‘Clean slate’ sought on school funding
Senators seek ‘whole new method’ to address taxes, district inequities
AUSTIN — In a surprise move sure to intensify the debate over public education in Texas, Senate budget writers on Monday took the first step toward making sweeping reforms in the way the state funds its local schools.
With an official mandate to “start with a clean slate,” seven members of the Senate Finance Committee were tasked with coming up with recommendations by early May for an entirely new funding system. They are seeking to address a situation that has spurred decades of court fights over equity between rich and poor school districts and growing taxpayer howls over rising local school taxes, as the state cut its share.
“The opportunity is huge for us to get it right,” said Jane Nelson, chairwoman of the Senate Finance Committee. “We need a whole new method of school finance. … No more BandAids. Start over.”
The House is expected to follow suit. In its initial budget made public last week, the House proposed an additional $1.5 billion in school funding tied to reform of the school finance system.
Texas consistently ranks in the bottom tier in perpupil spending on education nationally. And amid a state budget crunch fueled in part by a downturn in the oil and gas sector, state officials have warned that an end to the cap placed by Texas on special-education
funding districts could potentially cost the state hundreds of millions of dollars more to provide services for all eligible children.
The state’s school finance system, which has been the subject of multiple lawsuits and court orders since the 1980s, is generally regarded as a complex tangle of funding formulas, apportionment ratios and thick policies that have been adjusted many times since the system was established during the 1940s.
Few legislators fully understand it. Last year, when the Texas Supreme Court turned back the latest attempt to have the system declared unconstitutional, Justice Don Willett called it a “Byzantine” system that “is undeniably imperfect, with immense room for improvement.”
But through the years, proposed changes have provoked nasty fights in Austin. Districts that benefit from the system are loath to change it, and those that don’t benefit from it fight to get more money under the complex formulas.
Including all funds, public education costs make up about $55 billion of the state’s two-year, $209.4 billion budget.
Senate Education Committee Chairman Larry Taylor, the Friendswood Republican who Nelson selected on Monday to lead the Senate study, said the timing is right for a top-to-bottom review. All aspects of school funding are expected to be on the table for discussion, thanks to the Supreme Court’s ruling that did not throw out the old system but instead gave the Legislature time to come up with a new funding method.
“They’ve actually cleared the air for us to come and do a meaningful reform,” he said.
Taylor compared the current system to building a small lake cabin that is added onto over the years, time and again, and eventually becomes a complex hodgepodge of rooms.
‘It makes no sense’
Across Texas, news of the special study drew questions.
In Houston, where voters last November overwhelmingly rejected having local taxpayers pay the state for $162 million in so-called “recapture” of school funds, HISD trustee Jolanda Jones said the creation of the Senate group signaled that the message from the ballot initiative had been heard in Austin.
“They’ve done more with HISD pushing back than they have in 24 years of hearing school districts complain about it,” Jones, a vocal opponent of “recapture,” said Monday. “Recapture is based on the premise of Robin Hood, taking from the rich and giving to the poor, but that’s never what it did. It took from the poor and reallocated to the poor. Help me understand why 75 percent of our kids are poor, really poor, receiving free and reduced-price meals, and you’re taking money from us? It makes no sense; we need more money, not less.”
Because the district will refuse to pay the recapture fee, the Texas Education Agency has threatened to remove commercial buildings from HISD’s taxing district this July so it can give the money to other “property poor” districts.
HISD trustee Anna Eastman said she hopes lawmakers will act before the TEA takes the property tax revenue from local commercial properties, though she is not sure overhauling the school finance system can be done in one session. But she was heartened to see the Senate look at the funding system.
“School finance can’t be based on some kind of cryptic formula that makes it so kids in a certain pocket are getting lots of money and others are getting little,” Eastman said. “Areas such as ours shouldn’t be picking up all the slack for areas that can’t generate revenue off property growth. It shouldn’t be that big of a gap.”
In Pearland, where local schools receive $9,358 per student, the lowest share in the Houston area, Superintendent John Kelly said that if the state does not increase its share, his district may have to dip into reserve funds to provide any kind of an increase to employees or to meet rising costs. He said lawmakers have been disingenuous in saying they want to lower taxes while requiring districts to raise more local taxes.
“They talk out of one side of their mouth ‘tax cuts’ for people, but on the other side they’re confiscating the increase in tax values across the state,” Kelly said of the Legislature.
Already, Kelly said the district’s student-teacher ratio is above the state average. They try to keep the ratios low in K-4 grades to comply with state statute, but at the middle school level, Pearland ISD usually has about five more students per classroom teacher than the state average.
Working with less
Nelson said any recommendations from the special panel will be included in the Senate version of the budget, if they can be focused into a workable policy in time. As the special panel looks at reforms, the finance committee will begin work on Tuesday to fund the existing school-financing method, starting with the TEA.
Nelson called school-finance reform one of the two main issues facing the Legislature, as it attempts to craft a new two-year budget with at least $3 billion less to spend than is provided in the current budget. The other is the skyrocketing cost of health care, for which she named a second study committee to come up with a plan to contain costs while maintaining necessary services through possible collaboration between agencies and programs.
Included will be the Medicaid program where costs are spiraling; retirement programs for state employees and teachers, where costs also are increasing; and prison health care, where costs have mushroomed in recent years as the population of older convicts with expensive illnesses grows each year. The state spends about $60 billion in all funds on Medicaid every two years.
“There have to be ways we can control this, and that may include some changes that I think we will see in Washington on this issue,” she said. “I think there are innovations that we can bring to our system in Texas that will help us cut these costs. We’ve got to get this under control.”