School leaders ask House not to cut state aid program in finance fix

School officials whose districts would lose money under a Texas House plan to revamp the public school funding system asked legislators on Tuesday to ensure there are as few "losers" as possible.

They were among dozens who testified at a House Public Education Committee hearing on House Bill 21. State Rep. Dan Huberty, the Houston Republican who chairs the committee, pitched the legislation Monday as a preliminary overhaul of a school finance system the Texas Supreme Court upheld last year but said was in dire need of reform. 

The bill would inject about $1.6 billion into the public education system, boosting funding for almost every school district in the state although a few would be left out. It also wouldn't renew a soon-expiring program that awards supplemental state funds to more than 150 districts to offset a decade-old property tax cut — a major concern for education officials who depend on the funding. A provision in the bill that would award some grant money to make up for the loss isn't enough, they told the committee Tuesday. 

"My districts are going to lose," said Mike Motheral, executive director of the Texas Small Rural School Finance Coalition. He said he represents 14 West Texas school districts that could lose up as much as 53 percent of their state revenue with the end of the state aid program.

"One of my districts will lose $4.5 million and they have a $10.5 million budget," he said.

When the Legislature reduced property taxes by a third in 2006, it guaranteed school districts like the ones Motheral represents at least the same amount of funding they received in 2005-06 through a state aid initiative. The extra aid expires Sept. 1, so many districts have been asking for an extension to avoid falling off a funding cliff. About 156 school districts currently receive such aid.

As written, the bill proposes letting the initiative providing extra state aid expire and instituting a $100 million two-year grant program, prioritizing districts that would lose money through the new funding formulas. That's not enough to cushion the blow, school officials told the committee Tuesday.

Superintendent Cynthia Lusignolo said the Texas City school district is facing a dire budget year if the state aid expires. Located on the eastern tip of Texas next to Galveston, the Texas City district gets 17 percent of its annual budget through the state initiative, at $11 million, she told the committee. It has reached the maximum local property tax rate possible, and cannot gather more revenue.

"We didn't do anything to remain reliant on" the state aid initiative, Lusignolo said.

After the state closed the neighboring La Marque school district in 2015, it required Texas City to annex the failed district's more than 2,000 students. Even with an increase in enrollment, the state considers Texas City a property-wealthy district, meaning it has to give up money to financially shore up property-poor districts.

Lusignolo asked committee members to increase the amount of the grant program from $100 million, to more closely resemble the amount they are at risk of losing.

State Rep. Ken King, R-Canadian, said during Tuesday's hearing that he supports the plan to replace the state aid initiative with a two-year grant program. But he filed another bill, House Bill 811, to extend the expiration date from 2017 to 2021 in case Huberty's bill doesn't pass.

"I am wholeheartedly in support of it. That being said, if something happens to your excellent work, we can't allow these districts to fall off a cliff," he said.

Huberty, who chairs the House Public Education Committee, had touted the bill on Monday as one that would boost per-student funding for almost every school district while reducing the need for higher local property taxes.

The legislation also calls for property-wealthy districts to pay less to the state to shore up poorer districts through the state's controversial "Robin Hood" program. Local officials say those growing payments have forced them to increase property tax rates.

Numbers released Monday along with the bill show that about 35 of the state's 1,200 school districts and charters would lose the overall funding they receive to operate schools in 2018, and 58 would lose that funding in 2019.

All districts would see an increase from $5,140 to $5,350 per student in the base amount of funding they get from the state annually, thanks in part to an increase in transportation funding and more money for students with dyslexia. But some would lose funding on top of that, due to the bill's additional changes to the school finance formula.

Many school officials and advocates who testified on the bill Tuesday said it leaves too many districts behind.

"We want a bill that has no losers," said Christy Rome, executive director of Texas School Coalition, which represents mostly wealthier school districts.

The education committee did not vote on the school finance bill Tuesday — Huberty left it pending and said he plans to bring back a substitute at the panel's next meeting that addresses some of the concerns raised during the hearing.

Read related Tribune coverage here:

• The top public education policymaker in the Texas House unveiled a $1.6 billion plan on Monday that he described as a first step to overhauling the state’s beleaguered school funding system.
• The Senate has tasked a new budget working group with coming up with ways to overhaul the state's school finance system.
• With funding tighter than the previous legislative session, lawmakers are not expected to inject much more money into public education. For now, some are backing a plan to increase money to all school districts through the general appropriations bill.