EA KEY GENERAL
EXAS
AUSTIN ~~.TJZXAES March 9, 1964

Hon. J. W. Edaar Commissioner of Educati,on Texas Education Agency Austin, Texas OninionNo. C-224 * Re: Incentive aid payments to resulting consolidated independent schooldistricts under Article 2815-4 of Vernon's Civil Statutes and related questions. Dear Dr. Edgar:

We are in receipt of your request for opinionwherein

. . ._ you asK several questlons concerning the incentive ale payments to be given independent school districts created through consolidati,on.The original statutewas codified as Article 2815-3 of Vernon's Civil Statutes; however,Article 2815-4, a 1963 enactment, is the most recent and will be cited herein as the incentive aid payment statute. Article 2815-4 represents a reenactment of Article 2815-3 except for the change in Section 1B to reduce the average daily attendance requirement from one thousand to seven hundred and fifty. We shall proceed to answeryour questions in order of their submission. Situation I 'Recently a County School Board (Orane) has annexed a common school district (Bancroft 7 to an adjoining independent school district (WestOrange) under Article 2922a. The resulting enlarged district (WestOrange) is an independent schooldistrict (Art. 2922b) has in excess of 1000 scholastics in A.D.A. and has made timely application for incentive aid payments. "The independent schooldistrict before the annexation was a budget excess districtby some $67,- 000. This means it was not eligible for nor will it receive Foundation Program payments in the 1963-64 schoolyear. The independent schooldistrict as enlarged by the annexationwill stillbe a budget excess schooldistrict by approximately$36,800 when the costs of the Foundation Programs in the two districts existingprior to the annexation are combined and comparedwith total Foundation Program receipts (local fund assignments and State per capita payments) of the two districts.-1088-Hon. J. W. Edgar, page 2 (C-224)

"The former common schooldistrict is a Foundation Program district. According to its Fund Application for Foundation Program funds, it is eligible for $30,400 in this 1963-64year. This eligibility for $30,400 will be paid within 1963-64. Any incentive aid payments to the resulting independent school district, if any,would begin in 1964-65 and continue ordinarily for nine consecutiveyears.
“Asheretofore pointed out, the resultingenlarged independent school districtwill not be eligible for Foundation ProgramAssistance (see Section 1, Par. A) in 1964-65, Further, it has applied for annual incentiveaid paymentsand expects same on the grounds that the differencebetween the sumwhich the new districtwould realize from Foundation Program funds (a zero amount) and the sums of the Foundation Program fundswhich would have been paid to the districts in 1964-65had there been no annexation (a rough guess $30,000 plus) is the latter figure. "Query: Ma,yincentive aid paymentsbe legally made by thisAgency to a resulting independent school district that isbudget excess or budget balance; that is, where not eligible for Foundation Program funds as enlargedby annexationor consolidation?t1 Section l.A of Article 2815-4 states as follows:
“A. The amount of IncentiveAid Payments shall not exceed the differencebetween the sum of the Foundation Program Pavmentswhich would have been paid to the severaldistricts included in the newly organizeddistrict had therebeen no consolidation, and the amount of Foundation ProgramAssistance for which the new district aualifies." (Emphasisadded). The grant of incentive aid paymentsmade pursuant to Article 2815-4 is premised on the fact that the resulting consolidateddistrict qualifies for Foundation Program Payments under Articles 2922-11 s et seq. If the new consolidateddistrict is “budget excess” or budget balance,” or during the term it becomes "budget excess" or "budgetbalance" then it receivesno Foundation Program Payments and may not receive zanyincentive aid payments. Your first question is thereforeanswered in the negative.

-1089-Hon. J.W. Edgar, page 3 (C-224)

Situation II
"A common school district '(Kempner) operates a school in its district for 1962-63; thus it has never become dormant. It does not operate a school for 1963-64.;

it transferred all its scholasticsfor 1963-64 to an adjoining independent schooldistrict (Lampasas). By an electionheld under Article 2806, the common districtwas consolidated to said independent schooldistrict in January, 1964. Thus, the common school district did not operate itself a school for 1963-64--all scholasticsbeing transferred out# "The resulting independent schooldistrict (which is not a budget excess district)has applied for incentive aid payments asmay acarue as a result of the consolidationof the districts. "Query: (a) Where a schooldistrictwas not operating a school in 1963-64 and thereforewas not receivingFoundation Program funds at.the time of its consolidationwith an independent schooldistrict, is the resulting consolidateddistrict eligible for incentive aid paymentsunder Article 2815-31 @I(b) If (a) is answered in the affirmative: Should the incentive aid paymentsbe based on the Foundation Program status of the districts for 1963-64 and computed as though the common school districtwas operating a schoolprior to January, 1964; or be based on the Foundation Program status of the two districts for 1962-63when both operatedFoundation ProgramAid schools?
"In this second situationwe are inclined to the opinion that an incentive aid payment is legallywarranted, but we would appreciate assistance as towhat year should be used for its computation."
In answer to your Question (a)we adviseyou that the resulting school district is eligible for incentive aid payments. Even though the consolidateddistrictmust qualify for Foundation Program Payments under the answer given in Situation I, all of the districts need not have necessarily received payments prior to consolidation. This question is therefore answered in the affirmative.

-1090-Hon. J. W. Edgar, page 4 (C-224)

Article 2815-4 does not cover the situationwherein one of the districts,now consolidatedwith another,was not an operating district the year immediatelypreceding consolidation. We interpret Section 1.1 tomean that the year immediately preceding consolidation is the one to which the Texas Education Agency should look in ascertaining the Foundation Program Paymentsmade to a former schooldistrict. It follows that in your Situation II, although the common schooldistrict was not operating the year preceding consolidation (19631, this is the year that governs the Foundation Program status. Situation III "There is at least one countywhere developments are contemplatedand initiated to annex and/or consolidate adjoiningdistricts, as time and circumstances permit, thereby to reduce the severaldistricts in the county to one or two large financially strong districts. "Query: Where two or more districtshave been consolidated or annexed to become a resulting independent schooldistrictwhich has been determined eligible for certain incentive aid payments, then later in the same year or in a subsequentyear a second consolidation is perfected involving the originally enlarged district, would legally therebe an obligation to meet two separate series of Incentive Aid payments as a result of the two consolidations? "Stated anotherway and assuming an annual (10 years) incentive aid payments of $10,000 has been determined for the independent schooldistrict resulting from the first consolidation,and an annual incentive aid payment of $5,000 has been determined for the independent schooldistrict resul ting from the second consolidation,would the last resulting independent school district legally be entitled to receive annually two incentive aid paymentsuntil the ten years in each case expires?" Section 1 of Article 2815-4 provides as follows: "Section 1. From the effective date of thisAct independent schooldistrictshereafter created through consolidationmay qualify for IncentiveAid Payments by the State of Texas; provide~~t~o~r, no school a Deriod of more districtmav receive such naym than ten (10)vears. Such IncentiveAid Payments shall

-1091-Hon. J. W. Edgar, page 5 (c-224)

be made only upon application to the Texas Ed.ucation Agency and in compliancewith the terms and co;zoi;ions

contained in thisAct.” (Emphasis

. This section provides that no schooldistrict may receive such payments for a period of more than tent years. At the time a district is consolidated the Texas EducationAgency shoulddetermine the incentive aid payments to which that particular district may be entitled by virtue of the provisions of Article 2815-b. If at a subsequent time that district partipates in a consolidationwith another district, the independent school districtbefore consolidation ceases to exist. Since incentive aid payments cannot be made to a non-existent schooldistrict, you are advised that the Texas Education Agency should ascertain the incentive aid payments to which the resulting independent schooldistrictmay be entitled. Under this reasoning any independent school districtmay be entitled to only one series of incentive aid payments, the periodnot to exceed ten years from the date of the last consolidation. The question posed in Situation III is therefore answered in the negative.
SUMMARY Under Article 2815-k of Vernon’s Civil Statutes incentive aid paymentsmay not be made by the Texas Education Agency to a resulting independent school district that is budget excess or budget balance, as the district is ineligible for Foundation Program Payments. Where a resulting independent schooldistrict Is comprised in part of a former schooldistrict not receiving Foundation Program Payments at the time of consolidation, the resulting schooldistrictmay still receive incentive aid payments. These payments should be based on the Foundation Program status of the respectivedistricts participating in the consolidation for the year immediatelypreceding consolidation.
A resulting independent schooldistrictmay be entitled to only one series of incentive aid payments,

-1092-Hon. J. W. Edgar, page 6 (C-224)

the period not to exceed ten years from the date of the last consolidation.

Yours very truly,
WAGGONER CARR AttorneyGeneral **n**

-"Fred D. Ward , Assistant Attorney General
APPROVED:
'OPINIONCOMMITTEE
'W.'V;~ GeEpert, Chairman Ivan WI1 lams Jerry Brock Paul Phy
APPROVED FOR THE ATTORNEY GENERAL
BY: Howard W.,

Mays

-1093-