Education leaders call for changes to state funding system as AISD approves 2014–15 budget

by  · Community Impact Newspaper

On Aug. 26, the Austin ISD board of trustees approved the district’s $1.05 billion budget and tax rate for fiscal year 2015 following local education leaders’ call for changes in the way the state provides funding for the district.

Before the board meeting, AISD Interim Superintendent Paul Cruz stood alongside Reps. Donna Howard, Eddie Rodriguez and Paul Workman; Greater Austin Chamber of Commerce Education Chairman David Reiter; Education Austin President Ken Zarifis; and AISD board of trustees President Vincent Torres.

Howard said Austin is being penalized by the state’s current funding formula.

“What’s happening now is not sustainable,” Howard said. “And if we want our kids to be prepared for the workforce, as I know the Austin Chamber does, we are going to have to make sure that we invest appropriately in our schools.”

AISD’s budget

AISD’s approved 2014–15 budget includes $1.05 billion in expenditures, about $1.03 billion in revenue and $30,000 for a net of other sources and uses. The district has a $906.7 million general fund expenditure budget and is using $24.9 million from its general fund reserves to make up the gap.

The board also approved AISD’s tax rate, which is composed of two parts: maintenance and operations (M&O) and interest and sinking (I&S). For AISD, the two rates are $1.079 and $0.163 per $100 of valuation, respectively; they combine to make up the current $1.242 per $100 of valuation tax rate. For FY2015, the district is maintaining its current M&O tax rate but lowered the I&S tax rate to $0.143 per $100 of valuation.

The approved budget includes costs to continue supporting the 3 percent employee compensation adjustment made in 2013 and to provide a one-time 2 percent salary adjustment for AISD employees, representing an increase of 0.5 percent compared with the 1.5 percent lump sum payments employees received in FY2014. Several teachers spoke at the board meeting, asking the raise be made permanent rather than temporary.

As part of the budget, AISD will send $175 million to the state as part of recapture, also known as “Robin Hood,” Torres said.

Torres said AISD and the leaders supporting the district are not calling for an end to Robin Hood, but instead are asking the Texas Legislature to address the inequitable amount in property taxes AISD sends to the state compared with other districts.

“From fiscal year 2002—when the recapture law went into effect—through fiscal year 2015, AISD will have paid the state more than $1.8 billion in recapture payments,” Torres said.

Trustee Robert Schneider pointed out that last year, AISD paid an amount 58 times the size of the average payment from any other Chapter 41 district in the state, noting cities such as Dallas and Houston have never made payments.

How recapture works

Recapture is a system through which property-rich districts such as AISD are required by law to send money to the state to be redistributed among districts deemed property-poor.

While Texas considers AISD a property-wealthy district, more than 60 percent of the nearly 86,000 students in AISD participate in free and reduced-price lunch programs, Rep. Rodriguez said. He noted the Robin Hood plan had good intentions and has helped some other school districts in the state, but not Austin.

“It was never envisioned in any way that a situation like this [would be] happening in Austin which really is happening in no other place, where you have a district that’s giving almost $200 million—and it will be $300 million in a few years—away when we could really use that money here,” he said.

Zarifis, of Education Austin, said the state must recognize this disparity.

The Austin Chamber is asking the Texas Legislature to reduce the amount the state takes from Austin’s property taxes for a variety of reasons, said Reiter, a parent of two AISD students.

“First, the Austin Chamber continues to support local control of our public schools; the Texas Legislature is now capturing 22 percent of all local funds raised to support the operations of Austin ISD,” he said. “Second, the captured local funds go to the state’s bottom line, not to support other public schools. Third, the pending school finance lawsuit will not resolve the constitutionality of the historically high rate of state capture of local property taxes.”

Austin homeowners face the highest median home price and renters face the highest median rent compared with other Texas Metro regions, according to the chamber.

Howard said she wants the Legislature to increase the basic allotment that the state provides for the foundational part of AISD’s school program, which would decrease the amount of property tax funds AISD has to send to the state.