Expiring state aid program tightens wallets of Central Texas schools

5:11 p.m Thursday, June 29, 2017 Local
About 200 Texas school districts, including the Lago Vista school district, pictured, are slated to lose $200 million in Additional State Aid for Tax Reduction come Sept. 1. The fund was created in 2005 to help them maintain same revenue levels when the Legislature compressed property tax rates by a third.

About 200 Texas school districts — including Lake Travis, Lago Vista, Jarrell and Blanco — will enter the 2017-18 school year without a combined $200 million in state money that they had been receiving over the past decade.

A pot of money called Additional State Aid for Tax Reduction will go away in September, cutting up to 10 percent of some Central Texas school district budgets.

The Legislature established the money in 2005 to maintain school district revenue after lawmakers lowered property tax rates — the main source of funding for Texas school districts — by one-third. In 2011, the Legislature reduced the amount of state aid to school districts and set a 2017 expiration date.

In recent years, rising property values have allowed fewer school districts to qualify for the money. Butin many of the remaining 20 percent of school districts, officials are cutting teachers and extracurricular activities, freezing salaries, delaying repairs and dipping into savings to prepare for the loss of funding.

“The reality is that ASATR existed because of a promise made to taxpayers that compressed tax rates would not hurt school districts. That promise has been broken,” said Suzy Lofton-Bullis, deputy superintendent of the Lago Vista school district, which is expecting to lose $1.2 million, about 10 percent of the 1,450-student district’s budget.

Should funding expire?

Lawmakers, warning that the loss in the state aid program could close schools, filed a half-dozen bills to extend the program in the session that ended in May.

The most promising was House Bill 21, a $1.6 billion school finance package that would have created hardship grants for affected districts. Disagreement over a separate provision that would have allowed state money to help students pay for private school tuition ultimately killed the legislation.

In an opinion piece about education spending published this month, Lt. Gov. Dan Patrick suggested that districts should have been planning for the loss of funding.

“School districts have known for six years that ASATR would expire in 2017,” Patrick wrote.

Chandra Villanueva, policy analyst with the Center for Public Policy Priorities, a left-leaning Austin think-tank, said the funding program should expire because it’s based on decade-old revenue data, making it an inefficient system within the larger, already broken state finance system.

“Basically, districts with higher tax rates were subsidizing the ASATR for other districts,” Villanueva said. “What our Legislature needs to focus on is all 5.3 million kids and not just a handful of districts that were in a privileged position a decade ago, and that’s why they’re on ASATR.”

Planning for the cliff

Officials with the Lake Travis, Lago Vista, Jarrell and Blanco district said they have exhausted ways to plan for the loss in state aid, adding that cuts to the overall education system continue to be too burdensome.

The Lago Vista and Lake Travis school districts face a double whammy because they must also return millions of dollars to the state in recapture payments that help property-poor school districts. Lago Vista officials expect the district to send off as much as $5 million next school year, while Lake Travis will return to the state about $43 million and lose an additional half-million dollars when the state aid expires in September.

Lake Travis, which has a $113 million budget, is going into a deficit of $2.1 million next school year, forcing it to dip into savings.

“We’ve cut back on some of our transportation. We’ve also outsourced our custodial staff. We’ve not filled staff positions. What has hurt us is the other cuts that the state has put on us, and unfunded mandates,” said Johnny Hill, Lake Travis school district’s chief financial officer.

The Jarrell school district will lose about 7 percent of its $14 million budget when the additional state aid expires, also creating a budget deficit. Officials said they’ve cut staff and can’t afford to increase salaries — a top priority for districts at risk of losing teachers to neighboring districts or to other careers.

The Blanco school district will also lose up to 7 percent of its budget when the aid program expires.

Blanco district officials have tried to lessen the blow by asking voters earlier this month to approve a “tax swap” that will generate more money for the district’s operating budget but keep the taxpayers’ overall tax bill the same. The maneuver will allow the district to use tax money reserved for repaying debt to instead pay teacher salaries, utility bills and other day-to-day expenses.

The Lake Travis and Lago Vista school districts have also done a tax swap.

“We have not been planning with the expectation that the Legislature was going to help us,” said Matthew Strager, the Blanco school district’s business manager.

For the 30-day special legislative session that begins July 18, Gov. Greg Abbott has called on the Legislature to create a commission to make recommendations about the state’s school finance system. Local school officials aren’t banking on any meaningful changes to come from the special session.

“We keep doing studies … but nothing ever gets done with school funding because it’s going to require something very big,” said Jarrell Superintendent Bill Chapman. “There’s no getting around it.”