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Below is the HillCo client report from the July 10 House Appropriations Subcommittee on Article III hearing.

The committee met to take up Interim Charge 10:  Conduct a basic review of current public education and higher education funding formulas. Specifically, focus on whether items funded outside base formulas (Foundation School Program (FSP) and higher education formulas) should be included inside the formulas. After the review, the committee may recommend the addition or deletion of funding items or changes in levels of current funding.
 
Overview of Public Education Finance
 
Amanda Brownson, Texas Education Agency

  • Amanda Brownson reviewed handouts which gave an overview of public school finance
  • Variables impacting funding can include any combination of increase or decrease in the number of students, property value increase, or decrease and tax rates 
  • Rep. Donna Howard noted the state was losing funds and so the legislature just changed the formulas – the state changed the rules when they owed funds
  • Higher taxes from chapter 41 districts will benefit the state
  • Brownson pointed out that in a list of other state funds, technology funds are no longer a line item and are now folded into instructional materials
  • 2017 is when the additional state aid for tax reduction (ASATR) is scheduled to terminate
  • Howard stated if the Cost of Education Index (CEI) has not been adjusted, then it is not relevant to current circumstances
    • It is an arbitrary redistribution rather than reality said Howard
    • Brownson stated there are statements out there that support the statement that cost structures have shifted
    • Howard asked Committee Chair John Otto if the members will be looking at CEI at some point
    • Otto said he does not know if that is something specified but at end of day members can pull up specific concerns
  • Rep. Helen Giddings inquired about the CEI being applied to 71 percent
    • Salaries are equated to 71
    • Brownson clarified it may be professional salaries but if you add in other staff that could impact the numbers
  • Weights were established in 1984
    • Rep. Bennett Ratliff said that should be revisited at some point
  • Howard asked if Career and Technology education (CTE) funding is separate from endorsements
    • Otto agreed that one of the endorsements is STEM but he would not consider any of those courses to be CTE
    • Otto equated CTE to vocational education  
    • Brownson stated courses that lead to certification would be ones considered as CTE
    • Otto noted that when the time comes to look at formulas – course structures have changed, for some dramatically, and the question will need to be asked what will this do to school finance?
  • Giddings asked about transportation – since there are long distances people will be traveling in smaller districts would it be counted twice?
    • There are a few factors involved in the calculation and Brownson will review and get back to committee
  • There was not funding in the current biennium for instructional facilities
    • Ratliff  inquired why funding was stopped for instructional facilities
    • Otto said he was “pretty sure it was the budget”
    • Ratliff said he thinks they need to review that
  • Otto pointed out the regular program adjustment factor (RPAF) that was implemented in 2011-2012 was a budget reduction and then restored last session
    • Howard said that is exactly what she was talking about – if it was going against the state the legislature just adjusted the formulas so they didn’t owe it
  • Howard asked under chapter 41, is the Second EWL a windfall for some students?
    • Brownson said she thinks this impacts about 10%
  • Most chapter 41 schools when faced with 5 options to reduce wealth choose option 3 – which is purchase of attendance credits from the state
    • Option 4 – used to be widely utilized, maybe in part because it use to have an efficiency credit and that incentive is gone
  • Ratliff asked when was the last time Instructional Facilities Allotment (IFA) was calculated
    • Brownson state there was no change since the program was established – it could be 1995 but it has been a while
  • Rep. Diane Patrick asked for an overview of charter school funding which was subsequently given by Brownson
    • Charter school funding is based on state average and not on the funding components of the district/community costs
  • Calculation of WADA would impact the calculation of equity statistics
    • If just WADA was adjusted there would be winners and losers, concluded Otto
    • Ratliff said because the formulas are so old there are winners and losers today
    • Otto asked if ever see what is funding per ADA? Brownson said it could be requested and Byer (who spoke next) said the Legislature had requested several different charts last session

 
Von Byer, Deputy General Counsel, Texas Education Agency

  • Byer gave a synopsis of school finance lawsuit
  • Waiting for decision to be rendered by court  – case began Oct. 2012 and ran through 2013
    • There was a ruling issued but a final judgment was never entered some claims included:
    • Questions of efficiency which has historically been looked at as equity but this time they looked at qualitative efficiency
    • Sustainability – how well is system structured?
    • Adequacy – were resources provided to achieve the desired results?
    • Do you have to meet diffusion of knowledge rate before going to voters – this was a new question raised
  • Otto referred to a previous suit where Texas was accused of a statewide property tax with no local discretion
  • Otto was concerned that now there is still discretion but because it requires voter approval – is it like a statewide property tax
  • Otto inquired if any court had even defined adequacy
  • It is not defined in the Texas Constitution but witness says people will parse it out – is it suitable,  is it structured to achieved the results and are there resources devoted to it of a sufficient nature
  • Witness says there is a concept of adequacy that the court is talking about
  • After 2013 session the court did revisit and the trial occurred Jan. – Feb. of 2014 and still no final judgment – they are waiting

 
Overview of Public Education Budget and Actions Taken by the 83rd Legislature
 
Aaron Henricksen, Analyst for the Foundation School Program, Legislative Budget Board

  • 83rd Legislature added $3.4 billion to Foundation School Program (FSP) entitlement in the 2014-15 biennium
  • Howard would like a column that has 2010-11 appropriations so they could see funding levels before the cuts
  • The funds in 2010-11 were taken out differently than the way they were put back in the following session
  • 25 districts are coming out of recapture based on funding from last session – it is an estimate based on property taxes
  • Major cost drivers in 2014-15 are student enrollment growth, school district property values projected to increase, settle-up cost and other FSP cost
    • In total there would have been a savings but when adding the increase in entitlement funding there is a total cost to the state last session of $2.5 billion AF

 
Andrea Winkler, Analyst for the Texas Education Agency, Legislative Budget Board

  • Non-FSP appropriations was reviewed  
  • A small discussion on the children coming across the border ensued
    • Who is funding conversion of schools? State or Federal
    • If Dallas County opens a school will they need to educate them while there as well and who is in charge of funding? State or Federal
    • There is a federal funds team through LBB  – they are looking for some answers
    • Those being moved to Dallas County may be educated but it will remain a federal responsibility and they will not be mixed into the general population according to a news report from FEMA read by state officials
    • Otto said once the children are release – not sure of any method to track and they do not know upon release how many stay in Texas and go into the school system
    • Otto said he is glad because of the health issues he has heard about   

 
Update on Public Education Initiatives and Programs
 
Monica Martinez, Associate Commissioner, Standards and Programs, Texas Education Agency

  • Project Share funded out of Rider 68
    • Has been used to support learning management system platform and rest of funding is content development for teachers and students
    • In 5th year of implementation and have a variety of courses for K-12 educators
    • All of resources made available through Project Share are made available at no additional cost – started out with resources that were password protected and moving forward with making the information as accessible as possible
  • Student Success Initiative (SSI)
    • Texas SUCCESS state wide licenses that support students in grades 3-8 for math and reading
    • As of June 5, 2014 – Mathematics
      • 1,106 districts/charter schools
      • 5,946 campuses
      • 2,032,175 students enrolled
      • 21,917,214 lessons completed
      • 631,034,068 problems completed
      • 20,678,429 coach help sessions
      • 1,612,777 live help sessions
    • As of June 5, 2014 – Reading
      • 935 districts/charter schools
      • 5,644 campuses
      • 2,157,658 students enrolled
      • 9,643,194 participation hours
    • Student Success Initiative evaluation
      • Rider 50, 83rd Texas Legislature, 2013, required TEA to conduct an SSI evaluation
      • Gibson Consulting selected as external vendor
      • Work commenced March 2014
      • Comprehensive evaluation report will be submitted to 84th Texas Legislature in January 2015
    • Write for Texas through SSI
      • Grades 6-12
      • Write for Texas is organized around four guiding principles of effective writing instruction
  • Prekindergarten
    • A district must offer prekindergarten classes if the district identifies 15 or more children who are eligible and are at least four years of age
    • A school district may offer prekindergarten classes if the district identifies 15 or more eligible children who are at least three years of age
    • A district may charge tuition for a prekindergarten classes for certain students under certain circumstances

 
Gloria Zyskowski, Director, Student Assessment, Texas Education Agency

  • Reviewed assessment contracts
  • From time of award to current cost there has been a reduction of about $30 million
  • Last year of contract is 2015-16, this upcoming school year and will be up for renewal a year from now