The Education Session

School finance battle takes Capitol center stage

Citizens rally at the Capitol in April to oppose education cuts. (Photo by John Anderson)

If there's a poster child for what's best about Texas school kids, she could be Regan Lively. With a slight quaver in her voice, the high school senior from Flower Mound took to the podium at the April 18 Save Texas Schools Rally at the Capitol to tell her story. She has overcome profound dyslexia, and this year was accepted into Oklahoma Christian University, with a $16,000 scholarship. But unless she graduates, she can't go – and she won't graduate, because she has failed the U.S. History STAAR test. She told the assembled crowd of educators, administrators, trustees, parents, and kids, "As elementary students we are taught to shoot for the moon and reach for the stars, but when the challenge of a test comes across, our anxiety kicks in, and our dreams are shattered right before our eyes."

Students like Lively have also become walking, talking metaphors for what Texas education does wrong. The figures laid out at the rally were stunning, and well-established. Texas has a massive and expanding student population – it grows by 85,000 students annually, equal to adding the entire student body of Rhode Island to Texas schoolrooms in the last decade. Yet, even as Republican politicians boast about the "Texas economic miracle," per-student spending has dropped by roughly 25% since 2009. Specialist resources to help kids with extra needs, like dyslexia, or for the growing number of English language learners, are scarce to extinct. At the same time, the testing regimen has swallowed more and more of classroom time, and more and more of the operational budget. It's a minor miracle anyone graduates.

And the testing anxiety? That's what lawmakers seem to face, every time someone talks about school finance reform. It's too big, too complicated. Put money in one school, you have to take it from another. Yet the 84th Legislature has seen the most serious conversations yet about how – and how much – Texas should pay for its public schools. The question now is, are they doing enough?

A Perfect Storm

This was always going to be an education session, due to a confluence of three factors. First, a new governor: In his inaugural State of the State address, Gov. Greg Abbott declared education a top priority. Second, the 2013 passage of omnibus education reforms in House Bill 5, which brought sweeping changes to exams, graduation requirements, and how the state assesses schools and districts. With changes that broad, lawmakers knew they would be coming back to tweak the system after a couple of years of field testing.

Then there's the third factor: the 2014 ruling by state District Judge John Dietz that found that the whole Texas school finance system fails to meet its constitutional obligation to provide adequate and equitable funding. Texas' lousy track record on school finance had reached a new low in 2011, when then-Comptroller Susan Combs handed down a budget forecast of gloom and doom, and in a blind panic the Leg­is­lature went on a budget-slashing frenzy, cutting $4 billion out of public education funds for the 2012-13 biennium. However, because the state also failed to cover the increase in student enrollment or even inflation, schools were really $5.4 billion in the hole. In 2013, with a slightly rosier financial forecast, the state added $3.4 billion back. However, that barely covered enrollment growth or inflation, and did nothing to dent the hole they had dug two years earlier.

So 2015 is a perfect storm, a session when education holds center stage. And that's good news for lawmakers like House Public Education Committee Member Rep. Dan Huberty, R-Kingwood. On April 9, over the opposition of the Tea Party rump, the House passed his HB 4, establishing a $130 million fund for qualifying schools to help pay for half-day pre-K. Huberty is also sponsoring and shepherding SB 149 by Sen. Kel Seliger, R-Amarillo, setting up graduation committees that look at more than just test scores. That's exactly the kind of alternate path to graduation that students like Regan Lively – and 20,000 kids across the state just like her – need. "That's got to get done," he said, "so we can help these kids graduate."

Huberty admits the rollout of HB 5's testing reforms was "horrible," and most would agree with him. Yet while there are plenty of fixes to HB 5 still waiting in the wings, the real debate remains focused on money, and the center of attention is HB 1759 by House Public Education Committee Chair Jimmie Don Aycock, R-Killeen. It's the first serious attempt to shift how the state distributes money in more than a decade. Rather than wait for the courts to force his hand, Aycock took the initiative, and many of his fellow reps have his back.

Steve Adler (Photo by John Anderson)

In the House, school finance is a bipartisan issue, and that reflects a larger change. Texans – well, apart from the Tea Party – seem sick of seeing their school districts used as a punching bag. Groups like Save Texas Schools are gaining traction, while the pro-public ed Texas Parent PAC has become one of the most effective endorsers in primaries on both sides of the aisle. Louis Malfaro, president of Texas AFT, noted the teachers' union is just about to charter its latest affiliate in Waco. "We're growing across the state," he said, arguing that that indicates a strengthening of resolve. Even lawmakers are turning the tide. Malfaro cited the speech by Clarksville Republican Rep. Gary VanDeaver at the Save Texas Schools rally: "He said, 'I was a teacher and a superintendent, and gosh, I didn't know how bad our schools were until I got to Austin.'"

So HB 1759 has powered through the House. But just because school finance is a bipartisan issue, that does not mean it's bicameral. Center for Public Policy Prior­i­ties policy analyst Chandra Kring Villa­nu­eva notes that while the House has shown real determination, "the Senate has shown no intention to deal with school finance. ... It's a one-sided arrangement."

House vs. Senate

The Legislature is a simple place, and historically there's good reason why they called the Senate the upper chamber. That was traditionally the place where bad ideas, many of which originated in the hurdy-gurdy madness of the House, went to die. Now, with Lt. Gov. Dan Patrick in charge, and barn-burning radicals like New Braun­fels Republican Sen. Donna Campbell at his back, all that's gone out the wood-blinded windows of the Senate chamber. As Malfaro puts it, "The House is in touch with reality, and the Senate is in the USS Koch Brothers, orbiting planet ALEC" – referring to the American Legis­lative Exchange Council, the corporate-funded conservative bill-mill.

Not that the Republican-dominated House has morphed into tax-and-spend liberals. The House and the Senate are locked in a fight over tax cuts: The lower chamber wants a mix of business margins franchise and sales tax cuts, while their colleagues across the Dome are eyeing franchise and property tax cuts. How can they pay for this? By using part of a supposed $8 billion surplus – a surplus created by years of slashing school spending. House Approp­ri­a­tions Committee veteran Rep. Dawnna Dukes, D-Austin, said, "Cost, growth, and inflation have historically been ignored in state budgets. We now see it is designed to provide cuts, not to properly consider the greater and ignored needs of Texas."

But at least the House leadership is trying. The Senate seems to have no interest in Aycock's structural reforms, or Huberty's pre-K investment, and instead is pushing hard on vouchers and tax breaks for businesses handing money to private schools.

Even their core education budgets diverge by billions. HB 1, the House draft budget, proposes an extra $2.2 billion for inflation and population growth, the Senate version a billion less. And then there's Aycock's bill, with an extra $800 million hidden up its sleeve.

Band-Aid on a Hemorrhage

If HB 1759 passes, few districts will see more benefit than AISD. Board President Gina Hinojosa explained: "There's no district in the state that exemplifies how broken the school finance system is than Austin." Like Villanueva at the CPPP, she praised Aycock for starting the debate. "I love his quote about, rather than pay the lawyers, let's do what's right for the children of Texas."

What HB 1759 changes is not just how much money there is, but how the money is distributed. The changes are limited: Aycock himself has said this is a two-year fix, and lawmakers need to come back in 2017 to tackle "weights" Texas uses to adjust the basic allotment for higher-needs students. For example, the bill would get rid of the Cost of Education Index, a fudge factor designed to reflect the comparative cost of educating in an expensive city. However, the equations haven't been updated since 1991. Edna Butts, the district's director of Inter­gov­ern­mental Relations & Policy Oversight, said, "AISD has the same CEI as Killeen, and we're less than Round Rock. If Austin was rated the same as Houston, we'd get $13 million more."

This graph shows the amount of funding (from local property taxes) that AISD has returned (or will return) to the state, under recapture (aka "Robin Hood") for redistribution to poorer school districts elsewhere. The figures for 2016 and 2017 are projections – under current law vs. if HB 1759 (as drafted) is enacted. Austin is "property rich," but a majority of AISD students are poor by official standards.

Among a slate of tweaks, Aycock's plan would simply kill the CEI and put the cash in the basic allotment, which benefits AISD. Similarly, the district would finally get state assistance on transportation costs. So in raw numbers, what would this mean for AISD? Butts explained, "We have three different scenarios out there. We have House Bill 1 passed by the House, we have the committee substitute to House Bill 1 passed by the Senate, and neither factor in Aycock's bill quite yet." If the House version passes, then AISD gets another $19 million a year in its basic allotment. If the Senate wins out, then it's $10 million. But if HB 1759 passes, that means $48 million a year over the biennium for AISD.

Not everyone is happy with that shift. The Equity Center is one of the core groups involved in the current litigation, and its executive director, Wayne Pierce, is among the growing crowd that applauds Aycock for starting the discussion. However, that doesn't mean that he's happy with HB 1759; he argues that it does more for wealthy districts than poor ones. That's why he's critical of steps like eliminating the CEI, which he claims needs fixing, not killing. Pierce said, "They're putting the money in the right place. On the other hand, they're taking it from the wrong place."

The biggest hidden benefit for wealthier districts would be in recapture, aka the notorious "Robin Hood" system, whereby property-rich districts like Austin send a portion of their taxes to the state to fund poorer districts. AISD is the biggest single contributor, paying 11% of the statewide total collected, and Travis is the biggest contributing county. HB 1759 doesn't change that status, but it would mean some relief. Rather than the $228 million recapture AISD forecasts for 2017, it would be closer to $180 million – still bad, but not crippling. However, with the Legislature known for its volatility, Butts isn't cutting checks yet. She said, "We haven't done new plans based on Aycock's bill yet. We don't want to jinx it."

This sounds promising, but then it also sounds horribly familiar. There's a cycle in Texas politics. Lawmakers create a system. They get sued over it. After years of appeals, they lose. They come up with another system, or at least some serious tweaks. They get sued over it, and so on, and so forth (see timeline below). It's a 40-year cycle – less trial-and-error than trial and trial date. Huberty said, "School finance has always been, we put a Band-Aid on it, to fix one problem and then, oh, geez, we've got another problem."

Even Austin Mayor Steve Adler has been in those trenches. In 1997, he was chief of staff to then-Sen. Eliot Shapleigh, D-El Paso, fighting to get changes made to the weighting system. First set in 1982, after 15 years the weights were completely out of line with the actual costs of educating special needs kids and English language learners. But reformers failed to achieve any changes, and those same weights remain in place – that's 33 years of changes in educational theory, practice, and realities that Texas school finance ignores. As mayor, Adler sees school finance another way: The biggest chunk of local property taxes goes to school districts, so high ISD tax rates have a direct effect on affordability. Adler said, "There's only a shift in education funding when one of two things happens. The first is a court rules and mandates a change. The second is when the business community gets together and says that, for the economic well-being of their businesses in the state, things need to change."

This time, Texas has both factors working, with the Dietz ruling, and a broad coalition of industries, spearheaded by the normally anti-tax Texas Association of Busi­ness, calling on Gov. Abbott to abandon tax cuts in favor of education and infrastructure investment. That bodes well for Adler, who said, "We're only as strong as the court backing that we have, and our allies in the business community."

Another reality check: Any of this can change in an instant. While Huberty remains optimistic the Senate will play ball, Patrick has expressed little interest in filling the billion-dollar void between his and the House's plans. Aycock has even warned that, if HB 1759 passes without the $3 billion it needs to work, he will ask Abbott to veto it.

And there's a deeper question: Is this a real fix, or is this just another spin on the legislate/litigate merry-go-round? Aycock has been explicit that this is a two-year Band-Aid before the surgery begins. The CPPP's Villa­nueva argues that Aycock's $3 billion is a fraction of the $6 billion to $8 billion that public schools need right now, and then that the new basic allotment needs to become inflation- and poverty-linked. More­over, she notes, the problems with the franchise tax that the Legislature is trying to fox through cuts came about from a 2006 revision intended to put more money into – you guessed it – school finance. She said, "If we get rid of this revenue stream, we just have to replace it with another, and we become more dependent on sales tax or property tax."

Will HB 1759 even be enough to placate the courts? Pierce of the Equity Center thinks not. First, even if it passes, and the full $3 billion is injected, it will still barely touch the lowest definition of adequacy. Pierce said, "The Constitution is not what we need for public education. It's the least that we do for public education." But he's realistic about the size of the task, adding, "We have a severely inefficient funding system, and I don't think you can fix it all in one session." Until the state adds real money to replace property taxes, and tackles the weights, Pierce said, it's all triage. "It's like we have a dog who has mange, and we're trying to fix it by putting salve on the tail."

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Texas Legislature 2015, school finance, Jimmie Don Aycock, Dan Huberty, Louis Malfaro, Center for Public Policy Priorities, Dan Patrick, Dawnna Dukes, Gina Hinojosa, recapture, Equity Center, Wayne Pierce, Steve Adler, John Dietz, Texas Association of Business, ALEC

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