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The Expenditures Working Group met to review expenditures related to public school finance and consider and take actions on recommendations submitted to working group. No public testimony was taken. The focus of this working group focused on expenditures recommendations including various recommendations that would reallocate distribution of funds. Chairman Huberty suggested the working group reconvene in 30 days with a full report to review before presenting the recommendations to the full commission.

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 Remarks

  • Recommendations are consolidated from testimony and other sources received by the working group
  • This meeting is to vet some of the ideas in more detail before making a final recommendation to the committee
  • Began discussion on slide 35, recommendations to repeal things in current statute and reallocate them into other areas
  • It was clarified throughout the hearing that it is not about cutting funds but moving funds into the basic allotment

 

Recommendations Discussed

Repeal high school allotment

  • Huberty – noted fiscal savings and the amount of funds that would be made available to the BA
  • West – noted this won’t be new money but rather a reallocation, not sure if they would be put into BA or another program
  • Taylor – part of this is looking at what we have been doing well and reallocating funds into those areas
  • Ellis – when we have a final tally, hopefully there will be new money, but this is about looking at way to incentivize programs
  • Brister – convinced that we would be better off with something simpler in terms of finance system
  • West – an increase to basic allotment would have an impact on recapture
  • Huberty – recommends repealing that allotment as a starting point to start working from
  • Taylor – noted most of the items considered for repeal are not being spent specifically on those items at the local level
  • Ellis – this was designed for dropout prevention, but the districts that need this probably do not have the highest attendance rates
  • Huberty – will ask staff to determine the allocation associated with this

 

Repeal 1992-93 hold harmless

  • Huberty – there have been multiple attempts at repealing this
  • Ellis – for repealing anything that begins with 1992

 

Repeal staff allotment

  • Leo Lopez, TEA – described the Staff Allotment
  • Ellis – does this include paraprofessionals?
    • Lopez – It would apply to everybody outside of the salary schedule
  • West – if this was put into the basic allotment, the schools would still have the discretion to use this that best fits them, right?
    • Lopez – that is correct
  • West – still have some concerns about repealing this at this time but open to further conversation
  • Brister – not sure that making these decisions at the state level encourages people to be involved at the local level
  • Ellis – the benefit of having this has had its effect, and now we can peel off some of these items without undoing the whole idea
  • Huberty – would like additional information from TEA regarding what is being done and how this is being used

 

Repeal gifted and talented allotment

  • Taylor – this would help give schools more flexibility when they get the money, but the schools will still be getting the money
  • Huberty – should be providing the resources to the school, would like TEA to prove data on the number of students in this population and the geographic spread to verify the equity
  • Ellis – is there a statutory requirement?
    • Huberty – that would not change due to this
  • Brister – noted have heard no testimony regarding cutting G&T funding

 

Repeal public education grant allotment

  • Huberty – believes this should be left alone
  • Ellis – is this a permanent allotment or based on how long a student is enrolled?
    • Lopez – believe this is a one year
  • Taylor – believes this is being under utilized

 

Repeal transportation allotment

  • Huberty – suggests a different funding mechanism and notes that it may help recapture districts. There is an additional cost above and beyond what we are spending but there are multiple mechanisms to looks at
  • Ellis – noted it is a complicated formula but something that can be worked through
  • Taylor – mileage is what everybody else uses, which makes most sense
  • West – would this be best to do a spectrum approach
    • Lopez – there are a number of different ways this could happen
  • Taylor – this is a complicated thing and mileage would help simplify the process

 

Repeal½ cost of local option homestead exemption (LOHE) to Ch. 41 districts

  • Huberty – believes this is a revenue issue and should be taken up by that workgroup

 

Repeal recapture discount

  • Lopez – described this discount
  • Ellis – this is not an early payment?
    • That is correct
  • Huberty – would like to see the exact numbers to make a better determination

 

 

Property Values

Use CURRENT year property values in FSP calculations

  • Lopez – currently using prior year property values, there could be a discrepancy due to lag in fast growth areas between the calculated local share and the actual local share. Formulas would self-correct within that year
  • Taylor – would that be a one-year savings or does that lag continue?
    • Lopez – could make the argument that it is recurring
  • Huberty – would affect mineral wealthy districts
  • Ellis – for districts that are going up and down this would make it difficult for planning
    • Lopez – may add a little uncertainty into the state budget as well
  • Ellis – combined with CEI this could work well, stand alone it could cause issues
  • Huberty – putting this into the basic allotment would add equity across the board
  • West – noted this still must go through the legislative process
  • Brister – is this mostly used for configuring recapture?
    • Lopez – This is what drives the whole system
  • Huberty – requested the final numbers to be able to make a better determination

 

Funding Basics

Fund pre-K at 100% ADA

  • Taylor – not sure that we are ready to make a recommendation or to choose one of these options, but this is an area we would like to focus
  • Lopez – there are a number of options we can run models on
  • Taylor – numerous studies show reading on grade level is vitally important, so funding pre-K-3rd
  • West – discussed previous versions of this idea
  • Taylor – discussed possible incentives for reaching 3rd grade reading level
  • Brister – the $800 million price is assumed full day enrollment not half day?
    • Lopez – That is correct
  • Brister – the number may grow if more parents want to take advantage of this
  • Taylor – believes many more people will be involved in the program
    • Lopez – there may be some capacity issues and an expected ramp up

 

Equalized Wealth Level

Transition to single tier system

  • Ellis – having mentioned that the system is very complicated, this would be another way to help simplify the system as a whole
  • Taylor – agreed that the multi tier system is very complex, would like to simplify the system but not sure what that does to the numbers across the board
  • Brister – where does the noted savings come from?
    • Lopez – from the golden penny
  • Taylor – if we do not do something with the tiers, at a minimum we need to change what it is based on instead of using Austin ISD as the model because it is the worst-case scenario with high property values and lowering attendance

 

Recapture

  • Brister – this seems more like a revenues issue and think it should go to that workgroup
  • Taylor – agrees

 

Basic Allotment

  • Taylor – there are a whole lot of ideas for this issue
  • Brister – understand that the legislature is not in favor of inflationary measures that could bind future legislatures
  • Taylor – also bound by the constitution to have a balanced budget
  • West – agree that we cannot tie the hands of future legislatures, in terms of figuring out which recommendation to make, we need to fine tune these more substantially
  • Ellis – the proposal of moving recapture back into the basic allotment makes a lot of sense and ensures that those funds are being put back into education
  • Brister – as long as more students are arriving into Texas, funding will have to increase, but concerned with automatic increases of any amount
  • West – discussed similar issues with the CEI that came up in the past

 

 

Adjusted Allotment

Change charter funding to be based on: 1. Neighboring district’s ADA; OR 2. State student average (instead of district average)

  • West – am not prepared to make decisions on charters before we resolve the oversaturation issue
  • Taylor – from a policy or financial perspective?
    • West – believe both are connected

 

Cost of Education Index (CEI)

  • Taylor – has not been updated since 1991, and if we do not change that, do we keep it?
  • Ellis – the one this the commission cannot do is to leave the CEI as is; spoke earlier to using current year values, heard testimony regarding changing from CEI to comparable wage index (CWI). Need to talk about what that would do in a practical sense what this would do to the budget, and need to look at models of those changes. Does not believe that you can update CEI and the other option would be to get rid of it
  • Taylor – noted the dramatic effect of the CEI on the weights because it is so early in the formula, agrees that it needs to be changed or replaced
  • Huberty – it hasn’t been updated and is not working, and it would need to be updated every two years
  • Taylor – some of the changes could help raise the equity to all districts
  • West – how is the amount of money developed based on the CEI?
    • Lopez – there is no appropriation for the CEI, it is just a part of the general formula
  • Huberty – will continue to look at the CEI for recommendations

 

District Size Adjustments

Eliminate the SDA/MDA and density adjustment in the TA; use funds to increase the BA and provide an expanded sparsity adjustment

  • Lopez – described the adjustments made to the small district size adjustment made in the 85th Session through HB 21
  • Brister – discussed concern with this adjustment and the administrative expense related to consolidation
  • Ellis – discussed administrative consolidation in the 5 largest districts that showed no real savings from consolidation
  • Brister – discussed the difference between savings and giving districts extra money not to consolidate
  • Taylor – there are examples of areas that would be very beneficial to consolidate, that include some economies of scale included, asked TEA to look into how to make other incentives to reduce recapture to make them more appealing and useful for districts
  • Huberty – would eliminating the CEI make the adjustment equaling the district-based adjustment to the student-based adjustment?
    • Lopez – you could still do that
  • Huberty – the issue is that we don’t really know what the size adjustment cost, believes we should have a true metric for what this cost, not suggesting elimination just need to know the real cost before recommendations can be made
    • Lopez – will also look at alternatives
  • Taylor – we should also consider incentives to consolidation
  • Taylor – also noted that it should be considered to move that piece further down in the formula and see what impact that has

 

Special Education

  • Huberty – is not ready to make tweaks to parts of this formula, but need to associate it to actual need, the expectation is that due to new changes coming in there should be additional funding input and we should see what that does before making dramatic changes to the formula
  • Lopez – updated the workgroup on the new special education programs – expecting the number of students in SPED will grow 2% and FY 2021 1% and will level off after that
  • Huberty – what is the current SPED?
    • Lopez – $4.8 Billion
  • Huberty – what does the 2% represent?
    • Lopez – $682 million for 2019
  • Huberty – theoretically the changes would be between $1.2-1.3 billion
    • Lopez – that was for 2019, 2020 would be about $1 billion and could continue to grow after that
  • West – how accurate are these models?
    • Lopez – have not had to model this before, so these estimates are just that
  • Huberty – one recommendation is to let these changes play out before making additional changes, another is to add new weights for needs, but we will not have hard data regarding the changes until after the legislative session, but we can make tweaks along the way
  • Brister – heard testimony that there may be advantages to basing weights based on treatment versus condition
  • Taylor – discussed scheduling some of the pieces of the weights to be changed legislatively in a finance bill moving forward
  • Huberty – this is one part of the education code that districts could partner with private services, and would like to consider ways to make that more inclusive and would like to make incentivizing that part of the discussion

 

Career and Technology (CTE)

Expand CTE funding to include 6th-8th grade

  • Huberty – recommendations included expanding funding for 8th grade, the thing we are hearing is a need for skilled workforce. This would be new money, but it would be worth it to add 6-8th grade
  • West – need to be sure there is engagement, by requiring real world application
  • Taylor – this is also not a lot of money
  • Brister – how does this actually work in 6-8th grade?
    • Huberty – typically it is separate from regular course work, but there is a lot of flexibility and would be available in rural districts
  • Brister – want to be sure we are not deciding what students will become through programs like these or lowering the core classes
  • Huberty – there are still assessments for the core material
  • Ellis – noted correlation between CTE and core classes

 

Compensatory Education

Change basis of comp ed from free and reduced lunch

  • Leo Lopez, TEA – noted there could be a better model by using a spectrum-based weighting model
  • Taylor – noted the density and intensity of it effects the educational outcome as well as the differences in low income in a city versus rural
  • West – need to look at other compensation factor than free and reduced lunch

 

Bilingual Education

Encourage use of dual language programs in districts with the capacity to do them

  • Traylor – would like to move away from Bilingual and towards Dual Language and incentivize a move towards that through a higher weight
  • Ellis – the framework is there, there is already graduation incentive
  • Huberty – this is the one out of the six that I think should be recommended

 

Facility funding

Increase per ADA allocation of NIFA to $500 by increasing biennial appropriation to 200M3

  • Huberty – cost has gone up significantly, but this is an appropriations issue with the exception of NIFA. A very big concern for Fast Growth schools as well as charters. Increase ADA through NIFA is a recommendation and would require a statutory change from $25 million cap to $100 million cap
  • West – supports this, but has issue with charter community and over saturation
  • Huberty – requested statutory change language

 

Staffing

Make children of teachers eligible for free pre-K

  • Huberty – do not know what that cost is but believes this is a no brainer
  • Taylor – believes this is also a benefit to free pre-k programs

 

Study, formulate and fund a comprehensive teacher compensation system designed to recruit and retain a high quality workforce

  • Huberty – do not believe we are picking one type of program, but should think about how to get teachers into title 1 campuses and ensuring they want to stay through rewards. What would it cost to implement master teacher programs?
    • Leo Lopez, TEA – would need to add capacity at TEA, believes it would be small initially but likely expand quickly after that
  • Brister – how do you begin that when most districts have seniority program?
  • Huberty – have seen examples of large districts that use money to give everybody a raise as opposed to creating a target program to fix the most underperforming schools. Should make a recommendation to adopt this but will require legislation to really create this
  • Taylor – would need to be an ongoing cost
  • West – believe this is something that would have to be micro-managed
  • Taylor – believes this should be some kind of incentive program maybe on the back end
  • Brister – discussed signing bonus options
  • Ellis – spoke to Ed Prep programs and pay scale associated with various certifications

 

Increase BA to provide funding to improve mental health services by: 1.Hiring more counselors, social workers, LSSPs; AND 2.Providing teachers with trauma informed training

  • Huberty – consensus is yes, would like to discuss with Chairman Price. Believes everybody is on the same page with this, just need to be sure it is very targeted
  • Taylor – there is absolutely a consensus on mental wellness
  • Huberty – believes this should be part of a holistic approach and would like to defer to Speaker on moving forward

 

Increase state contribution from: 1.From 75 to 150/month; AND 2.Continue increases until state/local combined fully covers employee-only coverage (beyond FY20-21)1

  • Huberty – TRS board just decided to lower annual return, believes the appropriations should take this on
  • Brister – agrees
  • Leo Lopez – noted there would be some interaction with the minimum salary schedule if TRS is taken up. Spoke toward district paying contribution above minimum salary schedule
  • Huberty – if we ultimately voted to remove the CEI this would have to be reconfigured?
    • Leo Lopez – that is correct
  • Taylor – these are substantial dollars and the TRS care is a monopolistic system and allowing competition would help the quality of life for our teachers and should be considering that – will be looking at that moving forward

 

Create a funding incentive for districts to offer more instructional days, by providing optional half day funding for every day from 181-210 for students in grades PK-5.1

  • Huberty – noted cost estimate up to $180 million, this would be an optional item and potentially best as a pilot
  • West – agrees

 

Closing Comments

  • Huberty – suggests 30 days to reconvene with a full report to review and then reconvene to present the recommendations to the full commission
  • Next full commission meeting has not been scheduled yet
    • Do have multiple dates that the SBOE hearing room has been reserved through Decembe