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81st Legislative Session Convenes Tuesday, January 13, 2009 Vol. 27, No. 5

December 2008


News & Notes Advocating School Finance Equity and Adequacy in Texas

Eliminating the Target Revenue l u f Hold-Harmless School districts that were funded at lower levels under the pre-HB 1 system are being hurt by the Target Revenue Hold-Harmless scheme, which is holding them hostage to funding levels so low that children in these districts are harmed, not held “harmless.” The purpose of the Target Revenue Hold-Harmless was to ensure that districts with the highest funding levels under pre-HB 1 law continued to be funded at those levels even when the more equitable HB 1 formula system was put into operation. In order to do this, Target Revenue HoldHarmless, by definition, inherited all of the inequities in the pre-HB 1 system. Intended to be a temporary, transitional safeguard for only the highest funded districts, the Target Revenue Hold-Harmless scheme is now being used to determine the funding level for every district in Texas—to the detriment of most. So, why is this happening? Why are these disadvantaged school districts not being funded through the more efficient HB 1 formula system? The answers to these questions follow. Derailing the HB 1 Formula System: 2007-08 School Year The compressed tax rate (CTR) in the 2006-07 school year was $1.33. At that CTR, the system provided about $4,250 per weighted student. In the next school year (2007-08), the 88th percentile of wealth produced a guaranteed yield of $36.45 per penny of tax rate, which would have provided about $4,8481 per student at the $1.33 rate. But, the $1.33 tax rate was further compressed to $1.00 during the 2007-08 school year. Because the $36.45 guaranteed yield per penny was kept for a smaller number of pennies – resulting in a funding level of $600 per weighted student below the pre-HB 1 amount – every district was forced into the inequitable Target Revenue scheme. Maintaining the $4,848 funding level with a compressed tax rate of only 100 pennies required a guaranteed yield of $48.48 per penny of tax rate – which happened to be the 95th percentile of wealth that year. Getting back on track: 2009-10 school year This coming spring, Legislators can act to eliminate the inequitable Target Revenue scheme as a statewide funding system simply by raising the three basic funding elements (the basic allotment, the guaranteed level and the equalized wealth level) to a realistic level. (continued on page 2)

MARK YOUR CALENDAR SUNDAY, JANUARY 25, 2009 9th Annual School Finance and Legislative Workshop Austin Convention Center

ul f Eliminating the Target Revenue Hold-Harmless (continued from FRONT)

The Austin ISD yield next year will be in the $53 range, per penny of tax effort. By tying the three basic funding elements to the Austin ISD yield, a $1.00 tax rate would provide about $5,300 per weighted student—raising low-funded districts to about the state average. By setting the three basic funding elements to the Austin ISD level, the Legislature would achieve eight significant improvements to the school finance system: 1) Increase the level of equity; 2) Help keep M&O property tax rates low; 3) Re-establish a cost-based formula system as the primary driver of funding for most school districts; 4) Cut by half the number of districts that receive funding through the Target Revenue method from 1,025 to about 500; 5) Reduce the amount of funding distributed through the Target Revenue scheme from $6 billion to less than $1 billion; 6) Cut in half calculated recapture payments (Robin Hood) from about $1.4 billion to less than $700 million; 7) Reduce the number of districts with calculated recapture from 190 to fewer than 150; and 8) Simplify the school finance system. 1

$36.45 X 133 pennies = $4,847.85

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State & Local Taxation Attorneys Ray Bonilla (512) 328-8877

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Bond Attorneys - W. Jeffrey Kuhn - (210) 270-7131 Equity Center News & Notes


Region 2

Region 3

Region 4

Region 5

Oscar Rodriguez

Paul Clore

Mark Pool

Leland Willams

Mike McGowan

Mission CISD

Gregory-Portland ISD

El Campo ISD

Dickinson ISD

Silsbee ISD

Region 6

Region 7

Region 8

Region 9

Region 10

Walter Pond

Stan Surratt

Gary VanDeaver

Terry Allen

Kyle Collier

Rockdale ISD

Lindale ISD

New Boston ISD

Quanah ISD

Pottsboro ISD

Region 11

Region 12

Region 13

Region 14

Region 15

Melody Johnson

Keith Boles

Kirk London

Brad Lewis

Russ Perry

Fort Worth ISD

Connally ISD


Stamford ISD

Nueces Canyon ISD

Region 16

Region 17

Region 18

Region 19

Region 20

John Wilson

Jimmy Parker

Hector Mendez

Michael Quatrini

Richard Middleton

Childress ISD

Tahoka ISD

Ector County ISD

San Elizario ISD

North East ISD

December 2008

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Equity Center News & Notes

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Equity Center News & Notes

Data Suggests Target Revenue Level is Tied to TAKS Success Dr. John Hardwick is serving in his 11th year as a superintendent. His educational experience spans over 34 years which includes the application of research skills in both science and education. He began in the late 1980’s to present the importance of measurement and use of data at both the regional and state level to increase learner performance.

Dr. John Hardwick, Jr. Superintendent, Beeville ISD

I often share with our community and board that I do not feel that the main value I can bring to our learning community is in the area of school finance. My strengths lie more with building consensus for change and a depth of understanding for how students learn in a quality learning environment supported by an excellent curriculum and instructional strategies. I sense that many of my Superintendent colleagues face similar frustrations.

However, many of us find ourselves “circling the school finance drain” and our attention to school finance consumes our time, much to the detriment of our learners who deserve safe and productive learning environments. The state of Texas is in the bottom 20% of states in the U.S. in funding per student (U.S. Census Bureaus Statistics). Simultaneously our district is in the lower 10% of “target revenues.” We have a state constitution that requires equitable educational opportunity for all children. Consequently, it would seem to follow that if our constitution requires an efficient and equitable use of state resources for public education, then we should look at the results of dollars allocated per student and how learner performance is subsequently influenced. Currently, it appears we choose to ignore the learner performance information available to us. In response to this dilemma, I examined the state target revenue data from two perspectives. First, I took the highest “target revenue” districts and compared their accountability ratings with those of the lowest “target revenue” districts. The district accountability ratings of “Exemplary”, “Recognized”, “Academically Acceptable” and “Academically Unacceptable” were assigned ordinal values of 4, 3, 2, and 1, respectively. Next, a t-test for paired sample means was used to compare the highest 100 “target revenue” district accountability ratings with the lowest 100. The null hypothesis was of no difference at an alpha level of .05. Accordingly the highest “target revenue” districts have district accountability ratings (continued on page 7) TABLE 1

Average Target Revenue of Recognized & Exemplary Districts (per WADA)

Average Target Revenue of Academically Acceptable Districts (per WADA)

Funding Disadvantage to Students in Academically Acceptable Districts (per WADA)

$ 5,239

$ 5,036

$ 203

December 2008

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Equity Center News & Notes

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December 2008

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Equity Center News & Notes

Board Selects Dr. Ray Freeman as Deputy Executive Director The Equity Center welcomes Dr. E. Ray Freeman as Deputy Executive Director. Dr. Freeman brings a wealth of educational and legislative experience to the organization with a Doctorate degree in Education from Texas Tech University. Ray has served over twenty years as a Superintendent and/or Chief Financial Officer in Texas public schools. He was involved in the equity fights for good legislation throughout Edgewood I, II, II, and IV. During this time, he had the pleasure of working with legislators such as Ernestine Glossbrinner, Libby Linebarger, Paul Sadler, Bill Ratliff, and many others that cared deeply about and fought for equity. He has served as Chairman of the Alvarado Plaintiffs since 2003. While in that capacity, he was involved in all aspects of the court case from the District Court to the Supreme Court. Throughout the 1990’s and 2000’s, Ray testified before many legislative committees, including House and Senate Education committees and special interim committees during regular and special sessions. Presently, he has fostered working relationships with many members of both the House and Senate. He is also well respected with individuals and organizations in the education community. His extensive knowledge of Texas school finance and school law has allowed him the ability to uniquely analyze and interpret complex legislation. This expertise will greatly serve Equity Center members well during the upcoming legislative session in January. We are extremely pleased to have him on the Equity Center team.

Data Suggests Target Revenue Level is Tied to TAKS Success (continued from page 5)

significantly higher (α= .05) than those of the lowest “target revenue” districts. The second method involved inference testing the mean target revenue for districts scoring “Recognized” or “Exemplary” on their state accountability rating with the mean target revenue for districts scoring “Academically Acceptable” on theirs. TABLE 1 on page 5 reflects the results. The districts with state accountability rating of “Recognized” or higher have a significantly higher target revenue (α=.05) than districts with a state accountability rating of “Academically Acceptable.” Obviously, the logic of using “best practices” should lead us to the conclusion that all districts should be funded at the same level as the average “Recognized” or “Exemplary” district. We are continuously measured to make sure we are applying procedures and strategies that are scientifically researched based. Consequently, we need our legislature to use similar procedures in developing an adequate school finance solution. Our children need to be freed from the biases inherent in a system that is driven more by politics than carefully thought out solutions driven by the accessible data. December 2008

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Equity Center News & Notes

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Ray, Wood & Bonilla Specializes in All Aspects of School Finance Since 1977, the law firm of Ray, Wood & Bonilla has represented school districts in a wide range of legal matters. The firm has consistently achieved favorable results for their clients, and they pride Attorney themselves on providing personalized, high quality legal services. Their areas of practice cover an array of legal issues, with a Buck Wood focus on school finance, state and local taxation, debt collections, ethics and election law, public and administrative law and a wide range of civil litigation matters, including appellate representation. Since 1989, managing partner Randall Buck Wood has been pleased to serve as general counsel to the Equity Center, an association of over 600 school districts dedicated to equity and adequacy in the funding of Texas public schools. Mr. Wood and partner Doug Ray also served as counsel to the Alvarado Plaintiff school districts in the Edgewood and West Orange-Cove school finance litigation. The success of these cases has significantly enhanced the equity of the state’s school finance system over the past twenty years. The firm is proud to have played a constructive role in both the legal and subsequent legislative efforts toward that end. The Texas Association of School Boards has also called upon the firm for guidance as special counsel. Mr. Wood is recognized as one of the leading experts in the state in the area of elections, ethics December 2008

and open government. Ray Bonilla previously served as General Counsel at the Comptroller’s Office and since joining the firm in 1998 has successfully represented numerous school districts in administrative appeals of the State Property Value Study and related cases. The firm’s track record in this critical field of practice is the product of an unparalleled combination of legal, professional and technical expertise in the areas of property tax, administrative law, statistical analysis and school finance. Also encompassed by their complete package of Property Value Study services is their Local Tax Roll Quality Assurance Program. Specifically, this program — also known as taxable value audits under Section 403.302 (h) of the Government Code — is designed to focus on those areas of a district’s local tax roll where appropriate changes in a district’s “selfAttorney reporting” methodology can result in a favorable adjustment to its state assigned property Ray Bonilla values. Even if a district is assigned “local values” by the Comptroller’s Property Tax Division, their quality assurance process frequently identifies additional adjustments that will further reduce the property values used by the Texas Education Agency in its state aid calculations, thereby generating Page 8

additional state funds for school districts. Ray, Wood & Bonilla also collects delinquent ad valorem property taxes for many different taxing jurisdictions, including numerous school districts, towns, and counties. Most of their clients are small to QA Manager medium in size and their efforts focus on personalized service for their clients and their taxpayers. They have Risa Glenn three offices in the state staffed with experienced attorneys and legal assistants who diligently strive to maximize collections for their clients. They offer that service at no cost to their clients since Texas law creates a penalty for delinquent taxpayers to cover associated collection costs.

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The lawyers and staff at Ray, Wood & Bonilla are here to serve school districts. Please feel free to contact them to discuss your district’s financial matters. (800) 285-4789

Equity Center News & Notes