Texas Lawmakers to Highlight Education Spending Divide

The state’s escalating dependence on local tax dollars to fund public schools — and, at least indirectly, other government services — will be a “big focus” during a joint hearing of two House committees Wednesday and Thursday, according to the chairman of one of the panels.

“Clearly, there are points where the state is benefitting from appraisal value increases and schools aren’t,” said state Rep. Jimmie Don Aycock, R-Killeen, the outgoing chairman of the Public Education Committee. The budget-writing Appropriations Committee is the other panel meeting.

In June, House Speaker Joe Straus ordered the committees to study two key provisions of the state’s school finance system ahead of the 2017 legislative session, including the state’s “use of local property taxes to fund public education and its effects on educational quality and on Texas taxpayers.” The interim assignment came weeks after the Texas Supreme Court upheld the complex methodology as constitutional while also deeming it “byzantine” and urging state lawmakers to make improvements. 

Straus asked the committees to focus especially on “ways to reverse the increasing reliance” on payments that wealthier Texas school districts send to the state each year under its Robin Hood plan to help buoy the state’s poorer school districts. The number of schools required to make “recapture” payments has ballooned as property values have skyrocketed across the state. Recapture payments — expected to total more than $2 billion in 2017 — have made up an increasing share of what the state spends on public education and contributed to a trend of local communities footing a larger share of the public education tab than the state.

The state hasn’t just benefited from recapture, though, but property value increases in general, Aycock noted.

As property values have spiked in many school districts, allowing them to raise more tax revenue locally, the state doesn’t have to send them as much money. Last year was the only time in recent memory that state lawmakers passed along that “savings” to public schools, Aycock said, pegging it at about $1.8 billion.

“Every time a new building is built and the tax appraisal goes up, it saves the state money,” he said. “So instead of that money going to schools, it actually goes to a savings to the state that they spend on other things.”

What those other things are exactly is nearly impossible to say, according to school finance experts, but it’s safe to assume that other state services — even non-education-related ones — have benefited. 

Moak, Casey & Associates, an Austin-based consulting firm that’s been invited to testify before the committees this week, estimates lawmakers would have had to spend $9 billion more on public education last year alone if property values were still what they were in 2006. That year the Legislature ordered school districts to cut property tax rates and increased its own spending on public education to help make up the difference. (Straus also asked the committees to study the impact of this soon-expiring “hold harmless” provision.)

Despite that tax rate reduction scheme, property value growth has been so robust since then that it “has saved the state billions it otherwise would have had to spend,” said Moak, Casey associate Joe Wisnoski, who used to head the school finance division at the Texas Education Agency. “The value growth has really been a major contributor to the state’s ability to fund the system that it does today.”

The firm’s analysis shows that if property values hadn’t grown since 2006, wealthier schools would have paid $300 million total in recapture last year rather than $1.8 billion and tax rates would be substantially lower.

Amid rising property values, figures from the Legislative Budget Board show that the amount of money the state has spent on public schools has remained largely stagnant over the past 10 budget years, growing by about 7 percent during that time. Meanwhile, the amount of local revenue being spent on public education has grown by 44 percent, including recapture payments. (See page 227.) 

Rep. John Otto, the outgoing chairman of the budget-writing Appropriations Committee, said the committees will discuss “several alternatives” to the current system and attempt to identify “viable options.”

But the Dayton Republican also cast doubt on their ability to accomplish that, saying many of the alternatives would require the state to spend more money. Amid declining revenue projections and competing priorities, Otto said he doesn’t see that happening.

“I just think what these set of hearings is is to talk about, ‘What are the options?’” he said. “Not necessarily that we’re going to be able to accomplish many of them.”

Aycock last year unsuccessfully pushed a $3 billion school finance overhaul, which a majority of districts supported but didn't officially endorse. 

Many school officials fear that lawmakers won’t have the political will to make significant changes absent a court order.

Straus has been the only statewide official to call for school finance reforms following May's state Supreme Court ruling, although Lt. Gov. Dan Patrick had already asked senators to study funding schools based on academic performance rather than per-student attendance. 

Patrick responded to Straus’ interim assignment with a statement saying school finance reforms must be packaged with "education reforms," foreshadowing continued gridlock between the two chambers over public education. 

Read more of the Tribune's coverage:

• Citing a recent Texas Supreme Court decision that upheld the state’s public school funding system while deeming it “undeniably imperfect," state House Speaker Joe Straus ordered representatives to study the school finance system.  
• Texas has deemed an increasing number of schools as property-wealthy, requiring them to give up a share of their local tax dollars to help buoy poorer districts. 
• Should Texas fund public schools based on their academic performance rather than just giving them a certain amount of money per student? State senators are beginning to explore that idea.
• Analysis: Voters in the state's largest school district can say no to sending money to other school districts, putting Texas lawmakers in a bind and — maybe — raising their own school taxes in the process.