Texas lawmakers propose changes to school taxing, funding systems
Texas lawmakers have proposed a slew of bills that could introduce big changes to both the main funding mechanism for the state's public schools and the formula that calculates how much money individual school districts receive.
The proposals come as some school districts are struggling in the post-pandemic environment to retain teachers and fight higher operating costs due to rising inflation.
The proposals also come four years after House Bill 3, which passed in 2019, introduced a major overhaul of the state's public school funding, including increases to the per-pupil allotment and the reduction over time of the maximum tax rate districts can charge for basic operations.
The tax rate – called the maintenance and operations tax – is the bulk of what Texas property owners pay in taxes to school districts.
Several bills filed for the upcoming legislative session, which begins in January, propose going a step further than the 2019 HB 3 and eliminating or drastically reducing the maintenance and operations tax in hopes of alleviating the property tax burden.
The maintenance and operations tax funds everything from teacher salaries to utilities.
“It is the largest source of revenue for schools,” said Matt Worthington, a public school data analyst and trustee-elect for the Del Valle Independent School District. “If that goes away, the big question is what will replace that?”
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Burden could shift to sales tax
One proposal involves shifting more to reliance on sales tax or other consumption-based taxes, said Chandra Villanueva, director of policy and advocacy with Every Texan, a nonpartisan policy institute.
Villanueva said the concern is that shifting reliance to consumptive taxes will create volatility in funding and shift the burden to lower-income families.
Most states rely on three-legged stool approach to tax: a state income tax, property tax and sales tax.
“We don't have an income tax,” Villanueva said. “If we move to just a sales tax, we will be on a pogo stick, and it will go up and down with the economy.”
The system would require the state to find the sources of funding elsewhere, said Sheryl Pace, senior analyst with Texas Taxpayers and Research Association.
“It'll be made up from general revenue, which as you know is mostly sales tax,” Pace said.
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Change from attendance-based funding formula?
Other bills are seeking to revise school funding by increasing the direct funding given to districts.
Several bills have proposed using enrollment, instead of average daily attendance, as the basis for school funding calculations. Doing so would mean an increase in school funding for every district, since enrollment is always greater than daily attendance.
The attendance-based formulas can be problematic because districts must plan for all students to attend and many fixed costs don’t change if fewer students come to school on any particular day, Villanueva said.
“About 300,000 students are not counted in our school finance system, just completely not accounted for at all,” Villanueva said. “That is a big deal. These kids are enrolled in our school system. They still have to have a desk. They have to have a teacher.”
The coronavirus pandemic also changed expectations about attendance, said state Rep. Diego Bernal, D-San Antonio, who filed HB 135, one the several bills that seeks to replace attendance-based funding with enrollment-based funding.
“The attendance landscape is very different,” Bernal said. “If kids get sick, parents keep them home. If they get COVID, they have to stay home.”
State Sen. Nathan Johnson, D-Dallas, is also seeking to increase funding for districts by raising the basic student allotment.
In SB 88, Johnson proposed increasing the money each district gets per student from $6,160 to $7,075 and annually increasing the allotment to account for inflation.
“We are at a crisis level with exodus of teachers and overall satisfaction of teachers,” Johnson said.“Part of that is due to the very low salaries they make. The increase in the basic allotment is hard-wired to guaranteed an increase for teachers.”
The last time the state increased the basic allotment was in 2019, when lawmakers raised it from $5,140 to $6,160.
This article originally appeared on Austin American-Statesman: Texas lawmakers propose changes to school taxing, funding systems