Texas Senate Education Committee Advances Its Own School Finance Plan

SB 4 would essentially gut the House version of the bill

Education Committee chairman Sen. Larry Taylor during the 2017 Lege session (photo by Jana Birchum)

The Texas Senate Education Committee voted 8-0-3 to advance a fleshed out version of its school finance plan Wednesday morning, and the full chamber is expected to vote on the bill Friday, May 3.

The vote came as a surprise to the committee members, who did not have much time to review an updated substitute version of the legislation. Initially, the committee expected to vote on the bill next week.

Several senators, including Kirk Watson, D-Austin, expressed support for the legislation, but were concerned the rushed vote would result in less time to hear amendments. Sen. Paul Bettencourt, R-Houston, said, “I lament the committee process not being drawn out, [because] there are so many good things in this bill.” Bettencourt was one-of-three “present not voting” members, partly because the legislation’s funding mechanism was left unresolved.

Education Committee chairman Larry Taylor, R-Friendswood, acknowledged the discomfort felt by his members, and attempted to assuage their fears by saying the bill was “halfway” to becoming law. “I know many of you would prefer not to vote on this today,” he said. “This is a process, and it is not the end of the day. This is not the final process, I can assure you the bill will change.” At one point, Taylor became emotional while asking his members to support the bill: “This has been a grueling process, but it’s worth it. I appreciate your support.”

Senate Bill 4 was first laid out by Taylor at a committee hearing on Thursday, April 25. The upper chamber’s school finance bill would essentially gut the "Texas Plan" already passed in House Bill 3. Although SB 4 matches the amount of funding (about $9 billion) for school finance reform and property tax relief found in HB 3, the Senate’s legislation provides less for schools so it can provide more for property tax relief.

SB 4 would increase the base amount of state funding school districts receive by $740, while the house version of the bill would increase the basic allotment by $890. The Senate plan adds in a $5,000 pay raise for teachers and librarians, while the House plan would provide raises of about $1,388 to all school employees. Changes to the formulas that drive school finance in Texas – such as the amount of additional funding districts receive to educate low-income students, English-language learners, and students with special needs – remain in the Senate bill, but from there, the proposals from each chamber begin to diverge.

“I can’t let the perfect be the enemy of the good.” – Sen. Larry Taylor, Education Committee chairman

For property tax relief, SB 4 contains two provisions not found in HB 3. First, the homestead exemption would grow from $15,000 to $40,000, and by 2022, the state would impose a 2.5% property tax increase cap on school districts – an idea that has alarmed school district leaders. The bulk of property tax relief in SB 4, however, comes from an 8 cent tax rate cut in 2020 and a 7 cent cut in 2021 – amounting to a 15 cent reduction in school taxes over the next two years. The House plan would compress school tax rates by just 4 cents.

Beyond the differences in tax rate compression, a big difference between the two bills is that the Senate version would require the state to calculate a district’s funding based on current-year property values. Today, the state makes those calculations based on previous-year property values, which means districts that see consistent growth in property values – like Austin ISD – see more state funding, because the school district is bringing in less in local taxes. By law, the state is required to pay the difference for any minimum funding requirements a district cannot reach through local revenues. The bill provides “transition funding” for districts that would be impacted by the switch, but it is unclear at this point which districts would receive the additional funding, nor how much each district would receive.

Switching to a current-year calculation could cost AISD around $75 million in the first year, according to the district’s chief of business and operations Nicole Conley Johnson. More than just the loss in state funding, a current-year model could cause more financial uncertainty in a school district already grappling with a budget shortfall. With previous-year values, districts are able to certify property values through the Comptroller’s office, but that would no longer be possible if the SB 4 switch is made. “Creating uncertainty adds more pressure to writing a budget,” Conley Johnson told the Chronicle. “It makes things more difficult at the state and local level, because you’re writing a budget on a variable that could change.”

At the public hearing on SB 4, much of the testimony offered centered around a potentially controversial idea that was initially removed from HB 3: teacher merit pay. Bowing to pressure from teacher groups, which fear the concept of paying teachers more based on performance could lead to more emphasis placed on high stakes testing, House Public Education Committee chairman Dan Huberty, R-Houston, took out a pool of funding available to districts that implemented a merit pay program. But now the idea is back in SB 4, and Education committee members appear aware of the priovision’s potential to derail the Legislature’s school finance efforts.

House Public Education Committee chairman Dan Huberty, R-Houston (center) (Photo by John Anderson)

“I can’t let the perfect be the enemy of the good,” Taylor said to a Dallas ISD teacher who testified against the inclusion of a merit pay program. DISD has been praised by proponents of merit pay for its implementation of what the district calls its Accelerating Campus Excellence program. Essentially, ACE pays teachers more to work at schools that consistently struggle to hit state academic targets (often schools with concentrations of low-income students). The more teachers help those schools improve in a given year, the more money they receive.

Opponents say such programs incentivize teachers and administrators to focus on preparing students for STAAR exams, a practice that could de-emphasize subject matter not covered in the tests and push schools to implement educational models that harm a student’s desire to learn. But Taylor pointed out that school districts would be able to craft their own merit pay plans, and STAAR results would only be one factor in determining how much additional funding a teacher could earn. Notably, however, it would be up to the Texas Education Agency – a strong proponent of STAAR – to approve any district’s merit pay program.

SB 4 would also make a few tweaks to STAAR testing, aimed at addressing concerns over the exams that have built this session. The state would gradually move to an online version of the test, and they would be broken down into chunks, so students are not bogged down for days taking tests. Schools would also be prevented from giving the tests on Mondays, a change that Taylor said would give students and teachers more time to prepare during a testing week.

Sen. Royce West, D-Dallas, signaled his support for the bill in a way that could provide a path for the rest of the chamber: “This bill represents transformative changes in our education system,” he told the committee. “There may be some things you don’t like, but I [support] the entire bill, because we have to move the process forward.”

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