Texas senators seem open to major change in state’s public education funding formula

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During the Senate Finance Committee’s first public education hearing Monday, senators seemed open to reconsidering the core metric used to determine how much money the state gives schools per student, a switch that many school districts say would result in millions in additional funding.

Several senators questioned Texas Education Agency Commissioner Mike Morath on whether it would be wise for the state to change the basis of the state’s public education formula from average daily attendance to enrollment, as many Texas superintendents have requested.

“This is a key policymaking question,” Morath said. “An enrollment-based financial system is much more discernible; it's predictable. You have a little bit more budget stability from an enrollment perspective than you do on an average daily attendance basis.”

But Morath said the upside to an attendance-based system is that it creates an incentive for school districts to locate kids that are missing or chronically absent.

“On an average daily attendance basis, literally every day that a kid shows up to school counts,” he said.

Morath also estimated that if Texas were to overhaul its entire public education funding system and base it on enrollment, it would cost the state an extra $6 billion per budget cycle.

In Texas, the state gives money to schools based on their students’ average daily attendance rate. If a student misses school, their district’s attendance average goes down, and so does the amount of money it receives. And in a post-COVID-19 world in which parents are quicker to keep their children home if they’re feeling ill, some districts’ finances have become more volatile than ever.

Texas has about 5.5 million K-12 students, but only about 92% of them regularly attended classes last school year, meaning schools missed out on millions in funding from the remaining students. The state gives schools a base amount of $6,160 per student, which has not increased since 2019. Districts receive additional funding based on other factors, including the number of students with special instructional needs in the district, such as bilingual students.

Supporters of enrollment-based funding say the change would better reflect districts’ budgeting needs as they prepare for new expenses at the start of each school year. State Rep. Gina Hinojosa, D-Austin, has already filed House Bill 31, which would base the funding formula on enrollment.

State Sen. Robert Nichols, R-Jacksonville, has supported attendance-based funding but signaled that he may change his opinion if truancy laws are not addressed.

Nichols said that even if Texas school districts have the incentive to make sure that students are showing up to school, they don’t have enforcement mechanisms to help them because current truancy laws don’t allow districts to have “teeth” with parents. In 2015, Texas passed a law that decriminalized truancy, which is when a student intentionally misses school.

Morath said he believes there might be creative solutions that provide both financial stability for districts and incentives to get kids in school. For example, he said, lawmakers could decide to keep attendance as the core metric to determine how much schools receive per student but base the money they get for bilingual students on enrollment.

“There are any number of ways that the Legislature could entertain improvements to try to both add financial stability while maintaining the incentive to go after the most at-risk kids,” he said.

Morath also told senators that the TEA has projected that state enrollment will be on the decline until at least 2025 because of falling birth rates and more parents opting to home school their children or send them to private schools. In particular, the amount of families that withdrew their children from public schools to home school them instead saw a notable increase during the COVID-19 pandemic.

“What we saw essentially during COVID was a massive exit to alternative forms of education,” Morath said.

State Sen. John Whitmire, D-Houston, asked if enacting a school voucher system would contribute to more children being pulled out of the public education system, resulting in less funding for schools. Vouchers are the most commonly known form of “school choice,” a label used to describe state programs that give parents money to school their children outside the public education system. Critics say such programs siphon funds away from public schools.

Morath told Whitmire that the answer to his question “potentially depends on how any program like that would be structured.”

Senators also discussed the need to lower the recapture payments that property-rich school districts make to the state to help property-poor districts. The program is informally known as “Robin Hood.”

The burden of the program on property-rich school districts has grown bigger than previously estimated. It is projected that districts will pay about $5.06 billion through the Robin Hood program by 2025. Six years ago, that amount was projected at about $2 billion, State Sen. Paul Bettencourt, R-Houston, said.

Morath said property tax cuts planned by lawmakers this session may help bring those payments down.

When the conversation shifted to mental health funding in the wake of the Uvalde shooting, state Sen. Royce West, D-Dallas, said he wants to see money allocated to hiring more social workers in schools.

But Morath said the TEA did not include such a request in its budget because there is no requirement for school districts to use any amount of money to hire mental health counselors.

“If you wanted to see changes in student-counselor ratios then you'd either need to tell districts they need to spend their money differently or create new funding buckets just for that,” Morath told West.