Ratliff offers plan to restructure Texas public school finance

Lieutenant Governor Bill Ratliff last week offered a four-part plan to restructure the public school finance system in Texas.

Ratliff’s plan would replace the current method of state funding, which requires school districts to share local property tax revenue to meet a constitutionally-mandated standard of equity that has been upheld by Texas courts.

Ratliff’s plan calls for a voter-approved constitutional amendment to abolish local school property taxes and establish a statewide property tax to pay for Texas’ public schools Revenue raised by the new system would be combined with the state’s existing school funding resources to form a new foundation for public school finance.

Ratliff’s four-part plan includes:
Basic state funding distributed equally to all school districts based on student attendance.

•Limited local option property taxes for school districts that want to enrich their basic program; including a state-backed guarantee to support the efforts of poorer school districts to raise extra revenue.

•Limited state-funded support for all debt service on school facilities.

•A supplemental statewide property tax to fully fund the teachers’ health insurance plan at the level available to state employees.
Voter-approved constitutional amendment to:

•Abolish the current local school district authority to levy a property tax for the maintenance and operation of public schools leaving the current authority for debt service in place.

•Authorize the Legislature to levy a statewide property tax for the sole purpose of funding public schools in Texas.

•Grant the Legislature the statutory authority to allow school districts to levy a local property tax for educational enrichment, not to exceed $0.10 per $100 valuation.

Enact new school funding methodology by statute with the following features:
Statewide Property Tax: Levy a statewide property tax of $1.40 per $100 valuation to combine with the general revenue appropriation to form the foundation school program funding.

•Tier On – Basic Allotment: Distribute the equivalent of $30 per penny of the $1.40 levied per weighted student to school districts to cover their base maintenance and operations budgets. When transportation and other adjustments are made, this would allow the distribution of about $4,275 per weighted ADA ($6,085 per student) which is, on average, about $115 more per weighted ADA for maintenance and operations than is currently available to poorer school districts.

•Tier Two – Local Enrichment: Allow school districts through a local option election to levy a local enrichment property tax up to $0.10 per $100 valuation. School districts with tax bases less than $300,000 per weighted ADA will receive a state guaranteed yield of $30 per weighted ADA per penny of tax rate.

•Tier Three – Debt Service Allotment: The state will guarantee a yield of $35 per penny of tax rate per ADA for all debt service on educational facilities, up to 30 cents.

•Teacher Health Plan: The Legislature should consider levying an additional statewide property tax on top of the $1.40 in Tier One to fully fund a state paid teachers’ health insurance plan equivalent to the plan available to state employees.

Ratliff offered the plan to the Joint Select Committee on Public School Finance that was created by legislative leaders last year to address the issue of school funding. The committee, which includes public members and lawmakers from both the Senate and the House, has held public hearings to gather testimony and ideas for replacing the current system of funding Texas’ public schools.

The committee will issue a final report in November for consideration by the Legislature in the next regular session in 2003.