Texas Education Agency Commissioner Mike Morath told Texas lawmakers that a key part of thestate’s school finance systemrelies on projected property tax revenue — not what school districts actually collect — and that mismatch can leave districts short on money even as property taxes statewide have fallen.
Morath appeared before the House Ways and Means Committee to discuss property taxes, which have already dropped after lawmakers raised the homestead exemption and the real estate market cooled. More than half of Texas school districts ran a budget deficit this year.
Morath said the current approach can reduce state funding for districts because the state assumes they are collecting more in local taxes than they really are.
“It reduces the amount of state aid that they would have otherwise received, because we think that they’re collecting more in taxes than they actually are,” Morath told the committee.
Morath said lawmakers could consider changing the system so state aid is based on actual collections rather than estimated collections. “The legislature could entertain, which is to switch the school finance system, so it is predicated on collections, not on imputed collections,” he said.
ALSO| Family of Tierra Walker sues Texas AG, doctors over abortion denial and death
Josh Sanderson, executive director of the Center for Equity, Inadequacy and Public School Finance, said Morath was right to raise the issue as a potential fix.
“Commissioner Morath was correct in our opinion to bring this up as a possible suggestion to the legislature,” Sanderson said.
Sanderson said districts often do not collect all the property taxes they levy. “Most school districts don’t collect 100 percent of their taxes on a year-over-year basis for a variety of reasons,” he said.
When the state bases aid on estimates rather than what is actually collected, Sanderson said, districts can end up with budget shortfalls. “This is just a small piece in that bigger pie that’s causing the budget deficit issues,” he said.
Sanderson said the impact of a collections-based approach would not necessarily be bigger for property-wealthy districts such as Austin ISD. “Actually no,” he said.
He said districts that are property wealthy and pay recapture are already treated differently in the way the state accounts for collections. “If you’re a district like Austin and you’re property wealthy and you pay recapture, they actually do what the commissioner was talking about. They do look at collections in that instance,” Sanderson said.
But Sanderson said districts that are not property wealthy are handled differently under the current system. “If you’re not a property-wealthy district like Austin, so if you’re Leander ISD, the state doesn’t look at that way; the state looks at Leander’s property values, not their collections,” he said.
The Equity Center does not expect the Legislature to focus heavily on school finance in the next session because both the governor and the lieutenant governor have property tax proposals under consideration. Sanderson noted that because it is an election year, what lawmakers prioritize could depend on the outcome.
3
NEWFamily of Tierra Walker sues Texas AG, doctors over abortion denial and death6
APD searching for 3 suspects involved in robbery at The Domain’s Neiman Marcus3
Man charged with murder in May CaJJun Eats shooting that left 1 dead, 4 injured5
Kerr County flood survivors press Cruz for FEMA Individual Assistance
