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Additional State Aid for Tax Reduction

House passes school finance bills

I doubt they’ll meet a different fate than they did in the regular session, but kudos anyway.

Rep. Dan Huberty

The Texas House on Friday passed a package of bills that would put $1.8 billion into public schools and help out struggling small, rural school districts.

House members voted 130-12 to approve the lower chamber’s main piece of school finance legislation, House Bill 21, just as they did during the regular session. The House also voted 131-11 to pass House Bill 30, which would fund the school finance bill by putting $1.8 billion into public schools. Once the House gives the measures final approval, they will head to the Senate.

The funds cited in the legislation would come from deferring a payment to public schools from fiscal year 2019 to 2020, and would allow an increase in the base funding per student from $5,140 to $5,350 statewide.

[…]

The House Public Education Committee’s chairman, state Rep. Dan Huberty, R-Houston, the author of HB 21, has pushed his bill as a preliminary step to fixing a beleaguered system for allocating money to public schools.

“You cannot have property tax reform unless you have school finance reform. That is just a fact,” he said Friday. “We have the time to get this done. We just have to have the will to get this done.”

HB 21 would increase the base per-student funding the state gives to school districts, in part by increasing funding for students who are dyslexic and bilingual. It would also gradually remove an existing financial penalty for school districts smaller than 300 square miles, which was originally intended to encourage them to consolidate.

[…]

The House voted 67-61 Friday against approving House Bill 22, a separate measure that would have continued ASATR for two years before letting it expire in September 2019. Some school districts have warned they might have to close without the program, which totaled about $400 million this year.

See here for the first go-round on HB21, and here for the ASATR story. I don’t expect anything to happen with any of this, but I suppose a surprise is possible. The House and the Senate are on such different pages that it seems unlikely in the extreme, though.

What West Texas can do to improve their schools

Here’s an op-ed from the Statesman about one educator in West Texas who has had enough.

My hero this week is Graydon Hicks, Fort Davis superintendent of schools.

A West Texas publication published his open letter to Gov. Greg Abbott and Lt. Gov. Dan Patrick raking them over the coals for “the lack of positive legislative action for public schools in Texas” at the most recent session, which adjourned at the end of May without passing a school finance bill.

Hicks is a West Point graduate and an experienced school administrator. He is no-nonsense guy who does not mince words. After detailing the effect of shrinking state financial support for public schools on Fort Davis schools over the past 10 years — combined with an increasing number of unfunded mandates and requirements — Hicks wrote, “How much more do you want to harm our children?

“If your intent is to dissolve public education (and your actions are more than a clear signal of such), then simply go on the record with that statement and remove the state’s authority to further overburden us without financial support. Quit pontificating about bathrooms. Quit hiding your intentions behind righteous statements about school vouchers and choice.”

Hicks accompanied his letter with a chart showing the annually declining amount of state funding available to the Fort Davis school district and the increasing burden on local taxpayers since 2008. That year, state funding amounted to $3.9 million, or 68 percent of the school district’s budget. Local property taxes provided $1.8 million, or 32 percent. In 2017, the state will contribute $378,000 — about one-tenth of its 2008 commitment, or 15 percent of the total budget. Local taxes this year will provide $2.2 million, or 85 percent.

“The Fort Davis ISD has 226 students,” Hicks wrote. “It has no cafeteria, has no bus routes, has dropped our band program, has eliminated (or not filled) 15 staff positions, has cut stipends for extra-curricular activities, has frozen (or reduced) staff pay for one year, has cut extra-curricular programs, has no debt, and has increased our local tax rate to the maximum allowed by the law.

“We have nothing left to cut.”

I agree that Superintendent Hicks sounds like a fine fellow who is speaking truth to power. That said, I feel compelled to point out how Jeff Davis County (*), which is where Fort Davis ISD, voted in the last gubernatorial election:


Governor
			
Greg Abbott             623  60.54%
Wendy R. Davis          366  35.57%
Kathie Glass             31   3.01%
Brandon Parmer            9   0.87%


Lieutenant Governor
			
Dan Patrick             560  56.62%
Leticia Van de Putte    375  37.92%
Robert D. Butler         48   4.85%
Chandrakantha Courtney    6   0.61%

Hold that thought. Now here’s a similar story about the school funding woes in West Texas:

Educators were excited to hear Gov. Greg Abbott announce he would call lawmakers back to Austin for a special legislative session to consider $1,000 teacher pay raises.

But Donna Hale, superintendent at 200-student Miami ISD in rural Roberts County, is wondering where the money is going to come from. An unfunded mandate, she said, could throw a wrench into their already difficult budgeting process.

“That’s the last thing we really need – the state saying you’ve got to do this when they’re not offering any support for us,” said Hale, who already doubles as the district’s librarian and said she was considering taking over as principal to cut payroll costs.

A wind farm and a sea of oil and natural gas wells in Roberts County has been good to Miami ISD, giving the district a flush tax base to pay for teachers and buildings. But its $1 billion dollar tax roll was cut in half this last year amid tumbling oil and gas prices. A state aid provision that it has relied on in recent years to guard against economic downturns expires in September and will take more than a third of the district’s budget with it.

Many rural schools like Miami ISD, the only school district in the county, are facing a similar dilemma and pleading with the State Legislature to act. Lawmakers return to the Capitol next month for a legislative overtime period, but school finance reform has taken a back seat to bills regulating bathroom use and creating a school choice program.

Again, I sympathize, and again, I wonder how did Roberts County vote in 2014?


Governor
			
Greg Abbott             324  93.91%
Wendy R. Davis           15   4.35%
Kathie Glass              5   1.45%
Brandon Parmer            1   0.29%


Lieutenant Governor			

Dan Patrick             320  93.29%
Leticia Van de Putte     12   3.50%
Robert D. Butler         10   2.92%
Chandrakantha Courtney    1   0.29%

I think you get where I’m going with this. Now, I will stipulate that in 2014, one might have been able to believe that Greg Abbott, who was touting an expansion of pre-K, and Dan Patrick, who had served as the Senate Education Committee chair and had passed some bipartisan bills during that time, could at least have been okay on education and school finance issues. Here in June of 2017, after a session that included the Senate refusing to consider HB21 and a special session that includes vouchers on the agenda, it’s really hard to believe that now. Further, both counties are represented in the Lege by pro-education members. Roberts County is served by Sen. Kel Seliger, who was the only Senate Republican to oppose the main voucher bill, and by Rep. Ken King, who was endorsed by Texas Parent PAC in the 2012 primary. Jeff Davis County has two Democrats, Sen. Jose Rodriguez and Rep. Cesar Blanco, in the Lege. Both were unopposed in 2016, and Blanco was unopposed in 2014, but in all three cases they drew a comparable number of votes to Republicans on the ballot. In addition, former Rep. Pete Gallego carried Jeff Davis County in 2010, even as Rick Perry and the rest of the Republicans were also winning it. The voters there do vote for pro-education candidates. Will they – and other counties like them – recognize in 2018 that “pro-education” does not describe Abbott or Patrick? I for one will have a lot more sympathy for their plight if they do.

(*) Yeah, I know.

House passes school finance reform bill

Well done.

Rep. Dan Huberty

State Rep. Dan Huberty succeeded at a difficult task Wednesday: getting the Texas House of Representatives to vote for legislation overhauling the funding system for public education, without a court mandate.

After a four-hour discussion of more than 30 proposed amendments, the House voted 134-16 to tentatively accept its top education leader’s plan to inject $1.6 billion into public schools, simplify the complex formulas for allocating that money, and target certain disadvantaged student groups for more funding. The bill must still be approved on a third and final reading in the House.

[…]

The tentative victory comes after senators approved a budget that cuts state funding for public schools by $1.8 billion in general revenue, and uses local property tax revenue to make up the difference.

Huberty’s bill would increase the base per-student funding the state gives to school districts, in part by increasing funding for students who are bilingual and dyslexic. The Legislative Budget Board estimates about 96 percent of districts and 98 percent of students would see more money under the bill.

“This is the first time in over 30 years that we have the opportunity to vote for school finance, to make a holistic change,” Huberty said before Wednesday’s vote.

Throughout the evening, Huberty successfully moved to table many of his colleagues’ proposed amendments to the bill, either because they would add to the bill’s price tag or because he deemed them irrelevant to his legislation.

“This is the school finance bill,” he reminded Rep. Jason Isaac, R-Dripping Springs, who unsuccessfully tried to attach a provision to HB 21 that addressed the testing and accountability system.

The House budget allowance for this bill would provide more funding to more school districts for busing, but many legislators expressed concern that the money would be stretched thin because districts that didn’t provide bus service would still receive transportation money. None of the amendments to address transportation funding passed.

Rural legislators banded together to add a provision that would help hundreds of small districts with fewer than 1,600 students. The provision, proposed by Rep. Drew Darby, R-San Angelo, would remove an existing financial penalty for school districts smaller than 300 square miles, which was originally intended to encourage them to consolidate.

Darby proposed putting all districts with fewer than 1,600 students at similar levels of funding, which he said would increase funding for more than 400 districts.

“Almost half the school districts in Texas will benefit from these amendments,” he said.

Legislators voted 86-59 to approve Darby’s amendment, despite Huberty’s opposition.

See here for the background. The Darby amendment was about Additional State Aid for Tax Reduction, for which you can get some background here. Getting something through the House is a big accomplishment; as the story notes, Rep. Jimmie Don Aycock declined to put a bill forward in 2015 on the grounds that it didn’t stand a chance. Priorities are shifting, and there seems to be a lot of support for finally addressing some of the serious shortcomings in the current system. Which, if it happens, would vindicate the Supreme Court’s decision to not force the issue but leave it up to the Legislature. Assuming that Dan Patrick and the Senate – and Greg Abbott – go along, of course, That’s far from a sure thing, as a brief perusal of the Senate’s budget proposal would show. But it’s a start, and it could happen. That’s more than what we’ve had in a long time. Kudos all around.

How the Legislature is raising your property taxes

RG Ratcliffe explains it all to you:

Just how much money does the increased appraisal on property in your school district and elsewhere save the state budget writers? The projection is $1.5 billion for the next two-year budget. And where does this money go? In its initial budget, the Senate plans to use the savings on other state expenditures. The Straus starting-point budget includes giving the money to the public schools, but only if a school finance reform passes. But even if the $1.5 billion is put back into the school system, the state’s share of funding the public schools will decline to 39 percent by 2019 without a major boost in state spending.

That figure does not include the $3.8 billion that the state will recapture from property-wealthy school districts over the next two years to redistribute to low-wealth school districts. (That amount is about equal to what the state collected in oil-and-gas severance taxes in the current two-year state budget, or to the taxes collected on alcohol and tobacco combined, or about twice the tax motorists paid to fill the tanks of their cars and trucks.)

In the meantime, a program that was meant to keep school districts from losing money because of 2006 property tax cuts is set to expire. A decade ago, state legislators wanted to make certain that no school district had its budget cut because of state-mandated tax cuts, so they set up a program called Additional State Aid for Tax Reduction. Originally, they intended the program to phase out as property values rose. But faced with a budget crunch in 2011, the Legislature put an expiration date on the program: September 1, 2017. When the program expires, it will leave 175 school districts faced with having to raise taxes or cut budgets to make up for $225 million in lost state funding. For the 55,000-student Frisco school district near Dallas, that means a $30 million budget cut, while the 100-student Webb Consolidated on the border will lose $4.3 million in state funding – 66 percent of its total operating budget. Losing the state tax-relief funding is a hardship for the districts; for the state’s budget writers, it’s just another $225 million they won’t have to finance.

“Even though the state is working to say, ‘We want to provide property tax relief,’ they benefit from higher tax rates and higher tax efforts made by the locals,” Christy Rome, executive director of the Texas School Coalition, told me.

[…]

Plano ISD last year sent Governor Greg Abbott a letter explaining, how as a property-wealthy district, rising values did not increase funding for local schools even though local property owners were paying higher taxes. In the 2015-16 school year, the PISD collected $470 million from local taxpayers, sent $52.6 million to the state for redistribution, and kept $417.6 million to pay for local education. If the district did not change its tax rate, rising values would push tax collections up by almost $40 million, but the state would now take an additional $43.6 million in recapture and leave the district with $5 million less to pay for schools.

The district could cut the tax rate so that total tax collections stayed the same, but the formulas would still take an additional $25.6 million because of rising property values and leave Plano with $392 million to run its schools—a $25.6 million cut from the previous year.

The other idea was to give taxpayers some relief by adopting a $10,000 local option homestead exemption while leaving the tax rate unchanged. But even this proved problematic for PISD: the district would raise another $30.2 million in total property tax collections and boost the transfer of funds to the state by $43.6 million, all while leaving the district with $13.4 million less to pay for schools.

No matter how it was calculated, Plano taxpayers paid more, the state reaped cash that lawmakers could use to reduce how much they had to spend on public education, and the schoolchildren of Plano were left with less money to pay for their education.

Read the whole thing. And as RG says, when you hear Greg Abbott say that he wants to cut the business franchise tax even more, understand that he’s really saying he wants to put a bigger share of the burden of paying for schools on you.

Where we begin with school finance

A nice overview from the Trib on school finance, where the problems are many and the budget situation is non-optimal.

The current system is held together by a number of short-term fixes that have not been updated or reformed in decades. The Texas Supreme Court upheld the funding system as constitutional in May, and at the same time put the onus on state lawmakers to reform it — but few believe a major overhaul will come without a court order.

Even if legislators decided to tackle an overhaul of the whole system, experts say there is not enough money in state coffers to increase state spending, lower local spending and relieve Texans upset about rising property taxes. For now, some lawmakers are backing a simple plan to increase money to all school districts through the general appropriations bill, instead of taking apart the complex school finance system. Others have filed bills to tweak individual weights in the system, which provide additional money for disadvantaged student populations.

[…]

Legislators will also have to decide this year whether to re-up a program that provides extra funding for fewer than 200 districts that would otherwise have lost money in previous school finance rewrites. When the Legislature reduced property taxes by a third in 2006, it guaranteed school districts at least the same state funding they received for the 2005-06 school year by creating the Additional State Aid for Tax Reduction initiative.

That aid expires Sept. 1, but the districts still receiving the money are clamoring for an extension. “At some point, it does need to go away for the sake of more equity. But it can’t fall off a cliff at this point in time,” said Guy Sconzo, executive director of the Fast Growth School Coalition, which represents the fastest-growing districts in the state. “It does the entire system no good if any part of the system effectively goes bankrupt.”

So far, five legislators have filed bills to extend the funding program. State Rep. Ken King, R-Canadian, filed House Bill 811, which would extend funding through 2020-21. Sen. Lois Kolkhorst, R-Brenham, proposed an extension through 2022-23. Both lawmakers were members of their chambers’ public education committees last session.

King, who is on the short list to chair the House Public Education Committee this session, said some districts are still getting a large chunk of their overall funding through this program and that they cannot be cut off immediately. “I’m going to put a mechanism in place for school districts to roll off of the aid in 2021 and hopefully replace the dollars with another school funding system,” he said.

Other school finance advocates oppose the extension, calling it a “Band-Aid” that exacerbates the inequity among districts.

“It maintains an already inefficient portion of the system,” said Ray Freeman, deputy executive director of the Equity Center, which represents property-poor districts. Instead, he said, legislators should reform the base formulas so districts have access to a stable source of funds.

The Houston Independent School District will be a major focus this session because its voters in November rejected sending $165 million in local property taxes to poorer school districts. In the Texas finance system, districts with a wealthier tax base spend local money to help educate students in districts with less property tax money, as part of the “Robin Hood” or “recapture” system.

Texas Education Commissioner Mike Morath has warned that the state will probably move commercial properties from Houston ISD tax rolls to those of a nearby district. Houston legislators will be under pressure to find a way to ease the burden, as those property owners could face higher tax rates in their newly assigned districts.

David Thompson, an attorney representing Houston ISD, said a legislative win for Houston on school finance could also mean a win for other districts. “There are particular issues that would address some of the concerns in Houston and at the same time be helpful for schools across the state,” he said.

The state should update its formulas for determining which districts get transportation funding, and the state should also provide full-day pre-K funding for all districts, Thompson said.

“Everybody starts by saying, ‘There’s no money.’ There is,” he said. The state should allow the local dollars people are already paying to stay in education, instead of “siphoning local property taxes” for non-education purposes, he said.

But some legislators are saying Houston ISD voters dug themselves deeper into a school funding hole and should live with the repercussions. “I don’t think the Legislature has a lot of appetite to let Harris County out of recapture when everybody else is paying it,” King said.

[…]

School finance experts agree that increasing the basic allotment, the base funding each district receives per student, is likely to be the most popular way of changing the system. The House Public Education Committee recommended this approach in its interim report.

“The amount we set for the basic allotment drives the entire school finance system and, given our current system, increasing that amount would be a prudent move to help all districts,” said State Rep. Trent Ashby, R-Lufkin. “It’s important to note, this method can also be achieved through the General Appropriations Act alone, so it may also be the most realistic thing the Legislature can do this session without having to pass a stand-alone bill.”

It’s likely to be a favored proposal in the House, Ashby said. But like many other plans, it requires more dollars to public education, a difficult challenge this session, given that lawmakers have less money to spend than they did when they last met in 2015.

There’s also vouchers, the A-F grading system for accountability ratings, continued discontent with STAAR, curriculum and graduation requirements, etc etc etc. It’s important to remember that the local property tax boom that helped lead HISD and other districts into recapture is also a huge boon for the state budget, and not something legislators will give up easily. I think the best case scenario is some more money from general revenue, adjustments to the funding formula for transportation and pre-K as David Thompson noted, and a temporary extension of the Additional State Aid for Tax Reduction initiative with a plan to fix it next session. HISD will still owe recapture money even if all that is done, but I for one would feel a lot less aggrieved by recapture if these things happened, and would support a recapture re-vote to take place before detachment could begin. We’ll see how it goes.