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Sept. 11, 2017 - State Funding Continues Downward Trend

 

Texas topped a list of nineteen states who cut general funding per student during the 2016-17 school year, according to the Center on Budget and Policy Priorities. This decline occurred during a time when increasing property values throughout the state have benefited the state budget.

 

Nineteen States Cut General Funding Per Student This Year

Percent change in state formula funding* per student, inflation adjusted, fiscal years 2016-17

 

19 States Cut General Funding Per Student: -5.0% Texas; -4.9% Nevada; -4.5% West Virginia; -2.9% Oklahoma; -2.4% Louisiana-1.9% Arkansas; -1.9% Nebraska; -1.7% New Mexico; -1.6% Alaska; -1.6% Kansas; -1.3% Montana; -1.3% Mississippi; -1.1% Idaho; -1.0% New Jersey; -1.0% Kentucky; -0.9% North Carolina; -0.8% Arizona; -0.6% New Hampshire; and 0.02% Minnesota.

*General or formual funding is teh primary form of state K-12 funding. States also typically provide revenue for other, more specific purposes, such as bus transportation and contributions to school employees and pension plans. 

Note: Hawaii, Indiana and Wyoming are excluded because the data necessary to make a valid comparision are not available

Source: CBPP budget and enrollment Analysis, Center on Budget and Policy Priorities: CBPP.org

 

Recent certified property appraisal values show an increase of 8.6% for existing properties and 11.6% for existing and new properties in Plano ISD. Plano ISD school board members have advocated that this would be a prime opportunity to reduce the school district’s tax rate since keeping the same tax rate will result in higher property tax collections. However, those higher tax collections do not result in increased funding for the school district without school finance reform by the Texas Legislature.

The Texas Legislature’s Special Session concluded on August 15 leaving property tax reform at an impasse. “Real property tax reform cannot occur until we experience real school finance reform,” said Plano ISD School Board President Missy Bender. Public education is funded by contributions from local taxpayers and by the state of Texas. “What we see now is an over reliance by the state on local property tax dollars as the state decreases its own funding for public education.”

When a school district’s property values grow faster than its enrollment, as it has in Plano ISD, the state either reduces its contribution to education or requires the district to send more money to the state under the Robin Hood plan. Plano ISD Robin Hood payment requirements have increased by approximately $50 million for the last two years and will continue to do so for the foreseeable future. Bender described this essentially as a “hidden state tax” on the property tax statement. Plano ISD’s strong local economy coupled with this archaic funding system have benefited the state of Texas with a 384% increase in state Robin Hood payment requirements over the last four years and only a 10.6% increase in local operating funds. 

“It would be more palatable if the state used all of that money to enhance the plight of districts with lower property values,” Bender said. “But that is not the case because the state built its budget expecting to benefit from rising local property values.”

According to Article III (Education) of the Appropriations Bill, total statewide recapture payments will increase by $1.3 billion for the 2018-19 biennium. At the same time, the contribution from the state’s general revenue fund to Article III will decrease by $1.6 billion. “It is clear that the state diverted the increased recapture payments toward reducing its own budget rather than assisting the property poor districts that recapture is intended to help,” said Bender.  

While the state’s contribution declines, the student population continues to climb by about 80,000 students per year, with the state’s share of funding for public education falling to what may be an all-time low—less than 38%. “Essentially, the state took more money from districts like Plano, used it to balance the state budget, then reduced its own contribution to those property poor districts who experienced increased property values,” said Bender. Plano trustees made several trips to Austin this year during the regular and special sessions to advocate for property tax relief and school finance reform. In fact, they began their legislative work in the fall of 2015 by reviewing state and local legislative action, discussing ways of engaging representatives and appointing a board subcommittee to address the needs of the district as they developed legislative initiatives.

As school finance reform, property tax relief and transparency in taxation became top priorities leading up to the 85th legislative session, Plano ISD partnered with other districts in an effort called “Taxparency,” (www.taxparencytexas.org).

“Taxparency is a grass roots collaboration among several Texas school board trustees who feel property owners have the absolute right to know where and how their school taxes are being spent by their local school districts and by the state,” said Bender.

In Plano, the average homeowner’s tax bill states that $4,657 is collected by Plano ISD, yet does not acknowledge that the district receives $3,634, while the state takes the other $1,023. “This lack of transparency masks the hidden state tax and eliminates a school board’s ability to decrease operating tax rates since it must generate new funds to satisfy rising annual recapture payments,” said Bender.

Breakdown of Plano ISD Property Taxes on Average Home, 2015-17

(Note: This Recapture data is updated regularly. View the most recent Taxparency Chart in the Financial Transparency section of this website.)

 

 Breakdown of Plano ISD Property Taxes on Average Home from 2013 to 2017: Breakdown of Plano ISD Property Taxes on Average Home 2013-17: 2013 (Retained by district $3,322 and recaptured by State $222) Total $3,544; 2014 (Retained by district $3,448 and recaptured by State $314) Total $3,762; 2015 (Retained by district $3,497 and recaptured by State $401) Total $3,898; 2016 (Retained by district $3,581 and recaptured by State $706) Total $4,287; and 2017 (Retained by district $3,634 and recaptured by State $1,023) Total $4,657. The detail of the recapture by the state is: Detail: Plano ISD Recapture by State was: 2013 was $222; 2014 was $314; 2015 was $401; 2016 was $706; and 2017 was $1,023