (M&O) tax collections--The amount of local M&O taxes collected by a school district.

       1. (A) Local M&O tax collections to be used in the calculation of FSP entitlements are determined as follows.

          1. (i) On the preliminary Summary of Finances report, local M&O tax collections are calculated according to estimates of property value growth rates provided in the GAA.
          2. (ii) On the near-final Summary of Finances report, the local M&O tax collections used are those estimated by the school district for the fiscal year of the Summary of Finances report and reported to the TEA in the annual tax information survey conducted by the TEA division responsible for state funding.
          3. (iii) On the final Summary of Finances report, the local M&O tax collections used are those reported in the school district annual financial report for the fiscal year of the Summary of Finances report.
          4. (iv) On the current Summary of Finances report, the local M&O tax collections used are those shown on the final Summary of Finances report or amended M&O tax collections that have been submitted and approved by the TEA chief school finance officer.

       2. (B) M&O tax collections used to calculate FSP entitlements are adjusted as applicable. M&O tax collections are reduced for:

          1. (i) payments related to a tax increment fund arrangement under the Texas Tax Code, Chapter 311; and
          2. (ii) amounts related to the local share of a district's Instructional Facilities Allotment for a lease-purchase agreement.

   13. (13) Local M&O tax collections for revenue target calculations--The local M&O tax collections used in the calculation of revenue targets in accordance with the TEC, §42.2516(b), as that section existed on September 1, 2006, to determine a school district's minimum entitlement under the TEC, Chapter 42, as that chapter existed on January 1, 2006, as described in subsection (b)(1) and (2) of this section, are determined as follows.

       1. (A) For Scenario 1, the local M&O tax collections used are those reflected on a school district's current Summary of Finances report for the 2005-2006 fiscal year.

       2. (B) For Scenario 2, local M&O tax collections are determined by multiplying the following:

          1. (i) the 2006-2007 M&O yield per penny, which is determined by dividing 2006-2007 M&O tax collections reported in a school district's annual financial report by the number of pennies in the 2006-2007 M&O tax rate; and
          2. (ii) the number of pennies in the 2005 adopted M&O tax rate.

       3. (C) For Scenario 3, local M&O tax collections are determined by multiplying the following:

          1. (i) the 2006-2007 M&O yield per penny, which is determined by dividing 2006-2007 M&O tax collections reported in a school district's annual financial report by the number of pennies in the 2006-2007 M&O tax rate; and
          2. (ii) the number of pennies in the effective tax rate for the 2006-2007 fiscal year, calculated under the Texas Tax Code, §26.08(i) or (k)(1), as that section existed on September 1, 2006.
       4. (D) No changes to the calculations of the tax collections described in this paragraph will be made after September 1, 2014.

   14. (14) Local M&O tax collections at the CTR for Scenario 4--

       1. (A) Local M&O tax collections used for Scenario 4 are determined by multiplying the following:

          1. (i) the yield per penny, which is determined by dividing the M&O tax collections for the fiscal year reported in a school district's annual financial report by the number of pennies in the total M&O tax rate for the fiscal year; and
          2. (ii) the number of pennies in the CTR for the fiscal year.
       2. (B) For a school district that experiences an increase in tax collections in tax year 2012 or a subsequent tax year because it meets one or more of the criteria established under the TEC, §42.2516(f-1)(1), (2), and (3), or that ceases to deposit tax collections into a tax increment fund as described in the TEC, §42.2516(f-1)(4), in tax year 2012 or a subsequent tax year, local M&O tax collections used for Scenario 4 are reduced by the amount of the increase in the M&O tax collections at the CTR that is due to the changes described in the TEC, §42.2516(f-1).
       3. (C) For a school district that experiences a decrease in tax collections in tax year 2012 or a subsequent tax year because it meets one or more of the criteria established under the TEC, §42.2516(f-1)(1), (2), and (3), or that begins to deposit tax collections into a tax increment fund as described in the TEC, §42.2516(f-1)(4), in tax year 2012 or a subsequent tax year, local M&O tax collections used for Scenario 4 are increased by the amount of the decrease in the M&O tax collections at the CTR that is due to the changes described in the TEC §42.2516(f-1).
   15. (15) Minimum salary schedule (MSS) employees--Classroom teachers, full-time nurses, full-time counselors, and full-time librarians that are subject to the MSS requirements under the TEC, §21.402.

   16. (16) Scenario 1, 2, or 3--A series of calculations that existed in the TEC as of January 1, 2006, that determined the amount of state and local revenue per student in weighted average daily attendance to which a school district was entitled. The scenario that produced the greatest state and local revenue per student in weighted average daily attendance served as the basis of funding to which a school district was entitled under the TEC, §42.2516(b), as that section existed on September 1, 2006.

       1. (A) Scenario 1 (S1)--The series of calculations that resulted in the amount of state and local revenue per student in weighted average daily attendance described in the TEC, §42.2516(b)(1)(A), as that section existed on September 1, 2006.
       2. (B) Scenario 2 (S2)--The series of calculations that resulted in the amount of state and local revenue per student in weighted average daily attendance described in the TEC, §42.2516(b)(1)(B), as that section existed on September 1, 2006.
       3. (C) Scenario 3 (S3)--The series of calculations that resulted in the amount of state and local revenue per student in weighted average daily attendance described in the TEC, §42.2516(b)(1)(C), as that section existed on September 1, 2006.
   17. (17) Scenario 4 (S4)--The series of calculations that results in the amount of state and local formula revenue per student in weighted average daily attendance generated at the CTR for a given fiscal year.

   18. (18) Settle-up--A two-step process that reconciles the difference between the FSP payments that are made to a school district or charter school during a fiscal year and the actual entitlement earned by the school district or charter school for that year.

       1. (A) Near-final settle-up--The year-end reconciliation process that occurs after the close of a given fiscal year. The process incorporates the final attendance data for that fiscal year that have been submitted to the Public Education Information Management System (PEIMS). The FSP funding adjustments that result from this reconciliation are reflected on the near-final Summary of Finances report for the fiscal year.
       2. (B) Final settle-up--The postaudit reconciliation process that occurs after the TEA's receipt of school district annual financial reports for a given fiscal year. The process incorporates the tax collection data that are reported in the annual financial reports and any other changes to funding elements that have occurred since the near-final settle-up. The FSP funding adjustments that result from this reconciliation are reflected on the final Summary of Finances report for the fiscal year.

   19. (19) Summary of Finances (SOF) report--The document of record for FSP allocations. The different versions of the report are as follows.

       1. (A) Preliminary SOF report--The version of the SOF report published during a given fiscal year for that year.
       2. (B) Near-final SOF report--The version of the SOF report that reflects the FSP entitlements of a school district following near-final settle-up for the given fiscal year.
       3. (C) Final SOF report--The version of the SOF report that reflects the FSP entitlements of a school district following final settle-up for the given fiscal year.
       4. (D) Current SOF report--The most recent version of the SOF report that reflects the FSP entitlements of a school district for the given fiscal year as of the current date. The report reflects any changes that have been made since the final SOF report.
   20. (20) Supplemental tax increment fund (TIF) aid--Aid under the TEC, §42.2514, that may be due to a school district that pays into a TIF.
   21. (21) Target year--The year that produces the greatest revenue per student in weighted average daily attendance in the scenarios defined by subsection (a)(16) of this section and that is thus used in calculating the minimum revenue entitlement for each fiscal year beginning with the 2006-2007 fiscal year. If the maximum target revenue per student in weighted average daily attendance is produced with S1, then 2005-2006 is the target year. If the maximum target revenue per student in weighted average daily attendance is produced with S2 or S3, then 2006-2007 is the target year.

   22. (22) Weighted average daily attendance (WADA)--Weighted average daily attendance as defined by the TEC, §42.302(a). The WADA used for state funding calculations is determined as follows.

       1. (A) During a given fiscal year, WADA is calculated using the LPEs for that year.
       2. (B) On the near-final SOF report, WADA is calculated using the student attendance data reported to the PEIMS for the given fiscal year.
       3. (C) On the final SOF report, WADA is calculated using the student attendance data for the given fiscal year that are available as of the date of the final SOF.

2. (b) Additional State Aid for Tax Reduction (ASATR). A school district may be entitled to receive ASATR under the TEC, §42.2516(b). The entitlement to ASATR for a given fiscal year is determined by calculating the minimum revenue entitlement applicable to that fiscal year and comparing the minimum revenue entitlement to the total state and local formula revenue based on the CTR for that fiscal year.

   1. (1) Fiscal year 2006-2007. S1, S2, and S3 target revenue; S4 total state and local revenue; and ASATR are calculated as follows for the 2006-2007 fiscal year.

      1. (A) S1 target revenue. S1 target revenue is based on the actual state and local revenue earned by a school district for the 2005-2006 fiscal year as reflected on the current 2005-2006 SOF report. S1 target revenue is calculated as follows.

         1. (i) S1 revenue includes the sum of the following amounts, calculated based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2006:

            1. (I) Tier 1 state aid earned by the district in 2005-2006;
            2. (II) Tier 2 state aid earned by the district in 2005-2006;
            3. (III) the per pupil allotment as described in Rider 69, GAA, 79th Texas Legislature, 2005;
            4. (IV) Additional State Aid for Professional Staff Salaries earned by the district under the TEC, §42.2512, for 2005-2006;
            5. (V) Additional State Aid for Homestead Exemption earned by the district under the TEC, §42.2511, for 2005-2006;
            6. (VI) Additional State Aid for School Employee Benefits earned by the district under the TEC, §42.2514, for 2005-2006;

            7. (VII) any gain from a Chapter 41 partnership, which is the amount retained by the district as the result of an agreement under the TEC, §41.121. This amount is equal to the funds received by the district as the result of a 2005-2006 agreement under the TEC, §41.121, less the following amounts:

               (-a-) funds retained from the district's 2005-2006 FSP allocation due to attendance credits purchased through an agreement under the TEC, §41.121; and

               (-b-) funds due from the district to another entity based on a 2005-2006 agreement under the TEC, §41.121; and

            8. (VIII) M&O tax collections for the 2005-2006 fiscal year as defined by subsection (a)(13)(A) of this section.
         2. (ii) The sum is reduced by the amount of the recapture payments owed by the district for the 2005-2006 fiscal year to produce total state and local revenue.
         3. (iii) Total state and local revenue is divided by the number of WADA the district had in 2005-2006 to produce S1 target revenue per WADA.
         4. (iv) S1 target revenue per WADA is multiplied by the district's 2006-2007 WADA to produce S1 total target revenue.

      2. (B) S2 target revenue. S2 target revenue is based on the state and local revenue a school district would have been entitled to in 2006-2007 based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2006, and on the tax collections defined by subsection (a)(13)(B) of this section. S2 target revenue is calculated as follows.

         1. (i) S2 revenue includes the sum of the following amounts, calculated based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2006:

            1. (I) Tier 1 state aid the district would have received in 2006-2007;
            2. (II) Tier 2 state aid the district would have received in 2006-2007;
            3. (III) the per pupil allotment as described in Rider 69, GAA, 79th Texas Legislature, 2005;
            4. (IV) Additional State Aid for Professional Staff Salaries the district would have earned under the TEC, §42.2512, for 2006-2007;
            5. (V) Additional State Aid for Homestead Exemption the district would have earned under the TEC, §42.2511, for 2006-2007;
            6. (VI) Additional State Aid for School Employee Benefits the district would have earned under the TEC, §42.2514, for 2006-2007;

            7. (VII) any gain the district would have received from a Chapter 41 partnership, which is the amount the district would have retained as the result of an agreement under the TEC, §41.121.This amount is equal to the funds the district would have received in 2006-2007 if the 2005-2006 agreement had been maintained under the TEC, §41.121, less the following amounts:

               (-a-) funds that would have been retained from the district's 2006-2007 FSP allocation due to attendance credits purchased if the 2005-2006 agreement under the TEC, §41.121, had been maintained; and

               (-b-) funds that would have been due from the district to another entity if the 2005-2006 agreement under the TEC, §41.121, had been maintained; and

            8. (VIII) M&O tax collections as defined by subsection (a)(13)(B) of this section.
         2. (ii) The sum is reduced by the amount of the recapture obligation that would have been owed in 2006-2007 if the district would have been subject to the provisions of the TEC, Chapter 41, as that chapter existed on January 1, 2006, based on the 2005 M&O tax rate and the M&O tax collections defined by subsection (a)(13)(B) of this section to produce total state and local revenue.
         3. (iii) Total state and local revenue is divided by the number of WADA the district had in 2006-2007 to produce S2 target revenue per WADA.
         4. (iv) S2 target revenue per WADA is multiplied by the district's 2006-2007 WADA to produce S2 total target revenue.

      3. (C) S3 target revenue. S3 target revenue is based on the state and local revenue a school district would have been entitled to in 2006-2007 based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2006, and on the tax collections defined by subsection (a)(13)(C) of this section. S3 target revenue is calculated as follows.

         1. (i) S3 revenue includes the sum of the following amounts, calculated based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2006:

            1. (I) Tier 1 state aid the district would have received in 2006-2007;
            2. (II) Tier 2 state aid the district would have received in 2006-2007 based on the tax rate authorized by the Texas Tax Code, §26.08(i) or (k)(1), as that section existed on September 1, 2006;
            3. (III) the per pupil allotment as described in Rider 69, GAA, 79th Texas Legislature, 2005;
            4. (IV) Additional State Aid for Professional Staff Salaries the district would have earned under the TEC, §42.2512, for 2006-2007;
            5. (V) Additional State Aid for Homestead Exemption the district would have earned under the TEC, §42.2511, for 2006-2007;
            6. (VI) Additional State Aid for School Employee Benefits the district would have earned under the TEC, §42.2514, for 2006-2007;

            7. (VII) any gain the district would have received from a Chapter 41 partnership, which is the amount the district would have retained as the result of an agreement under the TEC, §41.121.This amount is equal to the funds the district would have received in 2006-2007 if the 2005-2006 agreement had been maintained under the TEC, §41.121, less the following amounts:

               (-a-) funds that would have been retained from the district's 2006-2007 FSP allocation due to attendance credits purchased if the 2005-2006 agreement under the TEC, §41.121, had been maintained; and

               (-b-) funds that would have been due from the district to another entity if the 2005-2006 agreement under the TEC, §41.121, had been maintained; and

            8. (VIII) M&O collections as defined by subsection (a)(13)(C) of this section.
         2. (ii) The sum is reduced by the amount of the recapture obligation that would have been owed in 2006-2007 if the district would have been subject to the provisions of the TEC, Chapter 41, as that chapter existed on January 1, 2006, based on the M&O tax rate resulting from the computation described in the Texas Tax Code, §26.08(i) or (k)(1), as that section existed on September 1, 2006, and the M&O tax collections defined by subsection (a)(13)(C) of this section to produce total state and local revenue.
         3. (iii) Total state and local revenue is divided by the number of WADA the district had in 2006-2007 to produce S3 target revenue per WADA.
         4. (iv) S3 target revenue per WADA is multiplied by 2006-2007 WADA to produce S3 total target revenue.

      4. (D) S4 total state and local revenue. S4 total state and local revenue is determined by the amount of state and local formula revenue that is generated at the CTR for 2006-2007 based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on September 1, 2006, and on the tax collections defined by subsection (a)(14) of this section. S4 total state and local revenue is calculated as follows.

         1. (i) S4 total state and local revenue includes the sum of the following amounts, calculated for the 2006-2007 fiscal year based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on September 1, 2006:

            1. (I) Tier 1 state aid;
            2. (II) Tier 2, Level 1, state aid, as determined under the TEC, §42.302(a-1);
            3. (III) the per pupil allotment as described in Rider 69, GAA, 79th Texas Legislature, 2005;
            4. (IV) Additional State Aid for Professional Staff Salaries earned by the district under the TEC, §42.2512;
            5. (V) Additional State Aid for Homestead Exemption earned by the district under the TEC, §42.2511;
            6. (VI) Additional State Aid for School Employee Benefits earned by the district under the TEC, §42.2514;
            7. (VII) any gain from a Chapter 41 partnership as defined by subsection (b)(1)(A)(i)(VII), (B)(i)(VII), or (C)(i)(VII) of this section for the applicable target year; and
            8. (VIII) M&O tax collections at the CTR as defined by subsection (a)(14) of this section.
         2. (ii) The sum is reduced by the cost of recapture based on the M&O tax collections at the CTR as defined by subsection (a)(14) of this section to produce S4 total state and local revenue.

      5. (E) Determining the need for ASATR funding or a reduction of excess revenue.

         1. (i) The need for ASATR funding is determined by comparing the revenue target to S4 total state and local revenue.

         2. (ii) The revenue target is calculated by adding the following:

            1. (I) the base target revenue, which is the greatest of S1 total target revenue as described in subsection (b)(1)(A)(iv) of this section, S2 total target revenue as described in subsection (b)(1)(B)(iv) of this section, and S3 total target revenue as described in subsection (b)(1)(C)(iv) of this section;
            2. (II) the Salary Allotment, which is the product of the number of MSS employees for 2006-2007 multiplied by $2,500; and
            3. (III) the High School Allotment, which is the product of the number of high school ADA for 2006-2007 multiplied by $275.
         3. (iii) If the revenue target is greater than S4 total state and local revenue, then the district is entitled to receive ASATR equal to the difference between the revenue target and S4 total state and local revenue. If S4 total state and local revenue is greater than the revenue target, then ASATR is equal to zero. For a district with an adopted M&O tax rate below the CTR, any ASATR the district is entitled to is reduced in proportion to the amount by which the adopted M&O tax rate is less than the CTR.
         4. (iv) If S4 total state and local revenue is greater than the revenue target, then a reduction of excess revenue is calculated by subtracting S4 total state and local revenue from the revenue target. The result will be a negative number. If the revenue target is greater than S4 total state and local revenue, the reduction of excess revenue is equal to zero.
      6. (F) Timeline for data changes. No changes to the calculations described in this paragraph or to the S1, S2, and S3 target revenue per WADA amounts described in subsection (b)(1)(A)(iii), (B)(iii), and (C)(iii) of this section, respectively, will be made after September 1, 2014.

   2. (2) Fiscal years 2007-2008 and 2008-2009. Adjusted S1, S2, and S3 target revenue; S4 total state and local revenue; and ASATR are calculated as follows for the 2007-2008 and 2008-2009 fiscal years.

      1. (A) Adjusted S1 target revenue. Adjusted S1 target revenue is based on the actual state and local revenue earned by the school district as reflected on the current 2005-2006 SOF report. Adjusted S1 target revenue is calculated as follows.

         1. (i) S1 revenue includes the sum of the amounts summed in subsection (b)(1)(A)(i) of this section.
         2. (ii) The sum is reduced by the amount of the recapture payments owed by the district for the 2005-2006 fiscal year to produce total state and local revenue.
         3. (iii) Total state and local revenue is divided by the number of WADA the district had in 2005-2006 to produce S1 target revenue per WADA.
         4. (iv) S1 target revenue per WADA is multiplied by 2007-2008 or 2008-2009 WADA, as applicable, to produce S1 total target revenue.

         5. (v) S1 total target revenue is adjusted by the following to produce adjusted S1 target revenue:

            1. (I) the difference between the New Instructional Facility Allotment (NIFA) that the district was entitled to receive under the TEC, §42.158, in the target year and the NIFA that the district was entitled to receive in 2007-2008 or 2008-2009, as applicable; and
            2. (II) for districts not subject to the provisions of the TEC, Chapter 41, the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in the target year and the transportation allotment that the district was entitled to receive in 2007-2008 or 2008-2009, as applicable.

      2. (B) Adjusted S2 target revenue. Adjusted S2 target revenue is calculated as follows.

         1. (i) S2 revenue includes the sum of the amounts summed in subsection (b)(1)(B)(i) of this section.
         2. (ii) The sum is reduced by the amount of the recapture obligation that would have been owed in 2006-2007 if the district would have been subject to the provisions of the TEC, Chapter 41, as that chapter existed on January 1, 2006, based on the 2005 M&O tax rate and the M&O tax collections defined by subsection (a)(13)(B) of this section to produce total state and local revenue.
         3. (iii) Total state and local revenue is divided by the number of WADA the district had in 2006-2007 to produce S2 target revenue per WADA.
         4. (iv) S2 target revenue per WADA is multiplied by 2007-2008 or 2008-2009 WADA, as applicable, to produce S2 total target revenue.

         5. (v) S2 total target revenue is adjusted by the following to produce adjusted S2 target revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in the target year and the NIFA that the district was entitled to receive in 2007-2008 or 2008-2009, as applicable; and
            2. (II) for districts not subject to the provisions of the TEC, Chapter 41, the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in the target year and the transportation allotment that the district was entitled to receive in 2007-2008 or 2008-2009, as applicable.

      3. (C) Adjusted S3 target revenue. Adjusted S3 target revenue is calculated as follows.

         1. (i) S3 revenue includes the sum of the amounts summed in subsection (b)(1)(C)(i) of this section.
         2. (ii) The sum is reduced by the amount of the recapture obligation that would have been owed in 2006-2007 if the district would have been subject to the provisions of the TEC, Chapter 41, as that chapter existed on January 1, 2006, based on the M&O tax rate resulting from the computation described in the Texas Tax Code, §26.08(i) or (k)(1), as that section existed on September 1, 2006, and the M&O tax collections defined by subsection (a)(13)(C) of this section to produce total state and local revenue.
         3. (iii) Total state and local revenue is divided by the number of WADA the district had in 2006-2007 to produce S3 target revenue per WADA.
         4. (iv) S3 target revenue per WADA is multiplied by 2007-2008 or 2008-2009 WADA, as applicable, to produce S3 total target revenue.

         5. (v) S3 total target revenue is adjusted by the following to produce adjusted S3 target revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in the target year and the NIFA that the district was entitled to receive in 2007-2008 or 2008-2009, as applicable; and
            2. (II) for districts not subject to the provisions of the TEC, Chapter 41, the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in the target year and the transportation allotment that the district was entitled to receive in 2007-2008 or 2008-2009, as applicable.

      4. (D) S4 total state and local revenue. S4 total state and local revenue is determined by the amount of state and local formula revenue that is generated at the CTR for 2007-2008 or 2008-2009, as applicable, based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on September 1, 2007, and on the tax collections defined by subsection (a)(14) of this section. S4 total state and local revenue is calculated as follows.

         1. (i) S4 total state and local revenue includes the sum of the following:

            1. (I) Tier 1 state aid;
            2. (II) Tier 2, Level 1, state aid, as determined under the TEC, §42.302(a-1);
            3. (III) the per pupil allotment as described in Rider 69, GAA, 79th Texas Legislature, 2005;
            4. (IV) Additional State Aid for Professional Staff Salaries earned by the district under the TEC, §42.2512;
            5. (V) Additional State Aid for Homestead Exemption earned by the district under the TEC, §42.2511;
            6. (VI) Additional State Aid for School Employee Benefits earned by the district under the TEC, §42.2514;
            7. (VII) any gain from a Chapter 41 partnership as defined by subsection (b)(1)(A)(i)(VII), (B)(i)(VII), or (C)(i)(VII) of this section for the applicable target year; and
            8. (VIII) M&O tax collections at the CTR as defined by subsection (a)(14) of this section.
         2. (ii) The sum is reduced by the cost of recapture based on the M&O tax collections at the CTR as defined by subsection (a)(14) of this section to produce S4 total state and local revenue.

      5. (E) Determining the need for ASATR funding or a reduction of excess revenue.

         1. (i) The need for ASATR funding is determined by comparing the revenue target to S4 total state and local revenue.

         2. (ii) The revenue target is calculated by adding the following:

            1. (I) the base target revenue, which is the greatest of adjusted S1 total target revenue as described in subsection (b)(2)(A)(v) of this section, adjusted S2 total target revenue as described in subsection (b)(2)(B)(v) of this section, and adjusted S3 total target revenue as described in subsection (b)(2)(C)(v) of this section;
            2. (II) the Salary Allotment, which is the product of the number of MSS employees for 2007-2008 or 2008-2009, as applicable, multiplied by $2,500;
            3. (III) the High School Allotment, which is the product of the number of high school ADA for 2007-2008 or 2008-2009, as applicable, multiplied by $275;
            4. (IV) any tuition paid adjustment, which is the difference between the tuition paid in 2007-2008 or 2008-2009, as applicable, and the tuition paid in the target year;
            5. (V) any other adjustment to tax collections; and
            6. (VI) any Texas Tax Code, Chapter 313, tax credit aid.
         3. (iii) If the revenue target is greater than S4 total state and local revenue, then the district is entitled to receive ASATR equal to the difference between the revenue target and S4 total state and local revenue. If S4 total state and local revenue is greater than the revenue target, then ASATR is equal to zero. For a district with an adopted M&O tax rate below the CTR, any ASATR the district is entitled to is reduced in proportion to the amount by which the adopted M&O tax rate is less than the CTR.
         4. (iv) If S4 total state and local revenue is greater than the revenue target, then a reduction of excess revenue is calculated by subtracting S4 total state and local revenue from the revenue target. The result will be a negative number. If the revenue target is greater than S4 total state and local revenue, the reduction of excess revenue is equal to zero.

   3. (3) Fiscal year 2009-2010. Adjusted S1, S2, and S3 target revenue; total HB 3646 state and local revenue; and ASATR are calculated as follows for the 2009-2010 fiscal year. Data elements and calculations are based on the provisions of the TEC, Chapters 41 and 42, as they existed on January 1, 2009, unless otherwise specified.

      1. (A) S1 target revenue is based on the state and local revenue a school district would have been entitled to in 2009-2010 based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2009. Adjusted S1 target revenue is calculated as follows.

         1. (i) S1 target revenue per WADA as described in subsection (b)(1)(A)(iii) of this section is multiplied by the number of 2009-2010 HB 1 WADA to produce S1 target revenue.

         2. (ii) S1 target revenue is adjusted by the following to produce adjusted S1 target revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in 2005-2006 and the NIFA that the district was entitled to receive in 2009-2010; and
            2. (II) the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in 2005-2006 and the transportation allotment that the district was entitled to receive in 2009-2010.

      2. (B) S2 target revenue is based on the state and local revenue a school district would have been entitled to in 2009-2010 based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2009. Adjusted S2 target revenue is calculated as follows.

         1. (i) S2 target revenue per WADA as described in subsection (b)(1)(B)(iii) of this section is multiplied by the number of 2009-2010 HB 1 WADA to produce S2 target revenue.

         2. (ii) S2 target revenue is adjusted by the following to produce adjusted S2 target revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in 2006-2007 and the NIFA that the district was entitled to receive in 2009-2010; and
            2. (II) the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in 2006-2007 and the transportation allotment that the district was entitled to receive in 2009-2010.

      3. (C) S3 target revenue is based on the state and local revenue a school district would have been entitled to in 2009-2010 based on the provisions of the TEC, Chapters 12, 41, and 42, as they existed on January 1, 2009. Adjusted S3 target revenue is calculated as follows.

         1. (i) S3 target revenue per WADA as described in subsection (b)(1)(C)(iii) of this section is multiplied by the number of 2009-2010 HB 1 WADA to produce S3 target revenue.

         2. (ii) S3 target revenue is adjusted by the following to produce adjusted S3 target revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in 2006-2007 and the NIFA that the district was entitled to receive in 2009-2010; and
            2. (II) the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in 2006-2007 and the transportation allotment that the district was entitled to receive in 2009-2010.

      4. (D) Adjusted HB 1 target revenue for 2009-2010 is calculated by adding the following:

         1. (i) the maximum adjusted target revenue, which is the greatest of adjusted S1 target revenue as described in subsection (b)(3)(A)(ii) of this section, adjusted S2 target revenue as described in subsection (b)(3)(B)(ii) of this section, and adjusted S3 target revenue as described in subsection (b)(3)(C)(ii) of this section;
         2. (ii) the Salary Allotment, which is the product of the number of MSS employees for 2009-2010 multiplied by $2,500;
         3. (iii) the High School Allotment, which is the product of the number of high school ADA for 2009-2010 multiplied by $275; and
         4. (iv) any tuition paid adjustment, which is the difference between the tuition paid in 2009-2010 and the tuition paid in the target year.
      5. (E) Adjusted HB 1 revenue per HB 1 WADA is calculated by dividing adjusted HB 1 target revenue by 2009-2010 HB 1 WADA.
      6. (F) HB 3646 base target revenue is calculated by multiplying adjusted HB 1 revenue per HB 1 WADA by 2009-2010 HB 3646 WADA.
      7. (G) HB 3646 adjusted target revenue is calculated by adding the amount of the funds received by the district in 2008-2009 for the Educator Salary Increase as authorized by Rider 86, GAA, 80th Texas Legislature, 2007, to HB 3646 base target revenue.
      8. (H) Minimum revenue hold harmless is calculated by multiplying 2009-2010 HB 3646 WADA by $120 and adding HB 3646 adjusted target revenue to that amount.
      9. (I) Maximum revenue is calculated by multiplying 2009-2010 HB 3646 WADA by $350 and adding HB 3646 adjusted target revenue to that amount.
      10. (J) Total HB 3646 state and local revenue is calculated by adding 2009-2010 Tier 1 state aid and 2009-2010 M&O tax collections at the CTR and then subtracting from that sum 2009-2010 recapture at the CTR.

      11. (K) The need for ASATR funding or the reduction of excess revenue is determined as follows.

          1. (i) If minimum revenue hold harmless is greater than total HB 3646 state and local revenue, then the district is entitled to receive ASATR equal to the difference. If total HB 3646 state and local revenue is greater than minimum revenue hold harmless, then ASATR is equal to zero. For a district with an adopted M&O tax rate below the CTR, any ASATR the district is entitled to is reduced in proportion to the amount by which the adopted M&O tax rate is less than the CTR.
          2. (ii) If total HB 3646 state and local revenue is greater than maximum revenue, then a reduction of excess revenue is calculated by subtracting total HB 3646 state and local revenue from maximum revenue. The result will be a negative number. If maximum revenue is greater than total HB 3646 state and local revenue, the reduction of excess revenue is equal to zero.
      12. (L) 2009-2010 revenue at the CTR is the sum of total HB 3646 state and local revenue, any ASATR the district is entitled to for 2009-2010, and any reduction of excess revenue the district is subject to for 2009-2010.
      13. (M) 2009-2010 revenue per WADA at the CTR is calculated by dividing 2009-2010 revenue at the CTR by 2009-2010 HB 3646 WADA.
      14. (N) No changes to the calculations described in this paragraph will be made after September 1, 2014.

   4. (4) Fiscal year 2010-2011. Minimum revenue; adjusted minimum revenue; state and local revenue (S4); and ASATR are calculated as follows for the 2010-2011 fiscal year.

      1. (A) 2010-2011 minimum revenue is calculated as follows.

         1. (i) 2009-2010 adjusted HB 1 revenue per HB 1 WADA as described in subsection (b)(3)(E) of this section is multiplied by 2010-2011 WADA to produce base target revenue.

         2. (ii) The following are added to base target revenue to produce 2010-2011 minimum revenue:

            1. (I) the 2010-2011 minimum increase, which is calculated by multiplying 2010-2011 WADA by $120;
            2. (II) the amount of any supplemental TIF aid; and
            3. (III) any tuition paid adjustment, which is the difference between the tuition paid in 2009-2010 and that paid in 2010-2011.

      2. (B) 2010-2011 adjusted minimum revenue is calculated by adding the following to 2010-2011 minimum revenue:

         1. (i) the amount of any Chapter 313 tax credit aid;
         2. (ii) the amount of the funds received by the district in 2008-2009 for the Educator Salary Increase as authorized by Rider 86, GAA, 80th Texas Legislature, 2007;
         3. (iii) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in 2009-2010 and the NIFA that the district was entitled to receive in 2010-2011; and
         4. (iv) for districts not subject to the provisions of the TEC, Chapter 41, the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in 2009-2010 and the transportation allotment that the district was entitled to receive in 2010-2011.
      3. (C) 2010-2011 state and local revenue (S4) is calculated by adding 2010-2011 Tier 1 state aid and 2010-2011 M&O collections at the CTR and then subtracting from that sum 2010-2011 recapture at the CTR.

      4. (D) 2010-2011 maximum revenue is calculated by adding the following:

         1. (i) the product of 2010-2011 WADA multiplied by 2009-2010 revenue per WADA at the CTR as described in subsection (b)(3)(M) of this section; and
         2. (ii) the product of 2010-2011 WADA multiplied by $350.

      5. (E) The need for ASATR funding or the reduction of excess revenue is determined as follows.

         1. (i) If 2010-2011 adjusted minimum revenue is greater than 2010-2011 state and local revenue, then the district is entitled to receive ASATR equal to the difference. If 2010-2011 state and local revenue is greater than 2010-2011 adjusted minimum revenue, then ASATR is equal to zero. For a district with an adopted M&O tax rate below the CTR, any ASATR the district is entitled to is reduced in proportion to the amount by which the adopted M&O tax rate is less than the CTR.

         2. (ii) If 2010-2011 state and local revenue is greater than 2010-2011 maximum revenue, then a reduction of excess revenue is calculated by subtracting 2010-2011 state and local revenue from 2010-2011 maximum revenue. The result will be a negative number. If 2010-2011 maximum revenue is greater than 2010-2011 state and local revenue, the reduction of excess revenue is equal to zero.

            1. (I) If the school district receives state funding based on its CTR, the funding will be reduced by the amount of excess revenue.
            2. (II) If the school district is subject to the recapture provisions of the TEC, Chapter 41, then its cost of recapture will be increased by the amount of excess revenue.
      6. (F) 2010-2011 revenue at the CTR is the sum of 2010-2011 state and local revenue, any ASATR the district is entitled to for 2010-2011, and any reduction of excess revenue the district is subject to for 2010-2011.
      7. (G) 2010-2011 revenue per WADA at the CTR is calculated by dividing 2010-2011 revenue at the CTR by 2010-2011 WADA.

   5. (5) Fiscal year 2011-2012 and subsequent fiscal years. Minimum revenue; adjusted minimum revenue; state and local revenue (S4); and ASATR are calculated as follows for the 2011-2012 fiscal year and each subsequent fiscal year.

      1. (A) Minimum revenue for the applicable year is calculated as follows.

         1. (i) 2009-2010 adjusted HB 1 revenue per HB 1 WADA as described in subsection (b)(3)(E) of this section is multiplied by the number of WADA for the applicable year and then by the multiplier specified in the TEC, §42.2516(i), to establish base target revenue.
         2. (ii) Base target revenue is added to the minimum increase, which is the product of the number of WADA for the applicable year multiplied by $120 and then by the multiplier specified in the TEC, §42.2516(i).
         3. (iii) The sum is adjusted by the difference between the tuition paid in 2009-2010 and that paid in the applicable year.

      2. (B) Adjusted minimum revenue for the applicable year is calculated as follows.

         1. (i) Minimum revenue for the applicable year is added to the product of the amount of funds received by the district in 2008-2009 for the Educator Salary Increase as authorized by Rider 86, GAA, 80th Texas Legislature, 2007, multiplied by the multiplier specified in the TEC, §42.2516(i).

         2. (ii) For the 2011-2012 and 2012-2013 fiscal years, the sum described by subsection (b)(5)(B)(i) of this section is adjusted by the following to produce adjusted minimum revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in 2009-2010 and the NIFA that the district is entitled to receive in the applicable year; and
            2. (II) for districts not subject to the provisions of the TEC, Chapter 41, the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in 2009-2010 and the transportation allotment that the district is entitled to receive in the applicable year.

         3. (iii) For 2013-2014 and each subsequent fiscal year, the sum described by subsection (b)(5)(B)(i) of this section is adjusted by the following to produce adjusted minimum revenue:

            1. (I) the difference between the NIFA that the district was entitled to receive under the TEC, §42.158, in 2009-2010 and the NIFA that the district is entitled to receive in the applicable year; and
            2. (II) the difference between the transportation allotment that the district was entitled to receive under the TEC, §42.155, in 2009-2010 and the transportation allotment that the district is entitled to receive in the applicable year.
      3. (C) State and local revenue (S4) for the applicable year is calculated by adding Tier 1 state aid for that year to M&O tax collections at the CTR for that year and then subtracting from that sum recapture at the CTR for that year.

      4. (D) The need for ASATR funding is determined as follows.

         1. (i) If adjusted minimum revenue for the applicable year is greater than state and local revenue for that year, then the district is entitled to receive ASATR equal to the difference. For a district with an adopted M&O tax rate below the CTR, any ASATR the district is entitled to is reduced in proportion to the amount by which the adopted M&O tax rate is less than the CTR.
         2. (ii) If state and local revenue for the applicable year is greater than adjusted minimum revenue for that year, then ASATR is equal to zero.
      5. (E) Revenue at the CTR for the applicable year is the sum of state and local revenue (S4) for that year and any ASATR the district is entitled to for that year.
      6. (F) Revenue per WADA at the CTR for the applicable year is calculated by dividing revenue at the CTR for that year by the number of WADA for that year.

3. (c) Recapture at the CTR used to calculate state and local revenue (S4) for 2012-2013 and subsequent years.

   1. (1) For a school district that experiences an increase in tax collections in tax year 2012 or a subsequent tax year because it meets one or more of the criteria established under the TEC, §42.2516(f-1)(1), (2), and (3), or that ceases to deposit tax collections into a TIF as described in the TEC, §42.2516(f-1)(4), in tax year 2012 or a subsequent year, recapture at the CTR for use in S4 for the applicable year is reduced by recalculating the recapture owed using M&O tax collections at the CTR that are decreased as described in subsection (a)(14)(B) of this section.
   2. (2) For a school district that experiences a decrease in tax collections in tax year 2012 or a subsequent tax year because it meets one or more of the criteria established under the TEC, §42.2516(f-1)(1), (2), and (3), or that begins to deposit tax collections into a TIF as described in the TEC, §42.2516(f-1)(4), in tax year 2012 or a subsequent year, recapture at the CTR for use in S4 for the applicable year is increased by recalculating the recapture owed using M&O tax collections at the CTR that are increased as described in subsection (a)(14)(C) of this section.

4. (d) Consolidation.

   1. (1) If two or more school districts consolidate, a new target revenue per WADA for the consolidated district is calculated as follows.

      1. (A) The number of WADA for each district for the applicable year is multiplied by the district's target revenue per WADA for the applicable year.
      2. (B) The results are summed.
      3. (C) The sum is divided by the total number of WADA in the consolidated district to produce target revenue per WADA for the consolidated district.
   2. (2) The new target revenue per WADA applies to the computation of ASATR and any incentive aid under the TEC, §13.281, for the consolidated district.

Source Note:The provisions of this §61.1011 adopted to be effective November 6, 2013, 38 TexReg 7708.