Summary of the Texas Commission on Public School Finance Final Report

Full Report: Funding for Impact: Equitable Funding for Students Who Need It the Most

For the past 12 months, a select commission of lawmakers, educators, and community members collaborated on the following final recommendations to dramatically improve Texas’ public school funding system. All recommendations should be woven into the funding formula where applicable.[1]

1. Establish a statewide goal of 60% or higher proficiency for critical PK-12 outcomes, and align local school board goals with these outcomes

In alignment with the state’s ultimate 60x30 goal, the state should set a goal that by 2030, 60% of 3rd graders read at the state’s “Meets” standard and 60% of high school seniors graduate without the need for remediation and access either a post-secondary education, the military, or an industry certificate. Local school boards should develop 3 and 5 yr. goals to align with these metrics.

2. Focus additional state resources on early education to substantially increase 3rd grade reading levels: $780M per year

Provide additional state funding for every kindergarten-3rd grade student who is an English language learner and/or comes from a low-income family, to be spent across Pre-K thru 3rd grade ($780M). Districts offering Pre-K will be required to offer full day Pre-K for 4 year-olds (subject to capacity constraints) and to meet the high quality pre-K standards established in the 84th legislative session.

3. Utilize outcomes-based funding to increase early literacy and postsecondary access: $800M per year

Provide additional funds in Yr. 1 to public schools for every 3rd grader who achieves “Meets” standard in reading ($400M) and every senior who graduates without needing remediation and enrolls in a postsecondary institution, attains an industry-accepted certification or enlists in the military ($400M). Greater funding (approximately 2.5x) would be provided for low-income students meeting these benchmarks vs. their non low-income peers.

4. Provide salary increases to our strongest educators with an Effective Educator Allotment: $100M in year 1, increasing $100M per year and reaching $1B in school year 2028-2029

Provide optional funding via weights in the school finance formula to school districts who develop a multi-measure evaluation system in collaboration with teachers and principals (and approved by TEA). Funding could be used for a variety of strategies, including salary increases for a district’s top performing educators and incentives for teachers who work on the most challenged campuses. Evaluation systems should increase retention of effective educators and enable districts to provide targeted professional development based on each teacher’s needs as identified by the evaluation.

5. Proposed Other New Allotments and Programs to Improve Early Literacy: $200M per year

Increase formula funding for dual language programs ($50M) and for students with dyslexia ($100M). Create an optional program for districts to receive up to 30 additional half-days of instructional funding in Pre-K through 5th grades to help mitigate summer learning loss. ($50M)

6. Reallocate $3.5B in existing annual allotments toward more impactful spending and greater system-wide equity

Reallocate some of the state’s current allotments and other provisions that are either outdated or no longer meeting the needs they were created to address, including: Cost of Education Index ($2.9B), Chapter 41 Hold Harmless ($30M), Chapter 41 Early Agreement Credit ($50M), Gifted and Talented Allotment ($165M), and the High School Allotment ($400M). The reallocations would provide an estimated $3.5B to be re-directed toward more impactful uses and an increase in the Basic Allotment, which represents the minimum amount of funding guaranteed to every Texas student.

7. Use current year district property values (one time state savings of $1.8B) and provide additional funding for fast-growth districts: $280M per year

Commission recommended (i) moving to current-year vs. prior-year values to more accurately reflect property tax collection revenue and (ii) creating a fast-growth allotment for the top quartile of school districts with particularly rapid population growth to help offset the costs associated with this growth.

8. Proposed Changes in Existing Allotments/Formula Weights

· Providing more funding for low-income students on a sliding scale, with more dollars allocated to schools reflecting higher concentrations of low-income students: $1.1B per year

· Base transportation funding on mileage rather than linear density (cost neutral)

· Provide transportation funding for recapture districts: $60M per year

· Recreate small/mid-size allotment as a stand-alone allotment (cost neutral)

· Increase New Instructional Facility Allotment appropriation to $100M per year

· Expand funding for Career and Technology classes to middle school students: $20M per year

9. Changes to Tier II Yields

· Copper Penny Yield: Link Tier II copper penny yield to the percentage of the basic allotment that would initially increase the yield from $31.50 to approximately $43.50, with an initial estimated statewide cost of between 0 and $286M. This increase would benefit school districts taxing above $1.06, with Chapter 42 districts seeing an increase in their Tier II aid while Chapter 41 districts would see a reduction in their recapture payments. This increase in copper penny yield should be paired with initial automatic compression of a district’s tax rate to provide taxpayers with immediate tax relief and provide districts with future capacity to seek increases in funding after a reasonable timeframe via an initial one-time school board vote up to the previously authorized level or a subsequent tax ratification election thereafter.

· Golden Penny Yield: Decouple the Tier II golden penny from Austin ISD and set the yield at a percentile of the basic allotment per student. (Revenue reduction to districts TBD, based on percentile set).

10. Slow property tax growth and reduce recapture growth

As property tax values have risen in Texas, both the local share of school funding and the number of districts subject to recapture has increased. If property values continue to rise at recent rates, recapture is set to triple by 2023. The Commission recommended the following three options be considered by the Legislature to slow the growth of recapture and property taxes:

· Compress districts’ Tier 1 tax rates for any value growth above 2.5% annually, with state tax revenues making up any balance needed to ensure school district entitlements are fully funded.

· Use recapture growth to fund statewide compression of property tax rates

· Share recapture dollars with school districts, taxpayers and the state.

11. Ensure districts receive all Available School Funding before any funds subject to recapture

12. Additional Recommendations.

· Making FAFSA or TASFA completion a graduation requirement (with parent opt out option)

· Funding for one optional in-school SAT, ACT or TSIA assessment per high school student

· Giving full-day attendance credit for districts providing full day pre-K

· Funding for districts using a turnaround model similar to the ACE program in Dallas ISD

· Funding for blended-learning models

· Expansion of educational opportunity for incarcerated students

· Allowing children of educators to be eligible for free pre-K

13. New Revenues Identified

· Prioritize projected revenue growth to fund education and property tax reforms (significant growth expected in sales tax and severance tax collections).

· Redirect a portion of severance taxes currently designated for the Rainy Day Fund

· Expand the sales tax base to include internet sales

· If the above identified revenues do not fully cover projected costs for outcomes improvements or property tax reform, the Report states that the Legislature may need to consider additional revenue options, including those listed in the Report’s Appendix.

[1] Special education funding is not included because the Commission deemed it prudent to wait to implement special education formula changes until TEA’s current corrective action plan is implemented.

Joshua Kumler