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 said HB 21—which would provide an additional $1.65 billion to public education funding over the next biennium—is the first step in a multisession process.
“We are putting more resources in the classroom and making needed reforms to our school finance formulas,” said Huberty, who serves as chairman of the House Public Education Committee. “By increasing state funding for schools, we can improve instruction and reduce the need for higher property taxes.”
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. Taylor said he believes the $10 billion fund should only be tapped for one-time expenses.
“That’s not a good long-term proposition,” Taylor said. “You don’t use your credit card to keep spending when your income is down.”
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.
Reforming Public School Funding[/caption]Bill 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, according to the bill.
Tomball and Magnolia ISDs could receive $4.3 million and $1.2 million more, respectively, than they would under the current formula for fiscal year 2017-18 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.
Additionally, HB 21 provides more weight in the funding formula for dyslexic students and for career technical education as well as a bilingual adjustment to factor in for schools with more diverse student populations.
This bill also lowers recapture payments by approximately $173 million in 2018 and $205 million in 2019, said Molly Karol Spratt, who serves as Huberty’s legislative director. 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 considered property wealthy and are expected to send more than $2 billion in total to the state, according to the TEA.
Over $2 million of that amount will come from TISD, Chief Financial Officer Jim Ross said. This school year marked the first time the district was subject to recapture, as the district’s tax revenue has risen in recent years due to an influx of new homes in the area. Magnolia ISD does not make recapture payments, according to Communications Director Denise Meyers.
Recapture is based on a district’s total wealth divided by the number of students as well as weighted average daily attendance, calculated by the state to take certain factors—such as special education and low-income students—into account.
Because the factors can change every year, the district cannot predict how much recapture payments will be each year. For FY 2016-17, recapture goes into effect once school districts reach a little more than $100 million in property tax collections, Ross said.
“The amount varies from year-to-year based on enrollment and property values in the district,” he said.
Ross said the district would “absolutely” support HB 21 if it passes, as it would increase state funding while reducing the amount the district has to give to the state in recapture payments.
Taylor’s SB 2145—which also aims to change the public education funding formula—takes a different approach.
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. SB 2145 would also allow about 240 fewer districts statewide to avoid recapture, 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 said he expects the House and Senate to reach a compromise, with facets of both bills passing as law.
Funding fast-growth districts
The proposed formula from HB 21 is better than the existing funding system when it comes to fast-growth districts like Tomball ISD, said Guy Sconzo, executive director of the Fast Growth Schools Coalition. The organization lobbies on behalf of the 75 fastest-growing school districts in Texas, Sconzo said.
HB 21 provides the framework for a permanent solution, he 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. “It’s grown, and it really has only gotten worse as far as equity and adequacy is concerned.”
In Tomball, the district has seen high rates of enrollment growth in recent years. Since 2010-11, TISD enrollment has increased by more than 32 percent. Enrollment is expected to reach 15,000 students in 2017-18, and more than 20,000 by 2025-26, according to a projection report from the district.
However, while the district’s studdent population continues to rise, state funding makes up only a small portion of the district’s budget.
“In total funding from all sources for the general fund, the district receives $7,991 per pupil,” Ross said. “The state pays only 12 percent of that total amount per pupil, or $959 per pupil. Local taxes pay over 86 percent of the total amount per pupil, or $6,884 per pupil. The remaining difference is other local revenue and federal funds.”
Determining state contributions[/caption]Next steps
If HB 21 passes, fast-growth districts like Tomball ISD hope the state increases funding for new schools and maintenance costs at older schools due to student population growth in future sessions, 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.
Voters in MISD approved a $92 million bond to pay for facilities in 2015, while TISD is conducting a facilities study to determine if the district will go out for a bond in November. TISD voters approved the district’s last bond in 2013, which funded the construction of four new campuses as well as renovations.
“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. “It’s the local property taxpayer who’s paying the lion’s share of that bill.”
Additionally, Sconzo said if public school funding is cut, as proposed in the Senate, districts—especially those with growing 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.
Additional reporting by Wendy Cawthon
