This is very interesting.
After reconsideration of an 18-year-old law, state education officials are adjusting their school finance calculations in a way that could save several dozen school districts roughly $100 million — while costing the state the same amount in revenue.
One of the apparent beneficiaries is Houston ISD, where the change means taxpayers will be sending about $60 million less to the state for public education than they had expected.
At issue is a calculation for recapture — the state’s term for the money that districts with higher property wealth send to the state for use in districts with lower property wealth.
It’s more commonly known as the Robin Hood system of school finance.
Some of those rich districts — “rich” here refers to the value of the districts’ property and not the income of its residents — have adopted homestead exemptions that are bigger than the exemptions mandated in state law. All school districts in Texas have to let homeowners deduct $25,000 from their taxable property values, but districts are allowed to raise those exemptions up to 20 percent of a home’s value.
Not all districts do that, and not all of those that do that are property rich. But some — including Houston ISD, the biggest one in the state — offer the higher homestead exemptions and are also subject to recapture, and they’re the ones subject to the new calculations from the Texas Education Agency.
In a letter sent Feb. 1 to school administrators, the agency’s associate commissioner for school finance said that starting in the current school year, TEA will include half of the money the districts have forfeited in optional homestead exemptions when calculating how much recapture money those districts should pay. That’s the agency’s new reading of a law that’s been on the books since 1999.
“The commissioner thinks he has the latitude to give them half credit for this,” said state Sen. Paul Bettencourt, R-Houston.
The recalculations would trim those districts’ bills considerably — by $100 million in rough numbers. In addition to Houston ISD, the unofficial list of beneficiaries of the new calculation include Spring Branch ISD, Highland Park ISD, Lake Travis ISD and Comal ISD. Officials with TEA said they have not yet calculated exact amounts for each district but said the $100 million is a reasonable estimate of the total cost this year.
[…]
Houston ISD said Friday evening that the board will consider a do-over and will vote next Thursday on whether to hold another election on May 6 to give voters an opportunity to reverse that November vote.
The effect of this new interpretation of the law would be to reduce HISD’s bill for recapture by about $60 million. HISD would still need to pay a bit more than $100 million to the state, so this is hardly a cure-all, but it’s a significant savings.
To me, this is a win for the No vote on recapture last November. As the story says, the TEA could have interpreted the law in this fashion, to allow districts that grant the higher homestead exemption more credit in the byzantize school finance system, years ago. I believe one reason – maybe not the only reason, but surely a big reason – why it didn’t happen before now is because there wasn’t a loud enough voice demanding the change. HISD’s No vote on recapture was a big deal that got people’s attention and focused some energy on just how screwy the system had become. Another boost to their argument was that HISD was being penalized for having a lower tax rate than it could have had. This particular kink in the way the finances were calculated was one of the things that “No on recapture” advocates like David Thompson pointed out, as it was a simple fix that could be easily implemented and would not only be fair but also have a big effect. Maybe this happens anyway if HISD meekly paid its recapture bill, but if anything should be clear at this point in time, it’s that kicking up a fuss tends to be a better way to get what you want.
Bettencourt’s office put out a press release lauding HISD for scheduling another vote. I haven’t seen any other reporting on this – as of Saturday there was nothing on HISD’s website or Facebook page about this – so he’s either being a bit premature or he’s gotten some verbal assurance that the Board will indeed approve a May election at its Thursday meeting. The Board can claim a victory here, and it should be able to sell the idea of writing a smaller check to the state to its constituents and allies from the last election. I’d be inclined to vote Yes this time around – the problem isn’t fully solved, and even without a big school finance overhaul there are other things that could be done for recapture districts like giving credit for pre-K students, but it’s a step in the right direction. It will be interesting to see how the Board reacts, and to see if groups like CVPE and the teachers’ union go along. Whatever else happens, this was a good thing.
I wonder if any calls went from Bettencourt’s office to the TEA asking them to save the Lege.
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