Districts fear loss of millions in state aid
End nears for guarantee to fund schools at current levels despite fewer students
Across the Houston region and Texas, school districts that lost enrollment during the COVID-19 pandemic are facing a drop in state funds starting in January if the Texas Education Agency or state lawmakers do not act.
Since the virus began sweeping across the state and nation last March, forcing schools to close, the TEA has given districts several grace periods in which it provided them the same funding they would have received in normal times. To date, that has provided a lifeline to districts that otherwise would have seen their state revenues plunge due to lower-than-expected student enrollments.
The current grace period, which the TEA calls a “hold harmless guarantee,” ends Dec. 31.
The Texas Legislature in 2019 allocated enough money to fund schools at their current levels until the end of the school year, but the TEA has remained mum on whether it will extend the hold harmless guarantee until then. Without another extension for the remainder of the 2020-21 school year, some local district finance officials worry they will be faced with two bad options: dip into and potentially deplete their reserve funds to keep their districts operating through spring, or lay off teachers and staff to make ends meet.
For Houston-area districts, which began the school year missing more than 20,000 students, the financial ramifications could run into the tens of millions of dollars. For ex
ample, Alief ISD could lose nearly $40 million after enrollment fell 3,500 short of initial estimates.
Cypress-Fairbanks ISD, which has 2,364 fewer students now than at the end of last year, estimates it could lose $29million. Aldine ISD could “easily” miss out on $20 million after its enrollment fell 4,000 students shy of projections, and Pasadena ISD would face a shortfall of nearly $14 million due to a 2,261-student enrollment drop.
Houston ISD did not respond to a request for comment, but the district began the year with 13,000 fewer students than expected.
There is no one answer for why students have dropped off schools’ radars. Some may have moved with family in search of work. Parents of prekindergarten and kindergarten students may wait to enroll them until school operations are more normal. Others may have been kept at home by parents waiting for COVID-19 infection levels to improve before sending their kids back to school.
Texas Education Commissioner Mike Morath told the Chronicle’s editorial board in November that the agency “already provided unprecedented flexibility to offer remote learning, and with it, full funding.”
“However, we know that certain districts face challenges because of significant enrollment declines, and we are working to ensure that our schools and teachers receive the additional financial support we need,” Morath said.
The lack of a concrete assurance that districts statewide will continue to receive funding at current levels has many on edge, said Kevin Brown, executive director of the Texas Association of School Administrators.
“Everybody right now is holding their breath, hoping the state will come through with hold harmless,” Brown said. “But they’re also starting to look at what will happen if that doesn’t come through — are they going to have to do layoffs, and if so, how extensively?”
State Sen. Paul Bettencourt, RHouston, said that while enrollments remain lower than predicted across the state, the situation is improving as the school year plays out and kids come back. He also said he expects more students to return as COVID-19 vaccines begin to be distributed.
Returning funding to the state’s attendance-based formula creates an incentive for districts to keep looking for students who have not shown up.
“You have to balance all these needs, because we have to keep the public school system making sure they make every effort to find students,” he said. “Otherwise children are left behind.”
School finance
At the heart of the concern for districts is Texas’ public school finance system, which hinges on how many students are enrolled and their daily attendance rates.
For many districts, the pandemic has created a double-barreled challenge of lower enrollment and difficulties maintaining the attendance of students who have returned.
Statewide, schools have lost 4 to 5 percent of their expected enrollments, said Amanda Brownson, associate executive directory of policy and research with the Texas Association of School Business Officers. Some districts have seen their enrollment unaffected, but others have seen drops as high as 10 to 15 percent, she said.
At the same time, many districts are struggling to make sure their students attend classes every day, particularly those who have elected to attend school virtually.
In Alief ISD, for example, attendance rates have fallen from an average of about 95 percent to around 87 percent, said Charles Woods, the district’s deputy superintendent of business services. The district’s enrollment also has fallen by about 8 percent, or 3,500 students.
School staff members have tried for months to improve those numbers, hosting car parades in neighborhoods, knocking on doors of students who have not been logging on to virtual learning, walking around apartment complexes looking for students who should be in school.
Despite those efforts, Woods is concerned the one-two punch of lower attendance and lower enrollment could cost the roughly 40,000-student southwest Houston district between $35 million and $40 million in state funding. That would represent as much as 8.7 percent of the district’s 202021 general fund budget. And that bill would come due next fall, when districts determine whether they were over- or underpaid by TEA and have to “settle up” with the agency.
“If the state doesn’t extend the hold harmless during this time, we have only two things to consider: How are we going to make it through this school year with dollars cut with attendance, and how are we going to budget for the following school year?” Woods said.
For districts like Alief that have a large population of students from lower-income households, the enrollment drops can be even more costly.
The Legislature in 2019 set aside money to help lower-income students catch up to their more affluent peers through what is knownas compensatory education. Fewer students enrolled means those districts would get less for programs aimed at closing those learning gaps.
“Their educational needs are going to be greater than ever” due to the pandemic, Brownson said. “The compensatory education programis designed to help catch them up when they struggle. I worry we’ll see cuts in that program, frankly, at a time they’ll need it most.”
Staffing repercussions
If the hold harmless is not extended, district financial officers say jobs also could be on the chopping block.
Between 80 and 90 percent of most districts’ expenditures go toward payroll and benefits, making it difficult to make meaningful cuts without layoffs. Without the projected budget gaps filled, some districts may need to look at their staffing levels.
Paul McLarty, deputy superintendent of business and support services in Clear Creek ISD, said his district and others currently are overstaffed because of enrollment dips. Clear Creek has about 2,000 fewer students than it expected.
McLarty said officials there based their staffing projections on assumptions made before or in the beginning of the pandemic, when no one knew how long campuses would remain closed to slow the spread of COVID-19.
“We did the bulk of hiring for this school year last spring, when we were going through early stages of pandemic,” McLarty said. “We didn’t knowwhat itwould do to enrollment. We set our needs based on what we thought enrollment would be.”
He said if TEA does not extend the hold harmless guarantee, the district has enough in savings to continue paying its current staff, putting it in a better situation than others.
Bettencourt said that statewide school districts have a combined $14 billion in reserve funds they could use to offset losses triggered by falling enrollments and diminished attendance. Most, he said, would be able to make it through the year without resorting to staff cuts.
“My message to administrators talking about (layoffs) is, showme the numbers, show me the money,” he said. “There could be a couple percentage points of high funding loss, but I think the lion’s share — 90 percent plus — they’re not in that situation because they’ve been covered for this first semester.”
He said he anticipates receiving better data about enrollment and potential funding losses closer to when the 87th Legislature meets in January.
Still, the prospect of budget and staff cuts led the Texas State Teachers Association to sound the alarm, urging TEA to keep state funding at current levels.
“School employees have responded heroically to this health crisis. At personal risk, they have protected students, kept them fed and reinvented teaching options, all at significant additional costs to districts,” said TSTA President Ovidia Molina. “Our state’s economic recovery depends on our public school system, and all our school districts must receive reliable, stable funding for this entire school year.”