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From The Texas Tribune: Texas school finance panel approves final report to lawmakers

By Aliyya Swaby, The Texas Tribune
Dec. 19, 2018

Texas Commission on Public School Finance member Todd Williams of Dallas, left, speaks with Texas Education Agency Commissioner Mike Morath and state Sen. Royce West, D-Dallas, on Jan. 23, 2018. | Photo by Bob Daemmrich for the Texas Tribune

Texas school finance panel approves final report to lawmakers” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

After hours of discussion Wednesday, a state panel studying school finance stripped its final report of language that blamed the state for inadequate education spending — and that added urgency to a need for more money to improve student performance.

The original version of the report, unveiled last Tuesday, included stronger language that held the state accountable for the lack of education funding and urged lawmakers to immediately inject more than a billion dollars of new funding into public schools. Scott Brister, the panel’s chairman and a former Texas Supreme Court justice, led the charge to make those changes, which he said would be more palatable to lawmakers and keep Texas from being sued in the future.

“I do have a problem several places where it says our school system has failed. I do think that’s asking for trouble,” he said.

Some lawmakers and educators on the panel pushed back before agreeing to compromise.

“I think we have failed our schools and we haven’t funded them, in my view, adequately or equitably,” responded state Rep. Dan Huberty, R-Houston, who chairs the House Public Education Committee.

Despite the conflict, the 13-member commission unanimously approved more than 30 recommendations on Wednesday aimed at boosting public education funding, improving student performance, cleaning up a messy funding distribution system — and providing property tax relief for Texans.

A final report will be sent to lawmakers, who are convening next month amid calls from state leadership to overhaul a long-embattled school finance system. Gov. Greg Abbott supported the panel’s vote in a statement Wednesday afternoon: “Today’s school finance commission report made clear that the state must reform the broken Robin Hood system and allocate more state funding to education. This session, we will do just that.”

The vote was the culmination of nearly a year of meetings and hours of testimony from school superintendents, education advocates and policy experts.

Panel members have bickered for months about basic foundational concepts, including whether the state had been underfunding public schools and whether they actually need more money in order to improve. The report takes a middle ground approach, promising more money to school districts that meet certain criteria or agree to offer specific programs such as dual language or merit pay for teachers.

Many of the debates among panel members Wednesday reflected their political divisions, with Brister — a conservative and Abbott appointee — arguing against citing a specific amount lawmakers should infuse into the public school funding system and school officials saying the panel should take an explicit stand based on its research.

An earlier version of the report said lawmakers should take the “important first step” of approving more than $1.73 billion in “new funding” for “the vast majority (if not all)” of the proposed programs.

The recommendation the commission approved Wednesday dropped that dollar figure.

Brister said he was uncomfortable sending a report to lawmakers that pressured them into making specific financial decisions.

“I am willing to say we will have to add new money to do these things. I am not willing to say, ‘And the first step is, every dime has to come from new money,” he said.

Nicole Conley-Johnson, chief financial officer of the Austin Independent School District, unsuccessfully argued to keep the paragraph in its original form.

“The spirit by which we were convened is to establish the changes and make recommendations,” she said. “I feel like we need to have the foresight to put in the estimated cost.”

Education advocacy groups criticized Brister’s decision. “There can be no real school finance reform that fails to address adequacy,” said Shannon Holmes, executive director of the Association of Texas Public Educators, in a statement after Wednesday’s vote. “ATPE is disheartened that some members on the commission were unwilling to acknowledge the reality of the limitation of our state’s current funding levels out of fears of sparking litigation.”

The report still includes cost estimates for recommended programs and changes to how funding is divvied up among schools. But it no longer implores state lawmakers to pay for them.

Among the recommendations the commission plans to send to lawmakers are:

  • $100 million a year to school districts that want to develop their own teacher evaluation metrics and tie pay to performance. The total amount available should increase $100 million each year until it reaches $1 billion.
  • Up to $150 million to incentivize school districts to offer dual language programs, which instruct students in both English and Spanish, and to improve their dyslexia programs.
  • $800 million to incentivize school districts to improve students’ reading level in early grades and to succeed in college or a career after graduating high school.
  • $1.1 billion to improve education for low-income students, with school districts that have a higher share of needy students getting more money.
  • Create a new goal of having 60 percent of third-grade students reading on or above grade level and 60 percent of high school seniors graduating with a technical certificate, military inscription, or college enrollment without the need for remedial classes.
  • Cap local school district tax rates in order to offer property tax relief and a small amount of funding for schools —a proposal from Abbott.
  • No extra funding for special education programs until the state has completed overhauling those programs in line with a federal mandate.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2018/12/19/texas-school-finance-panel-approves-final-report/.

 

Texas Tribune mission statement

The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

School finance commission discusses initial recommendations

School finance commission meeting Dec. 11, 2018.

The Texas Commission on Public School Finance met Tuesday in Austin to discuss recommendations for the commission’s report, which is due to the legislature by the end of the month. The initial draft recommendations can be viewed here, and additional resources can be found here.

The draft report includes a recommendation that the 86th Texas Legislature “inject significant additional annual state revenue” through new strategic allotments and weights outlined in the commission’s report, including about $1.7 billion in specific areas. The report adds that for the purposes of new funding, members should note that an increase of $500 million in state funding is equal to a roughly 0.9 percent increase over the last budget biennium. This would be formula funding, targeted at the neediest studies, and tied to specific outcomes.

Commission Chair Scott Brister voiced reservations, suggesting that asking the legislature for significant additional funding is not the commission’s job. He later clarified that his chief opposition was to placing a dollar figure on additional funding. Several members pushed back, including House Public Education Committee Chair Dan Huberty (R-Houston), who said he would not sign a report that does not call for additional school funding.

The report also calls for reallocating $5.34 billion in existing funds to more impactful spending and greater system-wide equity. The commission recommends significant investment to substantially increase third grade reading levels. Outcomes-based funding would be targeted toward early literacy and post-secondary access of career, military, or higher education without remediation.

The commission is recommending a high-quality teacher allotment, initially funded at $200 million, for districts wishing to offer differentiated compensation to pay their most effective educators higher salaries sooner in their career. This would be contingent on districts creating locally-developed, multi-measure evaluation and compensation systems based on an outline created by the legislature. This includes the state setting a goal that top teachers have a path to a $100,000 salary and incentivizing districts to assign top teachers to the most challenging campuses.

Finally, the draft report calls for statutorily increasing the basic allotment, though it does not specify a specific amount. It calls for increasing the yield on “copper pennies” and compressing the rate in order to provide tax relief, as well as reducing the role of recapture in the school finance system. The report makes no recommendations regarding special education, instead suggesting that the current corrective action plan approved by the U.S. Department of Education should be completed before any additional reforms are discussed.

Discussing the commission’s major findings, Brister acknowledged that schools are being asked to do more than ever before. This includes higher security standards and providing for the physical and mental well-being of students in addition to educating them. He then asked to strike language from the report that says the state has failed to adequately fund public education.

After breaking for lunch, the commission returned for more in-depth discussion on individual recommendations. Commission member Todd Williams of the Commit Partnership in Dallas pointed out that the teacher compensation portion of the plan (Section D) does not include specific funding for strategic staffing such as that implemented by the Dallas ISD ACE program, which is intended to incentivize top teachers to teach at the highest-need campuses. Williams argued the evaluation system and strategic staffing system should be treated as separate and funded accordingly.

State Sen. Paul Bettencourt (R-Houston) then laid out the recommendations from the working group he chaired on revenues. The group’s primary recommendation is to adopt Gov. Greg Abbott’s plan to cap local property tax revenue growth. The plan suggests capping growth at 2.5 percent annually, and replacing revenue lost by school districts with state funding. The governor’s office does not specify how much this would cost or from where the replacement funding would come.

Texas Education Agency (TEA) Chief School Finance Officer Leo Lopez presented a chart addressing the three plans endorsed by Bettencourt’s group, which suggests that the governor’s plan would reduce local maintenance and operations (M&O) tax collections by nearly $1 billion and increase school district revenue by $300 million in 2020 at a cost of roughly $1.3 billion. By 2023, the governor’s plan is projected to reduce M&O tax collection by $3.7 billion while increasing school district revenues by $74 million. Lopez pointed out that this is primarily a tax relief plan, as opposed to a school finance plan, which explains why future funding is projected to flatten out.

The commission discussed the level of emphasis that should be placed upon the governor’s revenue cap plan. Members pointed out the interrelation of property taxes and school finance, as well as the need to focus on the commission’s statutory charge, which is to fix the school finance system. The governor’s plan alone would not change the fundamental mechanics of the school finance system.

Sen. Bettencourt has argued that the state’s coffers will be flush heading into the next budget cycle based on tax revenue from booming oil and gas production, but the state comptroller has yet to release a formal biennial revenue estimate (BRE) with hard numbers upon which to base a budget. State Rep. Ken King (R-Canadian), who represents oil and gas-dependent west Texas, cautioned against relying on oil and gas as a reliable, long-term funding source. A combination of the governor’s plan and the commission’s recommendations for additional public education spending could add up to a price tag north of $5 billion for the upcoming budget biennium.

The commission is scheduled to meet next Wednesday, Dec. 19, 2018, to vote on final recommendations. The commission is required by law to submit its report to the legislature by December 31.

From The Texas Tribune: A tight-fisted Texas Legislature with expensive ambitions

Analysis: A tight-fisted Texas Legislature with expensive ambitions” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

The Texas Legislature’s strong allergy to tax increases might be abating — just as long as you don’t call them tax increases.

They’re not saying so out loud — no point in riling up a price-sensitive electorate before the holidays, before the upcoming legislative session — or before lawmakers are ready to make their sales pitch.

But the talk of school finance as a top legislative priority guarantees a conversation about taxes. While there are many great policy reasons to mess with that persistent and gnarly issue, the political motivation here is simple: Texas property owners have made it clear to their representatives that they want lower property taxes.

When you do hear lawmakers talking about tax increases next year — whatever euphemisms they choose — they’ll be talking in terms of how that money will pay for property tax cuts. Cutting everyone’s current most-hated tax is the only way to explain so many conservative legislators making serious noises about increasing state revenue.

Given the way the state pays for public education — with a combination of local property taxes, and state and federal funding — the only ways to lower property taxes are to cut public education spending or to find money elsewhere to offset property tax cuts.

In the state’s 2019 fiscal year, the local share of school finance spending is estimated to be 55.5 percent of the total, while the state’s share is expected to be 35 percent, according to the Legislative Budget Board. The rest comes from the federal government.

The last time the Texas Legislature tackled school finance, the local and state shares matched. Years of rising property values – and rising local property tax revenue with them – have allowed the state to lower its share.

The price tag for a rebalancing would be enormous, though. And in spite of Democratic gains in last month’s elections, Texas still has a Republican-dominated state government, with GOP majorities in both the House and Senate, and Republicans in every statewide office. Many of them got where they are by opposing anything that sounded like higher taxes, which makes the road ahead pretty interesting.

If you do some quick arithmetic on those 2019 estimates, it would take a $5.7 billion increase in annual state spending to rebalance the state and local shares of public education spending. Doing that would put them both back where they were in 2008 — each covering about 45 percent of the load.

That’s easier to do on the back of an envelope than it is to do in the Legislature. The budget ahead is tight. House and Senate leaders have to pass what’s called a “supplemental appropriations bill” to take care of shortages in the current budget, Hurricane Harvey recovery costs, and so on. Early guesstimates are that they’ll start more than $5 billion short of what they need for the next budget — and that’s before they even bring up the expensive school finance project.

The governor already is circulating a document that dares to mention taxes in the title: “Improving Student Outcomes and Maintaining Affordability through Comprehensive Education and Tax Reforms.”

That gets right to the politics of the situation: State leaders are interested in easing property tax burdens, and school finance is the biggest lever in their toolkit. It’s also way out of balance and happens to need fixing. Lawmakers often blame the imbalance on school funding formulas. But they’re the authors of those dreaded formulas, and this is also a chance to put something better in place.

But it’s the tax problem — the price of owning property — that has made their price-sensitive voters potentially receptive to increases in other taxes. New money could come from eliminating exemptions, from property appraisal reforms, from raising existing tax rates or creating new taxes — any number of things. They’ll decide the details when they meet. They’ll figure out what to call it, too: It might be remarkable to see “tax” in the title of the governor’s presentation, but its neighboring word — “reform” — is the political touch.

They want to lower property taxes to make their voters happy, and to accomplish that expensive task without stirring up a new revolt from a different set of taxpayers.

At the end, someone in Texas has to pay for this stuff.

 

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2018/12/03/tight-fisted-texas-legislature-school-finance-property-tax/.

 

Texas Tribune mission statement

The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

Finance commission group finalizes recommendations

The Texas Commission on Public School Finance working group on revenue met Tuesday at the Texas Capitol to discuss recommendations to deliver to the full commission. State Sen. Paul Bettencourt (R-Houston), who leads the working group, indicated he is open to using the economic stabilization fund (ESF), which is commonly referred to as the “Rainy Day Fund,” to help fund public education.

School finance commission working group meeting November 27, 2018.

Bettencourt opened the meeting suggesting that state revenues are looking bullish heading into the next budget biennium. Again, Sen. Bettencourt emphasized his priority is phasing out the “Robin Hood” system of wealth equalization through recapture. According to Bettencourt, freezing recapture would cost approximately $2.3 billion.

Before Bettencourt began his presentation, commission member and Austin ISD Chief Financial Officer Nicole Conley Johnson told the group she had identified $14 billion in new programs to propose to the commission.

According to figures Bettencourt provided to the group, the state comptroller increased the revenue estimate for the next biennium to $110.2 billion in July 2018 from $104.9 billion in 2017, a $5.3 billion increase. During the first two months of fiscal year (FY) 2019, sales tax revenues, which represent 58 percent of all state tax collections, are expected to be up ten percent compared to FY 2018.

Bettencourt asserted two point upon which most agree: Without school finance reform, the state’s share of public education funding will continue to shrink, and the amount of funding districts pay into recapture for wealth equalization will continue to increase. Bettencourt emphasized his prediction that increased revenue in FY 2019 will provide additional general revenue (GR) which will be available to help fund schools.

State Rep. Diego Bernal (D-San Antonio), who is vice-chair of the House Public Education Committee, raised a question over how equity would be preserved if legislators make changes to or eliminate the recapture system. State Rep. Ken King (R-Canadian), who is also a member of the House Public Education Committee, also raised a concern that any increase in school funding will need to be sustainable.

Bettencourt presented the governor’s tax cap plan as the solution. The plan would increase funding for districts that increase teacher pay and improve student outcomes, however Rep. Bernal noted that outcomes-based funding threatens to reward districts that already have the resources necessary to improve while neglecting districts that have failed to improve precisely because they lack the necessary resources. The plan would also limit property tax revenue growth to 2.5 percent per year, which the plan promises to make up for with state funding.

Another proposal discussed by Bettencourt is one presented by the Texas Public Policy Foundation (TPPF), a far-right pro-voucher organization, which would aim to eliminate all school district maintenance and operations (M&O) property taxes. This would cost roughly $51.3 billion for the 2018-19 biennium. The TPPF proposal claims to be able to pay for itself by dedicating future increases in state revenues to public education, but Bettencourt conceded that this is an optimistic view.

Bettencourt also briefly discussed the idea of “sharing” recapture. In this plan, property value growth would be divided by thirds, and the benefits from the growth in property values would ostensibly be shared. Additionally, Bettencourt suggested using the increase in production severance taxes – largely due to oil and gas activity in the Permian Basin – to help fund public education. This funding stream currently already flows to public education and general revenue, with an overflow stream that is bifurcated between highway funding and the ESF. Despite the Senate’s opposition to spending ESF dollars in previous legislative sessions, Bettencourt indicated he’s now open to spending ESF money to help fund public education. Johnson argued that this represents a redirection of existing revenues and does not represent the new revenue necessary to improve school performance.

The working group voted to advance each of the proposals except the plan offered by TPPF to be considered by the full commission. Rep. King made the motion to table the TPPF plan, which he declared nonsensical. Several members expressed similar concerns. Closing the meeting, commission chair Scott Brister suggested that legislators should feel less constrained by court rulings enforcing equity. As a justice, Brister was a dissenting voice in the West Orange-Cove school finance ruling.

The full commission will meet Friday, again on December 5, and at least once more during the third week of December. The commission will get a chance to react to Tuesday’s recommendations and will arrive at a decision by the December 5 meeting on what the final report should look like. The following meeting will focus on what the report should say. The commission is required to submit its report to the legislature by December 31.

Brister asked commission members to do their best to reach a unanimous consensus on recommendations, and said that in lieu of a minority report, individual members will be allowed to place letters in an appendix to the final report.