Does Proposition 6 Mean More Money For Education?

Warning: As the late, great Molly Ivins used to announce now and then in The Texas Observer, this is one of those “castor oil” stories–too laden with technicalities to go down easily, but good for you to digest nonetheless, if you have the stomach for it.

So just what is the story with Proposition 6, one of the ten constitutional amendments on the November 8 ballot?

The official ballot language for this constitutional amendment says in part that it aims “to provide additional funding for public education.” This language will surely help pass the amendment, because the public generally supports more funding for public education. But the ballot language does not tell the whole story.

Proposition 6 does indeed authorize increased withdrawals from the Permanent School Fund (PSF)–plus direct transfers of money from the School Land Board in lieu of deposits in the PSF–to help pay for current school operations.

But the effect of this increased draw from the PSF, the state’s endowment fund for public schools, is not necessarily an increase in spending on public schools. The amendment may simply allow the legislature to spend less revenue from other sources for school operations.

In fact, it turns out that this mere substitution of PSF dollars for other dollars is exactly what would happen in the short run. Counting on a new spurt of $300 million in dedicated revenue for the public schools from this constitutional amendment for fiscal 2012-2013, the legislature separately passed a bill (SB 2) in the June special session that has already reduced by $300 million the amount of other, general revenue that was originally included in the two-year budget to fund state aid to the public schools.

This reduction of general revenue for public schools under SB 2 is a done deal, whether Proposition 6 passes or not. Another way to say it: The short-term effect of passing the constitutional amendment is merely to provide a way to fill a $300 million budget hole that the legislature created in June.

Now, if Proposition 6 were to fail, the legislature still would have other options for filling that short-term budget hole, including a possible supplemental spending bill in 2013. (Bear in mind that, as a share of overall school funding, the amount of money at stake here is relatively small—a fraction of 1 percent of per-pupil formula funding for fiscal 2012-2013. And remember there’s more than $5 billion sitting in the Rainy Day Fund, with more billions due to flow in soon.)

But if the legislature should choose not to fill that hole, the failure of Proposition 6 could lead to “prorationing,” triggering a temporary reduction of perhaps $60 per pupil across all school districts next school year. Ultimately, though, prorationing is just a payment delay, not a payment cancellation; hence in fiscal 2014 the state would still owe school districts the money.

If all these convolutions leave you with a queasy sense that something is amiss, or maybe you’re missing something, well, hold that thought. For Proposition 6 at bottom is best understood as just one small bit of the budget legerdemain that the legislature has used to put off dealing with the Big Problem: a defective state tax structure lawmakers created in 2006, which has left us $5 billion a year short of the money actually needed to meet the state’s basic obligations to its citizens.

One result of the legislature’s avoidance strategy is the $4 billion cut in per-pupil funding, plus $1.4 billion in cuts from state grants, now hitting school districts in the current two-year budget cycle. Another result is this ballot proposition, which not just for 2012-2013 but permanently would give the state a way to squeeze a little more dedicated revenue for education out of the Permanent School Fund, thereby freeing up a little more general revenue for whatever purpose the legislature chooses to spend it on.

Clearly, passage of Proposition 6 is not a significant short-term or long-term answer to the unmet funding needs of our public schools or other essential state-supported programs. However, the legislature through the $300 million revenue cut in SB 2 has contrived a situation in which voting down Proposition 6 would create a potential short-term budget headache and uncertainty for school-district budget drafters that might not be resolved until sometime in 2013.

These conflicting considerations make it impossible to justify a recommendation in support of Proposition 6 or in opposition to it. One just has to step back and marvel at it as the crafty by-product of a revenue and budget system that is an ongoing embarrassment to the state.