Money, Money, Money

School Finance

Consensus of Group 2

Question 1

We had very similar ideas on the top three historical events in Texas Education.  We agreed on the “Robin Hood” legislation that took money from the wealthy school districts to be distributed to the school districts in need, the Gilmer-Aiken Laws that impacted how the state funded schools and how schools operated - increased teacher salaries, formalized the school year, and structured how the State Board of Education and the Commissioner of Education were selected.  Finally the decreasing of funds while raising standards during the 2006 when legislators decided to decrease property tax, which paid for education, and replaced that money with business franchise tax and cigarette tax.

Question 2

For the question dealing with issues impacting the state formula, we were a little more varied in our wording but there were some similarities in the ideas.  First, we agreed that the CEI – Cost of Education Index – was outdated since it was over 20 years old.  Next, the local tax appraisal districts are not consistent and can be very political.  Finally, the idea of recapture and how it impacts both the wealthy and the poor school districts was our third choice.

Discussion Question 1
Jay Cantrell
Top Three Events in Texas School Finance
After listening to the lecture by Dr. Nicks and reading about Texas school finance on different websites, I have come to the following conclusions about the three most important events. These will be listed in chronological order and not order of importance.

First, Reconstructionists were voted out of office in 1873 which lead to the passing of a new Texas Constitution in 1876. This new Constitution was one of my top three because of language that was included, “A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, it shall be the duty of the Legislature of the State…” A duty is an obligation. This language has lead to school districts challenging the state on funding issues. Without this duty, school districts would have a hard time proving the state was not meeting its obligation. For this reason, I have chosen the new Texas Constitution as one of my top three as it kicked the door open for districts to demand equity from the state. Without this line in the Constitution, the state could pawn their duty off on the local districts.

My second choice in my top three has us fast forward a little over 100 years when Edgewood ISD challenged the state on their duty of providing funding for education in an equitable manner. This lawsuit led to my second choice – the Robin Hood Plan. I have chosen the Robin Hood Plan because it did something good and bad at the same time. It provided money to those school districts that were poor and could not compete with the richer schools. But, it did it at the expense of those schools with more wealth which in turn impacted the education they could provide to the students of their district. This positive/negative impact has continued to lead the Texas school finance journey to my third event.

My third event revolves around the lawsuits that are pending across the state at present time. While only history will reveal the true impact of these lawsuits, I believe we are at a crossroads in Texas school funding and that educational courses in the future will reference this time for the changes it brought. I chose this event because I am an employee of one of those school districts that have joined one of the lawsuits and are claiming our current system is not providing equity. Why do those of us in Paducah ISD feel this way? Because a student thirty miles to the south of us is worth double what our kids are. How do you explain that away? If I were to go to a parent and tell them, “Your child is worth half as much as your neighbor’s child,” I would be criticized and deservedly so. This system is a product of all that has happened previously. Our hope is that the courts will force the state to find a plan that provides an education based on equity across the state where all students are valued equally.

Trevor Edgemon

My top 3 events in Historical Background

#1 Texas realizing the importance of education

When Texas declared its independence from Mexico in 1836 the Texas Declaration of

Independence cited as one of its reasons for seeking independence, “No system of public education has been established.” There were other grievances provided, but not providing a system of education impacted all citizens of Texas. The next organized attempt to fund public education in Texas was made during 1839 – 1849 under the leadership of Mirabeau B. Lamar, the second President of the Republic of Texas. Mirabeau B. Lamar is known as “The Father of Texas Education” because he was the driving force that persuaded the legislature to establish three leagues of land in each county to support education and 50 leagues of land for two universities. These land grants provided the initial funding for Texas A&M University and the University of Texas. The Republic of Texas became the state of Texas in 1845 and the new Texas Constitution provided for the establishment of free schools and called for state taxes to support education.

#2 Poor vs. Rich

 In the late 1980s the state of Texas faced a school funding crisis.   The issue was property taxes and a school district’s ability to levy funds from local sources. The result of the crisis was several law suits.  One of the most recognized was Edgewood ISD v. Kirby. Edgewood ISD in the San Antonio area is a poor school district with limited ability to levy property taxes comparable to neighboring districts.  Alamo Heights could levy local taxes at a near 3-1 rate compared to Edgewood. With this being the only source of funding at the time Alamo Height could levy greater amounts of revenue.

 #3 Decrease funding while raising Standards

In 2006 legislators decided to decrease property tax, which pays for education and replace that money with business franchise tax and cigarette tax.  All districts were compressed to a lower tax rate as a result of HB 1 (2006). The formula is: 2005 M&O tax rate X state compression rate (66.67% for 2009-10) = Compressed Tax Rate Example:$1.50 (most common 2005 M&O rate) X 66.67% = $1.00  This has been a miserable failure.  Many schools argue that lawmakers ran afoul of the state constitution 2011 cutting $5.4 billion in education aid while simultaneously implementing more rigorous “college- and career-readiness” standards. We either want increased standards, and we are willing to pay the price, or we don’t.   This could be two separate issues but I tied them into reducing the funding for Texas school.

Shawn Clubb

One of the top three events in school finance history would have to be in 1873 when the Reconstructionists were voted out of office. A new Texas Constitution was established and changed most of the laws related to education. This new constitution stated “A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, it shall be the duty of the Legislature of the State to establish and made suitable provision for the support and maintenance of an efficient system of public free schools.” (Texas Constitution. Article 7, Section 10). This issue is the basis of recent lawsuits involving the State's funding of education and restrictions it has placed on local school districts.

Another top event in school finance would be The Gilmer-Aiken Laws. These laws were passed during the 51st Legislative Session of 1949 and significantly changed how the state funded schools and how schools operated. They increased teacher salaries, formalized the school year, and structured how the State Board of Education and the Commissioner of Education were selected.

One last event that was important to school finance history would be when Senate Bill 1 was approved by the Texas Supreme Court in 1995. It was dubbed the “Robin Hood Plan” because it took excess funds from the wealthy districts and sent it to the poor districts. Although this plan helped poorer school districts it also took away some of the educational benefits of the wealthy districts. This plan has led to several lawsuits which claim that this is in effect a state tax and violates the Texas Constitution

Discussion Question 2
Jay Cantrell
Issues Impacting the State Formula

I believe one of the issues impacting the state formula is that the Cost of Education Index is outdated! How many of us would choose to go to a doctor or mechanic that was still using information from 20 years ago? Districts will have undergone many changes during that time. Schools that were once rural districts may now be metro-plex areas – for instance Frisco ISD. While I was coaching in Princeton in the late 90s, Frisco was a one high school town. That is definitely not the case now. Some schools that were thriving in the early 90s may now be struggling to survive, to just stay afloat. Those schools that were struggling but have found ways to thrive are another example. How could anyone argue that using information over 20 years old is the best way to make a decision?

Another issue that school financing must face is the instructional allotment monies. Schools across the state are given money to purchase materials for students to use in class. Most schools are still teaching with textbooks – something that is not easily updated and is difficult to repair and expensive to repair or replace. Also, information is changing at a much higher rate than in the past. These print materials will become outdated at a much faster rate than in the past. I consider this to be an important issue challenging the state formula because we will not be preparing students to compete globally with materials that are outdated. While technology allows for easier updates of information, it is not cheap. Laptops, ipads, ipods, online programming, online textbooks are all going to be expensive to develop. But, if we are trying to prepare our students to compete nationally and then globally, we must find a way to make these materials available on a greater basis.

I believe a third issue impacting the state formula is that we do not have a standard set when it comes to evaluating property values. In one community, properties may be valued at a lower level than one 30 miles down the road. The state takes these figures at face value. With these figures not being consistent across the state, students could suffer due to the opinion of the local assessor.

Trevor Edgemon

Funding

 # 1 Recapture

The provision of the Texas school finance system that was created in 1993 in response to the Edgewood II Supreme Court ruling finding the system to be inequitable and, thus, unconstitutional because “To be efficient, a funding system that is so dependent on local ad valorem property taxes must draw revenue from all property at a substantially similar rate.” Recapture requires certain property wealthy school districts to share locally-collected property tax revenue with the state for redistribution through the FSP. Also known as “Robin Hood,” the recapture system would benefit more than 90% of students if it weren’t for the inequity frozen by the Target Revenue Hold-Harmless (TRHH).

#2 Basic Allotments

The basic allotment of money per student is adjusted in a variety of ways:  using the small and mid-size adjustment or sparse adjustment and for the cost of education depending on the district characteristics.  The Cost of Education Index that is used to determine this allotment has not been updated in 23 years.  The initial starting number that, after adjustments for district and student cost differences is used to calculate foundation school program (FSP) costs and state aid to school districts. In theory, it is the minimum cost of a basic education. It is currently the greater of $4,765 or an amount calculated by multiplying the state average wealth per pupil by an arbitrary number (currently 0.0165) set in statute.

3# Local Tax Appraisal districts

Local property taxes will always vary and there are ways that taxes can be adjusted both for residential and business entities.  Some districts truly have lower property values and some districts have low property values with homes that should be at higher tax rates.  The Appraisal Districts and the Tax Assessor can be very political and they are responsible for placing a value on property.  If you take my house and put it in Highland Park then it is worth about $350,000-400,000.  It is currently worth 125,000 were it sits.   This is common sense but you can see the tax differences.  

Shawn Clubb

Three issues that have had a significant impact (in the last decade) on formula funding are:

1. The Property Tax Relief Law passed in 2006 and revised in 2009. This law guaranteed school districts would receive a set amount of funds per students according to their average daily attendance. This would compensated the districts for the mandatory reduction of their local maintenance and operations tax rates from the rates that were adopted in 2005.

2. In HB 3646, passed in 2009, by increasing the basic allotment and reducing recapture, more funds were allocated to school districts. However, this bill also included mandates that required districts to pay increases to teachers and other professionals. Superintendents argued that these mandates were not covered by the state.

3. House Bill 1 was a property tax relief bill that compressed the maintenance and operations tax rate from a maximum of $1.50 to $1.00. To make up for the loss in revenue from the loss of property taxes, the state would pay the difference. Therefore, revenue could only be increased through a growth in student enrollment or through a tax ratification election calling for a tax increase and requiring a public vote of approval.

Discussion Question 3
Jay Cantrell
Equality means that students have equal access to the basics of a public education.
Reading, math, science and social studies would be basics that all students should have an equal access to. 

Equity means that the system is fair to individuals and takes into account those that have different needs.
Special education, GT, Bi-Lingual are all examples of equity as it pertains to the differing needs of students. 

Adequacy equals a minimum level of support from the state to provide for success by students.
Teacher salaries would be the primary example of adequacy and instructional materials would be a very close second as both are necessary to provide a minimal level of success by students. 

Trevor Edgemon

Adequecy, Equity, Equality

Adequacy,The operative definition with respect to Texas public school funding is the amount of money schools would need to offer an “accredited” or basic program, or meet minimum state education requirements, with “adequate” being defined by the Texas Supreme Court in the West Orange Cove decision as the requirement that public education accomplish a general diffusion of knowledge.”

Equity, the term refers to fair or equal distribution of resources for schooling, taking into account student differences and school district characteristics. The standard used by the Texas Supreme Court is a taxpayer equity standard, which means “equal yield for equal effort.” The Court did not require complete equity, saying the Constitution only requires “similar revenue for similar tax effort.” In other words, the school finance system is to be property-wealth neutral: a district's property tax base should have little or no impact on its ability to finance the district’s program cost (funding level) established by the Foundation School Program (FSP), or on its ability to enrich above the basic program.

Equality in the state funding formula provides equal funds for educational programs that benefit all students and that enables a district to be able to meet state accreditation standards. This would include reading, math, and other basic courses.


Shawn Clubb
Equality means every student has the same access to the same type of basic
educational program.
Examples- basic course like reading, math, science

Equity means that the system is fair and responds to the needs of individuals
Examples- “Robin Hood”, free or reduced-price lunch program

Adequacy  means that the school district receives financial support sufficient to
meet state accreditation standards.
Examples- standardize testing and “No child Left Behind