Funding Public Education F. Scott McCown, Executive Director Center for Public Policy Priorities July

The Legislature Cut Spending on Public Education Underfunded Current Law Formula Funding$2.5 Billion Target Revenue$1.5 Billion Subtotal $4.0 Billion Cut Grant Aid$1.4 Billion

Schools are down roughly $1,000 per pupil, unless local taxes go up

What They Knew and When They Knew it: The 2006 School Tax Cut Created A Structural Deficit In 2006, the Fiscal Note said that for : Predicted Cost of Property Tax Reduction$14.2 B Predicted Amount of New Revenue$ 8.3 B Predicted Shortfall$ 5.9 B

And then the gap grew: Our $10 Billion Structural Deficit Bill $

Legislature Left Money in Rainy Day Fund RDF is designed to pay for ongoing expenses during an economic recession Contrary to the spin, the Legislature did not spend or commit the RDF—over $6.5 billion remains unappropriated and some project $9.5 billion The Legislature even rejected the contingent use of the RDF –Howard Amendment would have been spent RDF to fund enrollment growth –But only the amount above $6.4 billion already projected to be in fund at end of 2013 –And only to the extent needed to fund enrollment growth, but not more than $2.2 billion

Legislature Abandoned Historical Commitment to Fund Schools Created Regular Program Allotment Adjustment Factor—change in philosophy Allows legislature to adjust funding by a multiplier that produces an across the board cut This is done through appropriations rather than through regular lawmaking Rep. Patrick’s Amendment eliminates this trick after they write budget Watch out for an extension

Equity is a Sword, not a Shield. Every Texas student is equally valuable to us and therefore we should invest in each of them equally Every Texas student ought to have same opportunity $5.5 billion in Target Revenue –A Measure of Need, not Inefficiency Requiring equitable funding is the only way to produce adequate funding

Same...DistrictTax Rate*Revenue** Location Alamo Heights$1.04$6,243 San Antonio$1.04$5,036 Size Glen Rose$0.825$8,424 Diboll$1.04$4,881 Tax Rate Austin$1.079$6,171 Amarillo$1.08$5,094 Revenue Lamar Cons.$1.02$5,475 Calallen$1.17$5,475 Examples of Inequity Courtesy of Equity Center

Local Property Taxes Alone Can’t Make up the Cut At maximum tax rate of $1.17, schools could only raise about $2.4 billion in new revenue More than a fifth of the districts are already at the maximum rate of $1.17 Some districts can’t pass an election, which is required for any increase over $1.04.

The Legislature Has Choices Increase Property Taxes –($0.10 about $1.7 billion) Increase Sales Tax Rate or Expand Base –($0.01 about $3.2 b on current base) Eliminate Tax Loopholes ($2 b?) Fix Business Tax ($2 b?) Enact Healthy Texas Taxes –Increase cigarettes a buck a pack for about $1.5 billion –New penny an ounce sugar-loaded beverage tax for about $2.5 billion