The Texas Commission on Public School met to take up the draft final report and review the prepared recommendation. A copy of the materials reviewed are available here.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. It is not a verbatim transcript of the hearing but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Comments

  • Chair Brister – Recommendations are prepared, but not finalizing today; plan is to go through section by section
  • Brister – Goal is to vote on final version of the report on Dec. 19 & publish by the time Commission dissolves on Dec. 31
  • Brister – Have also discussed sending a draft to TEA to do some of the clean-up, document will also have an appendix summarizing the testimony heard during Commission hearings & appendix will be circulated for review
  • Brister – Asking for suggested edits to be sent to Todd Williams, will be reviewed

 

Report Draft Discussion

Executive Summary

  • Pg 1 has summary of recommendations, Chair Brister states that all are in broad agreement

Rec 1 – Establish a goal of 60% or higher for Pre-K-12

  • West – Agreeable to establishing a goal, not sure it should be to match 60x30TX

Rec 2 – Inject significant additional annual state revenue to fund new strategic allotments and weights

  • literacy, outcomes, high quality teacher funding, increases to Tier 2 yields
  • $500 million increment is roughly equivalent to 1% of increased educational spending
  • L Taylor – These numbers will likely change in the course of legislation, numbers presented here are goals
  • Bettencourt – We will need to tackle the changing numbers, might be better considered as guidelines; still no number from Comptroller on expenditure limit for the year
  • Williams – Happy to express these as goals and guidelines, did acknowledge that legislature is dealing with a lot of competing interests
  • Killian – I don’t remember much discussion over extended year allotment, not sure that we saw testimony that Summer school was effective, but that a longer year was
  • Williams – This proposal includes extended year for elementary focused on literacy, not a traditional Summer school; many school staff interested
  • Huberty – Came out of Expenditures, essentially pilot program likely at some Title I campuses around the state; districts would need to come up with the remaining half day if they want to participate
  • Killian – Likely should say something about minutes to avoid confusion
  • L Taylor – This is for lower income students
  • Conley Johnson – Wondering if there could be language added addressing the foundational elements of the education system
  • Conley Johnson – Also, basic allotment recommendation is in Rec. 11, should consider rolling this into first 5 to emphasize importance and focus of the Commission
  • Brister – Should include TEA estimate on costs, etc.; this recommendation goes together with Rec. 4 reallocation discussed in Expenditures
  • Brister – Uncomfortable with telling legislature that they need to inject new money, might should be phrased as a recommendation should the legislature find funding is needed; not sure direct recommendation for funding is within purview of Commission
  • Brister – Commission is not familiar with legislative budget requirements and shouldn’t be telling legislature what to spend, also want to be careful of not creating the next school finance lawsuit
  • Brister – Important to consider how a failing school system will not create public support for putting more money into the system; if Commission recommends a certain amount & legislature does not put in this amount, opens a cause of action that sufficient funding has not been expended
  • Ellis – Disagrees, no one is confusing the Commission with the legislature & there is a price tag on the solutions
  • Bernal – Work done does come with a price tag, I don’t believe the legislature not following the recommendation creates a cause of action
  • Brister – In his experience as a trial judge, has often heard of recommendations not followed
  • Bettencourt – Asks Chair Brister how would you change the recommendation?
    • Brister – Fine to have the numbers in, more of a drafting issue; unsure if the Commission is positioned to recommend a certain number
  • Williams – Could proactively say that Commission is not opining on constitutionality of the system, but rather opining on ability of state to meet 60x30TX
  • Bettencourt – Recommends incorporating this statement and to strike the last sentence of paragraph #2 as it does not fit goal of 60x30TX
  • Huberty – Recommendations will not work without putting additional resources in based on outcomes; would not be willing to sign a report that doesn’t say state will spend more money on education
  • K King – If we aren’t talking about new money, then we wasted a lot of time
  • Brister – I don’t mind stating that we don’t think this is possible without new funding, nervous about stating a specific number in the report
  • L Taylor – I don’t believe we are arguing, only a matter of getting the semantics right
  • L Taylor – Was some of this recommendation part of the reallocation as well?
    • West – My understanding was that reallocation was part of this, currently in Rec. 4
    • Brister – My thought was to combine them, we are recommending reallocation
    • Williams – $5.34 billion was funding things such as increase in Comp Ed, increasing basic allotment, etc.
    • Williams – We could put together a list of sources and uses to help the discussion, but would not be available today
    • Williams – Thought was that Rec. 2 programs would be funded by new money
    • Huberty – $5.34 billion was a separate issue, though it all needs to work together
    • Huberty – If we do nothing, without this funding state would be funding at around 32%
  • Conley Johnson – Recommends putting a line in recognition of costs in meeting 60x30TX and clarifying that this would be new dollars
  • Bettencourt – We are working with a potential new income stream with the severance tax; does not believe the amount specification is important & already recognized in the Revenues report
  • Brister – Will make a proposal to Williams and come back with 2 possible forms

Rec 3 – Unless otherwise noted all funding recommendations are formula funded and directed at those with greatest need

  • Certain extra allotments would then be considered formula funded
  • Brister has drafting concern over phrase “minimizing the number of districts

Rec 4 – Reallocate $5.34 billion to more impactful spending

  • CEI, talented & gifted, hold harmless, etc.; also includes a shift in property values used creating one-time expenditure
  • L Taylor – If the property value calculation shifts to create a one-time expenditure, should this not be sued for one-time items
  • Huberty – This will help us get to were we need, but ultimately it should create a funding balance and not penalize districts for lowered values
  • Killian – Will create an issue for fast growth districts due to budget uncertainty
  • Huberty – If the Commission takes the position of worrying over specific sectors, the school finance bill will not pass; recommended a statutory change to take fast growth up to $1k
  • Killian – Will cause a situation with budgeting & potential for harm; introduces many unknowns
  • Huberty – This works both ways, many fast growth districts saw negative values due to the Hurricane & will need supplemental support
  • Conley Johnson – This seems like a natural position to address the basic allotment instead of Rec. 11
  • Brister – Biggest difference we can make is to shift money to students having the most trouble, increasing the basic allotment does the opposite; basic allotment raise is important as it avoids recapture issues, but would prefer not to put this ahead of quality teachers, outcomes measures, etc.
  • Brister – Would prefer legislature to focus on these
  • Conley Johnson – Was my understanding that this was the intent of the Expenditures group & shifting basic allotment to this Rec. would reflect this intent
  • Huberty – Believes that the reallocation and new funding should be placed before stating resources should be funneled into the basic allotment
  • Ellis and Rep. Huberty discuss the positioning of the recommendations
  • Conley Johnson – Commenting on the balance between the basic allotment and the reallocation
  • Williams – Don’t mind referencing in Rec. 4 that the intent of the Expenditures group was that leftover funding would go into basic allotment

Rec 5 – Significant Investment to Substantially Increase 3rd Grade Reading Levels; additional $780 million of collective funding to improve critical early literacy levels

  • Williams – Many districts are not positioned to implement full day Pre-K
  • K King – Many of my districts are operating in old buildings and Pre-K is not feasible due to lack of space
  • Bernal – Confirming that these are separate weights from ELL, etc.
  • Bernal – Is there are selection of things this money could be spent on or is it open?
    • Williams – Nothing stated here, but my opinion is that it would be spent within the designated grades
  • Bernal – My instinct is that we should evaluate districts for fidelity to the program, but this this should not create a new exam for young students
  • Martin – Asks after the way of identifying lower income students
    • Brister – Mentioned in Rec. 18 to consider alternative means of identifying poverty aside from School Lunch Program; thought there was agreement to go to some other program that was a little more reliable
    • Bernal – So is the assumption that we move away from flat Comp Ed and to the new measure of poverty
    • West – I would think so, this is what I intended; would require statutory change
    • West and Rep. Bernal discuss varying degrees of poverty and need for measure addressing these degrees
    • Huberty – Need a better matrix to identify these students
    • Martin – School Lunch Program is not a reliable measure at all, applications for the School Lunch Program are not verified
    • Huberty – My belief is that a new measure is needed, and then the funding is a sliding scale
    • Bettencourt – Agrees that current measure doesn’t work & that new measure can be found through rulemaking, etc.
    • Bernal – So does this mean that Comp Ed references throughout the document will be using this measure instead & will the weights associated change due to the measure identifying the spectrum? Wondering how Comp Ed references in Rec 5 & 6 are affected
    • Ellis – Comp Ed weight will change throughout with legislative action, not related to the spectrum measure discussed here
  • Conley Johnson – Would you consider making the measure a discrete recommendation so that there is clarity in intent?
  • Bernal – So we change this, but in every other situation we use the School Lunch Program?
  • Agreement is to make a separate recommendation on the poverty measure piece

Rec 6 – The School Funding System Should Shift Towards Outcomes-Based Funding Targeting Two Critical PK-12 “Gates” Reflecting Current High Levels of Academic “Melt”; outcomes-based funding would be equitably distributed to provide campuses with much higher per student funding for their low-income students

  • early literacy @ $400 million and postsecondary access of career, military or higher education without the need for remediation @ $400 million
  • High poverty districts would receive ~28% higher than low poverty districts
  • West – Asks after remediation
    • Williams – There are different ways remediation is measured, students often asked to redo
    • Williams – Suggests that remediation requirement is filled by classes taken before college
  • Bernal – Not sure how this would work & recognizes that part of this is due to some wishing to avoid outright funding for Pre-K
    • Williams – $700 million just approved is more than enough to fund full day pre-K
    • Bernal – I understand, but concerned over the outcomes of 3rd graders affecting the education of a 1st grader
    • Bernal – I don’t understand why we can’t provide aid based on outcomes instead of creating another high stakes environment
    • Williams – I don’t prefer high stakes environment, but if we are to put an assessment on something it should be in an important area like reading
  • Bernal – Are we going to deploy some resources first?
    • Williams – This is Day 1 funding
  • Reyna – How would we know if students do not need remediation upon graduation?
    • Williams – Thought is that higher education would work with high schools; assessments exist like SAT or ACT
    • Williams – $400 million would provide for college prep, counselors, etc., but also gives districts discretion on this money is spent
  • Huberty – If we are to provide additional resources, we need better results; this test gives us the metrics we need
  • Williams – There are 8 STAAR assessments in elementary school, 3rd grader reading is one of these; this Rec emphasizes the higher importance of reading ability
  • Bernal – Going between Rec 5 & rec 6, Rec 5 funding is intended to be enough to implement full-day Pre-K & Rec 6 is additional to ensure that every 3rd grader can read; in the event Rec 6 doesn’t happen, but Rec 5 does, it essentially ensures high-quality Pre-K across the state
  • Reyna – Is Pre-K going to continue to be non-mandatory?
    • Williams – Yes
  • Ellis – I think the costs listed are ongoing costs, legislature can provide for the one-time costs at their discretion
  • Bettencourt – Important to make clear that these are estimates or guidelines, given that issue where Rec 5 could pass and Rec 6 not, etc.; need to make clear so as to have no unintended mandates (e.g. Pre-K)
  • Williams – Clarifies that funding in Rec. 5 is for eligible students, not universal Pre-K

Rec 7 – Creation of a High-Quality Teacher Allotment for Districts Wishing to Differentiate Compensation to Pay Their Effective Educators Higher Salaries Sooner in their Career; would commence in the 2019-20 school year at $200 million per biennium (growing an additional $200 million each subsequent biennium until it reaches $1.0 billion in the 2029-2030 biennium)

  • Martin – Would hope legislature gets input from educators to develop the acceptable evaluation system; wants this in the recommendation

Rec 8 – Create Optional Program for Districts to Offer Up to an Additional 30 Instructional Days by Providing Half Day Funding (Up to $50 Million in Year 1) for Each Instructional Day Above 180 Days (181-210) for Students in Grades PK-5

  • Ellis – I think there would need to be an application & grant program so districts do not begin process & then realize funding is not available
  • L Taylor – Where did you get the $6k?
    • Williams – Came from Comm. Morath’s testimony on average salary, equates to an extra month
  • West – Asks after the portion referencing childcare
    • Williams – Intent is the refer to need for childcare for working parents & that this would help for another month

Rec 9 – Creation of Additional Allotments/Programs Targeting Early Learning

  • $150 million delivered through a funding weight of 0.15, above the current bilingual weight of .10
  • Bernal – Believes in dual language, but it is difficult for some districts to do; personnel are scarce, etc.
  • Bernal – For the ELL population we have $50 million here & .1 weight from Rec. 5; wondering if something more can be done for this population
    • Williams – I don’t have an illusion that $50 million is enough, more a way to provide funding to expand use of dual language
    • Williams – $50 million is not a cap, only what has been set aside due to the additional weight
    • Huberty – There are other weights incorporated; goal is to try and shift towards dual language instead of just ELL
    • Huberty – Comp Ed would need to be added to it, etc., these children will often benefit from multiple other weights
  • Bernal – Comp Ed children have additional education costs that can’t be absorbed by Comp Ed, Texas has the most ELLs in the country and, while $50 million is appreciated, unsure if effort and magnitude match
  • Williams – This is an estimate, if there is more take up, there will be more cost
  • Bernal – Not disagreeing with need for dual language, but difficult to do and rare; wondering what we can do for all the schools do everything else aside from dual language
  • K King – Moving to dual language is a great recommendation, but calls for a highly qualified Spanish teacher and the standard is not available for many smaller districts; try to meet state standards as best we can, but state requires money to be sent back
  • Huberty – Intent was not to do this, have no intent to take anything away from districts
  • K King – Under the current system, if you cannot produce a highly qualified teacher, then the state does not allow the district to keep the funding; need to recognize the shortage of resources
  • Huberty – Intent was to address the known costs associated with implementing dual language; this seems like a wait & see to find out if the weight is correct
  • K King – Need to focus on letting districts keep & use funding moving forward
  • Williams – Speaks to results reported & recommendations to disaggregate the data by certain demographics; should think about how to continually improve the system with appropriate data
  • Killian – Likes the recommendation, but will likely need to see more money in the pool; could do a scaled funding schedule for different capabilities of districts to provide ELL services
  • Conley Johnson – Suggests adding component that legislature consider changes to spending requirements to cover recruitment stipends or salaries for both Dual Language and Bilingual
    • Williams – I think there is broad consensus on this
    • Huberty – As long as it is clear that the increased weight is specifically for dual language; would likely need approval through TEA
  • Bernal – Might be a marry these recommendations and allow recruitment spending for the purpose of establishing a dual language program
  • Conley Johnson – Intent is to have flexibility to buy teachers when needed
  • Bernal – So giving additional ability for current programs and then dual language weight is kept as is
  • Huberty – Concerned about making this type of recommendation right now, need to discuss & would likely need statutory change
  • Brister – Suggests that this is not put into general conclusions and is put into “Section E: Proposed Additional Allotments/Programs to Improve Early Literacy” instead
  • Reyna – Good beginning that this made it into the recommendations

Rec 10 – Change Existing Allotments and Formula Weights

  • Came out of Expenditures group
  • L Taylor – Need additional work on poverty indicators

Rec 11 – Statutorily Increase the Current Basic Allotment of $5,140/student in the 2020-2021 Biennium with all remaining funds freed from the streamlining of outdated formula elements

  • L Taylor – Recommends eliminating the sentence regarding preliminary estimates
  • Conley Johnson – Suggests repositioning this so that the remaining balance of the $5.34 billion from Rec 4 is closely tied to this & to emphasize that the basic allotment is the foundational costs, tied to CPI, and that costs would rise over time
  • Huberty – Understands the concept, but this is appropriated every year, do not want to tie the legislature’s hands by relating this to CEI

Rec 12 – Increase the Current Yields on Tier II Tax Rates to Equal the 75th Percentile of Equalized Wealth While Concurrently Considering Compressing the Rate to Provide Future Taxing Flexibility

  • Brister – Will get into some of the details when we get to “Section I: Proposed Change in Yields on Tier II Tax Rate”

Rec 13 – Substantially Reduce the Growth in Recapture

  • It was noted that there needs to be an increase in basic allotment in order to address recapture

Rec 14 – An Important Note Regarding Special Education

  • Williams – notes that this is a critical population but this section explains why they will not focus on this group in the report
  • Huberty – Points out that some recommendations were made to address this population

Conclusions

  • Brister – hopes the commission will unanimously approve
  • Conley Johnson – understand sentiment behind elimination of CEI but maybe a note should be added that after structural flaws are fixed that districts should access similar level of resources

 

Overall Comments

  • Brister – Impressed by witnesses, would want paragraph one being a recognition of those going above and beyond call of duty
  • Brister – Thinks #2 saying “state failure to adequately fund” is problematic and asking for trouble, could say need to align which includes a funding component; say state has failed to “align investment” with needs
  • Killian – says runs should be done at some point
  • Huberty – this is why we shouldn’t put hard and fast numbers in here, during legislative process they will find out some things that need to be plugged in
  • Williams – asked about exhibits H&I, nothing in this about Promise or PTECH; wants to increase FAFSA completion. He also notes there is a different skill set in getting someone set up for college and meeting mental health needs
  • Martin – not understanding why need to spend more money on adults not in the classroom when they could utilize teachers
  • Huberty – HS allotment being put in and testimony heard re HB 5 is they didn’t provide enough resources, determined counselors and social workers were also needed and also fulfill need for a safety piece
  • Williams – will write something up and circulate to address discussions
  • Killian – could add college and career to staff
  • Bettencourt – states programs like Promise and P-Tech are programs going right, don’t want to get in situation where it looks like we are preloading debt
  • Brister – suggest list of all names of members in front of report, concern of duplication of statements
  • Conley-Johnson – can an overview of state funding be done with LBB graphs to provide background on the why?
  • Williams – agrees should include share discussion since it was part of charge
  • Brister – will it be charts in exhibits?
    • Williams – yes
    • Bettencourt also provides comments on the charts to use

 

Comments on Sections

Section A

  • Williams – will add rural vs urban

Section B

  • Williams – will carry forward comments already made, potential uses are not meant all-inclusive but require the money to be spent in those grades
  • Williams- districts already required to provide a kinder readiness assessment, so recommended to move toward a “diagnostic tool” of kinder readiness
  • Williams – districts use Istation or other tools, it would be helpful to have a common assessment
  • West – agrees assessments would be used for diagnostic but notes there is skepticism and wants to make certain that is the only purpose of these assessments
  • Williams – will flesh out to make sure not about accountability of students
  • Brister – wants to add “est.” to point out they are estimated costs

Section C

  • Williams – regarding a student completing 12 hours or more of dual credit, trying to find multiple ways to account for this outcome so would include getting college credit in HS
  • West – wants advice if these test should be standard
  • Williams- again notes when it says funds could be including – that means not limited to so not comprehensive
  • West – in regards to remediation, why must they take entire area and would like more guidance on if student could just re-take a module
  • Ellis – maybe merge with agency what they are doing on CCMR and dual credit, he will send on language

Section D

  • Williams – points out this is funding phased in
  • Williams – will make it clear they want feedback regarding evaluation system
  • L. Taylor – inquired on numbering of recommendations 5 vs 7
    • Williams – will work on this but notes there are more recommendations in sections that listed in front of report
  • Williams = no specific funding in this report for ACE system
    • L. Taylor – but is it ACE like?
    • Williams – it could be argued this money could be used to fund ACE, but thinks it would be more cost than this provision would provide
    • West – notes report talks about ACE
    • Williams – report highlights ACE
    • Brister – asked about incentivization
  • Williams – teachers in ACE are getting additional funding on top of effective teacher salary, if they think ACE is effective it needs to be funded separate from effective teacher
  • Brister = thinks ACE model should be considered to get teachers to most challenging schools

Section E

  • Williams – doesn’t see anything new not discussed up front
  • No comments on this section

Section F

  • Williams – in GTE may need to make clear that GTE identified students are being under identified because this funding was put in basic allotment
  • West – asked how GTE students are identified?
    • Lopez – do have number of students reported by district
  • Bernal – Once CEI is rolled in basic allotment, is there anything in the system that accounts for labor cost? Anything that accounts items costing different across the state?
    • Huberty – refers to page 25 of the report, other metrics are being explored but the only way CEI works is if LBB reviews, if you put something back in, the only way it works if having someone review/update
    • Huberty – refers to other allotments and weights such as mid-size adjustment, doesn’t know what else there is to look at
    • Ellis – everyone has problems
    • Brister – people are generally flowing to cities, limits to what can be done to make people stop doing that
  • Williams – recapture/hold harmless provision eliminated, in part 2 discusses grants for those impacted by elimination. Glide path provided.

Section G

  • L. Tarry – could use census information for ELL
    • Williams – think ELL is diagnostic made by district
    • Brister – question on if this should be made as a second recommendation
  • Williams – if they go to census track it should be made clear it is where the student is not the location of the school
    • Bettencourt – it would be a huge mapping project if trying to track individual students
    • Williams – schools of choice are drawing kids from everywhere
    • Brister – reviews measures based on economic disadvantage
    • West – mapping program is needed, will be able to have resources going to that location
    • Bettencourt – not really an individual student but looking at a household situation
    • Bettencourt – there are a bunch of other systems that track as well
    • Williams – will make sure if they use census it will be based on the student and not the school
  • Huberty – on Transportation if just paying mileage could be rewarding inefficiencies, this could be one thing to index on a go forward basis
  • Bettencourt – makes suggestion on making it revenue neutral as capped or some language to that effect
  • Huberty – asked for Lopez to comment regarding mid-size district allotment
    • Lopez – historical way it was calculated was incorrect, actual investment is around $1.6 billion so baseline to model was changed and it ended up being a net loss
    • Huberty – if going to cut into their funding, not sure it that is what they were trying to accomplish
    • Ellis – will be a $600 million savings to the state which will be a cost to the districts?
      • Lopez – yes
    • Ellis – inquired how this would impact the maintenance of effort?
      • Lopez – would need to go back and look district by district
      • Ellis – need to make sure special ed funding not harmed
    • Huberty – may need to think about this, this was not the original intention to cost districts. It was to be revenue neutral. Intent was to be transparent and list out cost.
    • Bettencourt – have not solved problem with Fast Growth School Districts, maybe it should go in here
    • Huberty – wants to visit and get more clarification on this section
    • Brister – needs to know if district is choosing this size
    • K. King – points out when someone says a district is choosing to be small when they don’t live where he lives, “they can go home”
    • Huberty – speaking toward an urban county with a small district
  • Williams – Has there ever been discussion of having an incentive to get districts to work together
  • Sen. Bettencourt – Yes, why I’ve said this is a great place to put in school consolidation
  • Rep. K King – Had a huge debate over the “over 300 square miles” legislation, this was initially drafted as a consolidation incentive, but it did not work
  • Conley Johnson – Suggests inserting language that goal is to increase transparency and that it should not result in savings to the state or cost to the district
  • No comments on Rec 19 & Rec 20

Section H

  • No Comments

Section I

Rec 22 – Link Tier II Copper Penny Yield to a Percentage of the Basic Allotment

  • Williams – States that increase in copper yield should be automatically paired with compression in tax rate
  • Ellis – Looking at increasing the yield from $31.95 to $43.50, which is benefit to district, but also a property tax compression that is benefit to taxpayer? Can’t be both
    • Rep. Huberty provides a history of tax rate discussion,
  • Conley Johnson – So it isn’t a statewide imposed compression, but district rates would go up less based on increased copper yield
  • Sen. West – So we need more revenue @$286 million
    • Sen. Bettencourt – Yes, per year
  • Sen. West – This is just one bucket we need to fill with additional revenue
  • Rep. Huberty – This would help with tax compression and other concepts; would also suggest having a conversation about the ability of districts to bring the rate down and up, no incentive for districts to provide relief and have a TRE; want to have a one-time decision & no playing around with the rate later
  • Sen. West – If we do this and the state does not have the funds to put into this, what happens?
  • Brister – Assume it will work like other times were budgets are cut by percentage
  • Sen. West – If the state does not have the resources, do we just tell districts to keep the rate low?
  • Williams – My intent was that they would have the incentive to reduce the rate given the safety valve of being able to go back up with a Board vote
  • Brister – If everyone is at $1.17 it is essentially a statewide property tax
  • Sen. Bettencourt – If you have variable rates, then by definition someone is off the maximum
  • Sen. Bettencourt – This is one good tool that is in the kit
  • Sen. West – need to address what circumstances they could do this under
  • Conley Johnson – Is there a way to readjust the 75% if there is growth, concerned that there could be no capacity on the copper penny yields
  • Rep. Huberty – At the outset it was tied to a specific number from Dallas; intent is to have this as a floating number & as an appropriations issue
    • Leo Lopez, TEA – Need to examine the 75% number, provided several 75% measures & I believe the one under discussion was 75% of the WADA
  • Rep. Huberty – Would be a $125 million difference
    • Either way there would be increases, an automatic similar to Austin ISD & a more controlled increase with increases to the basic allotment
  • Rep. Huberty – If you did have it pegged to some number, it will create a definite increase
    • Will also decrease recapture
  • Killian – Which will help equity more
    • It will help all districts at that level, so talking about differences in magnitude only
  • Williams – My recommendations is to tie it as a percentage of wealth

Rec 23 – Link Tier II Golden Penny Yield to a Set Percentage of Wealth per Student

  • This would be a savings currently
  • Rep. Huberty – Previously we looked at this, it was 95% of people, now it is 100%; distinctions are meaningless
  • Ellis – Will see a rise in the whole system rather than just in one district
  • Sen. Bettencourt – I’m not sure the basic allotment isn’t the thing to tie these to; this is a known measure that the legislature votes on

Section J

  • Placeholder for later discussion

 

Sen. Bettencourt Property Tax Proposal, Replaces Section J & L

  • Bettencourt – Has a property tax proposal from Revenues that replaces J & L
  • Bettencourt presents slides on his proposal
    • Intent is to show property tax and recapture is growing unsustainably; recapture has increased by $1 billion in 14 years
    • Presents data showing that tax bills rise as values go up, even if rates do not increase
    • Option A – Gov’s Comprehensive Property Tax and Recapture Reform plan; greatest relief long-term with a 12 cent reduction in M&O by 2023, also grows over time due to limit of 2.5%
    • Option B – TTARA recapture tax compression; straight freeze that provides less relief @4 pennies, but holds as we are not expecting property tax to increase as with the boom years, but begins costing districts $2.2 billion by 2022

 

Leo Lopez, TEA

  • Presents data comparing current law tax rate projections, Governor’s plan, share recapture plan, and TTARA plan (link)
  • Recapture is a product of WADA, but WADA is not a 1:1 for Tier 1 funding & some districts are left without enough funding; Gov’s plan ensures districts are entitled to a minimum amount
  • Share recapture proposes that state, districts, and taxpayers benefit equally from property tax decreases, means that district revenue growth would be relatively flat; amount that districts share under this plan would need to go to pay for lost property tax
  • In the TTARA plan, would be roughly $1.7 billion change in formulas, provides more immediate tax relief initially, but settles to 6.5 or 7 pennies
  • Ellis – So the key difference between TTARA and Gov’s plan is that TTARA plan spreads the compression statewide
  • Ellis – What keeps us form being liable under the Gov’s plan for having to large of a spread between rates in one district versus another?
    • Von Byer, TEA – Supreme Court stated that there was no single ratio that determines if a state is out of compliance
    • Some case law suggests you need similar tax revenues for similar tax effort, but this is based on a widely different system than the current system
    • Also dealing with the equity issue
  • Brister – This structure was based on the word “efficient” in the Constitution, ought to include getting funding to the places it is needed the most
  • Ellis – If a district collects less locally, as long as the state makes up the difference then there is no issue
    • Correct, current idea of having funding available as specified under basic allotment and additional weights avoids the court conversation in Edgewood I
  • Conley Johnson – Looks like districts are getting less over time as property tax is bought down, can you explain this?
    • Lopez, TEA – Weights are not changed from current, discussion strictly surrounds compression of taxes
    • Plans presented here are primarily tax relief plans, not focused on providing more revenue to districts
  • Conley Johnson – So the entitlement piece is completely separate from the change in district revenue
  • Conley Johnson – Asks after basis for compression analysis
    • Includes all FSP funding, compression applies to Tier 1, any pennies above this where brought down to sit on top of the tax rate
  • Bernal – Per year, how much does this cost the state?
    • Chart illustrates change in cost, under the Gov’s plan you have $1.3 billion cost to the state in 2020 due to changes in state aid and recapture loses
  • Bernal – If you are a district in 2020-2021 and we did nothing else, would the district realize any difference in funding or program allocations
    • Gov’s plan allows for an increase in revenue of 2.5%, if the district passes this they would see additional local revenue
  • Bernal – In the assumptions made for the 4 years, is there student population growth and inflation based in?
    • Student population is baked in, no inflation factors
  • Bernal – Concerned about pinning plans to certain numbers, will have costs and other variables during the legislation; want to make sure this is the one non-negotiable portion
  • Bernal – Sounds like this could be a tremendous amount of money spent without much effect on education at all
  • Huberty – So this revenue plan does assume anything else done by the Commission; the expectation would be that if nothing else is done, this would be a tax savings because of the assumed high property value growth of the taxpayer
  • Huberty – And we would need to figure out the best methodology
    • Yes, as long as you are using the same relative data then the differences between the plans should stay the same
  • Martin – Getting recapture under control would have a direct impact on education, many districts with high numbers of lower income students are going to be required to pay into recapture
  • Martin – Property tax compression would also improve the livelihood of students & teachers in districts
  • Bernal – Question remaining include 1) do we know what effect this will have on equity? And 2) do we know what this looks like as a savings on the average property tax bill?
    • Can conduct an equity analysis and examine the average savings
  • West – As it relates to the Gov’s plan, we’re using current law and not comparing the recommendations made by the Commission; we should look at some base numbers on the recommendations and then compare to these plans
    • Byer, TEA – Under my understanding of the Gov’s model you receive basic allotment and additional weights, with anything more going to the state; perfect equity
    • Buyer – breaks down the pennies, says there are 5% of the kids over 6 pennies have access to something more, $30 per WADA is difference in formula points out with changes there is no lag now so seeing $30 per kid in ASF as differential for what districts have access to
    • Buyer – would need direction if they have a different measure of equity
  • Byer – covers discussion on GLO payment in SBOE and decisions of State Board, legislature gets to appropriate funds and can make split how they choose
  • Byer – State Board is tied historically to 50/50 split
  • Conley-Jonson – regarding revenue cap, presume you can go up to 2.5% or does it assume entitlement?
    • Lopez – most districts would start at a $1, not a cap on entitlement
    • Lopez- does not cap the size of the bucket
  • Bettencourt – there is option for additional revenue under the Gov’s plan
  • Brister – asked where are we headed on this?
    • Bettencourt – put plans back into section J, got Gov’s plan and TTARA plan second so question is to keep 1/3,1/3,1/3
    • Bettencourt – now that he sees 1/3’s there is no reason to take Plan C forward and instead move forward with other two plans
    • Conley-Johnson – disagrees with how numbers capture testimony, does not think it captures the Superintendent’s 1/3 testimony
  • Brister – ask if in section J should there be one or two specific plans or none?
  • West – haven’t made suggestions in terms of funding at all, suggests no plan
  • Bettencourt – said revenue group voted this out 4 to 1 and this is the committee recommendation, this is the proposal and they need to stand by it
  • Bettencourt – this model is based on static information, best conceptual plans that they have seen in the market
  • Huberty – it is his understanding that delta of 2.5% is that the state will make up 4.2%; how do they make up that difference on a sustained basis? Agree property tax reform and school finance reform do need to be done together
  • Bettencourt – says the plan should be taken forward with “cafeteria concepts” because they recognize you cannot do school finance reform without addressing property tax relief; should stay with the workgroup voted on but not pick one
  • Huberty – 4.2% delta about $3.5 billion to go back for tax relief does not address other changes; reviews revenue working group discussion
  • L. Taylor – report could say recommend considering adoption of one of the types of plans without making a certain decision at this point
  • Conley-Johnson – basically $1 for education for every $3 for tax relief, can performance of revenues absorb as it looks to be $8-9 billion
  • Brister – all plans suggest to cap growth of property taxes, state makes up difference to schools and a way taxpayers benefit so he wonders if report could say agreement on these three general aspects since he is uncomfortable with endorsing a particular plan
  • K. King – left off ideas that they thought committee wouldn’t even entertain, says all three plans have not one dime in them – where are we going to get the money?
  • K. King – severance tax is not sustainable, great with using RDF for starting place but if they truly want to fund education they need a multitude of streams, it can’t come from one place
  • K. King – on verge of creating same mistakes, committee may create a huge hold harmless another ASATR but legislature will have to fund this or just moving money around
  • Killian – know they don’t like to do runs, but 12 cents compression on Govs plan gives a max saving to a taxpayer of $300 on $250k home
  • Bettencourt – lets go forward with three plans
  • Brister – problem with property tax going up so fast, asked William’s committee to draft a proposal with three legs, commend the three plans (not recommend)

Section L – Overview of Potential Revenue

  • Bettencourt – reviews why he sees or believes in increases in general revenue/sales tax (it will be above 110)
  • Bettencourt – reviews why he believes ESF will increase, report recommends redirecting a portion of those funds heading to ESF ($3.2 billion higher and number increases substantially)
  • Conley-Johnson – highlights her suggestions
  • Brister – confirms #1-2 are Bettencourt’s and recommendations from 3 on are Conley-Johnson
  • Brister – thinks Bettencourt is a major finding, wants sense of commission on going beyond that
  • Bettencourt – said Wayfair is recognizing the obvious and ok with including that but all other suggestions could be put in appendix
  • K. King – there needs to be a spot for other sources, also notes history and severance taxes are not sustainable, state of Texas needs to expand severance and says if the energy sector is responsible for funding education it should be the whole energy sector including coal, nuclear, etc
  • Brister – asked Williams how he feels about putting other suggestions in the appendix
  • Williams – agrees
  • Conley-Johnson – also agree and supports that notion
  • Bettencourt – as long as those suggestions are just in appendix and not recommendations
  • Brister – it will be noted these are potential sources that have been mentioned in appendix and GR, ESF and Wayfair will be in major findings
  • Williams – there has been discussions on hardening, asked about report comments on it
  • Bettencourt – said the bill author is at the table working on this issue so leave this issue out of the report

Section K

  • Williams – provides general comments and reviews recommendations 24-29
  • Huberty – asked about military schools/challenge academies, would like to consider potentially expanding that model into different regions

 

Closing Remarks

  • Brister – Thanks drafting team, says he is tremendously encouraged
  • Brister – would like to get unanimous commission approval
  • Brsiter – Final meeting next Wednesday at 10 am