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TEXAS ASSOCIATION OF COMMUNITY SCHOOLS (TACS)
Annual ConferenceSan Antonio, Texas
September 14, 2015
CONTACT INFORMATION
Doug Karr, Ed.D. Contracted Services in School
Finance Office Phone: (806) 785-6676 Cell Phone: (806) 778-6440 Email: [email protected]
THE TASK or CHARGE
A Personal Perspective on the Current School Finance Lawsuit
“Crystal Ball Gazing”- Future Issues & Concerns
THE CONTEXT
A Lesson on Perspective There is BOTH a Scientific &
Historical Context for this Current School Finance Lawsuit
THE SCIENTIFIC CONTEXT
“For Every Action, There is an Equal & Opposite Reaction” (Sir Isaac Newton)- “Forces always come in pairs –
equal & opposite action-reaction pairs”- a.k.a. Cause & Effect
THE HISTORICAL CONTEXT
It’s Been Said, “History Repeats Itself”
Variations of that saying include:- “History Repeats Itself When Civilized People Ignore Its Lessons”- “Those Who Do Not Learn History
Are Doomed to Repeat It”
HISTORY
1949 - Gilmer-Aiken School Finance Plan- Funding on a Personnel Unit System- Allowed Taxation for Enrichment- Included the foundation for equity & equalization
HISTORY 1968 - Rodriquez vs. San Antonio ISD Lawsuit Filed - State’s finance system violated the “equal
access” clause to the U.S. 14th amendment - Sought relief for “wealth based
discrimination” in property poor ISDs - Upheld by the Federal Court in 1971 - Reversed by the U.S. Supreme Court in 1973
HISTORY 1983
- HB 72- Eliminated personnel units in favor of pupil units- Guaranteed a tax yield (GYA) to ISDs- Funding differences between rich & poor ISDs remained relatively unchanged
HISTORY
1984 - Edgewood I Lawsuit Filed - District Court rules the system
unconstitutional in 1987 - TX Supreme Court upholds the
ruling in 1989 saying the System is Not “Efficient”
HISTORY
1987- SB 1 Passed- Increased state aid to ISDs in response to Edgewood I- Little change to the system of equalization- Funding for budget balanced ISDs still greater
HISTORY
1990 - Edgewood II Lawsuit Filed - In response to SB 1 which did not
substantially modify the educational system of funding
HISTORY 1991
- SB 351- Established 188 County Education Districts (CEDs)- Tax Base Consolidation with effective tax rates of 72 & 82 cents the 1st & 2nd years- 1st Attempt at Wealth Redistribution through a system of recapture
HISTORY
1992 - Edgewood III Filed - CEDs ruled a “Defacto Statewide
Property Tax” without voter approval
- Legislature ordered by the Supreme Court to Devise a New School Funding Plan by 1993
HISTORY
1993- SB 7 (Robin Hood/Recapture)- Designed to equalize wealth levels through 1 or more of 5 options- Established the $1.50 M&O tax cap
HISTORY
1993 - Edgewood IV Filed - 1995 Texas Supreme Court
upheld the “Robin Hood” system of recapture as constitutional
HISTORY
1997 - HB 4 - Additional $10K homestead
exemption- Edgewood V Lawsuit Contemplated
- Sought relief from some school finance provisions- Not Advanced
HISTORY 1999 – 2003 (SB 4 & HB 2242)
- $3K added to each step of the salary schedule - Implemented a guaranteed facilities yield (EDA)- Mandated a statewide health insurance plan that ISDs must provide, not offer- Added $1000 per person to be used for other benefits or for salary
HISTORY
2003 - West Orange Cove Lawsuit Filed - Argued a required increase in the local
share while the state’s share is decreasing
- Funding is “Inadequate & Inequitable” - Supreme Court ruled that the $1.50 is a
“defacto statewide property tax” allowing for no meaningful discretion
HISTORY
2005 - 2008- HB 1- Target Revenue & Tax Compression- More Salary Increases ($2500, $500, & $250)
HISTORY
2009 - HB 3646 - Adjusted the target reveune ($120 -
$350 per WADA) - Supplanted $3.25B in SFSF money - Mandated salary increase = the
greater of $800 per teacher or $60 per WADA
HISTORY
2011 - Senate Bill 1
- $5.3B in Funding Cuts- Phases out Target Revenue & ASATR- Returns Districts to a Formula Driven System @ $1.04 capped tax rate- Provides for Proration in the 2nd Year of the Biennium, if needed
HISTORY
2011 - Texas Taxpayer & Student Fairness
Coalition Lawsuit Filed - Arguing that the current school
finance system is inequitable & inadequate for meeting the state’s mandated accountability system
HISTORY
2013 - SB 1 - Restored $4B of the $5.3B in cuts from
2011 - Raised the BA, GYA, & EWL District Court Upholds the Texas
Taxpayer & Student Fairness Coalition Lawsuit
HISTORY
2015 - SB 1 - Increases FSP by just over $1.4B - Provides Facilities Funding (IFA & NIFA) - Raised the BA, GYA, & EWL again - Taxpayer Relief Granted Texas Taxpayer & Student Fairness
Coalition Lawsuit Appealed to the TX Supreme Court
THE SCIENTIFIC CONTEXT REVISITED
“For Every Action, There is an Equal & Opposite Reaction” (Sir Isaac Newton)
Applied to Texas Public School Finance Since 1968, the Cause & Effect Conclusion Might Be:- School Finance Legislation Causes School Finance Litigation OR- School Finance Litigation Causes School
Finance Legislation
THE HISTORICAL CONTEXT REVISITED
“History Repeats Itself” Since 1968: - What Have We Learned & Accomplished From All This Legislative & Legal
Repetition? - Are We Doomed To A System of School
Funding That Will Continue to Be Perpetually Broken With Its Wealth Based Inequities, Its Inefficiencies, & Its Inadequacies?
MY PERSPECTIVE ON THE SCHOOL FINANCE LAWSUIT
“CRYSTAL BALL GAZING”FUTURE ISSUES TO CONSIDER
Hold-Harmless Calculation for ASAHE A.G. Advice to Comptroller Issued Sept. 10
- Taxing Entities cannot reduce or eliminate OHE until the end of 2019 tax
year- OHEs that were reduced or eliminated in 2015 tax year are ineffective
“CRYSTAL BALL GAZING”FUTURE ISSUES TO CONSIDER
Fractional Funding ASATR - What happens when these forms of
transition state assistance go away as has been the case with other types of transition assistance such as for salary increases, health insurance mandates, TRS, etc.???
“CRYSTAL BALL GAZING”FUTURE ISSUES TO CONSIDER
Future TRS Active-Care, & TRS Care Contributions That May be Required
New Tier I Special Allotment Reviews Increasing Demand for Pre-K services
vs. Insufficient Pre-K Funding for Full Day
No Change to 50 Cent Debt Test for Fast Growth ISDs
“CRYSTAL BALL GAZING”FUTURE ISSUES TO CONSIDER
Combining FIRST & Financial Solvency Into 1 System- Went from 20 indicators to 7 (rating year 14-15) & back to 15 (rating years 15-16 & 16-17) - Proposed Future Indicators Include Minimum # Days Cash on Hand & Others
“CRYSTAL BALL GAZING”FUTURE ISSUES TO CONSIDER
THE BIG & FINAL QUESTION- Will there be future cuts to public education like those in 2011 if the price of oil does not rebound??
Two Final Thoughts- Remember Who’s Pouring the Water!
AND
SECOND FINAL THOUGHTDO YOU OFTEN FEEL THIS
WAY?
Runs Good. Missing Seat & Steering Wheel.
Ideal for the person who has lost his butt and doesn’t know which way to turn!