House, Senate propose shift in education fundingTwo Houston-area lawmakers’ bills filed in the state Legislature this session could dramatically change how public school districts—including Humble and New Caney ISDs, receive their funding from the state.

House Bill 21, filed by Rep. Dan Huberty, R-Houston, was passed by the Texas House on April 20, just one year after more than 600 school districts challenged the public school funding formula in the Texas Supreme Court and it was ruled minimally constitutional.

Huberty, whose district includes Atascocita, Kingwood and a part of Humble, said HB 21 is the first step in a multisession process.

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

However, the bill could face a challenge in the Texas Senate, which has 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.
The Rainy Day Fund is a savings fund that 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,” Taylor said.
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.

House, Senate propose shift in education fundingBill 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.

Humble and New Caney ISDs could receive $4.3 million and $2.1 million more, respectively, than they would under the current formula for fiscal year 2018 if the bill is signed into law, according to the Texas Legislative Budget Board—a joint committee of the Legislature that completes fiscal analyses for proposed legislation.

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

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 2016-17, 379 school districts are expected to send more than $2 billion in total to the state, according to the TEA. HISD and NCISD are considered property-poor school districts and are not subject to recapture payments.

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

“It’s nice to see this step forward—especially for students with dyslexia, career and technical education and some of those areas that have been historically not been weighted properly to get some attention,” Humble ISD Superintendent Elizabeth Fagen said.

Taylor’s SB 2145—which also aims to change the public education funding formula—takes a different approach.

House, Senate propose shift in education funding

The bill would give all school districts the same money per student and provide more funding for students who have disabilities, are economically disadvantaged, are in career and technical education or are English language learners, Taylor said. That funding would then be multiplied by the district’s Maintenance and Operations Tax Rate to determine its guaranteed amount.

SB 2145 would also lower the amount of districts that return money to the state through recapture, he said. It would allow about 240 fewer districts statewide to avoid being penalized by the recapture rule, he said.

“[SB 2145] is a more equitable way to distribute the money,” he said. “[The current formula] is very complicated, which is why we have to reform the whole school finance system.”
A vote is pending on SB 2145 in the Senate Education Committee as of press time. Taylor expects the House and Senate to reach a compromise, with facets of HB 21 and SB 2145 enacted as law.

"It’s still wide open—it’s not like it’s going to be this plan or that plan,” he said. “It’s going to be one of the plans with some of the other measures put into it as part of the compromise.”

Fast Growth Districts

While the dollars from HB 21 are allocated to specific programs, the additional funding would free money for local districts to address issues created by rapid growth, district officials said.

The $4.3 million from HB 21 could help HISD as it prepares to add more than 10,000 students from 2017 to 2026, said Nancy Morrison, HISD board of trustees member.
“Being a district that’s about to open two new schools in two years, that’s a huge impact,” Morrison said.

The money could also help provide salary increases for faculty and staff in both districts, while NCISD could use the additional $2.1 million to add more funding for instructional materials and expenses related to opening a new elementary school in 2017, Superintendent Kenn Franklin said.

HISD would invest in safety and technology infrastructure and put more funding toward early childhood education—things that could otherwise be funded through a bond referendum HISD is planning for 2018, Fagen said.

The proposed formula is better than the current funding system for fast-growth districts, such as Humble and New Caney ISDs, said Guy Sconzo, executive director of the Fast Growth Schools Coalition. The coalition lobbies on behalf of Texas' 75 fastest growing districts, said Sconzo, who served as superintendent of HISD for 15 years.

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.

Next Steps

If HB 21 passes, fast-growth districts, such as HISD and NCISD, hope the state increases funding for new schools and maintenance costs at older schools due to student growth, 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, he said.
“HB 21 is all on the operating side of the budget, but we really need to get to the debt side—that’s another real pressure being put on fast-growth districts and their taxpayers,” Sconzo said.

More funding for debt would benefit NCISD, which has had a decrease in funding for local facilities as property values in East Montgomery County have increased, Franklin said.

“Our local taxpayers would benefit from adjustments to state allotments for facilities debt that ensure that local taxpayers are not bearing an undue burden,” Franklin said.

However, that is only if HB 21 passes, Sconzo said. If public school funding is cut, as proposed in the Senate, districts—especially those with rising student populations—would be forced to make tough decisions.

“We’ll [be] in a world of hurt—there’s no doubt about it,” Sconzo said.