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Groups focus on states' share of funding as school finance lawsuit approaches
By Conner Hammett, chammett@starlocalnews.com
Since its inception in 1993, Texas' Chapter 41 school finance system has drawn the ire of property-wealthy districts.
The system, popularly known as "Robin Hood," was conceived as a way to equalize funding by redistributing tax revenue from property-wealthy districts to property-poor districts.
Groups such as the Texas School Coalition, which has criticized the funding mechanism as an attack on districts' local control and a diversion of locally created funds, have waged a public fight to reverse the provisions of the bill since its approval.
Representing Plano ISD and more than 80 other districts, the Coalition is currently engaged in a lawsuit with the state over the constitutionality of the school finance system in the wake of last session's $5 billion education cuts.
But Robin Hood is still on the Coalition's mind. In a press release issued in September, the group noted 23 more districts are subject to recapture payments this year, bringing the total number of such districts to 374. Later that month, the group submitted testimony to a Joint Interim Legislative Committee pointing out that Chapter 41 districts will pay a combined $1 billion in recapture payments for the 10th year in a row.
"The Chapter 41 system is meant to equalize the system, and it's right now, unfortunately, doing that by keeping some districts down," said Christy Rome, executive director for the Coalition. "You wouldn't have to keep as many districts down if you brought more on the bottom up."
A district is considered property wealthy by the state as soon as its overall property value exceeds a threshold of $319,500 per student, according to the Texas Education Agency. If the changes to the threshold over the past 15 years accurately reflected the consumer price index, that threshold would be at $433 million, Assistant Superintendent of Business and Facilities Steve Fortenberry said at Tuesday's Plano ISD board meeting.
In other words, the bar has been lowered from the 90th percentile to the 64th percentile in a system that was initially designed to apply to a few outliers in the state, Rome said.
"The reason why we see so many districts that are Chapter 41 districts is the fact that the state has not made the investment in education to raise the floor," she said. "Instead, they just keep bringing the ceiling down."
New approach
The recent statements don't mean the group is holding out for the state to abolish the system. On the contrary, Rome said, the Coalition's legislative platform is that the state's contribution to the system is inadequate. This claim, along with a repeated complaint that the system constitutes a statewide property tax, forms the basis of the Coalition's lawsuit.
"If the state increases overall funding for schools, then that, in essence, would also change the Chapter 41 system, because you would, A, have a lot fewer districts that qualify and then, B, less money that would have to come out of [property-wealthy] districts," she said.
In Plano ISD, the effects of target revenue are not nearly as drastic as they were just six years ago. During the 2005-2006 school year, the district paid $136.3 million in recapture payments, or 31.5 percent of that year's total maintenance and operations tax revenue.
But the most recent figures from last year show the district's payment is down to $38 million, or 11.2 percent of its tax revenue.
"We have been very fiscally responsible in our district, and we've provided ourselves options by being very responsible in our management," said Karla Oliver, assistant superintendent for community and government services. "I think we're in somewhat of an enviable position even though it's been very difficult for us. We have really navigated a very difficult last few years in regard to school finance."
A Plano ISD draft statement for the 83rd Legislative Session does not call for the elimination of Robin Hood. It does, however, call for an adjustment to target revenue and the end of the so-called "copper penny" system that subjects the last 11 of the 17 cents of tax discretion available to districts to recapture.
Oliver pointed to the equalization of the school finance system in 2006 as one of the catalysts for the district to talk less about Robin Hood and more about adequacy in its lawsuit against the state.
"[Robin Hood's] not necessarily going to go away, [and] that's not something that we've been advocating for," she said. "We just want a more adequate funding system from the state of Texas."
Plano ranks fourth in the state when it comes to overall dollars spent on recapture last year. Nearby Frisco ISD paid $1.3 million, while Allen ISD made its first-ever recapture payment to the tune of $589,520. The highest-paying Chapter 41 district was Austin ISD, which paid $133 million into the system.
The equity side
Districts represented by the Equity Center, another group suing the state over the school finance system, come from an altogether different financial background than Plano and other Coalition districts.
The Center, which represents property-poor districts, is not only making the adequacy argument but claiming that the same changes to the system that eased the burden on districts like Plano in 2006 have created inequity for low-wealth districts.
The inequity, they claim, lies with the target revenue system, which dictates that any district whose local tax effort does not reach 2006 per-student funding levels will be reimbursed by the state to fill the gap. Conversely, districts whose revenue surpasses its revenue target must pay any excess back to the state.
This freezing of 2006 funding levels ultimately served to leave some districts with much less funding capacity than others, said Wayne Pierce, executive director of the Equity Center.
"Right now we have big differences in the amount people are funded, and it's not unusual to see a low-funded district get $60-70,000 less for a classroom of 22 than some of the wealthier districts, and we're saying that's inefficient and it's unfair," he said.
Pierce also pointed out that state aid payments to Chapter 41 districts through the target revenue system often exceed their recapture payments, preventing an in-the-red hit for most districts subject to the system. According to the Texas Education Agency, Plano received $43.2 million in state aid payments in 2011-2012.
While Pierce expressed agreement with the Coalition's proposal that the state contribute more to the system, he believes the lack of revenue-building, constitutional income and property taxes make recapture the best solution for ensuring equality.
"The courts have already said that it's constitutional, and they've already said it's a necessary part," he said. "If you didn't have recapture, you would either have gross inequities and vast differences in the funding levels, or you would have to have another state tax. ... To me, that's using an elephant gun to kill an ant. Recapture works quite well."
Pending outcomes
The lawsuit is expected to go to trial on Oct. 22. Fortenberry said a decision is expected in January or February of 2013, though appeals will likely go up to the Texas Supreme Court, potentially delaying a final outcome until early 2014.
When asked if the state would be able to afford to foot more of the bill for education if the adequacy argument is favored by judges, Rep. Van Taylor of Plano's District 66 said it's unlikely legislators will attempt to tackle a verdict until after the final outcome of the case.
"Right now, there's a wait-and-see attitude, and I think that's the right approach," he said. "The court could come out with any of a myriad different rulings. You've got five different parties in a lawsuit. It's very unclear what the outcome of the lawsuit will be, and it's wise to wait until the court renders its judgment before getting to work to perfecting a solution."
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