Texas School Finance Debate: Perceptions and Realities

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Texas School Finance Debate Perceptions and
Realities

• Lynn Moak
• Partner
• Moak, Casey Associates LLP
• lmoak_at_moakcasey.com

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State Spending

• Perception State spending for all services has
  risen dramatically
• Reality State general fund spending has declined
  after inflation and population growth have been
  taken into account

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Public School Revenue

• Perception Public school revenues have risen
  dramatically over the past several years.
• Reality Public school revenues have been
  virtually constant since 2001

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The State Investment

• Perception Despite difficult times, the State
  has continued to increase state funding
• Reality State commitments have not significantly
  increased since 2000 and the percentage funded by
  the state has dropped from close to 50 to almost
  a third

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• Reality Dependence on the Property Tax should be
  reduced. Achievement of a 50 state local share
  will require additional state funds of 4.5
  billion (.40 cent tax cut)

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Property Taxes

• Perception Increased property taxes have been a
  function of decisions by school boards to raise
  taxes
• Reality Increased property values, not rates,
  have been the driving force behind higher
  property taxes

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Level of Taxation

• Perception Property tax increases always
  outstrip income
• Reality The percentage of personal income
  devoted to property taxes hardly changed over the
  decade 1992-2002

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Taxes among governments

• Perception All tax rate increases are
  attributable to schools
• Reality More than one third of tax increases are
  attributable to other governments

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Equity

• Perception The school finance system is
  equitable and the Court agrees.
• Reality LBB confirms that equity has suffered
  significant deterioration

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Thoughts on Equity

• Sources of Inequity
• Outdated weights and adjustments
• State Initiatives
• Debt Service equalization process
• Failure to adjust structure

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Equity continued

• Legal Prerequisites
• Demonstrate tax variations in cost of basic
  program after adjustments
• Relate property tax to taxpaying ability
• Address sources of inequity in new terms
  structured on 1995 and 2005 decisions
• Continue political initiative

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Fundamental Problems

• Between 1998 and 2004, the state relied
  significantly upon rising property values and
  school board tax rate increases to fund
  educational improvements, growth, and inflation
• Structure prevented/discouraged productivity
  gains
• Result is a state property tax

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Perceptions

• Texas public education has sufficient funding
• Texas public education needs reform
• Texas schools are mediocre at best
• Texas school administrators are responsible for
  the failure of past efforts

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Funding Requirements

• Perception Texas public schools have enough
  funding
• Legislature often funds special initiatives, not
  growth and inflation
• Inflation and enrollment growth alone require
  1.5 billion of new funding per year (4.5
  billion per biennium)
• Increasing standards require greater investment
  for English language learners and disadvantaged
• Challenges are not being met by the funding
  system or reforms

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Legitimate Financial Requirements

• Enrollment Growth
• Facility Support
• Teacher Salaries
• Other Salaries
• Utilities and services
• New Programs

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Reform

• Perception Texas educators are resisting reforms
  favored by the legislature
• Reforms are mostly political or cosmetic none
  address changes in education process or resource
• Real reform agenda not considered by legislative
  or educational community

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Legislative Reforms

• School Calendar
• School Board Election Date
• 65 Direct Instructional Cost
• Increase Financial Reporting
• End State Textbook Program
• Private Control of low performing schools

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Results

• Perception Texas schools are failing to meet the
  challenges of educational accountability system
• Standards have been raised progress is being
  made
• Accountability systems in place

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Educational Standards and Results

• New Testing System
• Harder tests, more subjects
• Revised Accountability Systems
• 36 measure state system
• Rating on lowest measure
• Increased Requirements and Sanctions
• State takeover/consolidation option
• Parental choice
• Required Improvement

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Influence of the Education Community

• Perception Texas educators were responsible for
  the failure of the legislature to pass a school
  finance bill
• Reality The failure of the multiple sessions was
  the result of a wide variety of complex factors
  including failures of leadership to compromise,
  lack of agreement on taxes, and lack of support
  for critical elements

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Legislative Outcomes

• Agreement on most elements of school bill with
  less than 5 issues (65 definition, November
  board election. equity level in out years)
• Legislative failure to compromise on critical
  differences

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Needed (but unlikely) Debate

• Will the revenue system of the future support the
  full range of state services?
• How do we define adequacy and equity in terms
  meaningful to the courts and the legislature?
• Will the system address increase in productivity
  of the education dollar?
• How should the financing of high schools be
  restructured to produce desired results at the
  state and local level?

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Moak, Casey Associates, LLP

• Lynn M. Moak Joe Wisnoski
• Amanda Brownson, Ph.D.
• Associates
• Daniel T. Casey Bob Popinski
• Partners Research Analyst
• Kathy Mathias
• Larry Groppel
• Consultants
• 1801 N. Lamar Blvd., Suite 202
• Austin, Texas 78701-1050
• 512/485-7878 512/485-7888 (fax)
• http//moakcasey.com