Legislators clash on plans to reform school finance system

Editor's Note: This story originally ran in the May 20 edition of Community Impact Newspaper. Since being published, the Texas Senate voted 21-10 on May 21 to approve House Bill 21, including Sen. Larry Taylor's provision that would allow education savings accounts for students with disabilities. The bill will now be sent back to the House to vote on the version with Taylor's provision.

 

Two bills filed in the state Legislature this session by Houston-area lawmakers could dramatically change how public school districts receive funding from the state.

House Bill 21, filed by Rep. Dan Huberty, R-Houston, was passed by the Texas House on April 20, about one year after more than 600 school districts—including Cy-Fair ISD—challenged the public school funding formula in the Texas Supreme Court. The court ruled the existing system as “minimally constitutional” last summer, urging lawmakers to enact reform.

Huberty said HB 21 is the first step in a multisession process to reform public education funding.

“By increasing state funding for schools, we can improve instruction and reduce the need for higher property taxes,” said Huberty, chairman of the House Public Education Committee.

Meanwhile, the Texas Senate offered a different plan—Senate Bill 2145—to fix the funding formula without adding more money into the system this session.

Sen. Larry Taylor, R-Friendswood, who authored SB 2145, said HB 21 uses money from the state’s Economic Stabilization Fund, better known as the Rainy Day Fund, to cover the costs.

This fund allows the state to set aside excess revenue for unexpected revenue shortfalls. Taylor said he believes the $10 billion fund should be tapped for one-time expenses only.

“You don’t use your credit card to keep spending when your income is down,” he said.

As of press time, SB 2145 is left pending in committee. Although it is not likely to pass this session, Taylor is pushing to work aspects of his bill into HB 21.

After HB 21 was received by the Senate, its fate may have been jeopardized in changes made during a May 11 Senate Committee on Education hearing. In the hearing, Taylor presented a committee substitute that added a provision to the bill that caused it to lose the support of many public education advocates.

The bill would divert state funding from public education toward subsidizing private school tuition for students with special needs. House members have expressed opposition to private school subsidies, including vouchers and education savings accounts, in the past.

As of press time, HB 21 is being heard before the full Senate. If passed by the Senate, it will go back to the House, where representatives will get a chance to consider the changes made by the Senate.

The two state bodies have until May 29—when this legislative session ends—to reach a compromise on public school funding unless a special session is called to reconcile the differences.

Legislators clash on plans to reform school finance systemBill breakdown


HB 21 adjusts the funding formula for public schools and allots an additional $1.65 billion to public education over the next two years. As of press time, the Senate version of the bill did not have a fiscal cost attached to it.

“It’s important to increase school funding by more than a billion dollars, because in 2011 the funding was slashed due to the recession,” Huberty’s legislative director Molly Spratt said.

Under Huberty’s version of the bill, Cy-Fair ISD could receive $12.5 million more than it would under the existing formula for fiscal year 2017-18, according to the Texas Legislative Budget Board, a joint committee of the Legislature that completes fiscal analyses for proposed legislation.

This bill also lowers recapture payments by approximately $173 million in 2018 and $205 million in 2019, Spratt said. Recapture, colloquially known as the “Robin Hood” plan, was first created in 1993 as a way to divert tax revenue from property wealthy school districts to property poor districts, according to the Texas Education Agency.

In FY 2016-17, 379 school districts are expected to send more than $2 billion in total to the state, according to the TEA. CFISD is classified as a Chapter 41 district—meaning it is subject to recapture payments—but is exempt from paying them because the property wealth per student is not high enough, said Stuart Snow, associate superintendent of business and financial services.

Additionally, HB 21 provides more weight in the funding formula for dyslexic students, career and technical education and technology as well as a bilingual adjustment for schools with more diverse student populations.

Taylor’s provision to the bill would create an ESA for students with disabilities to use about $7,000 per year for private school tuition.

Snow said without the addition of a school choice components like ESAs, he believes HB 21 will have a difficult time passing.

“I [appreciate] any attempt to improve school finance because it is so outdated,” he said. “But any attempt to do that is going to take two or three legislative sessions. HB 21 is a good start, even though it probably doesn’t do everything we need it to do.”

After Taylor’s updates, the Community Leadership Committee within CFISD changed its stance on the bill to oppose it. CLC member Julie Hinaman said ESAs are a school choice mechanism intended to divert public funds to private organizations with no accountability standards in testing or financial reports.

“If they really wanted to support these special education kids, they would put that funding into public schools where they can access the resources they need and won’t be segregated from their friends and neighbors,” she said.

Taylor expects legislators to negotiate with facets of each bill enacted as law.

“It’s going to be one of the plans with some of the other measures put into it as part of the compromise,” he said.

Fast-growth districts


Although the current status of HB 21 has caused concern among public school advocates, reforming the school finance formula is still a top priority, especially among fast-growth school districts like CFISD. By 2021, demographics firm Population and Survey Analysts projects CFISD’s student enrollment of 115,000 will grow to about 120,000.

“All costs across the district continue to rise every year, so [HB 21] would help balance our budget, it would help us be able to provide salary raises for all employees and help fund operating costs,” Snow said. “We are opening several new schools in August—Bridgeland High School, Hoover and Wells elementary schools and the replacement campus for Matzke Elementary. The passage of HB 21 would help us continue [growing].”

Guy Sconzo, executive director of the Fast Growth Schools Coalition, said he believes the proposed formula from HB 21 is better than the existing funding system for fast-growth districts like CFISD.

HB 21 provides the framework for a solution that could take shape over the next three sessions, Sconzo said.

“The reality is that over 30 years, so many incremental changes have been made to the system almost every legislative session in an effort to put Band-Aids on the problem,” he said.

Growing districts want increased state funding for new schools and maintenance at older schools, Sconzo said.

A drop in state funding for new facilities since 2001 has put fast-growth districts on a two- to-four-year cycle of incurring high amounts of debt by calling a bond election, he said.

“HB 21 is all on the operating side of the budget, but we really need to get to the debt side,” Sconzo said. “That’s another real pressure being put on fast-growth districts and their taxpayers.”

Snow said state funding continues to decline, putting a greater burden on CFISD. In FY 2012-13, the state funded about 46 percent of operating revenue. That number decreased to 41 percent this year and is slated to drop to 38 percent by FY 2019-20. Snow said if HB 21 fails, the district could be forced to dip into other funds to balance its annual budget or face an unbalanced budget.

“We have not increased our tax rate [of $1.44 per $100 valuation], and we can’t without voter approval,” Snow said. “It puts a lot more pressure on us to be able to work within our budget, so it could cause us to start doing some other cuts in programs and personnel.”

Legislators clash on plans to reform school finance system