Mission creep critical at the Public School Finance Commission

Mission creep critical at the Public School Finance Commission

A slide from the governor’s school finance proposal that we should all get used to seeing. A lot.

State Sen. Paul Bettencourt’s Revenue Working Group—a subsidiary of the Texas Commission on Public School Finance— continues to be one of the more intriguing things you can watch on Texas Capitol livestream. 

The purpose, one would suppose, of the revenue working group, is to find money to fulfill the recommendations of the other working groups: the outcomes group (which will set goals for Texas’s public education system, which will in turn inform how funds are spent in pursuit of those goals), and the expenditures group (the group that determines how much money is needed to accomplish said goals).

With that in mind, it would seem reasonable for much of the time in the revenues working group to be spent on a central question: where can we find more money?

Actually, let me back up a little further. That assumes that Texas’s school finance system is not currently putting enough money into public schools. And in spite of eight months of testimony affirming that, yes, schools do need more money, we somehow have come to the working group, a little wishy-washy on that issue. 

You see, try as they may, neither Rep. Ken King (R-Canadian), Rep. Diego Bernal (D-San Antonio), or Austin ISD Chief of Business and Operations Nicole Conley Johnson could keep Bettencourt on topic when it came to getting more money into the system.

Rather than talking about supplementing current funding streams (a mix of property tax, general revenue, and interest earned on a huge land grant established in the Texas Constitution), Bettencourt really…REALLY wanted to talk about replacing property tax using surplus revenue from oil and gas.

Gov. Greg Abbott’s proposed 2.5% increase tax cap made the final list of six recommendations that will go before the full commission next month. Also among the six-item “buffet” of options, as Bettencourt called it, a version of the conservative Texas Public Policy Foundation’s proposal to eliminate baseline property tax entirely over the next 11 years, replacing it with revenue from the ever-growing general fund—the pot of funds from all State taxes not specifically designated for some other purpose.

Rep. King is no flaming liberal (the “Canadian” after his name isn’t what you think), but he does have institutional memory, and what appears to be buckets of common sense. The last time the Legislature chopped the allowable tax rate—by about 1/3 in 2006—it had to create a whole alphabet soup of mechanisms and efforts to keep the wheels from falling off school districts that were now severely underfunded.

“It seems like we’re repeating ourselves,” King said, as Bettencourt explained the various plots to take away local property tax funds and replace them with other funds.

Those other funds, Bettencourt explained, could be (should be, he argued) the increased revenue from projected booms in Permian Basin gas and oil production. New pipelines are going in, he explained,“This money is coming. What are we going to do about it.”

My temptation to let Bettencourt manage my investment portfolio (he just sounded so certain!), was curbed when I recalled a recent conversation with an oilfield worker’s wife who told me, “Oil is a fickle bitch.”

King put it more delicately when he said, “I’m a little concerned that we’re putting more money in, (but) it’s not a sustainable source.”

Making gas and oil part of the public school finance system isn’t a bad idea, unless you are making schools solely dependent on that revenue, or dependent enough that a change in the oil economy will create a funding crisis that then has to be fixed by the Texas Legislature which is the miserly bastard to the oil market’s fickle bitch.

Should fossil fuels indeed become the savior of public education in Texas that also leaves us with another, perhaps intended, consequence. Any move away from oil and gas to sustainable energy could be politicized as a strike against public schools. It’s a Faustian bargain if ever there was one.

The discussion of increased oil revenues did yield one bright spot: Bettencourt’s indication that he would champion the use of rainy day funds for public ed. Or at least would-be rainy day funds. Currently, surplus oil and gas taxes go into Texas’s absurdly cushy rainy day fund, the largest in the country at over $12 billion. The idea that legislators might forgo adding to their swimming pool of gold coins was news to everyone. Including Rep. King.

“That was proposed to the senate last session and you guys were not having it,” King said in visible disbelief.

This is different, of course, Bettencourt explained. Maybe because it’s not actually dipping into the rainy day fund. Maybe because the idea of eliminating a huge chunk of people’s property taxes seems like a great way to stem the rising blue tide that is slowly creeping into the Statehouse.

One thing is certain, Bettencourt came into this working group with two clear purposes: to decrease property tax and to come up with a plan to “ween off of Robin Hood.”

“We know that recapture is unsustainable,” Bettencourt said.

Do we? Perhaps in it’s current iteration, yes, but it’s also not something to be scrapped altogether according to more progressive analysts. A plan to equalize district revenues is considered good governance by many. Does it need to be updated? Sure. The threshold for what it takes to have some of your locally raised tax revenues “recaptured” by the state is outdated, and “wealthy” doesn’t mean what it used to. But scrapping it altogether might be a bit much.

Bettencourt also kept using the term “ween” like the school finance system was overly dependent on funds recaptured from wealthy districts. It’s really not. Those funds currently account for around 11 percent of the State’s share of school funding, which is currently 36 percent of the total funding. It’s growing, yes, but let’s keep our heads on straight.

By that meager calculation, it shouldn’t matter too much if you eliminated recapture either. But the whole point was to be seeking additional revenue streams, not eliminating and replacing them.

Which brings us back to Conley Johnson’s main complaint about the entire working group.

“I feel like we’re not identifying revenue,” she said, “Cutting spending was not the goal.”

Ah, but Ms. Conley Johnson, that’s where you may be wrong.

Bettencourt and Commission chair Scott Brister were quick to interrupt Conley Johnson and point out that none of the plans reduce the funds available to public schools. In fact they add around 10 percent to current available funds.

Her frustration, however, if I got this right, was that we’ve identified a huge potential surplus of funds that would solve most if not all of the woes outlined by school districts across the state, and instead, we’re going to use up the vast, vast majority eliminating current funding streams.

Take a brief intermission here to wrap your head around that, and come to this last point with fresh eyes, because it’s important.

There’s another shiv up the sleeve of the commission.

Another proposal from the working group—one that belongs in a different working group, but I suspect we are going to see it at every turn—has to do with how the money is allocated. It also has to do with popcorn.

The governor’s tax-cap presentation included the recommendation that the total funds to which a district is entitled be determined by that school district’s performance, not its size, property wealth, or any other factor.

The presentation included a slide with two buckets of popcorn. The smaller bucket had a lot of popcorn spilling out the top, and the larger bucket had less. The bucket represents the district and the popcorn represents the funding to which it is entitled. The overflow popcorn are funds that would be recaptured by the State and, in theory, redistributed to districts that could not fill their buckets with local property tax alone.

In the current system, the bucket is enlarged based on student body characteristics (income, special needs, military families, etc), and district characteristics (mostly size).

In the proposed system, a district could increase the size of it’s bucket with performance. You do well, you get more money.

The problem with that, Bernal pointed out, is that the measures used to determine performance already favor “districts that are better off.”

Middle class kids score better on standardized tests. Their homes also generate more revenue. Unless the State has some really…REALLY…good plans to ensure equitable performance evaluations, this is a guaranteed formula for the rich to get richer.

When Bernal pointed this out, there was some hemming and hawing from the others about how if recapture keeps taking money from more and more middle-income districts, then the low income kids will be the ones who miss out. It’s not fair, King argued, that low income kids should lose resources just because they go to a wealthier school.

Yes, there are low-income kids in property-wealthy districts, but how those districts allocate their money supporting the low income kids in their schools is between them and God, and the U.S. Department of Education. It’s not a foregone conclusion that the first thing that gets cut should be supports for low income kids. 

What worries Bernal, he said, was that the idea of equity seemed to be a “we’ll fix that later” element to the plan. That the tax cuts, and recapture elimination were a foregone conclusion, the one true must, and that attempt to create some sort of equity would be left to sort out later.

Another bright spot did emerge from this part of the discussion, in the form of Brister, who has somehow become the guardian of all things equitable (never minding that he repeatedly used the terms equity and equality interchangeably). Brister does seem genuinely determined to see that schools with “more expensive kids to educate,” as he put it, get, if not the funds they need, then a share of the funds that recognizes that reality. That, my friends, is progress.

The truth is, Bernal argued, that a dramatic tax cap like the one proposed by the governor will affect ever district differently. There’s not way to address equity at all until they know who the biggest winners and losers will be. It was like trying to solve an unknown using an unknown.

“Why would we do that?” Bernal asked.

Because, Mr. Bernal, that’s what we’re really here to do.

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