Austin school district’s recapture payment to state grows 55 percent

Updated Aug 31, 2015

The Austin school district projects that it will send $272 million to the state in the new fiscal year to subsidize property-poor districts elsewhere in Texas, a “recapture” payment that would amount to 30 percent of the district’s operating budget.

The Austin district pays more for recapture than any other district in Texas, and school leaders say the district’s financial situation is becoming increasingly dire as the amount of the payments continues to rise. The $272 million is 55 percent more than last year.

“People are feeling a higher tax burden so we can pay our bigger tax bill from the state,” school board President Gina Hinojosa said. “That’s what’s happening, and it hurts.”

Recapture is not being directly challenged in the ongoing school finance litigation, which will go to the Texas Supreme Court on Tuesday and involves about two-thirds of the school districts in the state. But in Austin, district officials said they hope for some kind of financial relief through the lawsuit. Unlike the majority of districts in the state, Austin still receives less in per-student funding than it did before the state made major funding cuts to public education in 2011.

The growth of the district’s recapture payment is outpacing the growth of its collections for operations. About 30 percent of local property tax dollars for maintenance and operations go to recapture.

District projections show Austin’s payments for recapture will nearly double in 2016-17 to $349 million and grow to $443 million by 2018-19.

Austin is considered property-wealthy, and as property values continue to rise and the district’s enrollment continues to fall, greater percentages of the tax revenue will go to the state. (Property values are expected to increase 15 percent in Travis County this year, while the district expects to lose 569 student, a third consecutive annual decline.)

Unlike the city and county, the district cannot keep all of the additional revenue generated by the increasing property values. Districts pay recapture based on the amount of property wealth divided by student attendance. The attendance figure is weighted to account for demographic and economic factors, but the weights have not been updated for decades.

The number of districts subject to recapture is growing and now is 439 statewide. Other area districts that will pay recapture in 2015-16 include Boerne, Brenham, Burnet, Caldwell, Comal, Coupland, Dripping Springs, Eanes, Fredericksburg, Georgetown, Jarrell, Johnson City, Lago Vista, La Grange, Lake Travis, Leander, Liberty Hill, Manor, Marble Falls, New Braunfels, San Marcos and Wimberley.

The so-called Robin Hood system was born after the Texas Supreme Court in 1989 declared the state’s previous school finance system unconstitutional. According to the court, children who live in property-poor districts have the right to “a substantially equal opportunity to have access to educational funds” as students who live in property-wealthy districts. Lawmakers decided to spread around some of the tax dollars generated by areas with more property wealth.

Advocates for property-poor districts have said Austin is not unfairly burdened by recapture and has long had more to spend per student than many other districts.

Austin district officials argue that the strain is real and say they need more resources to provide a growing array of services to students, 60 percent of whom are from low-income families and more than one-quarter of whom speak little to no English.

School board members tried to lobby the Legislature for help in the last session but made little progress. Funding formulas haven’t been adjusted for years. The regional cost-of-living adjustment hasn’t been updated since 1991, when housing costs in Austin were significantly lower.

Hinojosa said the district is going to need to find other means to pay for services and has partnered with other entities to fund some needs. In 2014-15, for example, the city helped pay for after-school programs and parent support specialists on campuses.

“We have to look for more creative ways to fund the needs of our students because the state’s finance system is broken,” Hinojosa said. “So we have to come up with solutions locally to address our needs. We’re exploring those options now with other governmental entities. It’s a crisis for our community, not just our school district.”