I. Overview
Across our education systems, it is important not only to find what we spend,
but also to determine from where the money comes. Elementary, secondary and
post-secondary education institutions are all funded through a diverse mix
of local, state, federal and – particularly in higher education –
private sources. This section on education expenditures will review the following:
- The funding mix for the nine area independent school districts;
- The implications of state policies on school financing;
- New federal policies from the No Child Left Behind act;
- The complexities in funding for higher education;
- Some basic expenditure information from the 2000-2001 school year for
the nine school districts and six colleges and universities.
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II. Public Schools
The sources of revenue for public education vary greatly across the nine
districts in our assessment area. Those districts that are deemed “property
wealthy” by the state receive very little state support. Statewide,
48.5% of all revenue for public elementary and secondary education comes from
local taxes and 43.6% comes from the state. But for the nine districts in
our area, the ratio is 79.7% local, 13.3% state. The percent of revenue
coming from the state demonstrates substantial differences in property value.
It is very telling that the three districts with the lowest state contribution,
Austin (4.2% state), Del Valle (6.9% state) and Manor (6.9% state) are the
same districts that have the highest percentage of low income students.
State Policy - Chapter 41:
State policy governing school finance is intended to provide equity across
all districts statewide, ensuring that all students have equal access to education
resources. Under a system based upon property taxes, like Texas’ system,
the potential exists for huge disparities among districts. For a century,
the state of Texas has grappled with the challenge of bringing equity to public
schools. Initially, the equity debate was centered on disparities between
urban and rural school districts. In 1971, the Rodriguez v. San Antonio ISD
court case shifted the debate to disparities between rich and poor school
districts. More than a decade later, the debate was renewed when Edgewood
ISD v. Kirby was filed. This suit contested the state’s reliance on
property taxes to finance public education, contending that this method was
intrinsically unequal because property values varied greatly from district
to district. In April 1987, the state district judge ruled for Edgewood; in
December 1988, the Third Court of Appeals reversed the decision; then finally
in July 1989, the Texas Supreme Court ruled for the plaintiffs and ordered
the state legislature to implement an equitable system by the 1990-1991 school
year.
A lengthy legislative process has paralleled this legal history. A series
of legislative efforts to reform school finance have become law, beginning
with House Bill 72 in 1984. When HB 72 was ruled unconstitutional, Senate
Bill 1019 in 1989, Senate Bill 1 in 1990 and Senate Bill 351 in 1991 followed
it. Each was, in turn, found unconstitutional. Finally, in 1993, the legislature
passed Senate Bill 7, which was ultimately accepted as constitutional by the
Texas Supreme Court. Under this legislation, each school district would help
to equalize funding through one of five methods: 1) merging its tax base with
a poorer district, 2) sending money to the state to help pay for students
in poorer districts, 3) contracting to educate students in other districts,
4) consolidating voluntarily with other districts, or 5) transferring some
of its commercial, taxable property to another district’s tax rolls.
If a district failed to take one of these options the state would order the
transfer of taxable property. If property wealth continued to exceed the state
defined threshold ($300,000 per Weighted Average Daily Attendance in school
year 2001-20021), the state would force a consolidation.
It was this legislation that was translated into Chapter 41 of the Texas Education
Code, and brought “recapture” into the language of school funding.
Following this approach, the state of Texas has made great strides toward
equity in school funding for all districts and all schools. However, the examples
of Austin, and Manor ISDs also point to an unexpected consequence of this
approach: it is possible for a district to be “property wealthy”
yet still have significant poverty among its enrollment, with educational
needs frequently outstripping available resources. By the 2001-2002 school
year, 28 of 101 Chapter 41 districts in the state had enrollments that were
more than 50% low income. Austin ISD was, however, the only major urban district
on the list.
Local Impact – Chapter 41:
As more area districts become subject to “recapture” under Chapter
41, the implications become increasingly problematic for our community. Attempting
to balance rapid growth, rising expectations and increasing diversity within
fixed resources is proving to be a difficult proposition. In the 2001-2002
school year, five area districts were subject to recapture under Chapter 41
(see Table 1).
Some examples of what this has meant for the individual districts follow.
Eanes ISD was designated a Chapter 41 district in 1994.
Since that time, Eanes has remitted approximately $182 million to partner
districts. In 2002, Eanes ISD will pay over $41 million ($5,687 per student),
a figure that is expected to rise to over $50 million in 2003 ($7,070 per
student). The district has steadily raised its maintenance and operations
tax rate each year to compensate for resources lost under Chapter 41. However,
in 2001, Eanes reached the state-mandated maximum of $1.50 per $100 in property
value. Now that no increase in local revenue is possible, recapture will result
in a budget shortfall of approximately $5.7 million in fiscal year 03. This
is the equivalent of 142 full time employees in a district of approximately
1000 employees.
Austin ISD is the largest Chapter 41 district in the state.
AISD has been subject to recapture under Chapter 41 since 2000. Since that
year, the district’s payments have grown rapidly: from $32 million in
2000, to a projected $179 million in 2003-2004. As in Eanes ISD, this growing
cost has driven the district to raise its tax rate to the maximum (pending
approval by the board of trustees). Payments to the state (by way of partner
districts) have limited the district’s ability to raise teacher salaries
to keep pace with the cost of living, reduce class sizes, and provide enrichment
and support services to students in need.
Lake Travis ISD has been subject to recapture under Chapter
41 since the 1999-2000 school year. As with Austin ISD, their recapture payments
have grown many times over in just a few years: from $4.5 million in 1999-2000,
to a projected $26 million in 2003-2004. For a district whose total operating
budget is $28.2 million, recapture payments are a significant portion of resources
available in the district.
As a result of Chapter 41, the district has been forced to reduce staff by
5%, resulting in increased class sizes, reductions in instructional programs,
support programs and administration.
Manor ISD is in its second year as a Chapter 41 district.
Over the past two years Manor ISD has made a number of adjustments to the
budget to compensate for state recapture. These cuts have impacted every aspect
of the district: central administration, instruction, technology, transportation
and support services. At all campuses and all levels, these cuts have resulted
in increased student-teacher ratios.
In the 2002-2003 school year, even more local districts
will become subject to recapture under Chapter 41. For example:
Round Rock ISD is expected to send nearly $10 million out
of the district in 2002-03. This will result in an increase in staffing ratios
and larger classes at the secondary levels. At the elementary level, classes
will be closely staffed at the 22:1 ratio according to current enrollment
rather than staffed for projected growth. Ratios have increased for campus
administrators as well and more than $500,000 in staffing reductions and reassignments
were made at the Central Office. Department budgets were cut by 10 percent
and employee calendars above 187 days were reduced by one day. The number
of teacher and technology facilitator positions has been cut.
To increase revenue, high school students who participate in designated extracurricular
activities and athletics will be assessed a $50 participation fee. To increase
the number of students attending Round Rock ISD schools, thereby reducing
the property wealth per student and the Chapter 41 liability, the district
this year is offering tuition-free enrollment at campuses and in programs
where space is available.
If the state system remains unchanged, Round Rock ISD expects a loss of up
to $25 million in 2003-2004.
Federal Policy
The No Child Left Behind Act: On January 8, 2002,
the No Child Left Behind (NCLB) Act was signed into law. This law serves to
reform the educational system in the United States by giving state and local
educational authorities more flexibility in administering and allocating resources
to schools, while stressing higher levels of accountability for student achievement.
This legislation enables states and local school districts to transfer categorical
funds to areas of highest need, while attempting to reduce associated bureaucratic
processes. The NCLB Act emphasizes the use of evidence-based strategies that
have been scientifically proven to be effective in achieving the desired outcomes,
especially in reading and teacher training. The NCLB Act seeks to direct resources
to the highest needs students. The majority of available resources will target
campuses/school districts that are low performing or have a high number (40%
or greater) of economically disadvantaged students. Using the Title I formula,
Texas will be eligible for a higher percentage of resources than in past years,
with no more than 5% allocated for administration costs for the Texas Education
Agency.
In some areas, this new legislation has been met with some trepidation. In
particular, stipulations regarding student assessment and teacher quality
could be problematic. In some states, the requirement for annual statewide
assessments is forcing major policy changes and substantial new investments
in standardized assessment tests. However, the statewide testing and assessment
system already in place in Texas meets the new federal guidelines so little
change will be required.
In the area of teacher quality, however, Texas shares the same challenge
as the rest of the nation. Under the new legislation, every public school
teacher must be “highly qualified” by the end of 2005-2006. While
all share this goal, making it happen may prove to be difficult. In a statement
that could easily apply to Texas, the California state superintendent of schools
said “You can’t just wave a magic wand and say we need to have
more teachers, it’s a resource issue” (Education Week, Jan 16,
2002).
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III. Higher Education
Economic challenges are not limited to elementary and secondary education.
Local higher education institutions must function within very real funding
constraints. For public institutions these may include:
- Decreases in state funding (State funds accounted for 60% of ACC’s
budget in 1984; today that figure is 39%.)
- A drop in the rate of local tax revenue growth from 15% in FY 01 to 9%
in FY 03
- A decline in the rate of total revenue growth from 8.44% in FY 01 to
3.24% in FY 03
For private institutions these may include:
- Loss of investment income resulting from the economic downturn
- Declines in alumni giving also resulting form the economic downturn.
Additionally, the large projected increases in enrollments present further
costs to institutions in services, facilities and staff. The combination of
these factors may be a barrier to institutional ability to reach out to underserved
populations. These challenges suggest that in addition to current initiatives,
it will take additional local public investment in order to supplement state
and federal funding to public institutions to reduce the impact on students
themselves, an impact that will increase the already significant barriers
to affordability.
A thorough assessment of funding for higher education in our community is
highly problematic due to the diversity of funding that goes into these institutions.
Where public elementary and secondary schools are funded almost wholly by
public tax dollars (local, state and federal), higher education institutions
run on a much more diverse mix. For example, Southwest Texas State University
lists nearly 30 different revenue sources. These include state appropriations,
tuition, a dozen or more different fees, revenue producing services (ex. Book
store), state and federal research grants and financial aid, private gifts
and endowment income.
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IV. The Basics
Although there is no comprehensive assessment of the community’s investment
in the formal education system, this section does offer the basic expenditures
for the institutions covered in this assessment. As Table 2
shows, expenditures by independent school districts in Travis County totaled
more than $1.16 billion in School Year (SY) 2000 - 2001.
Budget snapshots for each of the nine districts in the CAN assessment area
are included in Appendix K.
Each contains a breakdown of expenditures by function, and some basic revenue
information.
A thorough assessment of funding for higher education in our community is
highly problematic due to the incredible diversity of funding that goes into
these institutions, particularly among the four-year institutions. Where public
elementary and secondary schools are funded almost wholly by public tax dollars
(local, state, and federal levels), higher education institutions run on a
diverse mix of public funds, private contributions, and tuition and fees paid
by students. Endowments, endowed chairs, dedicated gifts and capital campaigns
further complicate the picture. The basic expenditure information on the six
area institutions are presented below.
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Next Section
1. TEC Section 42.302 (a): "WADA" is the
number of students in weighted average daily attendance, which is calculated
by dividing the sum of the school district's allotments under Subchapters
B and C, less any allotment to the district for transportation, any allotment
under Section 42.158, and 50 percent of the adjustment under Section 42.102,
by the basic allotment for the applicable year.
