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.
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.”