Dallas ISD Needs More Money, and Here’s Who You Should Be Mad At

Property Tax

(Courtesy the Center for Public Policy Priorities)

Yesterday morning, the Dallas ISD Board of Trustees met for several hours to review next year’s proposed budget.

It ain’t good.

And yes, being able to maintain the great strides the district is making is going to cost money that may only be available through a tax ratification election — meaning superintendent Michael Hinojosa is proposing for the third time (maybe three times is a charm) that the board consider sending a 13 cent property tax increase to the voters come November.

I mean, you can only cut so much before you have, as Hinojosa said yesterday, cut your way to the bottom.

It’ll be an uphill climb. People will blame the district. People will ask what the heck the district does with all its money, and how it can afford to open new schools and start a transportation department and still apparently poor mouth the taxpayers.

So let’s talk about that.

Perhaps the best summation of the issue came from someone who was against the last TRE proposal — trustee Audrey Pinkerton.

Yesterday, Pinkerton acknowledged the difference between a company dealing with cost increases and a school district.

“The advantage a business would have is that they could raise their price to cover that budget increase that they experience,” she said. “Unfortunately, we don’t have that luxury. We’re at the mercy of the state and state Legislature that, for how many years now, has said no increases.”

And this is true. The state legislature — your local state representatives and state senators — have largely refused to address school funding. Formulas have remained largely static since the 1980s.

And unless a sea change happens, that will continue.

“I think we’ll begin to have the understanding of the severely constrained environment that we as a district, and really every district in the state of Texas, is operating under,” Pinkerton said. “I just would hope that the Legislature would wake up to the reality and would begin to provide some relief for school districts.”

But to add insult to injury, in a district where the student poverty rate hovers around 90 percent, rising property values will mean that the district will hit the recapture threshold next year.

The district will lose about $75.6 million in foundation funds provided by the state, and the state will ask for almost $40 million back in recapture.

“What is recapture?” you ask. Well, let’s take a trip down memory lane.

Recapture — also known more commonly as “Robin Hood,” began in 1993. At first, 33 school districts were hit with it, to the tune of $130 million. It was meant to be a way to spread the money around to less land-wealthy districts, and level the playing field.

Only now, more than 400 districts are subject to recapture and they contribute about $1.5 billion a year to the state.

The state’s desire to at least partially fund public schools with local money began much earlier though, with the 1949 Gilmer Aiken Act, which allowed for districts to tax citizens to supplement state funds.

Over time, that became inequitable. Rich districts were obviously able to supplement more, while poorer, rural districts often had to make do with what the state provided only. As state funds did not keep up with population growth and other inflation, districts began to raise taxes to cover not only supplemental needs, but also operational ones.

In 1989, the Texas Supreme Court ruled in Edgewood Independent School District et al. v. Kirby et al. that this was inequitable. It took a few more years to scratch out something courts agreed was more equitable, and that became 1993’s system. At first, the state legislature increased funding formulas and kept apace with growth. But by 2003, that was not happening, and more and more districts were hitting that recapture threshold.

To be subject to recapture, districts must exceed at least one of these levels:

  • Equalized Wealth Level 1, which uses the district’s compression tax rate and is related to the district’s taxable wealthy per its Weighted Average Daily Attendance (or WADA);
  • Equalized Wealth Level II, which looks at the funding given to districts to make their tax revenue equal to that of Austin ISD. This threshold is dependent on AISD’s annual property wealth.
  • Equalized Wealth Level III, which deems a district property wealthy if its Level 3 funding is higher than $319,500.

Ten years ago, the state and local funding each accounted for 45 percent of public school funding, and federal funds made up the remaining 10 percent. The latter hasn’t changed, but the state part of the funding formula only covers about 38 percent of the share now, leaving districts to come to their taxpayers, hats in hands, asking for more money.

And state funding models do not take into account the cost of making sure every student can pass state testing, either.

And where does that recapture money go? Well, if you were thinking the state just sucked up that money into a big bank account called Public Schools, you’d be kinda wrong. Basically, it’s like this — the state uses property tax money collected by local school districts and then turned over via recapture to fund its share of public education. Those recapture funds go into the general fund, and then the state turns around and says, “Hey, here’s our part of the public education money.”

And again, it wasn’t always that way. The state contributed its 45 percent, local taxpayers contributed their 45 percent, and that was that.

But now, it’s like your roommate that borrows money from you with no intention of paying it back, then pays his half of the light bill, then turns around and says, “See? I’m still footing half the bills.” 

No, he ain’t.

Now, this isn’t to say that the things the general fund also goes for — roads, health care, prisons, etc. aren’t important. But if you’re looking at possibly paying more property taxes to cover public education, shouldn’t you expect that the money should go to public education?

Simply put, if the lege adjusted funding formulas for today’s expenses, and paid its part of the funding formula equitably, your school district wouldn’t be coming to you for more money repeatedly.

How much would it cost for the state to up its share to be even with what property owners are contributing? About $10 billion a year, the Center for Public Policy Priorities said.

“We estimate the basic allotment would need to increase to $6,600 per student from the current amount of $5,140 to reach an even state-local split for 2018,” the CPPP said in its Better Texas Blog. “As a result, the average funding per weighted student would increase to $7,650 from $5,845.”

“The formulas that make up the school finance system are not adjusted for inflation or growth in property values,” the CPPP said. “Many formula elements are thirty years old or are based on outdated data. For example, the Cost of Education Index, intended to adjust for size of the district, teacher salaries in neighboring districts, and the percentage of low-income students is based on data from the 1989-1990 school year.”

So what did the state legislature do instead of fixing funding formulas this most recent session? Bathroom bills, vouchers, and near fist fights, mostly. And in the meantime, Dallas ISD (and most other urban districts in the state) has to figure out how to convince new families to give the district a chance, maintain the momentum it’s achieving, and you know, create a transportation system out of whole cloth because the entity that was servicing its transportation needs was shut down after an election mandated by the state legislature.

And listen, nobody wants to pay more in property taxes. I own a home, and I don’t want to pay more than I have to. But I also know who to be mad at about it.

And now you do, too.

Want to look at the proposed Dallas ISD budget? Check out yesterday’s presentation here.

Bethany Erickson is the education, consumer affairs, and public policy columnist for CandysDirt.com. Contact her at bethany@candysdirt.com.

3 Comment

  • Good summary. Thanks for bringing clarity and attention to this issue.

  • Thank you for your excellent reporting. This is a complex issue that needs to be communicated to taxpayers/voters.

  • mm

    I think this should be a huge campaign issue in the next elections. There has to be a way to keep urban districts, which have more intense needs, from being so hurt by recapture.