Keep Austin’s school property taxes in Austin ISD’s schools

During my years serving the Austin Chamber, home and business property owners have been increasingly vocal about property taxes and their effect on affordability. These concerns grow louder every time we write our annual property tax checks. Most difficult to explain is the biggest portion of each property tax payment goes towards financing public education not just in Austin, but in school districts across Texas.

Texas currently funds public schools through what is referred to as a Robin Hood scheme, where property-wealthy school districts send money to the state to be redistributed to school districts considered property-poor to reach a pre-determined per-pupil funding level. When our property tax money runs out, the state kicks in the rest.

An understandable frustration follows when Austin taxpayers — and those in other property-wealthy districts across Texas — endure rising school property levies, but conversely see a smaller share of their contributions supporting their local schools. The reaction is understandable: Why?

People in Central Texas have worked hard and made sound public investments to boost our economies; subsequent growth has been a boon to our area. At the end of the day, we are penalized for this success. Based on Austin ISD projections, the district’s taxpayers are set to send the state more than $1.1 billion over the coming two-year budget cycle. This is a staggering amount of money, enough to raise every Austin teacher’s salary by $83,000 or to give every Austin ISD graduate a $40,000 college scholarship. Projections from Texas Education Agency data for 2017 mean that taxpayers in Austin ISD and nine neighboring districts could be on the hook for at least an additional quarter billion dollars for the coming biennium.

In fact, we are sending so much property tax money to the state Capitol that key leaders in the Legislature stand poised to cut state education funding by $3.2 billion for the upcoming two-year budget. Meanwhile, the districts that receive money based on this formula are no better off. They get the same allotment even if the state government contributes nothing. It may be more accurate to dub the school finance system “Sheriff of Nottingham.”

Let’s be clear: One third of annual local taxes raised to operate Austin ISD are actually diverted to recapture payments. This is a massive tax increase that is occurring because of the state’s complacency (or complicity) in areas like Austin, Houston, and in South Texas towns like Cotulla and Crystal City — where oil and gas industry activity has increased values, and it does not increase our per pupil funding. In these areas, increases in local property tax proceeds serve populations in other parts of the state. Meanwhile, the state reaps the benefit while reducing its own financial responsibilities.

Supporters of this “Sheriff of Nottingham” approach will say that it is unfair for some parts of the state to have more money to spend on education than others. But the Texas Supreme Court has been clear for decades: The state of Texas has a constitutional obligation to ensure equal access to equal revenue only up to a state-defined "adequate" education. Roughly 94 percent of Texas schools meet that definition. If the state were to raise its expectations through TEA’s new A-F rating system, perhaps that would justify the subsidies from districts like Austin. Sending so much recapture money is hard to stomach while the state is considering continuing lower high school graduation requirements and opposing real rating of post-secondary readiness.

Taxpayers and communities are asking the state to lessen the local property tax burden and allow us to keep more of our money in our communities, either in the schools or in the pockets of hardworking Texans. This can be accomplished through lowering reliance on property taxes and/or by updating formulas to adjust for transportation costs, living in higher-cost markets or educating children with more challenges. Nearly 60 percent of Austin students are on price-supported or free lunches and those kids end up being negatively affected when money is sent out of our communities.

Many Texas officials speak out about government overreach. They ask that Washington, D.C., respect the Tenth Amendment and allow states to govern and spend as they see fit. The same logic is often applied to the U.S. Department of Education: States know how to educate their kids more effectively than faceless bureaucrats in Washington.

Shouldn’t the same logic apply here? Once we meet adequacy standards, local school districts should be trusted to more effectively spend our own money on our schools. This is a more simple and practical route than trusting the state to redistribute our money to other areas as it sees fit. After all, it is not the state’s money. It’s ours. It’s better used in our community to help fund our school district. In the upcoming session, our elected officials need to act boldly to correct the problem. Thankfully, reducing property taxes has been raised by nearly all state leaders.

Education is about the students. I am hopeful that following this year’s legislative session I can tell my fellow Texans more money will stay in their communities. Having taxpayers from independent school districts like Austin write big checks to Texas doesn’t help other school districts — it harms our students. The state needs to allow local communities to invest in their students.

The time to act is now. We need to hold our officials accountable and address this problem before it does further harm to homeowners, local businesses, our schools, and damages our economy.

Drew Scheberle

SVP of policy, Austin Chamber of Commerce

@Drew_Scheberle

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