Why Texas isn’t paying for what it wants from Austin’s classrooms

Travis County and the City of Austin take part in a regular fiscal dance with the State of Texas over who pays the costs of government. Over the next three days, KUT News and the Austin Monitor will look at key examples of that interaction in our series, “The Buck Starts Here.” Today, we take on education.

It’s no secret that public education in Texas faces funding challenges, and the Austin Independent School District may be the perfect poster child for the issue. While the district sends more tax revenue to the state annually for redistribution than any other, it implemented austerity measures in 2008 and has been dipping into its reserves since 2012.

AISD Chief Financial Officer Nicole Conley stressed the issue when she spoke with the Austin Monitor. “We’re utilizing our reserves to really maintain funding that we know is important for students,” she said.

As reported in the Monitor, AISD Trustee Paul Saldaña illustrated the severity of the situation when he told the publication’s publisher, Mike Kanin, on an April 8 radio show that he supports selling the district’s downtown administrative building to cover budget shortfalls that have resulted, in part, from decreasing student enrollment associated with an increased cost of living in the city.

This situation — combined with the education budget cuts the Texas Legislature made in 2011 and only partially restored in 2013 — makes it difficult for the district to find the necessary funding to comply with new and more stringent state laws and regulations, especially when they come without any dollars attached. In other words, unfunded mandates.

Enter House Bill 5, a set of revised graduation requirements filed by Rep. Jimmie Don Aycock (R-Killeen) that passed the Texas Legislature and was signed by former Gov. Rick Perry in 2013.

“The biggest unfunded challenge at this time — when the (AISD Board of Trustees) approved the legislative priorities — was HB 5,” Conley said. “Most school districts cannot cover the costs of the adoptions.”

In the list of 2015 priorities Conley referred to, the board wrote in no uncertain terms that it opposes “any new unfunded mandates and infringements upon local control.”

Among other changes, HB 5 requires that Texas high schools provide students with three graduation plan options and five endorsement choices, and that students select an endorsement as they enter freshman year of high school.

Those who entered high school at the beginning of this school year will be the first class required to adhere to these plans through graduation, whereas students in higher grade levels will have the option to switch over. For these reasons, AISD and other Texas school districts won’t know the full costs until that first class graduates in 2018.

Conley explained that, despite the uncertainty, AISD sets aside funding for the rollout on an annual basis. “We do know we added $1.7 million to the budget last year for HB 5, and there is a need for $1.9 million in new resources next year that we will need to cover,” she said.

The current AISD budget report adds that this is likely just the beginning. “We anticipate costs will escalate over the next four years,” it reads. The district’s fiscal year, which started Sept. 1, corresponds roughly with the first day of classes, which took place on Aug. 25 this year.

“At this point, we do not know what to expect in terms of new revenue for (fiscal year) 2016. In fact, we are projecting a decline,” said Conley. “As a result, we are currently planning on trying to implement HB 5 in (fiscal year) 2016 by reallocating existing resources if we fail to obtain the legislative relief we are seeking.”

Despite the fiscal impacts, AISD Superintendent Paul Cruz was enthusiastic about the rollout when he spoke with the Monitor and KUT News. “We do believe in implementing House Bill 5, and also the distinguished level of achievement plan,” he said. “We do.”

Cruz added, however, that there are costs associated with the process. “When we change expectations for students’ performance such as moving to the distinguished level of achievement plan, it takes resources,” he said. “We can do it and we can get there, but we need the resources and support.”

AISD has published an overview of the law’s impacts. “HB 5 requires creating personal graduation plans for all high school students and for at-risk middle school students, providing information regarding post-secondary opportunities and financial aid, (and) educating and advising students and parents about endorsements and programs of study,” it reads.

The three graduation plan options the law establishes are the academically rigorous “Foundation High School Program, plus endorsement, plus distinguished level of achievement,” the traditional “Foundation High School Program plus endorsement” and the basic “Foundation High School Program.”

The AISD Board voted in December 2013 to make the most rigorous plan the default path that students take when entering high school. In addition, AISD requests that students select an endorsement before graduating eighth grade, though they can switch later or pursue additional endorsements.

Students must pursue at least one endorsement when enrolling. With the written support of a parent or guardian, however, they can make the decision after their sophomore year and a counselor consultation to graduate under the basic plan without an endorsement.

The five endorsements are science, technology, engineering and math, commonly known as STEM; business and industry; public services; arts and humanities; and multidisciplinary studies. Endorsements include more specialized career pathways that involve taking certain courses.

Though it is still relatively early in the implementation process, current and upcoming potential cost drivers include increased counselor workloads, new classes and additional transportation demands for students.

“The load for a counselor is significant, and when we look at counselor face-to-face time with an individual student or family, that’s considerable time,” Cruz said.

While all of the endorsements will be offered at each of the district’s comprehensive high schools, Cruz noted, the pathways will differ based on the school. “It is cost-prohibitive to do every pathway for every endorsement at every single campus,” he said.

In order to provide students the opportunity to pursue pathways that aren’t offered at their schools, Cruz said the district is considering a shared model so that students can sign up for classes and activities at different schools.

“Right now we’re really working with our high school principals to see how we can work that process out,” Cruz said. “We hope to implement some of that. It will be small-scale next year, though.” He added that it is too early to assess the transportation costs that may be involved.

AISD Chief Academic Officer Pauline Dow told the Monitor that the district has also seen an increase in the number of students enrolling in career and technical education courses, which are included in the business and industry, STEM and public service endorsements.

Between last year and this year, Dow said, AISD saw a 6.7% increase in career and technical education course enrollment and anticipates continued increases in the future.

Conley stressed the district’s financial hardships. “When the Legislature cut the budget, I think they just cut it to a level where it just was insufficient to meet the adoption requirements,” she said. “I do know that the State Board (of Education) has recommended an increase. We’re hopeful that that increase will ultimately be approved by the Legislature this session.”

Conley said the Legislature cut the AISD budget by about $58.2 million in 2011. Restoration efforts in 2013 brought back $10.7 million, but that has left the district with “a permanent cut of nearly $48 million.”

Complicating the issue further is the state’s designation of AISD as a property-wealthy school district in the state’s recapture system, which is often referred to as the “Robin Hood” system.

The state “recaptures” property tax revenues above a certain amount using a complex system of measures and formulas and redistributes the funds to districts that are not considered property-wealthy. One major measure, called the cost of education index, has not changed since 1991; another, known as the transportation allotment, has not been updated since 1984.

“This year, we’re going to give the state $175 million,” Cruz explained. “That’s going to continue to increase this next school year as property values rise and folks see higher tax bills here in Austin.” The district’s current property tax rate is $1.222 per $100 of valuation.

The current AISD budget report points out that the district’s demographics have changed significantly since the Legislature set some of its current measures and formulas.

“During the past 10 years, while AISD’s student population has grown by 7 percent, the district’s economically disadvantaged student population has grown by 25 percent,” it reads. “Approximately 61 percent of students qualify for free or reduced lunch; the district’s English language learner population has grown by 42 percent and comprises 27 percent of our student enrollment.”

These changes could have significant impacts on the cost of educating students.

Sen. Kirk Watson (D-Austin) is among those in favor of the measures included in HB 5, yet critical of the law’s lack of funding. “I supported House Bill 5 last session, and continue to support the goal of providing students with multiple pathways to career and college success,” he told the Monitor.

“I think it’s a failure of the Legislature that we haven’t provided the resources necessary to fully implement HB 5 — things like more counseling or an increase in transportation funding,” Watson continued. “I’ll continue to advocate for increased support for Texas public schools, including the implementation of HB 5.”

Rep. Donna Howard (D-Austin) voted for the law, though she said she doesn’t support everything that’s in it. She also pointed out that the bill came at a particularly difficult time as far as funding and said that AISD’s demographic makeup is currently “not taken into consideration in the way that it should be.”

Howard, however, was hopeful that the Legislature will address funding issues this session. “I think there’s a recognition on the part of many over here, Democrat and Republican alike, that there’s an inadequate amount of money in the system and, in fact, a lot of effort to replace the funds that were cut in the 2011 session prior to HB 5’s passage,” Howard said.

Watson, Howard and Cruz expressed excitement about HB 1759, a comprehensive bill filed by none other than Aycock that could improve funding conditions across the state. The House Public Education Committee passed a committee substitute of the bill Tuesday.

“I really like the focus that the House budget has paid to school funding,” Watson said. “Their plan includes $3 billion more for public schools. The Senate can and must do better to match our House colleagues and invest in education. The future of our state and its economy will be stronger if we make these critical investments today.”

Cruz was cautiously optimistic. “We’re hopeful, because Austin does benefit from it. It looks at some things that maybe haven’t been considered for us in the past, but also we understand that this is very early in the process,” he said. “It comes together for us to keep some resources here in Austin for our students in Austin, and I think that’s important.”

Watson, Howard and other senators and representatives have filed bills this session that AISD supports.

The elephant in the room, however, is a lawsuit pending at the Supreme Court of Texas that will determine whether the state’s public education funding system indeed violates the state constitution.

Travis County District Judge John Dietz ruled in favor of Texas school districts, including AISD, in February 2013 and August 2014, determining that it does. Gov. Greg Abbott, who was attorney general at the time, appealed the ruling.

“We are waiting on some final ruling which isn’t going to (happen), probably, until after this session ends,” Howard said. “The House made a conscious decision,” she continued, referring in part to HB 1759, “to move forward with some effort at addressing the issues that have been brought up in the litigation.”

Texas school districts, it seems, are now playing the waiting game.