State+Formula+Insights

Anthony Watson, Jesus Uranga, Tom Wales, Bart Walters

The three basic issues that affect the state formula are:

1. Property Value Decline (limits loss of funding) When the economy experiences a recession there will be decline in actual property values, this in turn will directly impact the amount of property tax that a school can receive per property. Property taxes are a major factor in school budgets. As property values decline, so does the amount of revenue that can be generated through the main vein of school district's finance. In most urban districts, property values have decreased, due to the lack of economic development and beautification efforts have been non-existent. The suburban flight has left the inner structure of the inner-city reeling due to the fact that most residents are no longer in property that has major value and the amount taxed in most cases is considerably less than in past years. However, the salaries, benefits, and needs of the district have increased. The districts may have less funding to lose as a result, but the gap exists between actual cost and generated capital from property taxes.

2. ADA decline (limits loss of funding) as the amount of students decline, so does the amount of money generated from the state. Urban districts that are experiencing suburban flight have major budget issues due to the loss of ADA funds. Successful school districts have had to make tough decisions over the years as the number of students continue to decline. Major cities such as San Antonio, Dallas and Houston have schools that are under-utilized because the students are no longer living in the boundary. The cost of maintaining the schools outweigh the amount of revenue generated by the ADA and other sources. The school districts have become a victim of their own success. As the students, who are initially served, grow up and out of the school system, the area is not being repopulated with other kids to maintain adequate numbers to justify the amount of capital needed to run the schools (i.e. the school's population was 2700 kids 15 years ago and now they are struggling to get 1200 in the building). The loss of capital due to ADA is major, especially when the cost of running the school is on the steady increase. The suburban districts are not far behind; in 10 - 15 years... they will experience the same dilemma.

3. Compensatory Education -The need for the compensatory education allotment is critical. As our country continues to experience a recession, we have experienced more cases of "situational poverty". As parents lose jobs, their income is affected and students who have never had to suffer are now experiencing a life change. For the first time in their lives they need assistance with free or reduced lunch. The school districts are being caught off guard due to the fact that some children were not considered in the previous year’s Compensatory Education allotment of funds. Funding is based on the number of students reported on the free and reduced lunch count from a district’s best six months of enrollment from the previous year. Situational poverty is acute and it gives little to no warning, and in most cases the state has not funded these students because the poverty may not have occurred until July or August of the current school year. In some cases, the number of students on free and reduced lunch can be under reported. Districts would not receive adequate funding from the Tier 1 allotments. This will impact a district's ability to maintain test scores and meet the minimum standards set forth by the state. Therefore, it is imperative that the numbers are accurate and reported in a timely matter. //3 Issues Impacting State Formula - Tom Wales://


 * 1)** My first is selection is Property Taxes vs Property Values. Although this is a good way of collecting revenue, the issue of concern would be that older areas with no residential growth and a decline in businesses would not have an opportunity for consistent increase in revenue each year although the cost to educate a child and keep a school functioning each year still increases. This leads to a greater revenue gap each year between many districts.
 * 2)** This leads to my second issue which is the 1995 Texas Supreme Court creation of Chapter 41 and Chapter 42 schools. In order to try and keep the revenue gap close between districts, the concept of "we rob Petter to pay Paul" does not sit well with many. The concept of assisting lower Socio-Eco schools financially is certainly not the issue as much as the thought it creates of education being a charity as opposed to equality. Perhaps a better funding formula would not create such a philosophy but what is not needed is ANOTHER added formula. So, the many formulas become a complex issue in itself.
 * 3)**With the creation of Mandatory School Attendance laws in 1869, schools now had a consistent opportunity to collect revenues for education. This was also a way for schools to be held accountable in making sure they established ways to get the students to school. Although several factors relating to mandatory attendance will haunt lower social-economic districts such as high teenage pregnancies, transportation, school safety concerns, and students who must work to help their family pay bills, it is still one of the best consistent ways for schools to receive state funding.

Jesus Uranga

1. Property value decline and ADA decline. Both of these characteristics help limit the loss of funding by districts. 2. Adjustments for Special Instructional programs. These programs generally require a bit more funding than your regular programs, therefore adding a weight to them only seems like a natural thing to do in order to help offset the cost. 3. Allotments for specific purposes. I believe this is an area that now requires more emphasis. With many of our high school graduates not going on to continue a higher education, being able to provide them with the necessary tools and education through these courses is becoming more common.

Bart Walters 3 Basic Issues impacting the state formula
 * 1) Property values – Property values tend to vary across the state. Also considered in this equation would be tax exemptions for government property, tax ceiling for homeowners over the age of 65, and Homestead exemptions. Allowing for inconsistency across the board.
 * 2) Local district tax rates – Tax rates vary from district to district.
 * 3) Lawsuits against the state- Lawsuits tend to be rather lengthy. Past rulings that point out that Texas’ method of financing schools is unconstitutional. Additionally requires legislation to make changes in the system.

Anthony Watson

The three basic issues that affect the state formula are: 1. Property Value Decline (limits loss of funding) When the economy experiences a recession there will be decline in actual property values, this in turn will directly impact the amount of property tax that a school can receive per property. Property taxes are a major factor in school budgets. As property values decline, so does the amount of revenue that can be generated through the main vein of school district's finance. In most urban districts, property values have decreased, due to the lack of economic development and beautification efforts have been non-existent. The suburban flight has left the inner structure of the inner-city reeling due to the fact that most residents are no longer in property that has major value and the amount taxed in most cases is considerably less than in past years. However, the salaries, benefits, and needs of the district have increased. The districts may have less funding to lose as a result, but the gap exists between actual cost and generated capital from property taxes. 2. ADA decline (limits loss of funding) As the amount of students decline, so does the amount of money generated from the state. Urban districts that are experiencing suburban flight have major budget issues due to the loss of ADA funds. Successful school districts have had to make tough decisions over the years as the number of students continue to decline. Major cities such as San Antonio, Dallas and Houston have schools that are under-utilized because the students are no longer living in the boundary. The cost of maintaining the schools outweigh the amount of revenue generated by the ADA and other sources. The school districts have become a victim of their own success. As the students, who are initially served, grow up and out of the school system, the area is not being repopulated with other kids to maintain adequate numbers to justify the amount of capital needed to run the schools (i.e. the school's population was 2700 kids 15 years ago and now they are struggling to get 1200 in the building). The loss of capital due to ADA is major, especially when the cost of running the school is on the steady increase. The suburban districts are not far behind; in 10 - 15 years... they will experience the same dilemma. 3. Compensatory Education The need for the compensatory education allotment is critical. As our country continues to experience a recession, we have experienced more cases of "situational poverty". As parent lose jobs, their income is affected and students who have never had to suffer are now experiencing a life change. For the first time in their lives they need assistance with free or reduced lunch. The school districts are being caught off guard due to the fact, this same child or population of children was not considered in previous years in the Compensatory Education allotment of funds. Situational poverty is acute and it give little to no warning and in most cases the state has not funded these students because the poverty may not have occurred until July or August of the current school year. This will impact a district's ability to maintain test scores and meet the minimum standards set forth by the state. Therefore it is imperative that the numbers are accurate and reported timely.