UPDATE: Alvin, Friendswood and Pearland ISDs deal with House Bill 3 unknowns

As a result from House Bill 3, the state is funding a larger portion of local district's budgets.

As a result from House Bill 3, the state is funding a larger portion of local district's budgets.

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Local districts deal with House Bill 3 unknowns
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Local districts deal with House Bill 3 unknowns
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Local districts deal with House Bill 3 unknowns
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Alvin, Friendswood and Pearland ISDs deal with House Bill 3 unknowns
Editor's note: This story was corrected at 11:43 a.m., Sept. 13, to reflect that Pearland ISD's teachers received a 3% raise, the state mandated 30% of funding increases go to district staff and that districts can opt for tax ratification elections in the following fiscal year. After press time, Pearland ISD's tax rate was approved at $1.3956.

Every year school districts have to create a budget to serve the district’s needs. This year, staff also had to consider changes made by House Bill 3, the newest legislation in school finance in Texas. HB 3 includes more money from the state for teacher pay but also limits how much districts can rely on property taxes.

While Alvin, Friendswood and Pearland ISDs all benefited from the bill in some way, each district was hurt in another. All districts will also have to figure out how to work with a lower tax rate, as the bill requires. However, the goal of decreasing reliance on local taxpayers is for the state to shoulder more of the financial burden, said state Sen. Larry Taylor, R-Friendswood.

“We have not been taking care of every student’s need,” Taylor said. “Our prosperity as a state makes sure we get these kids educated.”

Keeping salaries competitive

HB 3 required districts to invest in their teachers with salary increases. Some school districts gave teachers 10% raises if they were not funding teachers as much, FISD Chief Financial Officer Amber Petree said. However, for districts that have higher starting salaries for teachers, the money from the state barely covered the costs of raises.

The state allocated more money than it has in the past to teacher salaries. For high-performing school districts, the additional money was a small portion of the salary increase the districts typically give to teachers. The state mandated the districts give 30% of the total funding increase for salaries for all staff.

“We were only required to give $700,000. … How are you going to do that when teachers have been hearing all along, ‘You’re going to get $3,000, you’re going to get $10,000.’ Where do those numbers come from?” Pearland ISD Chief Financial Officer Jorgannie Carter said.

Alvin, Friendswood and Pearland ISDs give roughly 3% in raises every year and already have high starting salaries for teachers, including beginning teachers with a bachelor’s degree and zero years of experience, compared to the average starting salary in the state.

PISD gave teachers a 3% raise and a 2.5% raise for other staff, which is comparatively low, Carter said.

“Yes, we were one of the lowest raises. It still cost us $4.5 million,” Carter said. “Even that 2.5% was aggressive for us, and that’s why we adopted a $6 million deficit.”

School districts that were required to give larger raises were districts that were not giving raises yearly or did not have high starting salaries for teachers, Petree said. FISD gave a 3% raise to teachers this year.

“It was barely what we had been giving, plus we wanted to stay competitive,” Petree said.

The minimum salary for a teacher in the state of Texas with a bachelor’s degree and zero years of experience was $28,080 in the 2018-19 school year. At PISD, the minimum teacher pay range is $54,500 for the same year. At FISD, it was $53,805.

“These schools that had to pay more are trying to reach the standard,” Petree said.

Unique District Perks

While local districts did not receive a lot of money for teacher salaries, there were still pros and cons for each district from the bill. One of the bill’s primary focuses was full-day pre-K funding, said state Sen. Larry Taylor, R-Friendswood, who co-authored the bill. This was especially helpful to AISD.

“House Bill 3 created an early education allotment that provides increased funding for students in K-3 and is especially focused on building a solid foundation for math and literacy,” AISD Assistant Superintendent Daniel Combs said in a written statement.

The bill also increased funding for disadvantaged students, Combs said, which was another positive to come out of the bill for the district.

“These expanded funds will enable Alvin ISD to support and expand programs, particularly, in the areas of math and literacy that will serve our students now and into the future,” Combs said.

Overall, the bill increased funding per student by 20%, Taylor said. Lawmakers also looked at the density of poverty in an area and gave more money to low-income students in impoverished areas than low-income students in affluent areas, Taylor said.

“If you think about it, if you are low income but in a non-low-income area, you are around kids whose parents have higher-paying jobs, you have a better perspective of what is out there,” Taylor said. “When your peer group is ahead of you, it tends to bring you up. If your peer group is at the same level or lower than you, it tends to bring you down.”

Both PISD and FISD received more money as well. FISD also was a “Robin Hood” district, or a district that paid recapture, which took money from property-wealthy school districts and gave the money to the state to distribute to poorer school districts. While recapture still exists, the formula changed, making FISD no longer a district that pays recapture, and saving it from a deficit, Petree said.

Funding still has unknowns

Not only did the Robin Hood laws change, the way the districts collect money from property taxes changed as well.

In the past, districts would determine how much money they got from their property taxes by looking at property values from the year prior. The values would be released in the summer, and districts could use them to determine how much money they would receive from taxpayers. Now, districts have to base their funding off the current year’s property values, which will not be determined until after the school year has ended.

“It just makes more sense. You have less swings from year to year,” Taylor said.

One of the reasons the committee that wrote the bill decided to go with funding from the current year is schools with higher property values were getting less money from the state than districts that might be in the same socio-economic stance, but without the growth, Taylor said.

“There were bigger losses in revenue because of that,” Taylor said. “It didn’t make sense to continue to do it that way. This helps keep the state more involved.”

While this is meant to help fast-growth districts, AISD may lose out on some of the money it would have received to build new schools, Combs said in a written statement.

“The switch from using prior year values to current year values is a fundamental shift in the way districts receive their funding,” Combs said. “For fast growth districts, such as Alvin ISD, calculating funding based on the prior year value has provided resources that help with many of the one-time costs associated with opening new campuses and accommodating student enrollment growth.”

The bill also cut down district taxes and will not let districts call for tax ratification elections, or an election that allows voters to decide whether a school district can raise its taxes, for the 2019-20 school year, Carter said. A district can call for a TRE the following fiscal year, but only if the district had it in its strategic plan.

“How many districts put it in their strategic plan to raise taxes? Not many,” she said.

For districts such as PISD, the combination of cutting taxes and not being allowed to call for a TRE has left them with a deficit budget this year. The district had discussed having a TRE last year but wanted to wait and see what happened in the legislative session.

“Having the inability to make the best decision for our district, like having a TRE, is really hurting us,” Carter said.

The next legislative session may provide adjustments to the bills. Until then, districts will have to wait and see the effects.

“Every time you do something major like this, there are unintended consequences, but overall, it’s good,” Taylor said. “Oftentimes people want to take something away before they see how it works.”


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