A Fiscally Irresponsible Tax Plan: What Happened to Texas School Funding?

“Education is our future and our highest priority.”–Rick Perry

This statement came from a Rick Perry campaign ad that debuted on September 16, 2006 during the 2006 Texas gubernatorial campaign.  In the ad, embedded below, you will see Governor Perry in a school library reciting all of the legislative accomplishments of the previous session, including pay raises for teachers, more funding for Texas schools, and directives from the legislature to spend more on classroom instruction.

However, four months earlier in May 2006, Rick Perry received a letter from Carole Keeton Strayhorn, the then Texas Comptroller of Public Accounts, stating that the tax plan Governor Perry recommended to the state legislature was “fiscally irresponsible.” Strayhorn warned the governor of deep shortfalls to the state budget and education funding.

“The property tax relief contained in the bill, if it can be financed past 2008, will be quickly eroded by rising property values, and increases in local tax rates forced on local school districts struggling to keep up with rising costs. In as little as five years, the state could be right back in court.”

What happened in 2006?

In 2006, Governor Perry convinced the state legislature to lower property taxes by lowering and capping the maximum taxation level that could be put forth by Texas independent school districts.  School tax rates would be lowered from their then cap of $1.50 to $1.33 in the first year and $1.04 in the second year.  To replace this funding, a major revenue source for school districts, Governor Perry promised that money lost from the tax compression would be recouped by a state business tax (business margins tax). After much debate and consideration, a legislative special session was called to urge the Texas legislature to pass a comprehensive school finance reform package that included the property tax compression, the business margins tax, and an incentive pay program for teacher. Overall, the package provided a tax reduction of $7 billion over three years to employers and property owners. The package of bills drew broad support from the business community.

The elements of the tax compression were designed to alleviate high property taxes while giving Rick Perry campaign sound bytes for his run for re-election.  Perry celebrated the legislature’s support in his debates with Strayhorn and in his campaign ads of the year.  Meanwhile, school districts began to brace for the financial blow caused by tax rate decompression.

By conservative estimates by Comptroller Strayhorn (and gubernatorial candidate), school districts would be impacted by ongoing deficits estimated as follow:
2007–$3.4 billion
2008–$4.3 billion
2009–$5.4 billion
2010–$4.9 billion
2011–$5 billion

Unfortunately, Comptroller Strayhorn seems to have had crystal-ball accuracy when she made her predictions ……………………….

Entering the 82nd legislative session, the state of Texas was forced to solve a $27 billion dollar deficit. In their efforts to balance the state budget, the legislature took money out of the Rainy Day Fund to pay debts from the 81st legislative session and then examined state programs for cuts.  Education took a $5.4 billion dollar cut in funding and was not allotted dollars to account for student growth.  160,000 students will enter Texas schools over the next two years. As such, many school districts in Texas are looking for alternate sources of revenue through Tax Rate Elections and revenue shifting to account for the cuts from the state.

In 2006, Rick Perry worked to protect businesses while urging the legislature to pass bills that ultimately hurt education as was warned to him prior to calling special session to “reform” education.  The reality is that education was not reformed, it was stripped of funding in a structural deficit leaving local tax payers to recover the losses. Rick Perry claimed to lower property taxes for citizens in 2006; I think the people of Everman, Cisco, Canutillo, Pflugerville, and Birdville ISD would disagree.

Does “Throwing Money at the Problem” Actually Work?

“You can’t just keep throwing money at the problem” is a phrase you often hear when the topic of school funding comes up. If you listen closely you’ll hear various groups, legislators, and taxpayers parrot this now-common refrain as if it were gospel. But, have you ever considered the validity of this claim? Is it true or has it just been repeated so often that it’s become the conventional wisdom? Fortunately the facts are in and we no longer have to speculate about whether “throwing money at the problem” is truth or mere rhetoric.

Representative Scott Hochberg (D-Houston), one of the most respected authors and experts on school finance in the state of Texas, had a “hunch.” Last month he asked the Texas Education Association (TEA) to pull data detailing the average amount of funding Texas’ independent school districts received in comparison to their accountability ratings awarded based upon state standardized testing results from Texas Assessment of Knowledge and Skills (TAKS). Here’s what they discovered:

Accountability Rating	Average Funding*
Exemplary	$6,850 per student
Recognized	$5,571 per student
Acceptable	$5,662 per student
Unacceptable	$5,538 per student

*Based upon weighted pupil in daily attendance (WADA) formulas.

Hochberg’s “hunch” proves that “throwing money at the problem” does indeed make a critical difference in education. In fact, there is an apparent correlation between the funding received (i.e. money thrown) and measurable results. School districts rated by the state as “Exemplary” receive an average of $6,850 in funding per student. Districts that are rated “Academically Unacceptable” receive $1,052 less in state funding per student. Thank you to Representative Hochberg and the TEA for finally proving that the amount of funding provided to schools actually does make a difference.

Interestingly, Hochberg isn’t the only one that has uncovered this trend. Similar results have been seen in charter schools as well. Some folks that criticize public education systems often champion the charter school model as the alternative. Perhaps they don’t realize that the apparent success that some charters claim actually comes at a cost. KIPP Charters is the successful charter operation founded in New York and portrayed in Waiting for Superman. It is commonly held up by education reformers as one of the flagships of charter schools and a model for educational success. But, do they ever mention that KIPP receives more funding than most public schools? According to a 2011 study by Western Michigan University, KIPP charter schools actually achieve their success receiving more combined federal, state, and local funding ($12,731) than the national average for all schools ($11,937). It seems KIPP has also found that “throwing money” at education, actually does achieve results.

As interesting as these findings are (and to school finance geeks such as myself, this is pretty exciting stuff), there’s another important element that we can’t ignore. In fact, it’s probably even more important than school funding itself.

When did education become “the problem?”
There are many groups opposed to public education for a variety of reasons – school voucher proponents, “fiscal conservatives,” those that would financially benefit from privatization of education, etc. There are those who have a hidden agenda that drives them to tear down public education; and there are some that don’t even try to hide their bias. But perhaps – could it be – that the actual problem facing education is that these groups view education as “a problem.” Why do they choose to use this terminology?

If you are among those that think education is “a problem,” ask yourself why. Is it because you’ve heard it so many times that you assume it’s true? And think back to where you heard this. What agenda do those that wield this rhetoric hold and what “solutions” are they promising? Is it vouchers, charters, or allowing “the money to follow the student?” (None of which are “solutions” to the funding crisis – they just shuffle the same money among more recipients.) Or do they prefer to promote additional cuts in funding as a solution? (Perhaps they’re unaware that Representative Hochberg has already shown us the result of reduced funding and KIPP has shown us the success higher funding can yield.)

Let me make this perfectly clear – education is not “a problem.” I certainly agree there are many opportunities for reform in public education. I see it every day. I live it. But to label this important societal responsibility as a “problem” actually shows the deficiencies of those who cast it in such a light more so than the deficiencies of the institution itself. All the way back to our founding fathers, education has always been identified as one of the most fundamental responsibilities of government in a civilized society – never as “a problem.”

Education is a ticket out of poverty for disadvantaged kids. Education is how a child has a chance at a better life than his parents (isn’t that the American dream?). Education is a business driver (you want to watch Texas’ economic fortunes dry up and see Rick Perry hang the “closed for business” sign? See what happens when Texas can no longer provide an educated hiring pool.). And most importantly – sit down for this one public education opponents – education is a right. The state constitution of Texas (Article 7, Section 1) says so.

So, the next time you hear “throwing money at the problem,” please ask yourself – who has the problem?

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• Money inequity hurting schools (mysanantonio.com)

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