Understanding the Education Gamble on Houston Ballots This November

Leah Binkovitz | @leahbink | October 19, 2016

Image via Tobias Leeger

Image via Tobias Leeger

The Texas Supreme Court told more than 600 school districts in May that the state’s current funding system is constitutional, despite legal challenges from school districts arguing otherwise.

State Supreme Court Justice Don Willett wrote that “despite the imperfections” of the state’s system of education funding, imperfection, “does not mean imperfectible,” leaving the door open for the legislature to make changes.

Now, in a controversial ballot measure gamble, the state’s largest school district is hoping to add some pressure for the legislature to do just that.

Voters in the Houston Independent School District are being asked on the November ballot whether they approve of a plan to send $162 million in local property tax revenues back to the state for redistribution.

Part of the state’s recapture or “Robin Hood” plan, the redistribution of local tax revenues is meant to level the playing field between property-wealthy districts and property-poor districts. But for the first time this year, Houston is considered a property-wealthy district, triggering the recapture payment that the district says will cause a $95 million deficit in the 2016-2017 school year.

The trouble is, the district’s students are overwhelmingly economically-disadvantaged. So even as property values are rising locally, roughly 76 percent of the student body qualify for free or reduced lunch, according to the Texas Education Agency. “HISD paying recapture is proof that the system is broken,” said school board member Mike Lunceford, testifying before a joint meeting of the House of Representatives’ public education and appropriations committees.

Houston joined nearly two-thirds of the state’s districts in the recent lawsuit against the state, challenging its funding system as inadequate and unconstitutional after the legislature cut more than $5 billion in funding in 2011. The plaintiffs also argued that, despite a ban against a statewide property tax, chronic underfunding from the state forces many districts to set local property taxes at or near the limit — essentially creating a de facto state property tax. Advocates have also pushed for greater funding for economically disadvantaged and English Language Learner students, among other changes.

Lunceford and others are hoping to see reforms to the Robin Hood system. But Houston voters aren’t actually being asked to weigh in on any of those proposals.

Instead, when they head to the polls in November, they’ll have a choice. With a “yes” vote, they’ll send $162 million in HISD property tax revenue to state coffers in the spring. With a “no” vote, they would allow roughly $18 billion-worth of the district’s wealthiest commercial properties to be reassigned and taxed in another school district through a process called “detachment.”

Either way, the district will lose out on some tax revenue but it’s a gamble several school board members, the Houston Federation of Teachers and the city’s education czar, Juliet Stipeche, support. The hope is that by detaching some of those wealthy commercial properties — which will likely pay higher taxes in another district — the businesses may push for school funding reforms. Such a move would be unprecedented, and advocates hope it would garner attention from the legislature.

“This is our line in the sand,” school board president Manuel Rodriguez Jr. said in an interview with Urban Edge. “We’re hoping that business will get behind this and force the legislature to do something.”

A Houston Chronicle editorial also urged Houstonians to vote “no.” It called the ballot language misleading (technically, the language is about paying for “attendance credits,” not recapture or detachment, even though those issues are the crux of the debate).

“If the provision worked like a true Robin Hood, it would ‘rob’ from the rich and ‘give’ to the poor,” the newspaper wrote. “But in reality, the system robs from the poor and gives to legislators so that they don’t have to raise state taxes. There’s no guarantee that poor schools will receive a single extra dime if HISD pays up.” The newspaper argues that the recaptured money keeps the state from having to spend general fund revenue on schools.

Interactive: Click on each district to see more details about its 2015-2016 funding, demographics and programming. By Leah Binkovitz.

But not everyone thinks the gamble is worth it.

“The legislature is just as likely to either put more money into the system, or not to, regardless of whether HISD is sending money or instead having property detached,” said Scott Hochberg, an education finance expert and former state representative.

Every district that has had the same choice as HISD has opted for recapture — swallowing a bitter pill and making the payments — rather than picking the fight over detachment.

But Hochberg said the risk of sending the property to another district is that the district loses it forever — even if the legislature makes reforms that might benefit HISD in the future.

Detaching could also mean higher taxes for homeowners to pay for future bond measures, since its tax base would be reduced — something Dale Craymer, president of the Austin-based Texas Taxpayers and Research Association, warned about in a statement about the vote.

Hochberg shared his concerns. “Once the property is gone, it no longer is part of the base for future bond issues, meaning we all pay a higher tax rate on any future bond issues,” he said.

It may be voters’ only chance to weigh in on the issue. If they approve recapture, said Lauren Callahan, information specialist with the Texas Education Agency, “The district would still be able to choose another option to achieve wealth equalization in the future including detaching property – but they would not need to have voter authorization to do so and would probably not put the question to voters again.”

Historically, the legislature had worked to tweak funding enough to make sure Houston and Dallas stayed out of the recapture program. This is this first time that hasn’t been the case, according to Ashlea Graves, HISD’s government relations director. And Dallas may soon find itself in recapture as well.

“Either way is painful,” wrote state representative Jimmie Don Aycock for the Texas Tribune of the decision facing Houston voters. “Quite simply, the system doesn’t function unless some form of redistribution occurs.” Austin, Spring Branch and other districts have had to make recapture payments, he continued. “Houston cannot be treated differently.”

Last session, Aycock introduced a bill that would have combined multiple districts into a smaller number of taxing districts, to reduce wealth variation between them. “The concept would still redistribute taxable wealth but would do so within a group of districts with a common interest and common tax rate,” he wrote.

Though Aycock is on his way out, Rodriguez, the HISD board president, says he believes legislators, specifically Houston-area representatives, are committed to reforming the system. “For the most part, I believe everybody is on the same page,” Rodriguez said. “We’re hoping the legislature can see what’s happening finally and find a resolution.” Early bill filing for the next legislative session begins in November.

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