School district officials in Pearland and Friendswood are dealing with a slew of funding issues caused by decades of tweaks and modifications to the school finance system. When the 84th legislative session wraps up June 1 many of the inequities in the system will remain largely unchanged, partly as a result of an ongoing school finance lawsuit more than two-thirds of Texas districts joined in 2012.

Pearland ISD was one of the more than 600 districts in the state to join the lawsuit in hopes that legislators would create a more adequate and equitable funding system. Former District Court Judge John Dietz twice ruled the state’s school finance system unconstitutional in 2013 and 2014, but the decision was appealed to the Texas Supreme Court, which will hear the case later this year.

“State funding of public schools is inequitable, and Pearland ISD is a prime example,” PISD Superintendent John Kelly said. “We have received less than average state funding on a per child basis for many years. Because of state funding formulas, our district received from $500 to $1,000 less per child than the state average in revenue over the most recent years.”

Local challenges

Although Alvin ISD is not a plaintiff in the lawsuit, the fast-growth school district needs to add services and expand instructional opportunities to meet the needs of its growing student population, Superintendent Buck Gilcrease said.

“Over the past five years, AISD has experienced a growth rate of 18.5 percent and continues to add more than 1,000 new students each year,” he said. “To accommodate the rapid student growth, we encourage legislators to provide adequate funding for instructional facilities in fast-growth districts.”

During the era of state budget cuts, addressing the district’s needs were difficult because of the decreased level of funding, Gilcrease said. Since 2011 when $5.4 billion was cut from public education in Texas, AISD has slowly directed additional funding to expanding instructional programs, career and technical education, fine arts and other student-centered programs.

Friendswood ISD did not join the lawsuit either, but the district faces several financial challenges as well, Chief Financial Officer Connie Morgenroth said.

“Like most other districts, our general operating fund does not generate enough [revenue] to fund our capital outlay or large capital improvement projects,” she said. “We must typically pass a bond to fund the purchase of buses, major capital improvements, such as roof replacements or other significant renovation projects.”

Current legislation

After legislators in the House of Representatives and Senate proposed additional public education funding for the next two years, members from both chambers spent weeks coming to a consensus regarding precisely how that money should be spent in the next biennium.

“Once a decision has been agreed upon, the budget will return to the House and Senate for approval by both chambers before heading to [Gov. Greg Abbott] for approval,” said Tedrah Robertson, director of public affairs for the Texas Equity Center, a school finance research and advocacy group.

State Rep. Jimmie Don Aycock, R-Killeen, attempted to address irregularities in the school finance system by filing House Bill 1759 as this session’s school finance bill.

“Much of our school funding is based on local tax property,” Aycock said. “With that changing dynamic has come a series of lawsuits, and with each of those has come increased levels of complexity in the school finance system.”

The legislation aimed to answer the question of how to distribute money in the school finance system and deal with the model of distribution. However Aycock pulled HB 1759 on May 14 after it was heard on the House floor, meaning any school finance changes that happen during the remainder of the session must come through HB 1, the House of Representative’s general appropriations bill.

Although the legislation did not progress, Gilcrease said AISD officials appreciate Aycock for starting the conversation before the Supreme Court ruling is handed down.

“His leadership shows that he truly has the best interest of the children of Texas at heart,” Gilcrease said.

A broken system

Issues with the state’s school finance history date back several decades—there have been multiple school finance lawsuits since the 1980s in Texas.

“The system has been filled with all kinds of piled-on amendments over the past few decades, which has left it an ideological mess,” Kelly said. “It is our hope the Texas Supreme Court will act before the end of 2015 and require the Legislature to design a better system that is both adequate and equitable.”

Texas lawmakers, including Lt. Gov. Dan Patrick, made property tax relief a major priority at the start of the legislative session in January in response to rising home values in Texas. Abbott, Patrick and Speaker Joe Straus announced May 21 a new deal for property tax relief. If approved by both chambers, the legislation would increase the state-mandated homestead exemption for school district taxes from $15,000 to $25,000 if voters approve a constitutional amendment in November.

A similar plan was put into effect in 2006 after the Legislature mandated a statewide reduction in property taxes by one-third—several years before districts received massive cuts to state aid in 2011, Kelly said.

“The current system has morphed into one where increases in local appraisals benefit the state and not the local district,” he said. “The formulas decrease state aid when local property appraisals increase, so we don’t see much of a benefit as we would otherwise receive from new or growing businesses in Pearland.”

In isolation, an increase to the standard homestead exemption would decrease revenue generated to fund schools and classrooms. The legislation under consideration does provide additional state funds to offset the reduction in funding. Local superintendents said they worry it might not be a permanent funding source.

“As we saw following the 2011 session, state funds are not always consistent and can be cut,” Gilcrease said. “Should an increase to the homestead exemption be explored, it is critical that legislators ensure additional funding mechanisms are in place to offset any negative impact to the children of Texas.”