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School Finance Reform: What To Expect During the 2019 Legislative Session

State Rep. Diego Bernal speaks to students at Churchill High School Oct. 16, 2018.
File Photo | Camille Phillips | Texas Public Radio
State Rep. Diego Bernal, D-San Antonio, was a member of the Texas Public School Finance Commission

After failing to pass legislation to reform public school funding in 2017, state leaders have pledged to make it a top priority this legislative session.

The Texas Public School Finance Commission spent 2018 creating a roadmap for lawmakers to enact that reform, but key questions remain.

How We Got Here

In Texas, about 90 percent of public school funding comes from a complicated formula that combines state and local sources. Over the past decade, the state’s share has dropped from half down to 38 percent. School districts rely on local property taxes to make up the difference, with districts in areas of high property values helping to pay for property-poor districts.

At the same time, parts of the school funding formula haven’t been updated since the 1980s and 90s. There’s widespread agreement that reform is needed to replace outdated parts of the formula and reduce the reliance on property taxes. But there are different views on what reform means.

Commission Recommendations

The commission’s final report recommends getting rid of the outdated parts of the formula, increasing state funding, reducing property taxes and targeting money to better support students with higher needs, especially low-income students and English Language Learners.

What To Watch For

The big questions for the session: Will the state dedicate new money and, if so, will the increase be enough to provide more money to districts — or will it simply offset cuts to property taxes?

School finance attorney David Thompson, who has represented districts in past lawsuits against the state, said this is the question he’s most interested in.

“There are a lot of very good ideas (in the commission report),” Thompson said. “The real issue to me is: are they aspirational or are we going to have a commitment on the revenue side that will actually allow us to make them a reality.”

How Much Money Is Needed?

The first draftof the commission report said increasing state support by more than $ 1.7 billion would be an “important first step.” But the final draft instead says simply that “significant additional state resources” are needed. Commission Chair Scott Brister advocated for the removal of dollar amounts out of concern that it could set the state up for a lawsuit if it doesn’t follow through.

Outgoing House Speaker Joe Straus recommended adding $5 billion — something Thompson would like to see as well.

“If we’re talking about 5 (billion) or 6 billion additional state dollars then I think you can do some of both well. You can make significant improvements for schools and you can make some real inroads to reducing property tax burdens,” said Thompson. “If we’re talking about $2 billion than you’re not going to do either one well.”

What Kind of Property Tax Reform Can We Expect?

Governor Greg Abbott is proposing a 2.5 percent cap on property tax revenue growth, which would have a greater impact on school districts with rapidly increasing property values. According to the Texas Education Agency, his proposal would cut more than $3 billion from the school funding formula by 2023. The governor’s proposal does include some additional state dollars for schools, but not nearly as much. Districts get less than a dollar for every three dollars in tax relief.

Other Interesting Potential Changes

Expect some lively debate around educator merit pay. Most teacher unions would prefer to have an increase across the board before talking about rewarding some more than others.

There’s also an interesting proposal to give districts more money based on how many students are proficient in 3rd-grade reading and how many students graduate high school, basically ready for college. But there’s a lot of debate about whether you should give school districts money for proficiency versus giving them the money to help improve their schools to begin with.

Another proposal would add funding for early childhood literacy. Basically, give more weight to students that are in kindergarten through 3rd grade, and the idea is that could help fund additional full-day pre-K.

The commission is also recommending changing the way recapture is calculated in the state. Popularly called Robin Hood, this policy is intended to level the playing field between property-rich and property poor districts. But the amount of money collected and the number of districts required to pay has ballooned, allowing the state to contribute less.

The commission is recommending linking recapture to the amount of money the state guarantees each student, known as the basic allotment. Right now recapture is linked to Austin Independent School District’s property wealth level, greatly increasing the amount of local property taxes collected by the state.

Thompson said that increasing the basic allotment and linking recapture to a percentage of that allotment would make Texas’ public school finance system more equitable.

“When you raise the basic allotment, fewer districts are migrating into recapture,” Thompson said. “You’re making the pot larger and that helps all districts, not just one group of districts or one area of the state.”

Camille Phillips can be reached at camille@tpr.org or on Twitter @cmpcamille

Camille Phillips can be reached at camille@tpr.org or on Instagram at camille.m.phillips. TPR was founded by and is supported by our community. If you value our commitment to the highest standards of responsible journalism and are able to do so, please consider making your gift of support today.