State and Federal Budgets Skimp on School Funding

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A teacher at Stewart Elementary, which received an Improvement Required rating by the State, works with students in reading class. Photo by Scott Ball.

Scott Ball / Rivard Report

A teacher at Stewart Elementary works with students in reading class.

With proposed budgets reflecting the spending priorities at the federal and state level, politicians are quick to point out increases to education funding. However, budgets are tricky things, and the same appropriation can reflect both an increase in funding and a decrease in spending.

Take the Texas Senate’s proposed budget for education: Sen. Jane Nelson (R-Flower Mound) praised the budget’s education funding increase of $4.6 billion. That figure, however, relies primarily on increases in revenue from local property taxes: as property values go up, homeowners pay more in taxes. However, districts would not necessarily get more money, because the State would lower its share by $1.8 billion. 

To understand how local taxpayers and state government share the cost of public education, please see this helpful, animated explanation from Houston Public Media.

With the passage of the Senate’s proposed budget, the state share in public education, which was at almost 50% in 1993, will drop to 38% by 2019, according to Eva DeLuna Castro, analyst with the Center for Public Policy Priorities (CPPP).

“The State itself isn’t putting a single dollar into the formula,” Castro said.

That is an example of an increase in funding, and a decrease in spending, which sounds more responsible than it is, Castro said. Even with an increase in total funding, the budget can still function as a cut if it does not adequately cover inflation.

With the State relying on property tax increases and decreasing its share of spending, the budget increases primarily go to essential needs of the Texas Education Agency and the teacher retirement system. The amount of money spent on students, what is known as the “average daily allotment,” is not enough to cover inflation, Castro said. The U.S. inflation rate in February was 2.7%, the highest since March 2012.

Meanwhile, proposals to end the franchise tax (SB 17) and cap local taxes (SB 2) will continue to constrict revenue streams. 

Such efforts “speak not to the lean and mean economic policies of Texas, but to the real lack of commitment to education,” said State Rep. Diego Bernal (D-San Antonio). Bernal is vice chair of the House Committee on Public Education.

In the House, K-12 funding fares a little better, but not much, Castro said. It raises the daily allotment to cover inflation.  

Going into the 2017 legislative session, education advocates braced themselves for shortfalls. Republican legislators have repeatedly reminded the public that this would be a lean year in terms of revenue. Some of that is due to tax cuts passed in 2015, Castro said. 

Others have suggested that another name for a “lean year” might be a “rainy day.”

The Texas State Teachers Association (TSTA), CPPP, and others are calling on the State to use money from its Rainy Day Fund, which contains more than $10 billion of excess revenue put aside by the state for use in case of revenue shortfalls. The fund would approach $11.9 billion by fiscal year 2019 if untouched.

“At a time when Texas has a Rainy Day Fund surplus of $12 billion, the largest of its kind in the country, failing to adequately fund our neighborhood schools in unconscionable,” TSTA President Noel Candelaria said. “TSTA’s recent poll, conducted by a respected bipartisan polling team, found that 71% of Texas voters believe some of the Rainy Day Fund should be used to support public schools.” 

A proposal in the House (HB 2) suggests dipping into the Rainy Day fund, but only for Medicaid and the teacher retirement fund.

Efforts are being made in both houses of the legislature to study current school funding formulas. In 2016, the Texas Supreme Court challenged the legislature to reform the system, which it called “Byzantine.” 

“If every formula and mechanism stays the same, then an infusion [of emergency funds] is a temporary relief,” Bernal said. “If we change the formula or mechanism then we improve the system.”

Analysts are doubtful that meaningful change will occur in this legislative session, which will put districts even further behind by the time the 2019 Legislature convenes.

While traditional schools will be making do with the same $5,140 per student average daily allotment they’ve had for the past two years, school choice could see a bump in funding if the Senate can figure out a way to pass a bill (SB 3) creating education savings accounts (ESAs) and tax-credit scholarships. The ESA would allow families to use 60% of a public school district’s per-student budget to pay for private school. Economically disadvantaged families would receive 75% of that amount, and special education students would receive 90%.

ESAs would be funded by state education funds, not funds generated locally through property taxes. So in this case the State, which is cutting costs wherever possible, would add to its spending.

“The Senate hasn’t come up with a way to pay for that,” Castro said.

The other program proposed by SB 3, the tax-credit scholarship, would create a nonprofit scholarship organization to distribute funds for private school tuition donated by businesses and private individuals, who could then claim tax write-offs.

Through the SB 3 programs, the CPPP estimates that public schools would lose $2 billion if 5% of students choose to use ESAs. While the Senate has not figured out how to fund the entire ESA program, it would definitely divert the State’s current share of the average daily allotment for students choosing to go to private schools using their ESA. The tax write-offs created by the tax-credit scholarship program would also come out of the State funds for education.

In San Antonio Independent School District, if 5% of the current student body chose to go to private school through an ESA, the district would lose $21 million, according to the CPPP. That is more than the money generated by the tax-rate increase voters approved in November. The 13-cent increase in the district’s tax rate generated $15.6 million locally, with the state kicking in an additional $16.5 million. The rate increase passed with broad support, largely because local taxes raised in SAISD are matched by the state. That boost would be more than nullified by the ESAs.

The legislature is also considering increased facilities funding for charter schools.

The state’s signals that school choice remains a high priority echoes general signals given by the White House budget, which proposed $250 million for an unspecified “new private school choice program” and a $168 million increase to the federal charter schools program, currently funded at $300 million.

An additional $1 billion would be allocated to encourage districts to fund open-enrollment choices for disadvantaged students under Title I. That means that if a disadvantaged student wanted to go to a charter school, that school would receive not only state funds, but federal and local as well. SAISD, which is categorized as a Title I district, currently estimates its losses due to charter school enrollment at $6.2 million per year.

The White House budget shrinks the U.S. Department of Education budget by 13%, ends the AmeriCorps service program funding, and cuts funding for Title II, money intended to provide teacher training.

“This budget would cut most of our investment in leadership programs with the cuts to Title II,” SAISD legislative coordinator Seth Rau said. “By ending AmeriCorps, we would lose many of our CityYear and Teach for America corps members. It is unclear how the Title I changes would affect us.” 

Charter school leaders also have spoken out against the White House budget. In an op-ed for USA Today, charter leaders from the county’s most prominent charter networks said that while they “appreciate the proposed investment in new schools like ours,” they could not support a budget that hurts public schools.

“Budgets are statements of priorities, and this one sends a clear message that public education is not a top priority,” according to the op-ed.

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