In the context of the Texas public education funding formula, a district’s property value changes everything.
A 1993 state law divided school districts into two main categories: those who are “property-rich” and those who are “property-poor.”
The system mandates which districts must send payments back to the state to subsidize other districts so every student gets the same amount of public education funding, and which districts receive payments from the state.
The designation is made based on a formula that divides the district’s total property value by the number of students, as measured by the weighted average daily attendance.
Property value is based on properties throughout the district — including single family, multifamily and businesses.
Districts are found to be “property-rich” if they have more than $319,500 property wealth per student and are classified as Chapter 41. If deemed “property-poor,” or below this threshold, districts are classified as Chapter 42.
Chapter 41 districts receive less state aid and have to make payments back to the state in a process termed “Robin Hood” or “recapture.” Chapter 42 districts receive aid without having to send payments back.
Over time this system has caused the state’s portion of school finance funding to shrink and individual districts’ shares to grow.
In the coming biennium the state’s portion of funding is decreasing by $1.4 billion, according to Randy Staats, Round Rock ISD chief financial officer.
Chapter 41 districts only pay recapture if property wealth per student exceeds $319,500 and if the district maintenance and operations tax rate is above $1.06, or if property wealth per student exceeds $514,000 regardless of the tax rate.
Round Rock ISD has again been classified as a Chapter 41 district with property wealth exceeding $514,000 and is required to send money back to the state for the current school year.
For the first time ever, Pflugerville ISD is being classified as Chapter 41, but does not have enough property wealth to send Robin Hood payments, because the property wealth is below $514,000 and it levies a $1.04 maintenance and operations tax rate.
For the time being, it falls into a “gap” category where PfISD doesn’t sent payments to the state for redistribution, but it also doesn’t receive subsidizing payments from other districts.
Hutto ISD, a district with property wealth falling below the state threshold, continues to receive payments back from the state.
The Texas Education Agency’s preliminary assessment of districts for the 2017-18 school year revealed 426 are classified as Chapter 41. PfISD CFO Kenneth Adix said 203 “gap” districts exist that fall into the Chapter 41 classification but do not pay recapture.
If a Chapter 41 district does have to send recapture payments back to the state, payments are calculated based on the property wealth within a district.
RRISD will pay $9.7 million in the 2017-18 school year and plans to pay $38 million in 2018-19. This represents an increase of just under 300 percent in one year. In 2017-18, taxpayers would pay roughly $85 of their average property tax bill back to the state. In the year following, they would be paying more than $300.
“They are writing a larger check to Round Rock ISD, but they don’t get to keep that,” Staats said. “It goes back to the state.”
