1. The 29—Month Legislative Session Texas Impact - February 16, 2015 Presented by the

2. Center for Equity and Adequacy in Public School Finance Research in Texas School Finance Provide Expert Testimony in School Finance Litigation Testify before Legislative Committees Lobby for Fair and Adequate Funding for all Districts Lobby for Fair Treatment of Property Taxpayers Provide a resource to Legislators, Reporters, General Public, School Boards and Administrators 2/16/2015Equity Center2

3. The Texas Taxpayer & Student Fairness School Finance Litigation Timeline & Findings 2/16/2015Equity Center3

4. Texas Taxpayer & Student Fairness Coalition, et al. vs. Williams, et al. Spring 2011—Legislature cuts public education by $5.4 billion Including the lowest funded districts at maximum tax rates Summer 2011—Initial meetings to discuss whether litigation was only viable option October 11, 2011—Fairness Coalition files suit October 22, 2012—Trial begins February 4, 2013—After 45 days of trial, Judge Dietz rules from the bench that the Texas school finance system is unconstitutional on three counts: Lack of equity/efficiency Lack of resources to fund a general diffusion of knowledge (GDK)/Adequate Funding De facto state property tax 2/16/2015Equity Center4

5. Texas Taxpayer & Student Fairness Coalition, et al. vs. Williams, et al. Judge Dietz, however, does not issue a Final Decision with Findings of Fact and Conclusions of Law before the end of the 2013 Legislative Session Legislature restores $3.4 billion—the right way Funded Regular Program Allotment at 100% 2 years ahead of schedule $1 billion for the biennium Increased Basic Allotment/Equalized Wealth Level $2 billion for the biennium 2/16/2015Equity Center5

6. Texas Taxpayer & Student Fairness Coalition, et al. vs. Williams, et al. After the actions of the 83 rd legislature, the Court granted a motion to reopen the evidence to update the record The Court held an evidentiary hearing that began on January 21, 2014 and ended on February 6, 2014 2/16/2015Equity Center6

7. Texas Taxpayer & Student Fairness Coalition, et al. vs. Williams, et al. June 2, 2014—Attorney General Abbott filed to have Judge Dietz recused from the case for bias. Judge Dietz immediately refused to step down; Visiting Judge David Peeples was assigned to rule on the motion June 23, 2014—After a one-day hearing, Judge Peeples ruled: “The circumstances shown by the evidence do not justify recusal.” 2/16/2015Equity Center7

8. Texas Taxpayer & Student Fairness Coalition, et al. vs. Williams, et al. Thursday, August 28, 2014—Judge Dietz released 400+ page decision declaring the system to be UNCONSTUTIONAL 2/16/2015Equity Center8

9. District Court Decision “Based upon the competent evidence admitted at trial (both the main trial and upon the reopening of evidence)...” Inequitable Inadequate Unsuitable De facto State Property Tax July 15, 2015 deadline to fix the system Bond Payments excluded from deadline 2/16/2015Equity Center9

10. District Court Decision—Equity 1. All Texas students do not have substantially equal access to the educational funds necessary to accomplish a general diffusion of knowledge. 1. The Texas school finance system is structured, operated, and funded so that it is impossible to achieve a general diffusion of knowledge in a financially efficient manner. 2. A direct and close correlation between a district’s tax effort and the educational resources available to it does not exist. 3. There are large gaps in funding levels and tax effort between low- property wealth and high-property wealth districts. 2/16/2015Equity Center10

11. District Court Decision—Equity 4. Children who live in poor districts and children who live in rich districts are not afforded a substantially equal opportunity to have access to educational funds. 5. The system does not provide similar revenue at the same tax rates for maintenance & operations and facilities funding. 6. Low and high-property wealth districts have vastly different access to facilities funding which is part of the inefficiency and inequity of the system. 2/16/2015Equity Center11

12. District Court Decision—Equity 7. Target Revenue makes it impossible for the system to be equalized to accomplish financial efficiency. 8. Property wealthy districts are able to access substantially more funding at all levels of the system with lower tax rates. 9. Unequal local supplementation in the system destroys the efficiency of the system. 2/16/2015Equity Center12

13. District Court Decision—Adequacy 2. The Legislature has structured a school finance system that cannot and has not accomplished a general diffusion of knowledge for all students. 1. According to tests results, graduation rates, dropout rates, etc., Texas public schools are not accomplishing a general diffusion of knowledge due to inadequate funding. 2. The cost of meeting the constitutional mandate of adequacy exceeds the maximum amount of funding that is available to them at both the $1.04 M&O tax rate and the maximum $1.17 M&O rate. 2/16/2015Equity Center13

14. District Court Decision—Adequacy 3. The Legislature violated the ‘arbitrary’ standard described in West Orange Cove II by ‘defining the goals for accomplishing the constitutionally required general diffusion of knowledge’, and then providing ‘insufficient means for achieving those goals. 4. Economically disadvantaged students and English Language Learner students are not achieving a general diffusion of knowledge and that the cost of providing a general diffusion of knowledge to these students exceeds the amount of funding made available. 2/16/2015Equity Center14

15. District Court Decision—Adequacy 5. Current facilities funding is constitutionally inadequate to suitably provide sufficient support for districts to maintain, build, and renovate the classrooms necessary for an adequate education. This constitutional infirmity exacerbates the problems resulting from inadequate M&O funding because many districts are forced to use those scarce funds to make up for unfunded facilities needs. 6. M&O and I&S funding available…as a whole is insufficient to achieve a general diffusion of knowledge. 2/16/2015Equity Center15

16. District Court Decision—Suitability 3. The Legislature has failed to meet its constitutional duty to suitably provide for Texas Public Schools The system is structured, operated and funded so that it cannot provide a constitutionally adequate education for all Texas schoolchildren. 2/16/2015Equity Center16

17. District Court Decision—State Property Tax 4. The system imposes a state property tax in violation of Article VIII, Section 1-e School districts do not have meaningful discretion over the levy, assessment, and disbursement of local property taxes. 2/16/2015Equity Center17

18. District Court Decision—The Supreme Court The Texas Supreme Court has granted The Attorney General and Calhoun County Plaintiffs appeal of the District Court Decision and agreed to hear the case Oral arguments are expected to occur in late summer or early fall of 2015 The Supreme Court’s decision will follow (maybe late fall 2015 or early 2016) If any of the District Court finding are upheld, then the Supreme Court will establish a timeline for the Legislature to correct the areas they deem unconstitutional 2/16/2015Equity Center18

19. Second Class Children The state funding system touts a belief in equal revenue for equal tax effort, but the statement is far from true. It seems that when it comes to equal, some children and taxpayers are more equal than others. 2/16/2015Equity Center19

20. A Funding Comparison of the 100 Wealthiest and 100 Poorest Texas School Districts Much of school finance in Texas is determined by district property wealth or hold- harmlesses that are based on decades old revenue levels that, in turn, were based on past property wealth. The following analysis is based on Near Final student and district data from the 2013-14 school year because statewide data for the current school year are merely estimates. However, all of the funding parameters for the 2014-15 school year are known and were applied to the 2013-14 data for this analysis. For example, the basic allotment was increased from $4,950 to $5,040 this year. 2/16/2015Equity Center20

21. A Funding Comparison of the 100 Wealthiest and 100 Poorest Texas School Districts 2/16/2015Equity Center21

22. Less Revenue per Weighted Student (WADA) 2/16/2015Equity Center22

23. Higher Average Tax Rates 2/16/2015Equity Center23

24. Local Option Homestead Exemptions 2/16/2015Equity Center24

25. Less Revenue per Weighted Student (WADA) 2/16/2015Equity Center25

26. Classroom Funding Disadvantage If the poorest 100 Texas school districts were funded at the same level the state readily funds the wealthiest 100 districts, they would have an additional … 2/16/2015Equity Center26

27. Classroom Funding Disadvantage If the poorest 100 Texas school districts were funded at the same level the state readily funds the wealthiest 100 districts, they would have an additional … $91,688 2/16/2015Equity Center27

28. Classroom Funding Disadvantage If the poorest 100 Texas school districts were funded at the same level the state readily funds the wealthiest 100 districts, they would have an additional … $91,688 per typical elementary classroom 2/16/2015Equity Center28

29. Classroom Funding Disadvantage If the poorest 100 Texas school districts were funded at the same level the state readily funds the wealthiest 100 districts, they would have an additional … $91,688 per typical elementary classroom and reduce their M&O tax rates by 11 cents 2/16/2015Equity Center29

30. Classroom Funding Disadvantage If the poorest 100 Texas school districts were funded at the same level the state readily funds the wealthiest 100 districts, they would have an additional … $91,688 per typical elementary classroom and reduce their M&O tax rates by 11 cents and give a Local Option Homestead Exemption to Homeowners on their property tax, reducing their taxes even more 2/16/2015Equity Center30

31. Classroom Funding Disadvantage If the poorest 100 Texas school districts were funded at the same level the state readily funds the wealthiest 100 districts, they would have an additional … $91,688 per typical elementary classroom and reduce their M&O tax rates by 11 cents and give a Local Option Homestead Exemption to Homeowners on their property tax, reducing their taxes even more EVERY YEAR! 2/16/2015Equity Center31

32. The 84 th Texas Legislature and School Finance 2/16/2015Equity Center32

33. The 84 th Legislature Key School Finance Issues Address issues now or wait for Supreme Court to rule? 2/16/2015Equity Center33

34. The 84 th Legislature Key School Finance Issues Address issues now or wait for Supreme Court to rule? Some want to wait for direction from SC 2/16/2015Equity Center34

35. The 84 th Legislature Key School Finance Issues Address issues now or wait for Supreme Court to rule? Some want to wait for direction from SC Some want to address issues now 2/16/2015Equity Center35

36. The 84 th Legislature Key School Finance Issues Eliminate the non-cost based inefficiencies in the system Use of Prior Year Values Target Revenue Wealth Hold-Harmlesses and other options that benefit only wealthy districts High school allotment Assorted other “band-aids” 2/16/2015Equity Center36

37. The 84 th Legislature Key School Finance Issues Use funds recovered by eliminating inefficiencies and any new funds available in an efficient manner that improves the equity and adequacy of the system Increase the Basic Allotment Eliminate the Small District Adjustment Penalty Fully Fund the Cost of Education Index (CEI) Make the Yield for each Penny of Tax Effort Uniform Update the various Student Weights in Formula 2/16/2015Equity Center37

38. Equity Center Standing Up for Texas Taxpayers and Children 2/16/2015Equity Center38