The Austin Chronicle

School Finance Plan Headed for Hearing

By Richard Whittaker, April 8, 2015, 3:30pm, Newsdesk

Can Texas avoid further school finance lawsuits? That's what House Public Education Committee Chair Jimmie Don Aycock, R-Killeen, is hoping with his proposal to fix the broken way Texas pays to teach its kids. So while he prepares to take public testimony on his plan next week, the Senate is back on vouchers.

Yesterday, Aycock laid out in committee House Bill 1759: that's his draft plan for, if not a full-blown fix on school finance, at least enough of a redesign to forestall some of the impact of the ongoing school finance lawsuit.

School finances are hellishly complex: Aycock's old political running buddy, retired Democratic state rep Scott Hochberg, once quasi-joked that he designed the current system and still only understood about half of it. So Aycock simply presented the bill, and announced that he will be taking public testimony at a meeting next week.

It all comes down to how the state allocates the cash on hand. Aycock has already presented a proposal for an extra $3 billion in school funding, and that's a sharp reversal from 2011, when lawmakers cut $4 billion from schools (with inflation and population growth, gouging a $5.4 billion hole in the state's campus-based accounts).

What was noteworthy was that Aycock was talking less about the end-point as a process and more about goals. He called HB 1759 "our best first attempt" at reflecting the intentions of the bill, as where they want to get for the 2016-17 fiscal biennium.

Aycock first cleared up what his bill doesn't do. It doesn't deal with the five weights - or, as he dubbed them, "silos" - that nuance how cash is distributed. Aycock explained that the conversation is so complicated and politically divisive that, even with the amount of work the committee has already done on the interim, it will take at least another interim and session to get to that. HB 1759 also doesn't deal with maintenance and operations, the facility funding equations.

So next was laying out the 13 items he was tackling:

• The cost of education index, an outmoded way of shuffling around $4 billion that hasn't been updated since 1991. Aycock called it "indefensible" and suggests simply putting the cash in the basic allotment
Transportation: the state pays around a quarter of transpo costs, but administering it has become a headache, and Chapter 41 schools sees no basis. Again, moved to basic allotment.
• Ending non-professional salary increases, which encourage districts to hire staff other than qualified teachers. Again, moved to basic allotment.
Fractional funding, a complicated development in 2005 that actually penalized frugal districts: to be partially ended, allowing them to keep more cash.
• A 1992 "hold harmless" proposal that has been in place for 25 years, which Aycock simply wants to end.
• Pulling as many districts as possible off Additional State Aid for Tax Reduction, another misshapen fruit of the poisoned tree that was the 2006 school finance revision.
• Revising the mid-size school adjustment, which gives more money to schools of a size that are normally the most cost-effective anyway.
• Making permanent the adjustment for small schools, which see the biggest impacts from any financial changes.
• To offset property value increases, as the basic allotment goes up, the amount taken under recapture goes down.
Raw cash: In addition to $2.3 billion to keep up with student growth, the House has an extra $2.2 billion lined up, plus an $800 million rider that takes effect if HB 1759 passes. Significantly, Aycock said it takes money to make all these changes, so if the cash isn't there, he will kill this bill, relying on Gov. Greg Abbott's veto if necessary.
• Weighting for career technology education in eighth grade.
• Ending the high school allotment and putting the cash in basic allotment.
• And finally, a commitment that no district will lose money in the next two years.

And that's why even Hochberg found the system mindbendingly baroque. The numbers and calculations were so complicated, said Aycock, "It literally crashed the [Legislative Budget Board] computer."

The most important part of all this is what is called the runs: the breakdown for each district of what they will get (and get to keep) out of their finances. Everyone is still poring over the super-complicated equations, but Education Austin President Ken Zarifis said he's seeing back-of-an-envelope calculations that suggest Austin ISD could see between $20 million and $40 million in new cash from the state. "This is the first time that people want to put some money back. Not everybody wants to do this, but Aycock recognizes that this is pretty significant."

For larger districts, and those with high property values. the focus may well be on recapture, AKA the Robin Hood system. Aycock noted that, since WWII, the state has relied increasingly on property taxes, and he is proposing some fixes on this too. For example, Houston ISD has seen massive inflation on their bill to the state, paying a measly $3.7 million in 2008, facing what has been called a recapture cliff in 2018, paying in $101 million. Aycock's plan sees their contribution for 2016 cut to zero dollars and zero cents, with a dramatic decrease in 2017 as well.

That still makes HISD a mere piker by comparison to Austin ISD which, under the current system, will send $175.5 million property taxes to state coffers in the 2015 financial year, rising to a grotesque and budget-busting $301.1 for FY 2018. More recent calculations suggest they could hit that figure as soon as 2017. Notably, in his presentation Aycock, who met with AISD Superintendent Paul Cruz, singled out Austin as one of the districts most sorely afflicted by the current system. While Zarifis said he has not had time to explore the modified recapture numbers, he was glad of any improvements that could result.

Austin Greater Area Chamber of Commerce VP of Education and Talent Development Drew Scheberle was similarly generally positive about the broad impetus, calling himself "really appreciative" of the fact Aycock is bringing anything up. However, he noted that this still does not get AISD, or any of the surrounding districts clobbered in the big cuts four years ago, back to 2011 levels. Nor do the recapture changes really put a dent into how much Travis County subsidizes the rest of the state. "They're taking a whole lot of our money to help a whole lot of districts that cost a whole lot less."

A big coda: Aycock has warned that this is all a temporary measure, especially until the weightings can be shifted. Zarifis agreed with that assessment, calling it "a stop gap." With litigation still pending, he added, "I don't think we're going to see anything significant on recapture until we legally have to."

Curiously (or arguably not), education and anti-tax groups on the right have been relatively quiet about Aycock's proposal. That's possibly because they have been a little more fixated on school vouchers, which are wending their way through the Senate. Yesterday, as all eyes (and most education and finance reporters) were fixed on the lower chamber, the Senate Education Committee was busy at work on Senate Bill 4, their own omnibus school finance bill that is their voucher vehicle of choice for the session.

However, full-fledged vouchers do not seem to be part of the equation. While there is an allocation of $50 million for a "education tuition grant program" there's been little hullabaloo about that. Instead, Texas Americans for Prosperity boss Peggy Venable issued a press release praising the inclusion of vouchers super-lite: a tax credit for companies that contribute a portion of their franchise and/or insurance premium tax liability towards creating private school scholarships.

Texas AFP is painting this as a victory for their push for school choice, but the truth is that they're having a much tougher time with actual vouchers.

The political calculation seems pretty clear: The House will, as it always does, reject vouchers. Urban Dems hate them as yet more education privatization, while rural Republicans see how much of a hole they would blow in the finances of their small and struggling local ISDs. That's exactly what Aycock is trying to avoid with his school finance fix.

Oops: An earlier version of this story said that the Senate had not yet folded their limited voucher plan into SB4. Our bad.

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