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The School Funding Crisis Facing Rural Schools

A key program that has funded struggling school districts expires this year, and school superintendents are bracing for the fallout.

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Photo by Sean Gallup/Getty Images

In a patchwork of pasturelands and Piney Woods, right at the heart of Panola County, is Carthage. It has everything you would expect from a small East Texas town: a handful of Mexican food restaurants, a town square decked with wreaths during the holidays, and—perhaps most importantly—a community anticipating September’s promise of Friday night lights.

This oil and gas town revolves around its kids. I should know; I flipped the tassel of my graduation cap in the middle of the high school football field just a couple of years ago. But since the end of May, the quiet community has been reeling over an almost $5 million funding loss for its school district. That’s roughly a quarter of the district’s total budget. “We can survive for three years,” Kathy Worley, the district’s business manager, said in an email.

Carthage is one of nearly 200 school districts across Texas facing steep funding losses. For the past ten years, a number of school districts have relied on the state for Additional State Aid for Tax Reduction, a program the legislature intended as temporary relief when it voted to compress property taxes—the source of local funding for school districts—by one-third as a tax relief measure. Six years ago, when the state was facing a budget crunch, legislators set ASATR’s final expiration date for September 2017.

The first year, 1,217 school districts received ASATR funding at a price tag of $2.2 billion. The second year, the cost was up to $5.7 billion. Since then, fewer districts have remained dependent on ASATR as superintendents and school boards adjusted budgets and property values increased. Only 192 school districts received ASATR last school year. In other words, the temporary funding program was working as legislators intended—for some. But rural school districts like Carthage still don’t have revenue sources to make up for the shortfall they now face without ASATR.

Members of the House and Senate, including Representative Dan Huberty and Senator Lois Kolkhorst, introduced a few bills during the regular session proposing to extend ASATR or provide an equivalent form of financial relief. Superintendents from across the state, including Carthage’s Glenn Hambrick, traveled to Austin to give testimony in support of those bills. None of them passed.

Although Governor Greg Abbott has already signed off on the 2018-2019 state budget, some superintendents are hanging onto a hope that ASATR might still be extended during the legislature’s thirty-day special session, which began on July 18. ASATR was not specifically listed on Abbott’s twenty-item agenda, but the Senate passed a bill on Monday that, though primarily designed to create a private school choice program, also includes a stipulation to fund a $150 million hardship grant for small rural schools, like many of those dependent on ASATR. Additionally, the House Committee on Public Education held a hearing on Tuesday for a couple of bills specifically written to extend ASATR funding.

And the House is set to hear two bills on Friday that could offer some relief: House Bill 21 includes a section providing a $200 million hardship grant for small rural schools, and House Bill 22 proposes to extend ASATR through September 2019.

Representative Chris Paddie represents a cluster of East Texas counties, including Panola. As a Carthage High School graduate, he understands the gravity of the school finance situation. He joint-authored and supported a couple of the House bills relating to ASATR during the regular session, and hopes that formulas within the already set state budget to leave some wiggle room for ASATR relief. John Buxie, Paddie’s chief-of-staff, says immediate relief would “definitely be our intention.” But at the very least, he says, ASATR should be added to the list of items the school finance reform commission will look at over the next two years when considering how to revamp public school funding.

So for now, it’s a question of whether financial relief for the school districts will be put into practice or merely studied.

Even without ASATR, Carthage might fare the best of Panola County’s three public school districts. The other two—Gary and Beckville—could be in worse shape. Todd Greer is the superintendent of Gary, a school district just fifteen miles or so from Carthage, depending which Farm-to-Market road you take. ASATR accounted for $1.3 million of Gary’s $5 million budget last school year. Greer says that Gary, a school district with less than 500 students enrolled in kindergarten through twelfth grade, would be essentially bankrupt in two years without the program. Still, he remains hopeful that legislators will extend ASATR funding during the special session. “It has such a simple fix, to such a huge, catastrophic problem,” Greer said. “I can’t fathom people in the state of Texas not fixing that problem.”

Gary’s student population has been increasing, and without state funding, expanding school services would be difficult. “We’re at a point of needing to add personnel and add classrooms, and we’re supposed to cut 20 percent?” Greer said. “It just doesn’t work.”

Beckville, a school district slightly larger than Greer’s, is in a similar boat. It received $1.9 million in ASATR funding for the 2016-2017 school year. So without ASATR, where does that leave Panola County’s schoolchildren in three years? “I don’t know what happens after that,” Greer said, hesitancy creeping into his normally upbeat tone. “They just don’t have enough money to sustain.”

In other parts of the state, ASATR cuts become even more complicated. Some school districts are considered “property wealthy,” meaning the districts are required to participate in a recapture system sometimes referred to as “Robin Hood,” in which they must send a portion of their local income to the state. That revenue is then redistributed to school districts considered “property poor.”

For the ASATR-dependent districts that fall into the property wealthy category, it creates a bit of an ironic situation. Last school year, after shelling out nearly $7 million in recapture, Kelton ISD, in the Panhandle, received less than $1 million from ASATR—a figure Superintendent Doug Rice says amounts to about 45 percent of the school’s budget. Rice said that higher oil and gas prices two years ago bumped up the area’s property values, which have since fallen.

“When you’re a district that sends so much money back in recapture, a simple solution for districts like mine would be, ‘How about we just don’t send that much money back in recapture?’” Rice said. “We’re still going to send back plenty of money.” His district’s budget is “going to hurt” without ASATR, but he hopes to prevent laying off teaching staff. To save the district from paying another administrator’s salary, Rice is taking on the role of principal at Kelton’s K-12 school, in addition to his superintendent duties.

In most Texas school districts, over 80 percent of the budget goes to salaries, meaning large budget cuts will almost certainly lead to fewer personnel positions. Further complicating the situation, Abbott added discussion of a $1,000 pay raise per teacher to his special session agenda. Without this proposed pay raise being accounted for in the already set state budget, many superintendents are assuming that these raises could become an unfunded mandate. Rice thinks he would be able to swing the raises, even without ASATR funding. But he said when compared with rising insurance premiums, the raise is “still not going to help” support teachers.

Of the superintendents I spoke with, all of them agreed that cutting teachers would be their last resort. Several referred to the Texas Constitution, which holds the state responsible for making “suitable provision for the support and maintenance of an efficient system of public free schools.” Because, as many pointed out, children’s educations are at stake. “Our kids need to be educated,” Rice said, speaking not only about his own district in Kelton, but for school districts across Texas. “[The legislators] are breaking their promise to the schoolchildren of Texas.”

Critics in the legislature, meanwhile, argue that schools were aware of ASATR’s 2017 expiration date six years in advance and should have planned accordingly. Lieutenant Governor Dan Patrick said as much in a letter to the Austin American-Statesman on June 7:

ASATR has long been slated to expire this year and the state budget, which was approved by a vote of 135 to 14 in the Texas House and 30 to 1 in the Texas Senate, did not include additional funds for it. School districts have known for six years that ASATR would expire in 2017.

Don Rogers, executive director of the Texas Rural Education Association, acknowledged that some school districts with room to increase their property taxes to the maximum level allowed by the state could have planned better. “There may have been some folks that should have taken care of this along the way that didn’t,” Rogers said. “But the children are going to be the ones that suffer if they have to make these drastic cuts all at once.”

But in the case of school districts already collecting property taxes at the maximum level, or for districts like Kelton, where property values fluctuate with the value of oil and gas, superintendents argue that there was no way to better prepare. Dennis McEntire of Presidio is already taking a red pen to his budget, planning to cut travel stipends and sports teams. “I’m not going to cut teachers and what goes into the classrooms. I’ll get down to the bare bones of everywhere else before I do that,” McEntire said. “We are used to making do with barbed wire and duct tape, and we will continue doing it.”

Presidio is one of the poorest property districts in the state, and McEntire has lost faith that legislators will address ASATR during the special session. “I was hopeful that they would do something just to mitigate [the loss of ASATR] during the legislative session, but they got so caught up in one-upmanship that they totally forgot what they were there for,” McEntire said.

According to McEntire, the people in Presidio pay a price for living where they want to live. He laughed as he told me that no one lives in the tiny border town to climb the career stepladder—they live there “because you love the country and you love the people.”

But cutting $1.2 million from the school district’s budget makes the price of living in Presidio a little steeper.

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  • WUSRPH

    Texas has spent over $22 billion on a temporary, hold-harmless program that was supposed to end years ago that provided these districts with more funds than they would have earned under the school funding formulas. There has to come a time when it ends. Just “one more” time is not a solution. One solution that no one wants to talk about is that a district like Carthage and its two neighbors in a small county is a perfect candidate for consolidation into one district. The economic reality is that a single district could provide just as good, if not a better education, for what the three now spend. The idea that every little town can have its own inefficient and more costly school district has to be reconsidered.

    • Jed

      did you catch the part where at least one of these districts is paying into robin hood?

      crazy.

      fund state education at the state level.

      • WUSRPH

        Two problems with that: It removes the last power of the locals to have any say in what their money is spent on….giving that decision to the Dannie Scott Goeb’s….and, secondly, being Texas it would be financed by a dramatically increased and much more regressive sales tax.
        Of course, if Dannie boy had his way he’s close down all the public schools and give each student a voucher for a private school. Of course, it wouldn’t be enough to finance a decent education for those whose parents could not supplement it, but who cares about them anyway.

        • Sodbuster

          Based on your response I would assume you are either a voucher fan or reside in a large school district or private school alumni. I need too apologize for two wrongs in my previous post. First I attacked you on a personal level with the “blah,blah,blah” comment. Im am sorry! Secondly my grammar and sentence structure. I am sorry! I am responding on my cell phone and my plausible thumbs are to large for the keyboard. This is subject is very close to my heart. I feel like I need to give you some background before I explain myself further. I was born and raised in small farming community in the panhandle. I was surrounded my strong men and women that held you accountable for your actions where you were, whoever you were with or what you were doing. If you did something wrong and your parents did not see…. no problem the other parents would correct you and stand beside you as you told your parents what you had done. When I say correct I mean “whip your butt”! Then your parents got their turn. Everybody was good with that! No problems from anyone. My example is poor excuse to show how tight knit small rural communities are. I chose to run for school board for two reasons. Firstly so I could have more knowledge of the people my children were around most their young adult life. Secondly to see how my tax dollars were being spent at the school. Our little school is the heart and soul of the town. If the school dies so does the town, period end of discussion. So when I read about someones elaborate plan to simply close a campus somewhere and all will be fine my hackles flair up. I will have you know we have been part of of four consolidations. The dream of keeping all the consolidated campuses open is so veery hard. Simple logistics most of the time keeps this from happening. In response to higher level administration you will lose some higher administration: superintendents, business administrators, percentage of coaches depending on what you will now be classed and some CTE teachers. Regular ole’teachers…. not really. Parents don’t like to see more than 15-18 kids per classroom per teacher. They are afraid that their child’s instruction will suffer if the ratio is much higher, this does depend on the individual teacher though. Now with all this being said our little rural podunk school has graduated five Fortune 500 CEO’s. This year every graduating student went on to seek higher education. We are higher than the state average and federal average in every single grade percentile. One thing we did fail at was on the AF ratings category of “student growth”. Our student growth was rated at 97% from the previous year, the following year we received a failing grade from the state because our rate was………96.6%!! Shame on us. Other schools were at 51% and jumped to ….. 53%! Thank God someone is doing their job!! They received a “A”on student growth. So tell me again why us losing 41% of our budget increases the education our children will receive? We are largely dependent on oil and gas revenue. Our values went from 1.4 BILLION to 256 MILLION in four years. Now everyone says you should have saved money when times were good. It does not work that way. If the state sees you making money they simply increase your recapture payment to them. What a good deal! We are penalized for being frugal with our money. Spend it or we will take it is their motto! If we never had to pay recapture to all the other districts around the state we would have net cash available of around 225 MILLION! But we don’t! Remember large urban and poor rural districts standing their with their hand out. Now then we didn’t care!!!! The state is going to educate children with our money.. Good deal right? Now we stand here with 2% of that in fund balance. Well we are just spending too much money to run our school. We started preparing for this 3 years ago fearing that this would happen. The old “pat you on the head and stab you in the back while crying on your shoulder”. One thing I need you to riddle me is this. If everyone else knows how to run a school district and how much money it takes why don’t they ever help us. Come out to out little turd on the hill and show what we are doing wrong. If the people voting on this actually know what is wrong out here come on out and tell us! Budgets are submitted every year and are public knowledge! At least come show where we are missing the boat! They never will! Nothing but crickets! They don’t want small rural school! They want large county schools so they can keep a tighter fist on the money! I am tired of typing! I feel like throwing up. I will answer the rest of your comments later. Please reply with any questions and I will try to answer in a timely matter. I have mentoring meeting to go! Thanks

          • WUSRPH

            I was certainly not offended by your comments….I recognize how vital this is to you and how you must feel that the world is falling on you and your community for reasons beyond your control and how angering and frustrating that can be……

    • Sodbuster

      You are exactly right. Let’s close two schools that already have the teachers and facilities to accommodate those kids, just to build on to the consolidated school? The money is still the same, the losses are still the same. Of course I am sure you have come up a way to fund all the new construction to accommodate kids being all on one campus. Hold on I am reading your statement….nope don’t see it…..let me try again….blah blah blah…. nope not there. Can you please use plain common sense in your suggestions. If you remember ASATR was a promise made by the state to keep funding at the same level to districts who lost money because of cutting the taxing rate! Since the tax rate has not been readjusted to the previous level why is lost?

      • WUSRPH

        Actually, when they consolidated for the good of the younger student they would probably keep an existing elementary campus in each of the towns and consolidate only at the upper level, most likely using in this case the Carthage campus. That would be the sensible way to do it…There would be some immediate savings from no longer running two extra full higher level programs…which are the most expensive. Plus the cutbacks in the now triplicated administration. But the real savings would be over the long run. Also, since one of these three is a Robin Hood district, consolidation would probably lower the combined wealth per ADA (WADA) enough to stop the need for the Robin Hood payments to the state. This would immediately make more money available locally.

        ASTAR was a promise that…for a limited period of time….NOT FOREVER…..It has already cost the state $22 billion to continue to fund districts at levels higher than the state average and higher than districts that make substantially more local tax effort. They have had 11 years to adjust. Time is up.

  • Charlie Primero

    Eliminating football programs would save far more than $150 million in coach salaries, charter bus rentals, and stadium maintenance.

    As an added benefit, fewer boys would graduate illiterate.

    • eric

      You may think you’re being cheeky and smart, but you just come off as a snotty d bag. Sports will always be involved in K-12 schools. Doesn’t matter if it’s Texas, Maine, Oregon, or Alaska. Extra curricular activities like sports bother you? Sorry you didn’t make the team, Charlie. Better go out for one act play next time.

      • pwt7925

        You’re calling him snotty? Sorry YOU didn’t get cast in the play. If the schools haven’t already cut that particular extracurricular activity already.

        • eric

          lol

          • WUSRPH

            The fact is that the TOTAL SPENDING on extracurricular activities in ALL of Texas public schools represented less than 3% of the total expenditures. But then the Troll lives on myths, not fact.

          • SpiritofPearl

            And Twinkies . . .

          • WUSRPH

            The best way to handle the Troll is to just ignore him. Virtually every regular on BB has blocked him out so all that we seen when he posts something is “This user is blocked”.

      • Charlie Primero

        I love playing and coaching sports, especially Judo which kids can do for free via charitable donations.

        https://www.usja.net

  • WUSRPH

    The House defeated the bill to bail out hold-harmless districts……This does not mean that 10 districts will close in September…but it does put more pressure on the Senate and the governor to do something serious about school finance.

  • SeeItMyWay

    Sutton, you know the first thing that jumped out at me in your piece? It was the statement about Carthage being “an oil and gas” community.

    If we had not been giving these oil and gas folks tax breaks for umpteen years now, how much money might Carthage have in the kitty?

    I disagree with my state senator’s seemingly wanting Texas to do away with tax incentives to big corporations to settle here, while most other states are offering them. Want to end the practice then do it in D.C. and level the playing field.

    Oil and gas is different…”If you have it, they will come.” They don’t need tax breaks, but they have had enough stroke, in the form of Austin “throw around money” to virtually get everything they want from our legislators going back decades.

    Do they need tax breaks more than the average Joe needs a tax break? Why?

    The only problem with windfall money is a proclivity by local school boards and governments to spend it on fluff…to build a Taj Mahal instead of just a soundly built high school.

    Our legislature continues to carry on a legacy…protecting the profits of the Big’s while asking us to come up with more. If you study the conflicts going on in Austin this minute, there is no one on either side asking why oil and gas still need to continue to receive tax breaks.

    As the plunge in oil prices showed us a few years back, Texas can survive without crazy speculative spending by the “drill, Baby, drill” crowd, and they’re going under once again, like they do every two decades or so. Some never learn. The Texas voter doesn’t either.

    Let’s tax Big Oil and Gas like we do most everyone else. Seems to me like the right thing to do, but I am no legislator, and no Big has ever dangled a big carrot in front of my face.

    • WUSRPH

      You put me in a tough position….I half agree with you….but I half disagree. Most of the tax breaks enjoyed by oil and gas producers—-lower taxes for so-called “high cost” oil and gas production—were authored by one Tom Craddick, later the first GOP Texas Speaker of the House and father of the current RR Commission chair…..At the time when production was declining, they were justified as being very similar to the very kind of incentives for business to locate here that you are defending—i.e.—they would encourage producers to continue to seek out and produce oil and gas with “tertiary” and other advanced methods that were more expensive than the older punch a hole and pump methods that had worked in the past. This was seen as important to both the state’s revenues (some are better than none) and to help move America toward energy self-sufficiency. This was BEFORE the less expensive fracking techniques were widely used. As such, they may have served a useful purpose AT THE TIME,…but they are probably no longer needed. Of course, that’s just about what your state senator says about the incentives we give companies to come to Texas.

      • SeeItMyWay

        Damn….we are so close to agreeing on something.

        Your take on “then, and now” with regards to oil and gas is right on the mark; your wanting to compare Sen Burton’s position on incentives to the Apple’s, Facebook’s, Google’s and the like is not.

        Oil and gas is organic; we have what they want underneath us. Most states do not. If they want at it, come and get it, but don’t expect tax breaks.

        Today’s most sought after start-ups or major corporate expansions are intellectually driven. We have nothing over the Florida’s, South Carolina’s, Arizona’s or others from attracting them here if the are offering tax breaks and we are not.

        Seems pretty clear to me.

        I hate subsidies and tax abatements…just like Konni Burton does. She just doesn’t seem to understand where all these new additions to the TX economy would be going without them, or what her own Tarrant County would look like today without them having been offered.

  • WUSRPH

    PS….BY the way, there is about $200 million in HB 21 to help about 200 of hold harmless these districts so they aren’t being cut off from all the extra state money that others don’t get.

    Speaking of “hold harmless” clauses…another provision of HB 21 FINALLY ends one that goes back to 1993….which, like this one, was supposed to be “temporary” to give districts time to adjust to a change in the school finance system. I guess someone thought that 24 years was enough time for them to adjust.

  • Sodbuster

    Sir, If you are talking about the hardship grant program. Look closely at who would actually qualify for this grants. The federal government has more than 1.5 Billion in grant money available. So far from what I can tell the only thing who qualify would be a “one eyed purple unicorn carrying a nine foot tall leprechaun who has been struck by lighting twice while swimming in the northern part of Death Valley”.

    • SeeItMyWay

      I don’t think he is talking about that, Sodbuster.

      • Sodbuster

        OK. Sorry.. What was he taking about then?

        • Sodbuster

          TALKING! D.A.C.!

          • SeeItMyWay

            DAC?

          • Sodbuster

            Damn Auto Correct 🙂

          • WUSRPH

            I am talking about a new 2-year program in HB 21, the proposed school finance bill, that will provide up to $200 million (total) in hardship transition grants to 200 districts, probably including yours, to give them even more time to adjust to the new situation. Have you superintendent take a look at it in the bill or ask your state rep. It probably won’t cover all you will loose from ASTAR going away…but it will help lessen the blow while you wait for oil and gas values to go back up and/or increase your local tax rate or both.

          • SeeItMyWay

            Another bandaid, that will peel off with the wound not healed. Can you say, once again, “Kick the can?”

          • WUSRPH

            When the blood is running, a band aid can be better than nothing.

            I think I have called what Abbott is proposing “kicking the can” at least a half dozen times so far. Even what the House is proposing is only a first step (and not that big of one) but at least it is trying….A REAL commission charged with developing a REAL solution might be worth having……if only to put its stamp of approval on what many people know needs to be done…The problem, of course, is that neither Patrick or Abbott (I presume you voted for both, by the way) are interested in that kind of a commission…….They want to talk myths about “wrong priorities” and “wasteful spending” and push vouchers and the downgrading of public education….and their appointees to any commission will reflect that…….For all his flaws….I really wish that we had another Ross Perot…..
            .
            As I’ve said before, Bullock used to say that Texas would get serious about really addressing the state’s problems—and particularly its fiscal ones—only when the schools were closed, the prison doors were wide open and the roads were full of holes. The sad fact is that he was probably too optimistic.

          • SeeItMyWay

            Bullock is dead; he could not get away with what he did back then…and…as I said before, he will go down in history as one of the greatest, and also one of the most flawed.

            Krause is a greenhorn; he aligned himself when running for office with the ones pushing for radical change. I had several lunches with him. I saw potential, and also shared my reservations about his alignment with the radicals.

            He has shown some independence this special session, and it is based on long running conversations he has with constituents on social media. He listens; he responds; he cogitates; he changes.

            As I once told him…you communicate and take a reading on what the voters in Dist 93 want, you will never have to take money from, or listen to Empower Texans or any outside special interests again. You will be voted back into office.

            How many understand this? I think he now does.

      • SeeItMyWay

        They have already decided in Austin that we are not going to take Fed money, in a one time lump sum, and then be obligated to fund what they dictate after this money is gone. The Feds will send no more.

        • Sodbuster

          Make NO mistake! I did not want any Fed money. I agree totally with no Fed involvement! Just stating most grant programs are extremely hard to qualify for. Thats the easy way for governing bodies to stand behind a microphone and tell everyone about how much money is available through grant programs. You can offer the anything if no one can qualify, or what they do qualify for is so minuscule it is insignificant.

  • WUSRPH

    After the seminars on property tax and school finance I have offered you I rate you as being at least a sophomore….so I don’t explain everything…but maybe you were asleep in class?

    • SeeItMyWay

      I appreciate where you are coming from…a sophomore shows up in your class and is educated enough to ask questions which shows that he disagrees with you. Wow be to the dumbass who does that.

      You have a storehouse of info on how it was; much carries over to how it is now. Much of what you did back then was stinky. You can’t make yourself say so. You know it; I know it. Your boss told you to broadcast stink, and you did it. Right or wrong? It was politically expedient…would get you where you wanted to be…and you turned out whatever story you thought the dumplings wanted to hear. Right or wrong?

      Did you quit because you knew the message being conveyed was bogus? Nope, you just kept on keeping on.

      One of these days, maybe you will share some of the times you were conflicted and just caved. That is what a good professor would do.

      • WUSRPH

        Actually, I was fairly successful in avoiding the really “stinky” stuff, as you call it…..Part of that was that I was fortunate to have bosses that didn’t do much of that…..although Bullock did a few things I raised an eyebrow about—one of which contributed to my first “firing” by Bullock……I think that when there was one that I might question—-such as a special tax treatment primarily for the Bass brothers—I was kept “out of the loop”….but there were a lot fewer of those kinds of things than you think……There never has been as much “stink” as you try to suggest….but then you think all of them (and all who work around and with them) are lairs, crooks and thieves who have been bought don’t you? Have you given up on Krause? After all, he voted for the blue tarp bill……which you hate so much….and spent a good deal of his time pushing “sincerely held religious belief” exemptions.

        As to the uppity sophomore….I’m all for him…IF he can make a logical, factual case for his argument…..hiding behind myths and “everybody knows” won’t fly, however.

  • WUSRPH

    Because a historian gives a lecture about slavery does not mean he approved of it….You have never been able to understand the difference between “explaining” and “defending” and probably never will. It makes you feel so superior.

    • SeeItMyWay

      Back at ya. Admit it. You have animosity towards me. Even when I am on your side of an issue, you come up with a “yeah, but” on what I post. Get over it. I Iove you historical knowledge; I dislike your pedantry and proclivity for holding a grudge.

      • WUSRPH

        Your comedic talents grow by the day.

  • BCinBCS

    “It has such a simple fix, to such a huge, catastrophic problem,” Greer said. “I can’t fathom people in the state of Texas not fixing that problem.”

    I have very little sympathy. These are the same people who elected radical fiscal conservatives to the legislature and governor’s office. The “simple fix” would have been to elect politicians that had their constituents best interests at heart. They are now reaping what they sowed.

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