            EA               KEY      GENERAL
                              EXAS
                   AUSTIN     ~~.TJZXAES

                   March 9, 1964

Hon. J. W. Edaar                   Oninion No. C-224
Commissioner of Educati,on          *
Texas Education Agency             Re: Incentive aid payments to
Austin, Texas                           resulting consolidated in-
                                        dependent school districts
                                        under Article 2815-4 of
                                        Vernon's Civil Statutes and
Dear Dr. Edgar:                         related questions.
          We are in receipt of your request
                                      . . for opinion
                                                    ._ wherein
you asK several questlons concerning the incentive ale payments
to be given independent school districts created through con-
solidati,on. The original statute was codified as Article 2815-3
of Vernon's Civil Statutes; however, Article 2815-4, a 1963 en-
actment, is the most recent and will be cited herein as the
incentive aid payment statute. Article 2815-4 represents a re-
enactment of Article 2815-3 except for the change in Section 1B
to reduce the average daily attendance requirement from one thou-
sand to seven hundred and fifty. We shall proceed to answer your
questions in order of their submission.
                            Situation I
         'Recently a County School Board (Oran e) has
    annexed a common school district (Bancroft7 to an
    adjoining independent school district (West Orange)
    under Article 2922a.  The resulting enlarged dis-
    trict (West Orange) is an independent school dis-
    trict (Art. 2922b) has in excess of 1000 scholastics
    in A.D.A. and has made timely application for incen-
    tive aid payments.
         "The independent school district before the an-
    nexation was a budget excess district by some $67,-
    000. This means it was not eligible for nor will it
    receive Foundation Program payments in the 1963-64
    school year. The independent school district as en-
    larged by the annexation will still be a budget ex-
    cess school district by approximately $36,800 when
    the costs of the Foundation Programs in the two dis-
    tricts existing prior to the annexation are combined
    and compared with 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 school district is a Founda-
     tion Program district. According to its Fund Appli-
     cation for Foundation Program funds, it is eligible
     for $30,400 in this 1963-64 year. This eligibility
     for $30,400 will be paid within 1963-64. Any incen-
     tive aid payments to the resulting independent school
     district, if any, would begin in 1964-65 and continue
     ordinarily for nine consecutive years.
          “As heretofore pointed out, the resulting en-
     larged independent school district will not be eligi-
     ble for Foundation Program Assistance (see Section 1,
     Par. A) in 1964-65, Further, it has applied for an-
     nual incentive aid payments and expects same on the
     grounds that the difference between the sum which the
     new district would realize from Foundation Program
     funds (a zero amount) and the sums of the Foundation
     Program funds which would have been paid to the dis-
     tricts in 1964-65 had there been no annexation (a
     rough guess $30,000 plus) is the latter figure.
          "Query: Ma,yincentive aid payments be legally
     made by this Agency to a resulting independent school
     district that is budget excess or budget balance;
     that is, where not eligible for Foundation Program
     funds as enlarged by annexation or consolidation?t1
          Section l.A of Article 2815-4 states as follows:
          “A. The amount of Incentive Aid Payments shall
     not exceed the difference between the sum of the
     Foundation Program Pavments which would have been
     paid to the several districts included in the newly
     organized district had there been no consolidation,
     and the amount of Foundation Program Assistance for
     which the new district aualifies." (Emphasis added).
          The grant of incentive aid payments made pursuant to
Article 2815-4 is premised on the fact that the resulting con-
solidated district qualifies for Foundation Program Payments
under Articles 2922-11 et seq. If the new consolidated district
is “budget excess” or sbudget balance,” or during the term it be-
comes "budget excess" or "budget balance" then it receives no
Foundation Program Payments and may not receive zany incentive aid
payments. Your first question is therefore answered in the nega-
tive.



                           -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 scholastics for
    1963-64 to an adjoining independent school district
    (Lampasas). By an election held under Article 2806,
    the common district was consolidated to said inde-
    pendent school district in January, 1964. Thus, the
    common school district did not operate itself a
    school for 1963-64--all scholastics being transferred
    out #
          "The resulting independent school district (which
     is not a budget excess district) has applied for in-
     centive aid payments as may acarue as a result of the
     consolidation of the districts.
          "Query: (a) Where a school district was not
     operating a school in 1963-64 and therefore was not
     receiving Foundation Program funds at.the time of its
     consolidation with an independent school district, is
     the resulting consolidated district eligible for in-
     centive aid payments under Article 2815-31
         @I(b) If (a) is answered in the affirmative:
    Should the incentive aid payments be based on the
    Foundation Program status of the districts for 1963-64
    and computed as though the common school district was
    operating a school prior to January, 1964; or be based
    on the Foundation Program status of the two districts
    for 1962-63 when both operated Foundation Program Aid
    schools?
          "In this second situation we are inclined to the
     opinion that an incentive aid payment is legally war-
     ranted, but we would appreciate assistance as to what
     year should be used for its computation."
          In answer to your Question (a) we advise you that the
resulting school district is eligible for incentive aid payments.
Even though the consolidated district must 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 af-
firmative.


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


          Article 2815-4 does not cover the situation wherein
one of the districts, now consolidated with another, was not
an operating district the year immediately preceding consolida-
tion. We interpret Section 1.1 to mean that the year immedi-
ately preceding consolidation is the one to which the Texas
Education Agency should look in ascertaining the Foundation Pro-
gram Payments made to a former school district. It follows that
in your Situation II, although the common school district 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 county where develop-
    ments are contemplated and initiated to annex and/or
    consolidate adjoining districts, as time and circum-
    stances permit, thereby to reduce the several dis-
    tricts in the county to one or two large financially
    strong districts.
          "Query: Where two or more districts have been
     consolidated or annexed to become a resulting inde-
     pendent school district which has been determined
     eligible for certain incentive aid payments, then
     later in the same year or in a subsequent year a sec-
     ond consolidation is perfected involving the origi-
     nally enlarged district, would legally there be an
     obligation to meet two separate series of Incentive
     Aid payments as a result of the two consolidations?
          "Stated another way and assuming an annual (10
     years) incentive aid payments of $10,000 has been
     determined for the independent school district re-
     sulting from the first consolidation, and an annual
     incentive aid payment of $5,000 has been determined
     for the independent school district resul ting from
     the second consolidation, would the last resulting
     independent school district legally be entitled to
     receive annually two incentive aid payments until the
     ten years in each case expires?"
          Section 1 of Article 2815-4 provides as follows:
          "Section 1. From the effective date of this Act
     independent school districts hereafter created through
     consolidation may qualify for Incentive Aid Payments
     by the State of Texas; provide~~t~o~r,    no school
     district mav receive such naym         a Deriod of more
     than ten (10) vears. Such Incentive Aid Payments shall
                            -1091-
Hon. J. W. Edgar, page 5   (c-224)


     be made only upon application to the Texas Ed.uca-
     tion Agency and in compliance with the terms and
     co;zoi;ionscontained in this Act.” (Emphasis
           .
          This section provides that no school district may re-
ceive such payments for a period of more than tentyears. At
the time a district is consolidated the Texas Education Agency
should determine the incentive aid payments to which that par-
ticular district may be entitled by virtue of the provisions of
Article 2815-b. If at a subsequent time that district partipates
in a consolidation with another district, the independent school
district before consolidation ceases to exist. Since incentive
aid payments cannot be made to a non-existent school district,
you are advised that the Texas Education Agency should ascertain
the incentive aid payments to which the resulting independent
school district may be entitled. Under this reasoning any inde-
pendent school district may be entitled to only one series of
incentive aid payments, the period not to exceed ten years from
the date of the last consolidation. The question posed in Situ-
ation III is therefore answered in the negative.
                           SUMMARY
         Under Article 2815-k of Vernon’s Civil Statutes
    incentive aid payments may 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 school district Is
     comprised in part of a former school district not re-
     ceiving Foundation Program Payments at the time of
     consolidation, the resulting school district may still
     receive incentive aid payments. These payments should
     be based on the Foundation Program status of the re-
     spective districts participating in the consolidation
     for the year immediately preceding consolidation.
          A resulting independent school district may 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
                            Attorney General             n



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




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