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Testimony of the TCTA to the House Select Committee

on Federal Economic Stabilization Funding

March 17, 2009

First of all, TCTA would like to express our thanks for the work this committee is doing to make sure federal stimulus funds are spent in a manner that will maximize the benefit to the State of Texas.

TCTA recommends that Texas make full use of the money allocated to education and that a portion of the funding that is available to free up general revenue be used to supplement funding for the Foundation School Program.  While we are cognizant of warnings from the federal government to beware the “funding cliff” with regard to stimulus funds, we must remind the Legislature that we are rapidly approaching another dead end due to the failure of the Legislature to adequately address school finance reform in 2006.

Among the problems with our current school finance system are the following:

  • The Legislature created a structural deficit under which the state taxes that were enacted are covering only a fraction of the cost of property tax reductions.
  • The Legislature has left in place an arbitrary school finance system based upon holding districts harmless at their 2006-2007 or 2007-2008 funding levels, essentially making school finance formulas meaningless.  The “temporary” provision placed in law in 2006 that “drags back” districts to the hold harmless or target revenue amounts has been left in place.
  • School districts have no mechanism for raising revenue to cover increasing costs of inflation and ever increasing accountability standards other than to raise local property tax rates.
  • The fact that districts must raise tax rates to increase revenues makes it inevitable that enough districts will hit the new maximum maintenance tax rate (generally $1.17) in the near future to once again generate a legal challenge that the school finance system is an unconstitutional statewide property tax.
  • Most school districts have maximized their ability to raise local property tax rates without having a rollback election to ratify tax rates.  School districts are required to adopt budgets before they know whether voters will authorize such a rate increase.  The resulting difficulty and confusion in budgeting has led an increasing number of school districts to consider implementing layoffs of teachers and other employees pursuant to reductions in force.

The current funding bills both contain a $1.9 billion rider that is contingent upon the adoption of a bill moving back to a formula-based school finance system.  It is our understanding that this increase comes from decreased state general revenue needed to supplement funding generated by local property value increases.  While this rider is a start, it can only fund a fraction of what is needed to fix our broken school finance system.  TCTA recommends that available public education revenues from the State Fiscal Stabilization Funds and available general revenue freed up by other components of the stimulus package be used to significantly supplement the $1.9 billion to an amount that can bring about meaningful school finance reform this session.

We also urge that the state dedicate a significant portion of increases in funding for school finance reform to teacher salary increases.  By providing for teacher salary increases through the school finance formulas, the state can achieve equitable school finance reform while ensuring that school districts use the increases in funding for instructional purposes.  By providing salary increases along with school finance increases, the state will improve teacher retention and make the teaching profession more attractive to college students choosing a profession.  When the state has in the past enacted school finance reforms without addressing teacher salaries, average teacher salaries have not risen proportionately with other school spending.

There are many other needs Texas schools face that should be considered with regard to the expenditure of stimulus funds.  The districts affected by Hurricane Ike have immediate needs.  The losses in the Permanent School Fund appear to make it very unlikely that Available School Fund revenues will be available for textbooks, technology, and Foundation School Fund support.  Schools need increased bandwidth and technological infrastructure to be able to utilize streaming video and other internet resources.  Teachers need meaningful training tailored to individual need and provided during compensated time.  Stimulus funds could help cover the costs of these endeavors.

TCTA believes that federal stimulus funds can be used to jump start needed changes in our school finance system.  Doing so will not obligate the state to pay more in the future than the state will have to pay to fix the system anyway, but it will allow the problem to be addressed sooner rather than later for the benefit of our public schools and the school children they serve.

Posted: 03/17/09