The Austin Chronicle

Preschool Funding Loophole has Tax Dollars Going to Religious Schools. Who Benefits?

Private school partnerships boost district enrollment

By Rob D'Amico, October 27, 2023, News

Through October, legislators have been debating whether public school money should be diverted to pay for Texans' private school tuition. But that's already happening, through a little-discussed program that some call a "loophole" or "gaming the system." Perfectly legal partnerships between public school districts and private (even evangelical Christian) pre-K schools allow districts to enroll kids in schools hundreds of miles away. The state pays for it, with districts and private schools determining their split.

While much of the opposition to private school vouchers being debated in the Legislature focuses on lost revenue to public schools, concerns about taxpayer money funding religious education also play a significant role. Opponents to the education savings accounts (ESAs) proposed in the legislative special session say this is the foundation for a plan to significantly increase state funding to Christian schools – part of an agenda by Christian nationalists to take a bigger piece of Texas public education and the tax money funding it.

Money and Miles

Those concerns about separation of church and state aren't an issue for Graydon Hicks III, superintendent of Fort Davis ISD, a small, rural district in Far West Texas. "That doesn't bother me a bit," Hicks said. As for the funding issue, Hicks has found a way to make partnering with private schools a financial boon to his district, which was facing financial ruin after the state failed to provide any significant additional funding the past two legislative sessions. The superintendent is using early learning partnerships that allow districts to enroll students from private entities – usually day care and Head Start centers with pre-K kids – and share state funding allocated per pupil with the entities. In essence, it's like a voucher with state money funding private school students, but it can also pump money back to the public schools.

"Oh, it's huge," said Hicks, who estimated that with about 115 additional students, he might take in $780,000 this year from the program. That may be chump change for a district like Austin ISD with a $940 million budget, but it's a savior for Hicks' tiny district, which was facing a $500,000 deficit. "It puts me in the black and lets me start building my fund balance," he said. "I can start looking at teacher raises, facility improvements, new vehicle purchases, those kinds of things." Hicks said the district takes half of the state funding, with the rest going to the partner schools.

These partnerships began long ago in 2003 when state law changed, compelling districts to explore partnerships if they planned to create pre-K programs – a means to save taxpayer dollars by piggybacking on existing providers when districts couldn't afford to create new facilities. What wasn't intended, however, was what Hicks is doing to maximize his revenue potential: partnering with schools in faraway places from his community, sometimes hundreds of miles from his district. This year Hicks partnered with Alpine Montessori School and Alpine Christian School (both 25 miles away), Transformative Leadership Academy in Monahans (113 miles away), and, once agreements are signed, two El Paso schools (200 miles away.) Hicks is even eying Fort Worth-area partnerships some 469 miles away for next year. Hicks' strategy is not the norm, as a review of district partnerships shows only a few other districts going outside their boundaries to enroll students, and even then they're mostly close to their district.

"I wish we were in a state that fully funded public education and didn't kind of force districts to find these kinds of loopholes in order to secure funding that they need to educate their enrolled children," said Michelle Hartmann, former superintendent of Pawnee ISD, which was one of the first districts in Texas to enroll students in faraway locations. "If it's a potential pathway that brings in additional revenue for public school districts to educate their children – especially at a time when they're underfunded – then I think schools need to look at it."

Pawnee ISD in South Texas appears to lead the state in these remote partnerships, with nine partners outside of the district – three each in the Galveston, Fort Worth, and Coastal Bend areas. Pawnee ISD Superintendent Anthony Annis, now in his first year there, said the general formula is partners taking 60% of the state funding and the district retaining 40%. But his district generally covers staffing expenses and invests in curriculum and other upgrades for the partners, all of which only enroll pre-K students. Key for him has been the ability to lower recapture payments to the state with the additional enrollment. The move has reduced the district's recapture from about $3.5 million in payments to $1.4 million. "Without those off-campus sites, we'd be like Fort Davis, facing shutting our doors."

Christian Curricula

One of Fort Davis' partners – Alpine Christ­ian School – has raised eyebrows for another reason. The evangelical Christian school promotes all students to become "effective leaders and servants for Christ" and to "establish and develop a personal relationship with God the Father through Jesus Christ." Social media accounts for the school show that prayers are said, religious imagery is found throughout the school's classrooms, and lessons involve biblical passages. The school declined to comment for this story.

It's uncertain how many partnerships are operating in Texas, because data from the Texas Education Agency is incomplete. A TEA spokesperson told us 174 partnerships are in place, but a list from the agency showed 57 districts partnering with 133 private entities. Three Dallas ISD partners – two day cares and a K-12 school – include "Christian" in their names. Those schools, unlike Alpine Christian, have no reference to religion in the materials found on their websites or social media. (Directors for those schools did not return calls for comment.)

"Taxpayers should never have to subsidize private religious institutions," said Imelda Mejia, communications director for the Texas Freedom Network, a nonprofit that works to support religious freedom. and individual liberties, particularly in public education. "But the biggest concern that I see, which is what I think is a very real concern happening all over Texas, is that our legislators aren't doing their job in funding our public schools. So, administrators have to get creative and look for funding elsewhere."

Hicks said, despite his personal belief in the benefits of Christian education, that his intention is not to seek out religious schools or promote religious education. "That's not what I'm doing right here. What I'm doing here is I'm trying to take care of this public school. And this is the only tool I have left to make sure my kids are taken care of in Fort Davis." He also points out that enrolling in the Christian school is a choice made by local parents, so no one is being forced to participate in that environment.

There's another wrinkle: Despite the funding influx, Fort Davis ISD partner private schools that the Chronicle reached said they are going to keep charging their current tuition – which runs about $5,500 to $6,000 a year – unless a child is eligible for free pre-K under state guidelines. The extra state revenue will provide a level of stability for schools struggling to make ends meet, they said. "We really didn't want to change and disrupt the tuition structure until we saw how this partnership would play out," said Katie Nixon, Alpine Montessori Board president. "We will continue to evaluate tuition and fees as we go along." Lindsey Balderaz, the Transformative Leadership Academy director, said they're planning to use the extra state money to increase scholarships for lower-income students to afford their tuition and keep their tuition rates from inflating.

What About Us?

For Austin ISD and Round Rock ISD, these partnerships are hardly boons. Both districts have partner facilities, but while Fort Davis and Pawnee ISDs take about half of the state money these partnerships elicit, AISD and RRISD are giving the vast majority of the funding to their private partners.

AISD has at least 16 partner facilities under the administrative umbrella of United Way and its Success by 6 initiative, which aims to prepare kids to be academically and emotionally ready for kindergarten. "[We're] ensuring that these private schools are utilizing high-quality materials and curriculum and that their teachers are well trained, so that when these students do enter our schools at kindergarten, they're well prepared," said Jacob Reach, AISD chief officer of governmental relations. He said the program supplements a wide spectrum of pre-K and Head Start programs throughout the district, and the district only retains a small percentage of their added state funding for administration and training costs. "This isn't making money for the districts," he said. "It's just covering the cost." A United Way spokesperson said 10% goes to Austin ISD.

RRISD partners with five day care and Head Start programs also under the umbrella of United Way, according to Denisse Baldwin, the district's early learning director. The district only partners with schools offering half-day programs for 3-year-olds who meet guidelines for free schooling. The additional state funding "helps lower the overhead cost for providers, whether that's for salary or for building instructional materials," she said. Baldwin said the district only takes 8% percent of the state funding, with the rest going to the providers.

Uneven splits benefit the private entities, but in some cases they may also be a result of the competition that the partnership model creates. For instance, Alpine ISD Superintendent Michelle Rinehart said she learned about Fort Davis ISD partnering with her local private schools when the deals were almost done, and it didn't sit well with her that a district 25 miles away was getting additional revenue for her community's kids. "I'm really of the mind that if private schools are wanting to enter these partnerships, they should enter them with the public school district in which they geographically reside," she said. Rinehart, who also called remote partnerships a "loophole" in the law, said she intends to try and form partnerships with Alpine Montessori and Alpine Christian next year, essentially taking them from Fort Davis ISD.

Pawnee Superintendent Annis said the reason his district offers private providers 60% of state revenue and other big investments in their facilities is to prevent other districts from swooping the private schools up. As it is, they're put in a position of having to make a better offer than Pawnee.

Rinehart said districts should get "first right of refusal" in these deals, meaning the local district should be approached to gauge interest before a remote district forms a partnership.

Hartmann, who now consults with districts on educational policy, agreed on the need for a first right of refusal. "It makes sense," she said, "that if there is going to be a partnership between public and private, that it is a communitywide partnership that benefits all schools in one community, instead of private schools partnering with an outside public entity." But she said that overall, these partnerships – even remote ones – are a win-win for parents, private providers, and districts. When done right, she says, they are longstanding legal partnerships that can provide additional service to parents and students. "Often the day ­cares and Head Start centers can expand access to afterschool care and resources for low-income students that wouldn't be available in small school districts," she said.

While the unusual partnerships used by Fort Davis and Pawnee appear to be limited to those districts, more superintendents may embrace the idea if their budgets are stressed from losing funding to a state voucher program – something that could lead to even more tax money going to religious education.

* Editor's note Friday, Oct. 27: A previous version of the story incorrectly stated Austin ISD receives 6% of funding elicited by a public-private partnership; a copy of the contract shows it is 10%. The Chronicle regrets the error.

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