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Spring Branch ISD continues to closely watch the school finance lawsuit as the Texas Supreme Court heard oral arguments on Tuesday, Sept. 1. Part of the Fort Bend ISD Group of plaintiffs, the district wants the court to uphold the lower court ruling that the state’s school finance system is unconstitutional. But any court decision is likely months away and even a decision favorable to Spring Branch doesn’t mean immediate relief – the Legislature will have to tackle the school finance system either in special session if called by the governor or during its regular session in 2017. And even then the fix might be simple and quick or more complex.
Spring Branch continues to face financial issues of its own due to the ongoing negative impact of the State’s school finance model on the district’s bottom line. With the same net revenue levels as 2010, SBISD is trying to keep up with inflation, unfunded mandates and competitive pressure from surrounding districts who have not been as adversely impacted by the school finance model. Trustees have for several years used part of the district’s fund balance – its savings account – to balance the budget. That’s especially frustrating when watching property values increase by more than 12 percent for two years and that revenue increase being largely eliminated through recapture (Robin Hood) and reduced funding from the state.
State Asks Supreme Court to Drop School Finance Lawsuit
By Kiah Collier
“Money isn’t pixie dust” when it comes to improving public schools, lawyers for the state of Texas told the state Supreme Court on Tuesday, arguing an appeal in what has been described as the most far-reaching school finance case in state history. They urged the high court to either dismiss or remand the lawsuit brought four years ago by nearly two-thirds of the state's school districts.
Lawyers for those 600-plus districts meanwhile argued the state had not given them enough money to achieve higher goals state lawmakers have set for the state’s more than 5 million public school students, imposing them “without knowing the true cost” by relying on decades-old cost estimates that do not account for the growing population of disadvantaged students who are more expensive to educate.
Districts sued the state in 2011 after state lawmakers slashed $5.4 billion from public education to help balance a post-recession budget shortfall. During the long-running lawsuit, they have argued that the Legislature is violating its constitutional duty to provide an adequate and efficient public school system, enacting large cuts even as rigorous new testing and accountability systems raised the bar on expectations.
Since making those cutbacks, however, lawmakers have added back more than 90 percent of what they took away — albeit unevenly — while also enacting policy measures aimed at reducing the burden on student performance.
During a nearly three-hour hearing Tuesday that saw the court shower all sides with tough questions, lawyers for the state urged the nine justices to either dismiss or remand the lawsuit because of the kinds of changes made this year. They also said that more money is not the answer.
"Funding is no guarantee of better student outcomes," said Texas Assistant Solicitor General Rance Craft.
But his boss, Texas Solicitor General Scott Keller, delivered what has emerged as the heart of the state's argument: That school finance should be addressed by the Legislature, not the courts — an argument at least one justice, Debra Lehrmann, pointed out the court specifically struck down a decade ago during the last school finance lawsuit. Others, including Justice Don Willett, appeared receptive to the claim.
Lawyer Richard Gray III, representing a group of 443 districts that was the first to sue, meanwhile told the court that "the output screams at you that this system is not doing what it's designed to do."
He noted stagnant scores on the state’s standardized exam known as STAAR, implemented in early 2012 just after the budget cuts took effect.
"The state can point to statistics that will make the system look better, but they choose to ignore their own standards, their own model," he said of the high-stakes test when Justice Eva Guzman asked about the state's high graduation rates.
"The STAAR test was the state's model that they developed to measure" student performance, he said. "And when they got the results that they got, which are abysmal by anybody's standards, then they run to other things and say, 'Oh but look at this,' and 'Oh, but look at that.'"
The school finance case was the first heard by the state’s highest civil court during its new term. The justices, who are all Republican, did not indicate Tuesday when they might rule, although some insiders and experts have speculated a decision could come shortly after the primary election next spring.
If the court rules well before the 2017 legislative session and at all favors the districts — or two other parties suing the state, including charter schools — it could force Gov. Greg Abbott to call a special legislative session.
As attorney general, Abbott — elected governor last year — appealed a lower court ruling against the state in the case directly to the state Supreme Court, on which he used to serve.
After considering changes lawmakers enacted in 2013, including a $3.4 billion funding boost to public education, the now-retired state District Judge John Dietz — a Democrat — struck down the state’s system of funding schools as unconstitutional last August. He cited inadequate funding and flaws in the way the state distributes money to the state's more than 1,000 regular school districts, and found that the system imposes a de facto state property tax.
Dietz also ruled against two groups that do not represent traditional school districts — Texans for Real Efficiency and Equity in Education and the Texas Charter Schools Association — whose lawyers also argued before the state Supreme Court Tuesday. Dietz concluded that the Legislature was the more appropriate entity to address the issues they raised at trial.
Later Tuesday, Texas Attorney General Ken Paxton said the same should apply to school districts, elaborating on the solicitor general's jurisdictional argument — also advocated by Abbott in an amicus brief filed with the court ahead of Tuesday's hearing.
“This issue is best dealt with by the Legislature, the elected representatives of the people of Texas, and not by the courts," Paxton said in a statement released after the hearing. "Texas education must be about properly educating students, not endlessly battling in court.”
During the hearing, lawyers for school districts asked the justices to uphold Dietz’s ruling, pointing to sluggish STAAR scores and difficulty getting students ready for college or careers after graduating high school.
“We are not preparing students for the 21st century,” said former state Supreme Court Chief Justice Wallace Jefferson, who is representing schools in the lawsuit.
"Now is not the time to abandon judicial review," he said in his opening remarks, alluding to the long history of courts forcing state lawmakers to address the way the state funds its schools — and addressing the state's jurisdictional argument.
The current case is the seventh time since 1984 that a case challenging the state’s school finance system has reached the state’s high court, which partly sided with school districts in 2005 although it rejected their argument that the state was not providing adequate funding.
During Tuesday's hearing, lawyers for the state pointed to high graduation rates and slightly improving test scores as evidence that school districts are slowly but surely reaching the benchmarks the Legislature has set for them.
The public education system is “currently working toward its goals and is thus constitutionally adequate,” Craft said.
Spring Branch ISD has outlined a set of Legislative Priorities for the 84th Legislative Session that focus on two key areas:
- Funding Adjustments that Support Texas Students
- A Focus for Success - Program Alignment and Support
Below are additional links of interest. An in-depth look at information about out school board and these priorities can be found on the SBISD Board's website.
Links & Resources:
Consideration of tax increase on hold
By Rusty Graham
For the better part of the year, it looked like Spring Branch ISD would ask district voters to approve an increase in the tax rate.
Tired of waiting for the Texas Legislature to reform school finance – or even adequately fund public schools – Superintendent Duncan Klussmann last spring conducted two town hall-type meetings that explained the district’s financial reality – past, present and future – and gathered feedback from the community.
Then in June, the district convened a Financial Advisory Committee comprising some 40 community members and supported by district staff. Over three meetings, the FAC heard basically the same information presented at the town halls, but were charged with making recommendations to the board of trustees.
One of those recommendations was a 2- to 4-cent increase in the general tax rate of $1.09, the rate used to fund district maintenance and operations, including, significantly, salaries and benefits. The committee said that the district should also keep diligently looking for ways to cut expenses.
But there’s a catch – several, actually: any tax increase has to be approved – ratified – by voters in a tax ratification election (TRE). And while the first 2 cents of a tax increase are not subject to recapture (Robin Hood), the next 2 cents – and 11 cents after that, up to 13 cents – are, producing less revenue that stays local.
While trustees are still considering the recommendation, there won’t be a TRE this fall. Certified appraised property rolls came in higher than estimated, and of the $26 million in additional tax revenue generated in Spring Branch ISD, the district keeps $5 million.
That’s not always the case. Because Spring Branch ISD is a considered a property wealthy district, in general, tax revenue generated from property value increases is largely passed on to the state, through both recapture and through reduced funding.
Total appraised property values are up 12.5 percent this year, generating an increase of $26 million over last year’s revenues. Of that $26 million, about $10 million goes to recapture while state funding is reduced another $11 million, leaving about $5 million for Spring Branch.
$26 million – Additional taxes paid by Spring Branch ISD taxpayers
- $11 million – State reduces funding because of value growth
- $10 million – Recapture (Robin Hood) by state of Texas
= $5 million – Net increase that stays in Spring Branch ISD
“There’s not a lot of (community) awareness of how (school finance) works,” committee chair Warren Matthews told trustees. “People see their tax bills going up and all the new development and wonder ‘how does the district need money?’”
The district’s bond program – capital improvements such as new school buildings that are financed with borrowed money and repaid over time – is managed through a separate fund, and repaid through an interest and sinking fund. The tax rate for the bond fund is $.03045, bringing the district’s total tax rate to $1.3945 per $100 valuation.
Spring Branch will soon wrap up a $597.1 million bond program, approved by district voters in November 2007. Duncan points out that the bond fund – 100 percent locally controlled – is strong and healthy.
And as Duncan and trustee Wayne Schaper Sr. have noted publicly, Spring Branch taxpayers are writing larger checks for their tax bills, thinking that their district is getting extra revenue when in fact, most of that increase is passing through to the state. Spring Branch loses not only much of the revenue generated locally, but also meaningful discretion over its tax rate.
Duncan’s message is particularly strong – if the state of Texas were a private corporation, he said, it would be guilty of deceptive trade practices. “It’s the biggest redistribution of wealth ever, and it’s happening under conservative leadership,” he said.
It’s a double whammy that is partially addressed in the school finance lawsuit, where District Judge John Dietz recently ruled for a second time that the state’s school finance system is unconstitutional, partially on the grounds that the system constitutes a de facto statewide property tax.
The state has appealed Dietz’s decision to the Texas Supreme Court. Spring Branch trustees and district leaders expect no movement by the Texas Legislature on school finance reform during the coming session, but they’ll be watching closely to see what legislators might do.
A weak economy led to a projection of reduced state revenue in 2011, and the Legislature cut funding for public education by $5.4 billion, resulting in a loss of nearly $37 million in state funding in Spring Branch. The district eliminated nearly 350 positions, including 100 or so teachers.
Spring Branch has since been able to rehire some of those positions and squeeze in nominal pay increases but at a cost – money from the district’s reserve fund has been used to balance budgets. The fund is still healthy – by board policy it can drop no lower than 19 percent of budgeted expenditures. But a few more years of deficit spending will push the reserves below the 19 percent threshold and put the district at risk of lower bond ratings and a weakened cash flow position.