Despite meeting for a special session this summer, some experts and legislators said the 85th Texas Legislature provided little relief to schools and taxpayers in regard to school finance and property tax reform.
Sen. Paul Bettencourt, R-Houston, authored the Senate’s property tax reform bill, Senate Bill 1, which failed to pass during the Legislature’s special session. House Bill 21—which transfers $351 million from Health and Human Services to public education—did pass this session and was signed by Gov. Greg Abbott.
“Depending on where you live, it is generally true that school taxes are the largest portion of your property tax bill, but not always,” Bettencourt said. “However, local ISD revenues have been the slowest-growing portion of tax bills over the last decade.”
The state’s share of funding has decreased from 46 percent of funding for an average public school district in 2012 to 41 percent for an average district in 2017 as the local contribution from taxpayers has increased, according to research from Austin-based Center for Public Policy Priorities.
However, state education spending grew 82 percent between 2004-05 and 2015-16, according to data from the Texas Education Agency.
As property values increase statewide, school districts receive more property tax revenue each year without changing their property tax rates, education experts said.
Yet because of the state formula for public school funding, more local property tax revenue does translate to additional revenue overall, CPPP Senior Policy Analyst Chandra Villanueva said.
“Every time you put a new local dollar in your bucket, the state takes away a dollar because the state fills up that bucket if you can’t fill it yourself,” she said. “[The state is] shifting the reliance on funding our schools to local [residents].”
Local revenue—which is largely made up of property tax revenue—amounts to 64.9 percent of Katy ISD’s general fund revenue for fiscal year 2017-18, according to budget data. In contrast, local funding accounted for 52.8 percent of the district’s FY 2013-14 budget, according to district data.
“[Districts are] having to use that money not to lower taxes but to fill in what the state has taken back,” said Wayne Pierce, Texas Children Advocacy Project director at the Equity Center, an Austin-based school finance research and advocacy organization. “Basically, the state is living off of local school property taxes, and it’s not going to public education at all.”
However, Bettencourt said municipal tax rates are increasing faster than the public school portion of a tax bill. About $50 billion of the state’s 2016-17 biennium budget went to public education versus $48 billion allotted for the 2014-15 biennium, according to the Legislative Budget Board.
“From 2005-15, tax levy revenue for taxing entities other than school districts has grown two times faster than ISD tax levy revenue,” he said.
SB 1 would have required municipalities to hold elections if property tax revenue increased by more than
4 percent from the previous fiscal year. Meanwhile, both chambers did concur on HB 21, authored by Rep. Dan Huberty, R-Houston, to provide more than $300 million in school funding throughout the next biennium.
Funds are divided between charter schools, property-poor districts, geographically small districts and grant programs for autistic and dyslexic students, Villanueva said. Suburban districts are not expected to benefit from the bill.
“At the end of the day, large urban districts and large suburban districts get pretty much zero [additional]dollars,” Villanueva said. “Charter schools are the big, big winners in all of this and a handful of very rural areas.”
The bill also creates a commission to study school finance and find a long-term solution to the problem.
“[The school finance system has] been added on to by different people, different groups for different reasons. It’s outdated and messed up,” said Sen. Larry Taylor, R-Friendswood, chairman of the Senate Education Committee.
Additional reporting by Amelia Brust, Vanessa Holt and Chris Shelton