Millions at stake for Plano ISD as state task force debates funding formula

A Texas commission is examining the state's funding formula for public schools as millions of dollars in Plano ISD property tax revenues hang in the balance.

A Texas commission is examining the state's funding formula for public schools as millions of dollars in Plano ISD property tax revenues hang in the balance.

As hundreds of millions of dollars in Plano ISD revenues hang in the balance, a state task force is examining potential reforms to the Texas public school finance formula, which has been plagued with legal battles and reform efforts that failed to pass in the Texas Legislature.

Plano school officials project the district will be required to turn over more than $200 million to the state in recapture payments next fiscal year.

Local officials hope the school finance commission’s work will lead to a revamp of parts of the state’s funding formula to rein in future recapture payments.

The commission’s membership comprises 13 members appointed by the governor, lieutenant governor, speaker of the House and State Board of Education.

The commission chairman, former Texas Supreme Court Justice Scott Brister, was the lone dissenting voice in a 2005 case that ruled Texas’ school funding requirements were imposing an unconstitutional state property tax.

Members chairing working groups include state Rep. Dan Huberty, chairman of the House Public Education Committee; Todd Williams, a Dallas-based education research firm executive; and state Sen. Paul Bettencourt.

“It’s clear that school finance is broken,” Williams said. “It’s incredibly complicated; it’s not focused as much as we would like on outcomes and goals as it is on just what money we have available every two years and how we are going to allocate it for the rich and the poor districts.”

Despite the variety of backgrounds of the members, PISD board of trustees President Missy Bender said she remains hopeful the commission can compartmentalize their political opinions and their work to make the best recommendation to the Legislature.

“I have to choose to believe that they will compartmentalize it—otherwise it’s too devastating to imagine the alternative,” Bender said. “I believe each person [on the commission]  wants to do what they believe is right.”

Implications for Plano ISD

PISD is expected to send more money to the state in fiscal year 2018-19 than ever before, but the commission is just beginning its work, and it is unclear if enough of the commission’s members are willing to recommend the state increase its share of public education funding.

The state’s recapture policy requires property-wealthy districts with low enrollment growth, like PISD, to send some of their property tax revenues designated for maintenance and operations to the Texas Education Agency. PISD has been critical of this practice, which local officials have said enables the Legislature to withdraw state sources of revenue from education, rather than using it to increase funding in property-poor districts.

While Plano ISD has been able to increase the amount of money designated for administration and classroom expenses in recent years due to swelling North Texas property appraisal values, the district’s recapture payments to the state are expected to outpace that property value growth next year, said Randy McDowell, PISD assistant superintendent for business services.

The district anticipates property tax revenue for maintenance and operations will be lower in the 2018-19 school year than it was in 2017-18, even as property taxes collected are expected to continue on their upward trajectory.

“We’re going to net about a $7.5 million loss,” McDowell said. “Recapture is actually going up more than what we project [property]  values to go up.”

Although North Texas is witnessing a housing market boom, McDowell said the district cannot rely on increased property tax revenue alone to stave off the recapture payment hikes.

“We’re kind of riding that values are going up about the same amount they went up the prior year,” McDowell said. “At some point, if values ever flatten out, … we’re going to have to use about $40 million worth of reserves just in one year, just because our recapture is based on the prior-year value.”

Bender spoke before the commission at a public meeting in March. Testimonies like hers are informing the commission on how to move forward as it begins drafting a recommendation for the Legislature to consider.

Work to be done

Before splitting into its respective work groups, the school finance commission has been hearing reports from independent tax research groups and testimonies from Texas school districts.

“The vast majority of our time has been receiving information and asking questions,” said Williams, the research firm executive and chairman of the outcomes work group. “There has been ... relatively little discussion yet.”

Williams said the commission is preparing to present its recommendation to the Texas Legislature at the beginning of 2019.

And as part of Williams’ position as chairman of the outcomes group, his priorities include setting measurable goals to better inform the commission where state and local tax dollars would be best spent.

Some of the goals Williams said he is particularly interested in pursuing include having 60 percent of Texas students complete postsecondary education by 2030 and enticing more graduates to pursue education-related vocations. Williams also said he expects proposals about recapture are going to be brought to the table in the commission’s discussions.

“When we’ve got very large districts that serve primarily poor kids, such as Dallas and Houston, having to now start to write checks back into the system, I think both economically and politically, that’s something that has to be addressed,” Williams said.

Although some members of the commission have in the past opposed legislation that would have increased state funding to Texas school districts, Williams maintains increasing the state share of public education funding will likely result in better student performance.

“I think we can make some meaningful difference in reforms … with our existing pot, but I don’t think our existing pot of money is adequately sufficient enough to do all of the things I think we need to do to meet our goal,” Williams said.

But not everyone on the commission shares the same outlook.

Variety of backgrounds

Brister, the commission chairman and former Texas Supreme Court justice, has voiced his reluctance in the past about providing more funding for public education before determining whether school districts can do more with the money they currently have.

”You’ve got to figure out what you would like the schools to look like before you figure out whether you need more money or less money or where that money’s going to come from,” Brister said in an interview with The Texas Tribune, a nonprofit news organization and Community Impact Newspaper media partner.

Bender testified on behalf of the district at a March 19 school finance commission meeting. Bender shared information about some of her previous work to inform Plano property owners where their property tax dollars are being dispersed.

When residents receive their property tax statements, Bender said, they are usually not aware how much is returned to the state in the form of recapture payments, rather than funding local schools and administration.

“In fact, we are getting less and less … and I still have to give teacher raises and so forth,” Bender said during her testimony. “To support the Legislature doing the heavy lifting, we feel like if the populace knew what was happening, they could be supportive of [the Legislature] really doing the hard work.”

Brister said, regardless of any change to the allocation of tax revenues, PISD would still likely send money back to the state.

“Is the problem you’re addressing really that the state’s not bearing its share, or [is it]  if we just turned all the property taxes into a state property tax, they wouldn’t know where the money is going?” Brister asked Bender during her testimony. “We all know when we say the state needs to up its share, that’s us. I mean, we are the state. The state doesn’t print money. And frankly, if we raised the sales taxes, or some of the other things, money from Plano ISD is probably going to go out to poorer districts regardless, isn’t it?”


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