SECTION 61.1035. Assistance with Payment of Existing Debt

(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. Lease-purchase agreements 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 (FOS) or bond order. The debt service schedule contained in the FOS (or in the bond order, if the bonds are privately placed) and filed with the state information depository will be used to determine eligible bond payments. Bond issues and their related debt service payments that are not reported to the state information depository are not eligible to receive EDA state assistance.

(2) Eligible bond payments include regularly scheduled principal and interest payments that are made between September 1 and August 31 each year.

(3) A lease purchase refinanced with a general obligation bond shall be eligible for consideration for the EDA in future years.

(b) Qualifying debt service. The following provisions apply to the applicability of debt service payments for use in calculating EDA state aid.

(1) Computation of qualifying debt service for fixed-rate bonds shall be based on debt service schedules obtained from the state information depository. 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.

(2) Computation of qualifying debt service for a variable rate bond shall be based on the minimum payment requirement necessary to meet the computed interest costs for the year.

(3) 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 qualifying 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 FOS stipulates the requirements of the I&S fund.

(c) Local share requirement. The following district revenues qualify to meet the local share requirement of the EDA when computing state assistance amounts.

(1) District revenues that qualify to meet a district's local share requirement for the EDA are specified in the TEC, §46.032(b) and (c). The commissioner of education will provide each district with information about which tax collections were not equalized by state assistance in the preceding school years and worksheets to enable districts to calculate tax collections that will not receive state assistance in a current school year. The commissioner will determine the amount of excess collections, if any, to be applied to the EDA local share requirement.

(2) 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 and then to satisfy the local share requirements of any Instructional Facilities Allotment (IFA) debts for that school year.

(d) Limits on assistance. The following exclusions apply to the amount of state assistance to which a district is entitled under the TEC, Chapter 46, Subchapter B.

(1) For purposes of computing EDTR, as specified in the TEC, §46.034, and in accordance with the provisions of the TEC, §46.033, relating to eligible bonds for the EDA, tax collections or payment amounts associated with bonded debt in the IFA program shall be excluded from the calculation.

(2) Excess funds budgeted in prior tax years that conform to the TEC, §46.032(c)(2) and (3), will not be applied for purposes of computing a district's tax rate for the payment of eligible bonds for the final year of the preceding state fiscal biennium as specified in the TEC, §46.034(b).

(e) 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.

(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; estimates of the taxable value of property under TEC, §48.269, as determined in accordance with Texas Government Code, Chapter 403, Subchapter M; and the amount of taxes budgeted to be collected for payment of eligible bonds from the prior year Texas Student Data System Public Education Information Management System (TSDS PEIMS) budget submission.

(2) A near 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, taxable value of property defined by TEC, §48.256, for the current year as determined in accordance with Texas Government Code, Chapter 403, Subchapter M, and tax collections are available. If applicable, this determination will also take into account a reduced property value that reflects a rapid decline pursuant to TEC, §48.258.

(A) Any additional amounts owed will be paid as soon as practicable after the near final determination is made.

(B) Overallocations determined at near final will first be subtracted from the EDA or IFA entitlements in the subsequent school year. If an overallocation cannot be recovered by reducing the subsequent year's allocation, the district will be notified and the balance will be collected from the district in accordance with the TEC, §46.009(e).

(3) A final determination of assistance for a school year will be made after audited tax collections are submitted to the Texas Education Agency (TEA) in the annual financial and compliance report.

(A) Any additional amounts owed will be paid as soon as practicable after the final determination is made. Any additional overallocations calculated as a result of the final determination will be subtracted from entitlements in the subsequent school year.

(B) Adjustments to state assistance based on changes in the final counts of ADA, changes to IFA eligible debt, or any other reason must be requested no later than three years following the close of the school year for which the adjustment is sought.

(f) 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.

(g) Refinancing of eligible debt.

(1) A district that refinances eligible debt in part or in full must submit the refinancing information to the state information depository, which will send the revised information to the TEA division responsible for state funding. Refinancing of eligible debt includes:

(A) the refunding of eligible debt through the issuance of refunding bonds; and

(B) the conversion of the period, mode, or index used to determine the interest rate for eligible debt in accordance with the order authorizing the issuance or delivery of such eligible debt.

(2) The portion of the debt eligible for state assistance on refinanced bonds is subject to the same limits as eligible debt that has not been refinanced.

(3) If a refinancing transaction decreases the current year bond payment requirement, the reduced payment amount shall be the basis of determining the limit on funding.

(4) If a refinancing transaction increases the bond payment requirement, the amount of increase will only be used to determine state aid if the refinancing took place before the end of the previous state fiscal biennium.

Source Note: The provisions of this §61.1035 adopted to be effective December 12, 1999, 24 TexReg 10858; amended to be effective May 16, 2002, 27 TexReg 4017; amended to be effective September 5, 2004, 29 TexReg 8282; amended to be effective May 4, 2008, 33 TexReg 3415; amended to be effective June 19, 2018, 43 TexReg 3883; amended to be effective June 21, 2022, 47 TexReg 3534