The Texas Commission on Public School Finance met Tuesday at the Texas Capitol to hear recommendations from the working group on expenditures, which is led by House Public Education Committee chairman and state Rep. Dan Huberty (R-Houston).

School finance commission meeting September 25, 2018.

Texas Education Agency (TEA) Commissioner Mike Morath began the hearing by presenting the agency’s annual report, which purported to show an increase in education funding since 2007. Responding to questions from commission members, Morath conceded that the numbers were not adjusted for inflation.

State Sen. Paul Bettencourt (R-Houston) asked Morath to explain the dispute between the General Land Office (GLO) and the State Board of Education (SBOE) over public education funding. Morath stated that through the School Land Board (SLB), the GLO sent $750 million to public education for the last biennium. The GLO only sent $600 million for this biennium, bypassing the SBOE, and representing a roughly $150-190 million decrease in funding.

Sen. Bettencourt appeared to come down on the side of the SBOE in the dispute. SBOE Member Keven Ellis (R-Lufkin) suggested that the dispute will require a legislative fix. The entire SBOE sent a letter asking GLO Commissioner George P. Bush to reconsider the action and increase funding, but Bush refused to do so.

Commission Chair Scott Brister suggested that on the big question, whether to increase public school funding is not up to the commission. Member Ellis rightly pointed out that while it’s true the legislature is the only body that can appropriate funds, it is certainly the commission’s duty to discern what appropriate funding levels are and to make recommendations accordingly. This point was backed up by Austin ISD CFO Nicole Conley Johnson.

Brister added that the commission will require a half dozen meetings in November and December in order to finalize its report.

Rep. Huberty then walked the commission through a list of 22 recommendations from the working group on expenditures, beginning with reallocating cost of education index (CEI) funds. The recommendations are as follows:

Reallocations of existing funding:

1. Reallocate cost of education funds. The CEI was last updated in 1991 and provides adjustment for cost of educating children in different parts of the state. Huberty argued that this formula is outdated and that funding could be rerouted to add $2.9 billion to the basic allotment.
2. Reallocate Chapter 41 hold harmless funds worth $30 million annually.
3. Reallocate Chapter 41 early agreement credit funds for an annual savings of $50 million.
4. Reallocate gifted and talented allotment funds worth $165 million annually. Rep. Huberty and state Sen. Royce West (D-Dallas) emphasized that gifted and talented (GT) programs will not go away. Pflugerville ISD Superintendent Doug Killian cautioned that districts could come to view GT programs as an unfunded mandate, and suggested weighting GT funding instead. Todd Williams also voiced concern that eliminating dedicated GT funding could lead districts to underidentify GT students as a way to cut costs.
5. Reallocate high school allotment funds worth $400 million annually.
6. Move from prior year to current year property values worth $1.8 billion. Huberty suggested that this would more accurately reflect the current needs of school districts. Killian cautioned that this change will cost Pflugerville, which is a fast-growth district, $22.7 million in the first year. Conley Johnson added that this could add uncertainty to the budgeting process for districts.

Increased spending on existing programs:

7. Increase compensatory education allotment from 0.2 to a spectrum of between 0.225 and 0.275, based on the concentration of severely challenged students. This would be worth $1.1-1.2 billion. Commissioner members engaged in a lengthy discussion on identifying metrics with which to identify need other than qualification for federal free and reduced lunches.
8. Change the transportation allotment to a mileage-based approach based on at least $0.80 cents per mile appropriated by the legislature.
9. Provide transportation funding to Chapter 41 districts, at an annual cost of $60 million.
10. Recreate the small- and mid-size district adjustments as a standalone allotment, at an estimated cost of $0-400 million. Rep. Huberty argued that this would create more transparency.
11. Increase the new instructional facilities allotment (NIFA) to $100 million per year, which would be a direct benefit to fast-growth school districts.
12. Expand career and technical education (CTE) funding to 6^th through 8^th grades, at an annual cost of $20 million.

New programs:

13. Create a new dual language allotment at 0.15, at an annual cost of $15-50 million. This is aimed to incentivize schools to transition from bilingual to more effective dual language programs.
14. Create a new dyslexia allotment of 0.1, at an annual cost of $100 million. Currently districts do not receive direct funding for students with dyslexia, despite the fact the number of dyslexic students in Texas is estimated to be anywhere from 2.5 to more than ten percent.
15. Create a new early childhood support allotment of 0.1, at an annual cost of $786 million. This would benefit students from kindergarten through 3^rd grade, and could be used to fund any program that seeks to improve 3^rd grade math and reading, including full-day pre-K.
16. Create a 3^rd grade reading bonus of 0.4, at an annual cost of $400 million. This is a simple incentive for students to meet grade level in 3^rd grade reading. Williams suggested granting students facing social or economic challenges a greater reward.
17. Create a college, career, and military readiness bonus at an annual cost of $400 million. This would provide additional funding for each graduating senior who does not require remediation after graduation or who is able to directly enter the workforce or military. This is intended to support the state’s “60x30” goals.
18. Create a new teacher compensation program, at an annual cost of $100 million. This is a merit-based pay program that would allow certain educators to earn more by performing well on certain evaluation systems. Teachers would also be rewarded for teaching at campuses with higher levels of disadvantaged students. This program could grow significantly in size depending upon district participation. Williams acknowledged that local development involving teachers is incredibly important, and measures other than student STAAR results should be considered. Williams suggested it would be incumbent on the commissioner to develop a set of minimum standards.
19. Create an extended year incentive program at an annual cost of $50 million. This would be aimed to reduce summer learning losses.

Additional changes:

20. Utilize remaining funds from reallocations to increase the basic allotment.
21. Change the guaranteed yield on tier II copper pennies from a set dollar amount to a percentage of the basic allotment.
22. Link the tier II golden penny yield to a set percentile of wealth per student.

Many of these recommendations were also supported by recommendations from the working group on outcomes, led by Todd Williams. Williams congratulated Huberty on his working group’s efforts to find more efficient ways to provide the support students need, and added that the system will nonetheless need more money. In a final conversation around spending, Brister continued to suggest that more funding is not necessarily the solution. Member Ellis emphasized that the commission must address the adequacy of public education funding.

The working group on revenues, led by Sen. Bettencourt, is now the only working group yet to produce recommendations. Bettencourt pushed back on warnings that time is running short for the commission to complete its work, but did not provide a timeline for his work product.