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Texas School Coalition

House releases school finance fix bill

A step in the right direction.

Rep. Dan Huberty

The top public education policymaker in the Texas House unveiled a $1.6 billion plan on Monday that he described as a first step to overhauling the state’s beleaguered school funding system.

At a Capitol press conference, state Rep. Dan Huberty said House Bill 21 would boost per-student funding for nearly every public and charter school in the state while reducing the amount of money wealthier school districts are required to give up to buoy poorer ones. The state’s so-called Robin Hood plan has become a hot-button political issue as large districts like Houston have recently had to begin making payments.

“House Bill 21 will not only improve our schools but it will also reduce the need for higher property taxes,” said Huberty, a Houston Republican who chairs of the House Public Education Committee.

[…]

He said HB 21 would increase the basic funding for almost all school districts from $5,140 to $5,350 per student per year. That would happen in part through an increase in transportation funding by $125 per student for all school districts, including property-wealthy districts that currently have limited access to that money.

It also would increase the amount of money the state gives to schools for students with dyslexia. And it would include additional funding for high schools and non-professional staff.

Huberty estimated it would lower payments that property-wealthy school districts pay to the state to subsidize property-poor school districts by $163 million in 2018 and $192 million in 2019. As the state’s share of school funding has decreased, more school districts with swelling enrollment are on the hook for such Robin Hood payments.

The bill is similar to an unsuccessful school finance initiative filed in 2015 that would’ve injected twice as much money into the system — $3 billion — and boosted per-student funding across the board. Still, $1.6 billion is a significant sum amid the current budget crunch.

This bill had a hearing yesterday as well, and despite being overshadowed by the sound and fury of the bathroom bill hearing, there was a report about it.

The bill would inject about $1.6 billion into the public education system, boosting funding for almost every school district in the state although a few would be left out. It also wouldn’t renew a soon-expiring program that awards supplemental state funds to more than 150 districts to offset a decade-old property tax cut — a major concern for education officials who depend on the funding. A provision in the bill that would award some grant money to make up for the loss isn’t enough, they told the committee Tuesday.

“My districts are going to lose,” said Mike Motheral, executive director of the Texas Small Rural School Finance Coalition. He said he represents 14 West Texas school districts that could lose up as much as 53 percent of their state revenue with the end of the state aid program.

“One of my districts will lose $4.5 million and they have a $10.5 million budget,” he said.

When the Legislature reduced property taxes by a third in 2006, it guaranteed school districts like the ones Motheral represents at least the same amount of funding they received in 2005-06 through a state aid initiative. The extra aid expires Sept. 1, so many districts have been asking for an extension to avoid falling off a funding cliff. About 156 school districts currently receive such aid.

As written, the bill proposes letting the initiative providing extra state aid expire and instituting a $100 million two-year grant program, prioritizing districts that would lose money through the new funding formulas. That’s not enough to cushion the blow, school officials told the committee Tuesday.

[…]

Numbers released Monday along with the bill show that about 35 of the state’s 1,200 school districts and charters would lose funding in 2018 and 58 would lose funding in 2019. The rest would see basic funding increase from $5,140 to $5,350 per student annually thanks to an increase in transportation funding and more money for students with dyslexia.

Many school officials and advocates who testified on the bill Tuesday said it leaves too many behind.

“We want a bill that has no losers,” said Christy Rome, executive director of Texas School Coalition, which represents mostly wealthier school districts.

Here’s HB21. I agree with Christy Rome and Mike Motheral. There shouldn’t be any losers in this. As much as HISD and the other districts affected by recapture should be made right, it should not come at the effect of these other districts. The right answer is the put enough money in to fix the formulas. Easy to say, and Lord only knows what kind of reception this gets in the Senate. But this is what it comes down to, and what needs to happen. The Chron has more.

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.

The recapture blues

What are you gonna do?

BagOfMoney

At least once a year, an official from a property-wealthy Texas school calls Christy Rome and tells her they’re just not going to do it. They don’t want to send a big chunk of their tax dollars to the state, even though they’re required to do so under a state law meant to buoy poorer districts.

“I can’t recommend that,” the Texas School Coalition chief always tells them, citing a host of potentially worse financial consequences.

The resistance dates back to the mid-1990s, when Texas lawmakers — under the gun of a court order — enacted a plan known as Robin Hood that was meant to ease vast funding inequities among school districts fueled by a property tax-based funding system.

For years, getting rid of the scheme altogether was the primary legislative goal of Rome’s 140-member coalition of school districts, which has unsuccessfully fought Robin Hood in the courts. Now, she says, the goal is simply to rein it in.

With major pushback from property-poor schools and decades of case law reinforcing the take-from-the-rich, give-to-the-poor concept, whether that will happen is a big question.

But Rome says the group is hopeful for reform during the 2017 legislative session. Resistance from property-wealthy schools has exploded, along with the number of districts — including very big ones — required to pay up under the Robin Hood plan.

[…]

The coalition will face fierce resistance from property-poor schools, represented by the Equity Center, which agree with wealthier districts that the state has grown too reliant on local tax revenue to fund public education and underfunds schools in general. But they also believe Robin Hood is crucial to easing funding inequities. The system is far kinder to property-wealthy districts even if they have to make recapture payments, said Equity Center Executive Director Wayne Pierce.

Contrary to popular belief, he said, that money isn’t funneled directly to poor districts but instead into a big pot of money distributed to all of the state’s more than 1,200 public and charter schools. And he said schools like Houston and Austin still get hundreds more dollars per student than the average school district.

“Recapture is a salvation to public education,” Pierce said. “Those that pay it are still funded at higher levels and have lower tax rates, so it’s not hurting those schools but it is helping the state.”

The only way the Equity Center would support eliminating Robin Hood, Pierce said, is if the state totally changed the way it funds public schools, replacing local property taxes with a statewide property tax or other statewide tax — a concept that has had little to no political traction.

The genesis of this story is HISD having to make a recapture payment, which comes at an especially bad time for them. I wish the story had explored the HISD board’s handing the issue off to voters, as that subject needs to get more attention, but I’ll have to wait till another day for it. The bottom line is that Pierce is right, a statewide tax is the fairest way to do this, and it ain’t gonna happen any time soon. The Republican leadership wants to spend less on education, and it wants to point a finger at the school districts when they are left holding the bag. At the risk of repeating myself, nothing will change until the leadership of this state changes.

A cheat sheet for the school finance lawsuits

The Trib has a useful guide to the six (so far!) lawsuits that have been filed over school finance.

Texas’ latest round of school finance litigation adds some new players to the courtroom, with interests that are more varied than ever before. We’ve created a cheat sheet to help you keep all six lawsuits — and the plaintiffs’ basic arguments — straight.

Charter schools and a newly formed organization pushing for more school choice are both suing the state for the first time. Four different groups of school districts, by now veterans in the school finance wars, are returning once again.

A judge has already consolidated these five lawsuits into one trial, and will likely do the same with the latest claim, filed by the Texas Charter School Association. In many instances, the plaintiffs’ arguments will overlap, but in some, their interests will conflict — that’s why there are so many different parties.

(And note that at least one party doesn’t agree their cases should all be heard at once. MALDEF has filed a petition to dismiss the complaint from Texans For Real Efficiency and Equity in Education, saying that group should be making their argument to the Legislature, not the courts.)

The main thing to know as far as I’m concerned is that the TREE lawsuit is the skunk at the garden party. It’s the one of these things that isn’t like the others. I think MALDEF’s petition has a lot of merit, and I hope the judge looks favorably on it. Anyway, you can see all of the plaintiff’s complaints as well as a chart showing who’s alleging what and a summary of the key issues. Check it out.

A field guide to the school finance lawsuits

The Trib has a handy overview of the school finance lawsuits – who the plaintiffs are, who their lawyers are, and on what grounds they are suing. Among other things, it shows that I was correct in saying that there had only been three suits filed at the time that was written, with the Thompson lawsuit now in as of last Thursday. Anyway, since it’s often hard to tell the players without a scorecard, now you have a scorecard. Check it out.

And then there were three

Three school finance lawsuits, that is.

Flanked by Edgewood Superintendent Jose Cervantes, parents, students and community leaders from Texas districts, MALDEF attorney David Hinojosa highlighted three key claims in its suit at a press conference Tuesday.

The lawsuit claims the state has shown inequitable treatment against property-poor school districts in violation of the Texas Constitution, with gaps in funding forcing impoverished districts to tax at a higher rate than rich districts.

It says the state inadequately funds low-income and English Language Learner students’ education.

It claims that local school districts have lost all meaningful discretion in setting their tax rates by having to deal with a tax cap putting the biggest burden on poor districts.

The article refers to four such lawsuits, but as far as I can tell only three have been filed so far. The Equity Center lawsuit was first, in October, and the Texas School Coalition suit came last week. The Thompson lawsuit is still out there, but as far as I can tell from searching around, it has not been filed yet, and appears to have been delayed a bit. Originally expected to be filed in mid-November, this story from November 29, which I found on the Thompson & Horton LLP website, said that it was expected the week of December 5. As that has now come and gone, I presume we’re still waiting. And as with the redistricting litigation, these suits may well end up being joined, but it’s too early to say. According to the story, don’t expect any or all to go to trial till next fall.

Second school finance lawsuit filed

We’re just getting warmed up.

A coalition of property wealthy school districts jumped into the school funding fray Friday, filing a separate lawsuit claiming the current system has created another illegal statewide property tax and does not provide children with adequate funding.

It’s the second school finance lawsuit filed this fall, with two additional suits expected next week. All are aimed at a Texas public education system that critics contend is unequal and inadequate to meet the growing needs of a student enrollment increasing by at least 80,000 children per year.

[…]

While the trend line shows that school funding is dropping, the state’s school accountability system is getting tougher, said Mark Trachtenberg, a Houston-based lawyer for Haynes and Boone, the law firm representing 60 property wealthy school districts joining the Texas School Coalition suit. More are expected to join in the coming months, Trachtenberg said, noting the coalition includes 120 school districts.

[…]

Other lawsuits, including one led by the Texas Equity Center, will focus on vast inequities in the school funding system. Per student funding in Texas now ranges from less than $5,000 per child in some school districts to more than $10,000 in others, according to the Equity Center’s suit, which involves 362 school districts. Texas school districts have lost previous court claims that school funding was inadequate to meet their needs. The Texas Supreme Court ruled in 2005 that the state’s public school funding system had not yet become inadequate — but warned: “It remains to be seen whether the system’s predicted drift toward constitutional inadequacy will be avoided by legislative reaction to widespread calls for changes.”

Trachtenberg was one of the attorneys in the previous school finance lawsuit, so he knows his way around the issue. This suit differs from the Equity Center suit in a key way.

[The plaintiffs] contend the current system violates the state constitution in two ways: Legislators have effectively imposed a statewide property tax because districts do not have “meaningful discretion” over local tax rates; and the state provides inadequate funding for schools to prepare students while requiring them to meet higher academic standards.

The suit does not, however, argue that the system is inequitable, which is a central argument of the first school finance lawsuit filed this fall. That group of plaintiffs represents districts from the lower end of the spectrum in terms of per-student funding and now has 362 school districts and about 1.2 million students.

Trachtenberg said his districts wanted to avoid that claim because they are concerned that the potential remedy could hurt the districts without actually improving the situation overall by forcing the state to put more money into public education.

Eanes Superintendent Nola Wellman said the district supports equity in public education but not at the expense of property-wealthy districts.

“We believe that equity must be addressed by ‘leveling up’ the funding from the state rather than taking funds from one district to give to another,” she said.

The second claim, about the state mandating standards then not providing sufficient funds for districts to meet those standards is central to the not-yet-filed Thompson lawsuit, to which HISD is a party. The ideal outcome here is that the state is forced to put more money into public education and that it is forced to come up with a way of ensuring that funding keeps up with growth and need. These plaintiffs are hoping that by doing so, there will no longer be a need for recapture. If you’re thinking that this will require a massive overhaul of the state’s tax structure, you’re on the same page as I am. We’ll see how it goes.

Another school finance lawsuit update

The Trib brings some news about the impending school finance lawsuits. Yes, lawsuits – there are two in the works.

The Equity Center’s lawsuit will focus on fairness, attacking the target revenue system established in 2006 when lawmakers reduced the property tax rate and guaranteed that districts would get no less than the amount they received per student at that time. That stopgap has since become permanent, resulting in an arbitrary funding scheme in which neighboring school districts can have as much as a $7,000 difference in state spending per student — and, the Equity Center will argue, is wildly inefficient.

Many of the state’s 1,030 school districts, like its largest, Houston ISD, whose school board will take up the question at its meeting on Oct. 13, have yet to decide whether they will join a suit. But as of Tuesday, 139 districts — a mix of suburban, rural and inner-city schools of varying sizes, though they are primarily low- to middle-property wealth — have joined the Equity Center’s coalition of schools. In addition to schools, Executive Director Wayne Pierce said they also eventually plan to include taxpayers like business owners and parents in the suit as well.

See here, here, and here for some background. School Zone has a list of the districts that have signed on so far. I will be very interested to see if HISD joins in. I hope they do.

[Attorney David] Thompson’s group will focus primarily on adequacy and property tax issues, arguing that not only has the state failed to dedicate enough money to public education for schools to meet increasingly rigorous accountability standards, but that in doing so, it has not given local districts enough choice in how to spend or whether to raise property taxes — in effect, instituting an unconstitutional statewide property tax.

“Educational standards are continuing to go up, but the revenue is flat-lined — and in this session it’s gone down,” said Rickey Dailey, a spokesman for the Texas School Coalition, a group that represents “Chapter 41,” or property wealthy districts that send money back to the state through Robin Hood laws.

Seems to me both groups have strong cases. Ultimately, whatever the courts say – and nobody knows what they’ll do – it will be up to the Lege to fix it. They seem to like being ordered to take action rather than doing it themselves. They’re likely to get their chance soon.