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House Bill 3 and its Effects
Graydon Hicks
Friday, February 28, 2020

I have several concerns regarding public education finance.  The last legislative session gave radical Republicans, like Dan Patrick, their campaign sound bites....but no one seems to be reading the "rest of the story," as Paul Harvey would say.  The political environment at both the national and state levels seems to have made common sense and middle-of-the-road decision making impossible.  Our children are suffering for that, and, as our children suffer, so will the state of our State suffer in the future.

Here are just a few points to remember when you see the political advertising.

1.  HB3 increased teacher salaries, significantly......but teacher salaries are funded by the local districts.  The state gave local districts no extra money to cover the increase in salaries.

2.  HB3 cut property taxes......the problem is that property taxes are the primary means for local districts to raise revenue.  The other problem is that while tax rates were compressed, the property values are mandated to increase (faster than inflation and cost of living indices).  Texas home and property owners may see a drop in the tax bill for 2019, but the Legislative Budget Board (via the Comptroller's Office) is REQUIRING property values to rise over 4% for 2020.  If the local county appraisal districts (CAD's) do not increase your local property values to within 5% of what the state says they should be, then the CAD's ultimately lose all control of your appraisals, resulting in the even higher state assigned values.  Tax payers will see 2020 tax bills rise to the levels of 2018, and they won't stop there.  Why? Every time local property values rise, the state decreases the amount of money it sends to local schools.

 3.  HB3 increased state funding to the local districts.....the problem is that local districts lost significant local revenue via the tax compression, and local expenses shot way up due to the increase in minimum teacher salaries.  The so called "extra state funding" did not even cover the loss of revenue from the tax compressions.  Local districts, especially the small rural ones with no energy and utility resources, have realized almost no change in their dire financial situation.  State funding divides local district allotments into two basic sections: Tier 1 and Tier 2.  There is, barely, a one-for-one trade off of local revenue loss and state revenue gain at the Tier 1 level.  Tier 2, however, has no such swap.  Local revenue losses in the Tier 2 section are not covered by the state.  The result is that for every $1 that districts lose from the tax compression, they only receive about $0.75 (or less) from the state.

 4.  HB3 reduced "recapture" from the "rich" districts.......this is a true statement.  Recapture funds, overall, have been reduced.  The problem is that the adjustment to school finance formulas have created a larger gap between the "rich" and "poor" districts.  The truly resource rich districts have an overwhelming advantage when it comes to passing bonds.  There are still many districts that are labelled "rich" that have no real chance of passing any bond elections, ever.  Why is this important?  Locally raised revenue from bonds is not included in any calculations to categorize the districts as "rich" or "poor."  The truly rich districts can pass bond after bond, build impressive and opulent new facilities, and acquire the latest in equipment and technology.....all without counting that revenue when the state calculates what their annual allotment should be.  The other districts in the "rich" category, the ones without those resources, still have to pay recapture money and have to make do with the bare minimum of facilities and equipment, trimming staff, and leaving vital maintenance of their meager facilities undone.

  The last legislature was supposed to make school finance more equitable, efficient, and adequate......they accomplished none of those things, but that is not what they are going to tell you.