Commission on school finance hears call for restoring state school aid in 11-hour hearing

Texas AFT President Louis Malfaro, in testimony today echoed by many others witnesses at a capitol hearing, called on the Texas Commission on Public School Finance to recommend sustained increases in state funding for educational services needed by 5.3 million Texas students. Malfaro’s message was amplified as well by nearly 2,000 email letters to the commission from education employees, parents, and community allies.

Highlights of Malfaro’s testimony for Texas AFT included an inventory of state funding shortfalls, examples of spending needs, and a sampling of potential new revenue sources:

The state has yet to make up for a decade of education funding stagnation and outright cuts that have undermined educational opportunity and achievement. In 2011 the Legislature cut per-pupil formula funding by $4 billion and cut discretionary grants to school districts by $1.4 billion. Since then, the Legislature has only partially restored formula funding, relying chiefly on rising local property-tax collections rather than state effort. In fact, the state funding share has fallen sharply, to 38 percent, and average per-pupil funding remains below the pre-recession level of 2008. Most of the massive cuts enacted in 2011 remain in force for valuable grant programs such as full-day pre-kindergarten and the Student Success Initiative offering extra help for students struggling to pass state exams.

The constraints on state funding have led the state to a de-facto policy of setting our sights too low for our students. Performance targets set by the Legislature in the 2018-2019 budget illustrate the point. Consider these disparities in the targeted percentages of students passing all tests taken: For all students the target is 67 percent; for African-American students 54 percent; for Hispanics 60 percent; for economically disadvantaged students 55 percent. Targets for graduation rates follow a similar pattern. While graduation rates have improved, the state’s performance targets for four-year graduation rates by African-American, Hispanic, and economically disadvantaged students still are significantly lower than for all students (less than 86 percent, versus 89.2 percent). For students with disabilities, the targeted graduation rate is 80 percent. As a state, through the appropriations act, we are, by design, aiming too low for students with highest needs.

Restoring the pre-recession funding level of 2008 has been estimated to require $3.2 billion more per year in additional funding. If Texas fails to invest at least at that level on a sustained basis to educate 5.3 million students in our public schools, 59 percent of them economically disadvantaged and in need of intensive educational services, our state’s economic growth will be stunted—with average income of Texans projected to decline significantly over the next 20-plus years, as estimated by state demographers. Yet the Legislature in 2017 actually cut state aid to school districts by $2.68 billion, leaving that cost to be borne by local property taxpayers.

Over the past 15 years, teacher pay in Texas has stagnated; adjusted for inflation, teachers’ average pay actually has declined 2.7 percent since 2010. Average teacher pay remains some $6,000 below the national average and roughly 20 percent below pay for comparable jobs within Texas requiring similar levels of knowledge and skills. Meanwhile, active and retired teachers and support personnel are seeing their compensation further eroded by dramatically rising health-care costs. The state is creating a financial disincentive for quality employees to enter or remain in education.

It is time for Texas to stop pretending that doing more with less is a sustainable long-term funding policy. The state needs to provide the increased funding on a sustained basis that will help:  recruit and keep high-quality educators in our schools; pay for full-day pre-K; provide essential services for students with disabilities and other special needs; reflect actual variations in costs based on pupil characteristics and regional cost-of-living differences; and distribute funds equitably, so that educational opportunity does not depend on local property wealth and schools with high concentrations of economically disadvantaged students get the extra resources they need.

To assure the needed funding, the commission should start by recommending restoration of the state share of funding to at least 50 percent. Rising local school property-tax receipts should not be used as an excuse to supplant state aid and reduce the state’s share. The commission also should recommend that the state make sustained, long-term increases in state aid to districts, and you should not shy away from identifying needed reforms in the state’s tax structure to support these increases.

For instance, obsolete tax breaks cost the state billions of dollars in lost revenue yearly and must be ended. A prime example is the so-called high-cost natural-gas tax exemption, which has no relationship to actual production costs and has outlived any justification by decades. Ending just this one unwarranted exemption would bring an additional $1 billion plus into the state treasury, according to a 2013 Legislative Budget Board report on government effectiveness and efficiency.

Billions of dollars a year also could be reaped by modernizing the state sales-tax base. The state’s economy has grown largely in the service sector, but the sales tax remains predominantly a tax on goods, not services. Sunsetting unjustified sales-tax exemptions for business and professional services (while preserving exemptions for “lifeline” services to families, like health care and child care) would yield approximately $3.5 billion in fiscal 2020, and the amount would increase as the service sector grows in subsequent years, according to the comptroller’s 2017 report on tax exemptions and tax incidence.