Rich Schools Hopeful Houston ISD Could Topple Robin Hood Plan

At least once a year, an official from a property-wealthy Texas school calls Christy Rome and tells her they’re just not going to do it. They don't want to send a big chunk of their tax dollars to the state, even though they're required to do so under a state law meant to buoy poorer districts.  

“I can’t recommend that,” the Texas School Coalition chief always tells them, citing a host of potentially worse financial consequences.

The resistance dates back to the mid-1990s, when Texas lawmakers — under the gun of a court order — enacted a plan known as Robin Hood that was meant to ease vast funding inequities among school districts fueled by a property tax-based funding system.

For years, getting rid of the scheme altogether was the primary legislative goal of Rome’s 140-member coalition of school districts, which has unsuccessfully fought Robin Hood in the courts. Now, she says, the goal is simply to rein it in.

With major pushback from property-poor schools and decades of case law reinforcing the take-from-the-rich, give-to-the-poor concept, whether that will happen is a big question. 

But Rome says the group is hopeful for reform during the 2017 legislative session. Resistance from property-wealthy schools has exploded, along with the number of districts — including very big ones — required to pay up under the Robin Hood plan.

The frustration is particularly rife in the state’s largest school district, Houston, which is making its first-ever “recapture” payment this year because the state now considers it too property-wealthy. The obligation — estimated at more than $160 million — drove a $95 million shortfall the district is closing by cutting funding to some campuses, along with administrative and tutoring positions and a controversial teacher bonus program. 

Officials there are calling for a vigorous lobbying effort, as are those from other large and politically powerful school districts such as Austin, which has seen recapture payments skyrocket over the years amid rapid property value growth and declining student enrollment. The state’s sixth-largest district is expecting to send more than $400 million to the state this year.

Robin Hood has “far exceeded its life-hood as a law,” Houston school board trustee Greg Meyers said recently.

House Speaker Joe Straus has also ordered state representatives to study Texas’ “increasing reliance” on Robin Hood as a method of funding public education ahead of the 2017 legislative session, which begins in January. The San Antonio Republican’s directive came in early June, just after a Texas Supreme Court ruling upheld the state’s method of funding public schools as minimally constitutional and urged state lawmakers to enact reforms.

Rome said the coalition had hoped the political motivation to banish, or at least change, the system would bubble up 16 years ago when the Austin district began making recapture payments.

“That wasn’t the tipping point,” though, she said. “Maybe Houston will be.”

The coalition will face fierce resistance from property-poor schools, represented by the Equity Center, which agree with wealthier districts that the state has grown too reliant on local tax revenue to fund public education and underfunds schools in general. But they also believe Robin Hood is crucial to easing funding inequities. The system is far kinder to property-wealthy districts even if they have to make recapture payments, said Equity Center Executive Director Wayne Pierce.

Contrary to popular belief, he said, that money isn’t funneled directly to poor districts but instead into a big pot of money distributed to all of the state’s more than 1,200 public and charter schools. And he said schools like Houston and Austin still get hundreds more dollars per student than the average school district.

“Recapture is a salvation to public education,” Pierce said. “Those that pay it are still funded at higher levels and have lower tax rates, so it’s not hurting those schools but it is helping the state.”

The only way the Equity Center would support eliminating Robin Hood, Pierce said, is if the state totally changed the way it funds public schools, replacing local property taxes with a statewide property tax or other statewide tax — a concept that has had little to no political traction.

“Houston’s problems are more important than other people’s problems for political reasons,” he added.

But even some of those who are most frustrated with Robin Hood aren’t hopeful much will change.

State Sen. Kirk Watson, an Austin Democrat, says the Republican-dominated Legislature is more interested in attacking local entities for skyrocketing property taxes than acknowledging that rising recapture payments, and property values, have decreased by billions of dollars the amount of money the state is required to spend on public education every year. He notes that the average Austin homeowner’s annual tax bill is $1,400 higher because of recapture.

“I’m most of the time the glass-is-half-full kind of guy, but I’m not seeing any momentum toward doing anything other than the practice of blaming others and not fixing the system,” Watson said.

Rome acknowledges the coalition faces an uphill battle. Robin Hood has become a reliable and ever-increasing source of income for a thrifty Legislature that is eager to cut taxes whenever possible, she said. It also is facing declining state revenue amid a slump in oil prices. 

Recapture payments now make up a sizable chunk of what the state spends on public education, with more than $2 billion in payments expected in 2017. (That is notably more than $1.2 billion the Texas Lottery generates annually for public schools, Rome likes to point out.)

The Robin Hood program started out small, with only 34 school districts paying up — mostly smaller rural ones near big industrial plants or other major tax-generating properties. But as property values have skyrocketed across the state, an increasing number of school districts have hit the maximum level of wealth generation set in state law. Most of them are required to send money to the state because they raise more tax revenue than they are allowed to keep.

Of the state's 1,207 school districts and charters, 257 are expected to make recapture payments this school year. That is up from 142 districts that made recapture payments in 2006.

“We just feel like it’s gotten out of hand,” Rome said. “I don’t think anyone ever imagined Robin Hood would grow to the level it has now.”

Lawmakers have tweaked the system a few times over the decades to ensure it includes only the most property-wealthy districts, thus saving some schools from recapture payments. (Dallas ISD is doing everything it can to avoid having to pay up.)

As the number of school districts required to pay recapture has grown, along with the size of payments for many schools, so has the resentment.

It was on full display at a recent meeting of the Houston school board board, where trustees grudgingly voted to place an item on the November ballot that would authorize the district to send a recapture payment to the state. Some trustees have said they may encourage voters to reject the measure, in essence placing a bet that the Legislature will bail out the district next year. But they also acknowledge its failure could have negative consequences — namely, the education commissioner would then have the authority to sever select commercial buildings from the tax rolls.

“I think at this point what I would love to see is a very, very concerted — very concerted — effort to go up to Austin to talk to our legislators to continue to educate them on the impacts,” said Meyer, who represents southwest Houston on the board. “Because I can promise you $162 million — that’s going to affect kids. That will affect teachers."

State Sen. Paul Bettencourt, a Houston Republican who has lambasted local school districts for a rising debt load that they blame on insufficient state funding, warned that HISD will be forced to hike taxes if voters reject the recapture measure. He described trustee resistance as retaliatory following the recent state Supreme Court ruling that upheld the state's school finance system. 

"They want to make a major statement, but making a major statement could have major consequences associated with it," he said. 

Many tiny, rural school districts in South Texas' Eagle Ford Shale that saw property tax values skyrocket during the oil boom are having to pay up for the first time, too. These districts are frustrated that recapture payments lag a year behind and so don’t reflect their current dire financial state during the oil bust. 

“We’ve got to now make sure we’re starting to talk to state lawmakers and legislators about where we are,” Runge schools interim superintendent Pam Seipp told The Texas Tribune in an interview this summer.

The situation is “more or less a disaster,” said Cuero schools interim superintendent Ben Colwell.

Read more coverage about how public school funding in Texas:

• Oil patch schools are facing a budget nightmare during the oil bust.
• Texas senators are exploring whether to fund schools based on academic performance rather than attendance.
• The Texas Supreme Court in May deemed the state's method of funding public schools as minimally constitutional and urged lawmakers to enact reforms.