One of the positive aspects of House Bill 3 is that state law now provides districts with options regarding when recapture payments are made to the state. In the past, districts began making six equal payments in February. While this is still an option districts can choose, you can also choose to make a one-time payment to the state no later than August 15.
At the time this concept was first proposed by some Coalition districts, the thought was that districts would like the opportunity to hang onto those funds for as long as possible, and perhaps have the opportunity to invest and use those dollars to the benefit of the local community that paid the tax dollars until the time they were officially due to the state.
That thinking still holds true, but now there are also some other factors to consider. As you are well aware, there are still many changes in the works and unknowns when it comes to HB 3. The Texas Education Agency is trying to make decisions and give guidance as quickly as possible, and to the best of their ability. But the implementation of changes as dramatic as what HB 3 put in place take time, and this school year in particular looks to have finances that are based on a lot of guesswork that may require a great deal of settle-up down the road.
Whether your district wants to make six equal payments over time or one lump sum payment in August in the future is a decision you change in later years, once all the facts are on the table. But for this school year, as many districts face a great deal of uncertainty,
we recommend that all districts subject to recapture select the option to make a single payment before August 15.
As TEA continues to work through the details for how district entitlements will be calculated, we expect those numbers to change as WADA counts, comp ed numbers, and a whole host of other factors are decided and finalized. Since recapture is now "local revenue in excess of entitlement," changes to the calculation of a district's entitlement could change the amount of recapture that is due by quite a lot, as could changes in property values. More information will be available on all of these fronts before payments are due August 15, and the picture will hopefully be clearer than it is today.
As more information becomes available, we will certainly update you with those details, but for now, we suggest that Chapter 49 districts select the option to make a payment in August before the January 15 deadline.