As the Texas Legislature prepares to convene Jan. 10, local public school districts are preparing to influence lawmakers and avoid scheduled funding shortfalls.

Lovejoy ISD is working with an Austin consulting firm in an effort to preserve a funding source, known as Additional State Aid for Tax Reduction, or ASATR program, from which the Fairview-area district derives 16 percent of its annual revenue. Losing ASATR funding would set the district back a projected $6 million in the 2017-18 school year, district Chief Financial Officer Shay Adams said.

The state enacted the tax-reduction aid program in 2006 after it required districts to cut property tax rates by one-third over a two-year span. The program was intended to ensure districts were compensated for all losses to per-pupil revenue, according to the state’s Legislative Budget Board.

But when the state faced a financial crunch in 2011, the Legislature approved a series of expenditure cuts, including setting a Sept. 1, 2017, expiration date for the ASATR program.

“In effect, what they did is they reneged on the promise they had made in 2006,” Lovejoy ISD Superintendent Ted Moore said. “So the ASATR money that we get, all it does is keep us at the same level of funding per student that we had in 2006.”

When ASATR expires, it will set the district back a projected $6 million in the 2017-18 school year.

If LISD were to lose that funding, the district would face a series of difficult decisions on whether to cut expenditures or raise revenues, Moore said.

The district’s property tax rate for maintenance and operations is already at $1.17 per $100 valuation—the highest allowed under state law.

“A tax increase is not an option,” Moore said. “So we would have to look for nontraditional opportunities to raise revenue.”

Perhaps the most promising of these nontraditional revenue options, according to Adams, is the expansion of a tuition-based program for students from outside LISD to attend its schools.

The program charges roughly $8,000 per elementary student and $10,000 per secondary student, Adams said, and with each pupil comes additional state funding.

But this approach would not completely fill the budget gap left by the expiring ASATR program.

The district only serves about 70 tuition-paying students this year, and it would probably take more than one year to recruit enough to maximize the revenue from the program, she said.

“We have the capacity to add 202 students across the district without adding any expenditure, and that’s $3 million for the district,” Adams said. “So that cuts in half where we are. Certainly, it’s not going to be an automatic [fix]—it’s probably not all going to happen the first year—but those are the type of things that we’re talking about right now.”

In the early days of the bill-filing period, at least two House lawmakers have introduced bills to extend ASATR funding.

One such piece of legislation is House Bill 527, which proposes a two-year extension of the program through the 2018-19 school year. Another, House Bill 308, proposes a nine-year extension through the 2026-27 school year.

The program was designed to be a temporary stop-gap to assist districts dealing with the tax-rate compression. The program, which at one point doled out more than $5 billion per year to school districts across the state, now provides $225 million to 175 districts after increases to state formula funding have made up the difference of revenues lost from compressing tax rates, according to a September report from the Legislative Budget Board.

But those formula-funded revenue increases have not affected every district equally, leaving the districts that receive ASATR, including LISD, in a financial bind, Moore said.

“Property values have grown so we’re generating more money locally, but we also have a lot more kids,” Moore said.

Other legislative priorities

Unlike their LISD counterparts, Allen ISD school officials are not revealing their top legislative priorities until closer to the session.

AISD does not receive funding from the expiring ASATR program, Chief Governmental Relations Officer Maroba Zoeller said.

Administrators plan to wait until more bills are filed before giving a public update on legislative priorities to the board of trustees in January, she said.

“They file a lot of preliminary bills and do a lot of posturing before [the session],” Zoeller said. “Until something really happens and [a proposal] is in place, we really won’t have any idea how it might affect us.”

That said, the Allen and Lovejoy districts are both keeping an eye on legislation that could affect their recent pursuits of exemptions from state rules through a District of Innovation designation.

Districts of Innovation are allowed to adopt local plans that exempt them from certain state requirements regarding school-start dates, teacher certification and other areas.

LISD administrators believe some lawmakers will try to remove or water- down the exemptions available to Districts of Innovation, Moore said. But, he added, districts that adopt their innovation plans before the session may retain more exemptions through grandfathering provisions.

Zoeller and Moore both pointed to the ability to set an earlier school-start date as one of the key benefits available to their respective districts through the District-of-Innovation designation.

“When you lock in the start [date] like that, it really doesn’t leave you much flexibility as you plan your calendar for the year,” Moore said. “And so we’re interested in getting a waiver for that uniform start date under District of Innovation so that we can do a calendar that really reflects the preferences of our community.”

But for Moore, the district’s top legislative priority ought to be salvaging the district’s funding from ASATR. If the program expires as scheduled in September, Moore said, the district will have to look at budget contingencies, including revenue increases and spending cuts.

Since tax-rate increases are not on the table, the district could consider introducing fees for certain services, Moore said. The district is also exploring marketing opportunities in addition to an increase in the district’s tuition-paying student enrollment.

“We’re going to have to respond to whatever the Legislature does or doesn’t do by the time they gavel out by Memorial Day,” Moore said. “So the next semester’s going to be interesting.”