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2004
Special Session on School Finance
The
following two reports
were posted by Plano ISD to inform
and update the community regarding the
Texas
Legislature's Special Session on School Finance.
Special Legislative Session
Underway
April 22,
2004
Governor Perry has proposed a remedy
to the current Robin Hood plan that is called the Educational Excellence
and Equity Plan. Highlights of the plan include
- Splitting the property tax
base into residential and commercial property, with a statewide commercial
rate of $1.40;
- Reducing residential property
taxes by $.25, establishing a $1.25 cap;
- Allowing for up to 15 cents
local enrichment for school districts;
- Eliminating recapture;
- Placing a 3 percent cap on
annual appraised value increases of residential properties;
- An Education Incentive Program,
including additional dollars for high school advancement and teacher
excellence;
- Truth in Spending Initiative
calling on the Texas Education Agency to implement and improved financial
accountability system;
- Additional revenue options
including video lottery, cigarette/tobacco tax increase, adult entertainment
admission fee and closing the franchise tax loophole, among others.
How does this plan affect Plano
ISD?
The district is monitoring and
analyzing this plan and will do so as additional plans surface from the
legislators. We plan to report to you on the impact of various measures.
Unfortunately, it is difficult to fully judge the impact because the proposals
are not usually accompanied by details regarding implementation and costs.
Our
preliminary review indicates that under the Governor’s plan, each school
district will give up the revenue from its commercial and business
property. The plan amounts to a loss to
the district of approximately $35 - 50 million. Even though the plan protects
us for a period of time from a direct loss (in a “hold harmless” position),
there will be no infusion of new money to the district. We face increased
costs for growth and operational expenses including utilities and no way
to raise additional revenue. Under the Governor’s plan, we foresee that
Plano ISD’s financial outlook will not improve resulting in more budget
reductions.
While the Governor’s plan states
that more money is being put into school districts by the state, initially
it appears that this is simply a shifting of monies from local control
to state control.
Dr. Doug Otto, superintendent of
schools, says, “We strongly support the concept of equity and adequacy,
but it is incumbent upon me and the board of trustees to work for what
is best for the families of the students in the Plano Independent School
District. Our families demand quality schools and quality teachers. So
far we do not see a plan that will meet those demands.”
Do we have any specific recommendations?
-
We request that the legislature
update the CEI (Cost of Education Index - which is a variable based
on where we live) and ensure that it is funded outside the hold harmless
provisions. We should get additional dollars based on how much
it costs to live in this area in comparison to other areas of the state.
-
We request that the legislature
ensure that the opportunity for local enrichment be enacted prior to
2006.
-
We request an infusion of new
dollars that will actually affect the district’s ability to operate
and its ability to provide consistent and quality educational programs
for
children. The shifting of local property taxes from businesses
and corporations to state control does not add new money to the district.
-
We request that the legislature
ensure that the “hold harmless” provisions are based on actual expenditures
per pupil rather than revenues per pupil. This is a better measure
of Plano ISD’s costs.
Talking
Points from Texas Schools Coalition
May 7, 2004
This week has seen the passage
by a slim majority of a House Bill on property tax relief and school
finance (in priority order). This bill has been sent to the Senate where
another
bill will be presented early next week (according to reports). As
you have no doubt read in the news, there is little consensus in Austin
- under the plan that passed the House, PISD sees no relief to its budgetary
problems.
Following is information
prepared by the Texas Schools Coalition, the group of "high-wealth" districts that
has been working for the elimination of Robin Hood. It clarifies Plano
ISD’s position on many issues under discussion in Austin by the Texas Legislature.
1. What is your stance on a statewide
property tax?
We adamantly oppose for the following
reasons:
- The current local tax system encourages
a more efficient system of public education than a largely state-funded
system.
- A statewide property tax breaks
apart the close relationships between the business community and local
schools, to the detriment of both.
- State bureaucrats will take control
over educational programs away from the people who use the local schools.
- School boards and communities lose
the opportunity to be meaningful partners in economic development.
- Disrupts the ability of school
districts to control their revenue.
A statewide property tax sends the
benefit of local property value increases to Austin.
- The state will ultimately control
the process of appraising local property.
- Optional homestead exemption will
be repealed.
- Tax abatements, Tax Increment Financing
(TIF) agreements, redevelopment zones, and other local agreements involving
reduction or waiver of property taxes would all be jeopardized if the state
becomes the primary taxing entity.
- Forget “Independent” – Texas
will have a system of Dependent School Districts.
2. Should recapture be eliminated?
We believe that the legislature
should develop a long-term comprehensive school finance plan that will
provide alternative sources of revenue that can adequately provide funds
for public education, thus reducing the reliance on local property taxes
and thereby eliminating recapture for the majority of school districts.
This ideology in no way jeopardizes the balance of equity in the system and
in fact would provide greater equity than we see today. 3. What do you want the legislature
to do?
- Develop and implement a long-term
school finance plan that includes restructuring the tax system to provide
a stable and adequate stream of revenues to fund public education.
- Substantially reduce the state’s
reliance on local property taxes, which in turn eliminates recapture on
a majority of school districts and greatly mitigates it for the remaining
districts.
- Provide enough capacity to the
current system to allow all school children to pass state tests at the
exemplary level and to meet all other state and federal mandates.
- Allow districts meaningful local
discretion through access to local enrichment. These dollars should
not be necessary to support a quality general diffusion of knowledge,
they are for local communities to supplement the general diffusion
of knowledge
with programs they deem desirable. These dollars must not be recaptured,
subject to local referendums or limited on a year-to-year basis based
on the state’s ability to fund a guaranteed yield.
4. Why do we need capacity in the
current school finance system? Hasn’t the state increased spending
for public education by $7 billion dollars since 1999?
Since the 1998-99 school year,
state and local maintenance-and-operations (M&O) revenues have increased
by slightly more than $6 billion. Of that $6 billion, 90 percent
came from local property taxes and only 10 percent from the state revenues.
(Source: TEA statewide totals) The $6
billion in new money represents a 17.62% increase in revenues per enrollment.
However, new mandates
have eroded that amount as follows:
Change
in minimum salary schedule - 4%
Mandated
insurance increase - 2-3%
Step
pay raised compounded at 2.5% - 12-13%
Total
effect of Mandates (estimated) - 18-20%
As you can see, these three mandates
alone have wiped out the entire revenue increase since the 1998-99 school
year. Beyond that, Texas schools have had to contend with:
- Inflation
- New nutrition mandates
- Changing demographics and student
needs
- Payroll taxes
- Reduction in state money for educators’ insurance
supplement
- Rapid enrollment growth
- Increased safety and security concerns
- Individual graduation plans
- New accountability system
- Almost $1 billion in student cuts
in the 2004-05 state budget for extended year programs, master reading and
math teachers, disciplinary placements, guidance counselors for bilingual
students and technology infrastructure
- New high school graduation requirements-tougher
recommended high school program, more math and science classes
- No Child Left Behind Act of 2001
After including all of these factors,
Texas schools are financially worse off then they were six years ago.
5. Do you support reduced appraisal
caps?
No, for the following reasons:
- Appraisal caps devastated California’s
public education funding.
- Appraisal caps slam the brakes
on real estate activity.
- Similar homes will face vastly
different tax bills, as people who purchase homes will pay much higher
taxes than neighbors who have lived there for several years.
- Appraisal caps put new real estate
development at a competitive disadvantage.
- Lower appraisal caps will reduce
the re-sale value of homes.
- Caps the resources available for
all government services- including schools, cities, and counties.
- Limits the ability of local governments
to adjust to boom-and-bust property values.
- Local governments have made commitments
on bond debt service to taxpayers based on long-range estimates of
appraised values. If appraisal caps are reduced, local governments won’t
have the resources to keep those commitments.
- Appraisal caps will result in higher
debt tax rates.
- Negatively impact school-based
programs currently funded by cities and counties.
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