“Education is a lifelong process that benefits individuals and entire communities and countries and helps lay the foundation for the future.”
- President Ronald Reagan
- 1984 - HB 72 Gives pay raises to teachers, revamps school finance to improve academic achievement.
- 1993 - SB7 passed to ensure that districts had more than a set amount of property wealth per student.
- 1995 - SB1 gives more authority to local school districts.
- 2003 - Inadequate state funding to school districts leads to litigation causing an overturning of most of the school funding system.
- 2004 - Governor Perry institutes school finance incentive proposals to send more funding to schools that excel in overall performance.
- 2006 - Governor Perry forces school districts to cut local taxes promising to replace those funds with a new state business tax, which never materialized.
- 2011 - The Federal "Education Jobs Bill" sends $830 Million to Texas but funding is held up in Texas Congress due to disputes over how money will be used.
(click the link above for more information on Public Education in Texas)
In 1984, the Texas Legislature passed what is commonly known as House Bill 72, enacting sweeping reforms of the public school system. House Bill 72 provided a pay raise for teachers, revamped the system of public school finance to funnel more money to property-poor school districts, and took many other steps aimed at improving the academic achievement of students.
A second major reform to the Texas Education System occurred in 1995 with the complete overhaul of the Texas Education Code. Passed by the 74th Legislature, Senate Bill 1 stripped the education code of several state-mandated rules and returned more authority to local school districts; gave the governor power to appoint the commissioner; gave the State Board of Education authority to grant open-enrollment charter schools, and established the separate State Board for Educator Certification.
Equity spending among school districts has been a driving force during the latter half of the 20th Century. From 1989 to today, the system of school finance has been subject to both legislative volleys and on-going court battles between those termed “property-poor” and those termed “wealthy” school districts. In 1993, the Texas Legislature passed new legislation intent on leveling the funding field for Texas schools.
- In this suit, property-poor districts challenged the second tier of financing created under the 1975 Foundation School Program law, claiming it to create unfair inequity in funding.
- The trial court found the system violated the Texas Constitution. The Court of Appeals reversed the trial court's decision.
- The Texas Supreme Court found that the system was "neither financially efficient nor efficient in the sense of providing for a 'general diffusion of knowledge' statewide, and therefore it violates article VII, section 1 of the Texas Constitution."
Senate Bill 7 was passed to ensure that none of Texas’ school districts had more than a set amount of property wealth per student. Those districts that exceed the set limit, can choose among several options for giving away some wealth, including merging tax bases with one or more “property-poor” districts; sending money to the state; contracting to educate students in other districts; consolidating voluntarily with one or more districts, or moving some taxable property to another district’s tax rolls.
During the 1990’s dissatisfaction with recapture mounted. At the same time, modest state funding increases were not keeping pace with the cost of education in Texas. To meet revenue needs of districts, school boards raised property tax rates. In fact, by 2003, nearly 690 school districts were at or near the statutory maximum tax rate of $1.50. This, in turn, sparked litigation to overturn the system because of high taxes and inadequate funding.
1991 - Edgewood I.S.D. v. Kirby (II)
- In response to the 1989 case, the Texas Legislature adopted SB 1 in 1990, which required biennial studies on district inequity, followed by adjustments to address the gaps. The mechanism for funding remained the same.
- The Texas Supreme Court found the system remained unconstitutional.
1992 - Carrollton-Farmers Branch I.S.D. v. Edgewood I.S.D.
- In 1991, the Legislature passed House Bill 351, which created 188 County Education districts-which were allowed to levy state-mandated property taxes and redistribute the revenues to member districts.
- Districts sued, asserting that HB 351 levied a state ad valorem tax in violation of Texas Constitution Article VIII.
- The Texas Supreme Court sided with the plaintiffs and found the bill unconstitutional.
1995 - Edgewood I.S.D. v. Meno
- In 1993, the Legislature passed Senate Bill 7 which, instead of a state property tax, created a provision-known as "recapture"-that redistributed property tax dollars to create equity.
- School districts of all economic strata sued on the same grounds as in the 1991 and 1992 cases.
- The Texas Supreme Court found for the defense, upholding the system.
In 2001, a group of school districts mounted a lawsuit that became known as West Orange-Cove CISD v. Neeley. When the case went to trial in 2004, over 300 school districts were involved as plaintiffs or plaintiff interveners. Plaintiff school districts argued that, because they must levy the maximum property tax rate to maintain equity and adequacy, the local property tax had become equivalent to a state ad valorem tax, which is prohibited by the Texas Constitution. They also argued that the state finance system underfunded public education, preventing the districts from meeting their responsibilities to promote the General Diffusion of Knowledge.
2001 - West Orange-Cove Consolidated I.S.D. v. Alanis et. al.
- In this case, plaintiff school districts argue that, because they must levy the maximum property tax rate to maintain equity, the local property tax has become equivalent to a state ad valorem tax, which is prohibited by the Texas Constitution.
- In March 2003, the suit was argued before the Texas Supreme Court, which ruled that the case should not have been dismissed by an appeals court and sent it back to Texas ' 250th Judicial Court in Travis County for a trial.
In September 2004, the Travis County District Court ruled in favor of the plaintiffs and set a date of October 1, 2005 for the Texas Legislature to remedy the unconstitutional aspects of the school funding system, including unconstitutional aspects of facilities funding.
2004 - West Orange-Cove Consolidated I.S.D. v. Neeley et. al.
- Judge John Dietz, the Travis County trial court judge declared:
- The state’s school finance system fails to provide an adequate, suitable education as required by Article VII, section 1 of the Texas Constitution
- Some districts are forced to tax at the $1.50 cap on maintenance and operations taxes, violating the Texas Constitution
- The Texas school finance system is not financially efficient or efficient in the sense of providing for the mandated adequate education.
- The system for funding school facilities is inadequate and violates the Texas Constitution
- The judge issued an injunction against state spending for education if the Texas Legislature does not remedy the problems of the funding system by October 1, 2005.
In 2006 the legislature, prodded by Gov. Rick Perry, forced school districts to cut local school taxes and promised to replace the lost school revenue with proceeds of a new state business tax. That business tax has never produced the revenue needed, and the state now has a structural shortfall of $5 billion a year as a result.
In May of 2006, the Texas Legislature made major changes to the funding of public education, primarily by substituting state revenue for local property tax revenue in the formulas. The nature of those changes shifts the funding of many, perhaps even most school districts in Texas to a “hold-harmless” based upon each district’s 2005-06 state and property tax revenue despite the statutory formulas, which were also adjusted. Because this analysis is based on funding from prior years, the impact of those formula changes is not analyzed. However, since the effect of the “hold-harmless” is to freeze prior funding, and therefore prior inequities in place, it is unlikely that the conclusions would be dramatically impacted. The formula has produced unintended side effects that may lower the incentive for some schools to improve educational quality.
Because Texas districts vary so widely in uncontrollable cost differences, Texas school finance formulas provide funding adjustments to pay for those differences. Comparisons of funding between Texas school districts are usually and most appropriately done on the basis of funding per weighted student in average daily attendance, or “WADA”. The formulas adjust both for differing costs of instructional arrangements resulting from the varying education needs of students (program weights) and for the differences in costs between districts as a result of diseconomies caused by size (the small and sparse district adjustments) and differences in wage markets due to competing wages and “desirability” factors (the Cost of Education Index, or “CEI). The controls for funding differences that result from uncontrollable cost differences due to the nature of the student populations of districts and to the varying impacts of salary market forces, through the CEI and economies or diseconomies of scale.
The school funding system and fairness depend on state, as well as local, support. But state funding has dropped, not risen. During the last two decades, the state has reduced its contribution from 52 percent to 36 percent. Addressing these funding inequities can improve the educational funding system and help the citizens of Texas and the region to meet the challenges of the 21st century.
Recent News - 2010-2011
Perry Poisons Education Funding - September 17,2010
How will Texas schools fare without federal education money?
On Sept. 3, Texas submitted an application for its $830 million share of the $26 billion in job support cash allocated by Congress under House Resolution 1586; $10 billion of that was set aside for education spending, intended to prevent an estimated 160,000 teacher layoffs nationwide and alleviate the pressures of low teacher salaries. If Texas' application had been approved, the Austin Independent School District stood to gain $17.5 million.
But on Sept. 8, the Department of Education announced that it was rejecting Texas' application because of what amounted to a poison pill inserted in the application by Texas Education Commissioner Robert Scott on Perry's behalf that was designed to flout an amendment in the enabling legislation authored by Travis County Congressman Lloyd Doggett. The amendment, which obliged Texas to maintain education spending for three years (rather than one year, as is the case for other states), was a response to Perry's use of American Recovery and Reinvestment Act money in 2009 to shore up the state budget. Back then, Doggett's office calculated that AISD was supposed to receive $78 million in stimulus money; instead, due to Perry's diversion, the district only got $12 million, and the rest went into state coffers. This time around, according to Texas Education Agency spokeswoman Debbie Graves Ratcliffe, the application rules clash with clauses in the Texas Constitution barring long-term spending commitments. Therefore, said Ratcliffe, "We can't make those assurances until the Legislature meets and adopts a budget." Without a commitment, the application is invalid.
Drop in the Bucket: Disputed Fed Ed Funding Comes to Texas - April 22, 2011
After a long fight, Texas looks likely to receive a delayed $830 million in school funding under the federal Education Jobs bill. Yet lawmakers still have to solve how, when, and where to spend that cash. On April 15, Commissioner of Education Robert Scott announced that he had filed the state's application with the U.S. Department of Education. He wrote that Texas "has been denied access to its share of these funds for nearly nine months because of an amendment added to the Education Jobs bill by Representative Lloyd Doggett." That amendment, authored by the Austin Democrat and backed by the entire Texas Democratic congressional delegation, required Texas to maintain education spending for the next three years. Intended to prevent a repeat of the 2009 bait-and-switch, when Gov. Rick Perry used $16 billion in federal stimulus cash to backfill the state budget, the amendment was eventually stripped away as part of the congressional budget deal to avoid a federal government shutdown. Doggett called the move "disappointing, but hardly surprising," and warned that "this is money that can either help avoid school closures and teacher terminations or be diverted like $3.25 billion in federal aid to education in 2009."
If approved by federal Education Secretary Arne Duncan, the cash will only fill a fraction of the hole in Texas' education funding. The draft House budget drops school funding by $10 billion over the 2012-13 biennium; the Senate proposes a somewhat less devastating $4 billion cut. Both chambers are struggling to pass measures to fill the void. Public education expert Rep. Scott Hochberg, D-Houston, is pushing two measures – House Bill 2484 and HB 2485 – that would severely overhaul major aspects of school property taxes, including a revamp of the "Robin Hood" recapture program. However, many school districts considered "property rich" under recapture standards, including Austin, fear that Hochberg's new numbers will only worsen their finances. Similarly, education unions fear that HB 400, giving school district administrators unilateral power to renegotiate teacher contracts and introduce unpaid furloughs, could go too far. In a sign of the desperate times, Senate Finance Committee Chair Steve Ogden, R-Bryan, and nine members of the State Board of Education have proposed taking the unprecedented step of pulling $2 billion from the state's $25.5 billion Permanent School Fund as a stopgap funding boost.
When the federal EduJobs bill was first proposed, it was supposed to be an extra boost for cash-strapped schools. Senate Education Committee Chair Florence Shapiro, R-Plano, who has her own sweeping reforms pending in Senate Bill 22, suggested adding the federal money to the supplemental budget bill intended to cover the state's current $4 billion deficit; that in turn would free up almost $1 billion from the Rainy Day Fund approved for spending this session for the 2012-13 biennium instead. Others are calling for the EduJobs cash to go straight into the next budget cycle. In a statement, Texas AFT President Linda Bridges said that would insure the money is "used as Congress intended – to save educator jobs." For TASA, when the state spends the money is less important than making certain it is spent on schools. As long as that is what happens, LaCoste-Caputo said, "We're not real picky about whether it's this biennium or the next."
