Monday, February 28, 2005

IDRA Analysis of HB2

Texas House of Representatives Grusendorf Proposal
Analysis provided by the Intercultural Development Research Association, a member of Texas Latino Education Coalition

The major school finance proposal that has been submitted for consideration in the Texas House of Representatives is House Bill 2 authored by Rep. Kent Grusendorf of Arlington, Texas.

Despite conservative promises to kill the “share the wealth” feature used in part to fund Texas public schools, this proposal does not eliminate recapture. Legislators have found that they still need that source of revenue to support the whole system, but more importantly, recapture provides a way to keep the wealthiest districts from increasing the level of inequity in funding. Although recapture is kept in the system, this major House plan still reduces the level of high-wealth school district contributions, specifying that wealthy districts can now keep 65 percent of money they once gave to the state for re-distribution to all other schools. This approach clearly increases inequity between most school districts and high-wealth districts.

Accreditation-Based Funding
The cornerstone of the proposals introduced into the Public Education Committee in the Texas House of Representatives involves major changes in the way Texas schools are funded. The radically new approach was first introduced in the last failed special legislative session convened in 2004 and serves as the basis for a new funding strategy. Continuing to rely on findings from a controversial study that examined the level of expenditures of school districts would need to meet extremely low state accreditation requirements, the House plan proposes to use a new “accreditation allotment” concept to replace the existing basic allotment, which is the major driver or component in the current funding. The new plan recommends an elementary school accreditation allotment of $4,550 for each student in average daily attendance in grades K-8, and $5,550 for high school students.

Special Population Programs
The House proposal includes provisions that will abandon funding weights for special education, compensatory education and bilingual education programs (where additional funding for these programs is connected to the amount of money provided for “regular” students). This funding is converted from mechanisms that automatically adjust funding based on increases in the state’s basic allotment, to an approach that isolates these specialized programs and requires biennial battles to acquire specific funding for these special populations, a throw-back to the 1960s and 1970s. Historically, such specific fixed dollar-based mechanisms have made it extremely difficult to secure any necessary funding increases since districts that have few such students typically do not support increases that may require tax hikes at the state level.

Hold Harmless Provisions
As in the 2004 special session, this warmed-over plan incorporates provisions that assure all school systems will receive enough money from the state to keep them at their previous revenue levels, plus 3 percent more in state funding to offset changes that are proposed for the system. These, in turn, essentially leave the effects of the prior system in place, delaying any real impact on districts negatively affected by the proposed changes, for at least one year.

Equalized Enrichment
A major reform in the House proposal is a change in the level of local school district enrichment permitted. In the current system, the state allows local schools to supplement the basic funding level by up to 64¢ of local tax effort. This enrichment effort is partly equalized when the state ensures that districts with different abilities to raise local revenue will get similar amounts of money for every penny of tax effort they choose to charge. The potential inequality created by partially equalized enrichment is initially limited by the lower level of enrichment taxes permitted in the new plan. This means that instead of equalizing 64¢ of local enrichment effort, the state only allows districts to have a 10¢ enrichment tax.

On the other hand, because of changes in the recapture part of the system, the extent of inequality in the Texas school funding system is allowed to get bigger than it is now. For example, a school district that qualifies for equalization funding may get up to 45¢ for every 1¢ of enrichment taxes; a wealthy district may be able to net over $200 for every penny of tax, or $155 more for every enrichment penny. If one multiplies both the 45¢ and the $200 by the 10¢ of local enrichment permitted in the new plan, the gap in funding between most districts and wealthy districts would increase to $1,550 per student ($450 in low and average wealth districts compared to $2,000 in the wealthiest), or $31,000 per classroom. Contrary to some claims, this would make the new plan less equalized than the system now in place.

Overall Assessment
The new proposal being considered by the Texas House is a warmed-over plan rejected by House members in 2004. The funding levels promised provide very little “new” money to help local districts meet their cost of operation and are set below the levels estimated for providing every child in Texas an excellent and equitable education. The weakening of existing recapture features also sets up the potential for districts to eventually acquire authority to use the taxing capacity provided to produce high level of un-equalized enrichment, which the existing recapture plan short-circuits. Finally the reversion to fixed funding for special student programs for special education, low-income and students who are learning English would take the state of Texas 20 years back in funding approaches.

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