From the rich to the poorThe cost of complying with a Texas law that requires certain school districts to share their property tax revenue with poorer counterparts is increasing for two Northwest Austin-area districts, although a court ruling this year over the state’s educational funding system has brought new calls for reform.

Austin ISD officials have long been frustrated with their designation as a “property-wealthy” district under the Texas Education Code’s Chapter 41, commonly referred to as recapture or the “Robin Hood” law, which requires the district to send a portion of its annual property tax revenue to the state Legislature to bolster districts deemed “property-poor.”

Proponents of recapture say the philosophy has been invaluable to lessening historical funding inequities among Texas school districts since Chapter 41 was enacted in 1993. But as Austin’s property values have risen in recent years, recapture has placed an increasing burden on AISD as it and districts statewide see cuts to state funding, said Nicole Conley, the district’s chief financial officer.

“It puts pressure on the district’s budget,” she said. “The inequity that it was trying to solve has gone the other way.”

AISD projects during fiscal year 2016-17 it will pay the state more than $406 million, or the largest recapture payment among the 257 districts subject to the law. The amount is about $174 million more than the district paid in FY 2015-16, according to AISD’s most recent budget numbers. That annual expense will increase, as the district expects it will make nearly $2 billion in recapture payments in the next four years, Conley said.

From the rich to the poorRRISD’s return to recapture


Soon to rejoin AISD as a recapture-paying district is Round Rock ISD, which expects to make a payment in FY 2017-18, district CFO Randy Staats said. RRISD has been considered property-wealthy since 2003, but it was only required to make payments from FY 2002-03 to FY 2005-06 and in FY 2008-09, according to the Texas Education Agency.

Preliminary projections, which Staats said would be revised later this year, put RRISD’s recapture payment in FY 2017-18 at about $12 million.

Pflugerville ISD is considered “property-wealthy” but is not subject to recapture this year and does not expect it will be in the next fiscal year, district spokesperson Steve Scheffler said.

Staats said he believes the complexities within the law have led to some misconceptions among taxpayers in recapture districts. For instance, although recapture money comes from districts’ tax collections, the districts do not control how that money is used, Staats said. Instead, recapture money is sent to the Texas Legislature and distributed to all of the state’s public and charter schools.

“Taxpayers don’t truly understand that piece, I believe,” Staats said.

Because RRISD’s recapture payments are not expected to restart for another year, Staats said there has not been a lot of discussion among board members. District spokesperson Corey Ryan said the district’s board and finance team would develop plans to handle the added costs.

Calls for educational reform


Debate over recapture reignited this year after the Texas Supreme Court in May ruled the state’s school funding system was constitutional but urged lawmakers to consider reforms, describing the system as “Byzantine” and “meeting minimal standards.”

The issue is expected to come up during the Legislature’s 85th session, which begins in January, following an order from Speaker of the House Joe Strauss, R-San Antonio, to study ways to improve the state’s school funding system, including possible recapture reform.  Strauss has called for recommendations to be issued before the start of the session.

From the rich to the poorExploring funding options


Conley said the big issue for AISD is its unique student population, which includes high percentages of economically disadvantaged students and English language learners, resulting in more expensive educational needs than other recapture districts. AISD faces a major challenge in offsetting the hundreds of millions of dollars it sends to the state each year, she said.

“There’s not a lot of wiggle room in the current law,” she said. “It means we have to cut services to pay this requirement.”

Austin Mayor Steve Adler suggested during a South by Southwest Conferences & Festivals panel in March that the city might be able to help increase funding for AISD through a “tax swap.” Under such a plan, Adler said AISD would lower its tax rate and the city would agree to increase its tax rate by the same or lower amount, putting the money generated toward school services.

Jason Stanford, the mayor’s spokesperson, said as of September Adler was still exploring the proposed arrangement with city staffers, adding the process is complicated and includes “a lot of moving parts.”

Many school districts partner with local governments and nonprofit agencies on educational programs for students. The city of Austin funds AISD grants for parent support specialists and Prime Time, a free after-school program for elementary and middle school students.

District 4 Council Member Greg Casar said he believes state lawmakers are not adequately funding education, and the city “is acting as a good partner” with AISD in providing assistance where it is able. He said many students in his district come from low-income families and benefit from extracurricular programs.

Casar was part of a group of elected officials and education leaders as well as AISD trustees, teachers and parents who asked Austin City Council in August to keep funding for parent support specialists and Prime Time in the city’s budget for FY 2016-17. He said losing the programs could have a significant effect on children in Austin’s schools.

“I’m tasked with the job of representing the city as a whole but with special attention of the future of the city,” Casar said. “In the end those kids who are losing their after-school programs can’t vote, but, to me, if we’re going to be responsible leaders, we need to pay attention to them more than anything else.”