Podcast Transcript: How Much Is Your Student Worth to Texas? Learn How the Basic Allotment Impacts School Districts.

Morgan Smith: You’re listening to the Raise Your Hand Texas IntersectEd podcast where the stories of public education policy and practice meet. I’m your host, Morgan Smith. And today we’re talking about the amount of money Texas pays to educate a student in public schools. 

This topic is notoriously complicated and can be very dense, but I’ve tracked down some very knowledgeable people to help guide us through it. We have three guests with us today, Laura Yeager, a public school parent and founder of Just Fund It TX, a nonpartisan group of parents, students, and community members, Bob Popinski, Raise Your Hand’s, resident school finance and policy expert, and David Pate, the assistant superintendent of finance for Richardson Independent School District, which operates 55 campuses and serves more than 39,000 students in the suburban Dallas area.

So right now, we are in the middle of the legislative session we’ve been hearing since last summer about this record-breaking budget surplus, lawmakers have to work with a historic $33 billion surplus. Plus there’s tens of billions more in estimated growth in revenue over the next two years. Meanwhile, depending on what measure you use, Texas ranks at least in the bottom 10 states in public school funding. So the money is there. It’s clear Texas is behind where we should be. So why can’t we just give the schools what they need? Well, as I said, this is complicated. Here we go.

Bob, so today we’re going to be focusing on what’s known as the basic allotment or the per-student sum the state uses as the foundational building block to determine how much money it will pay to educate a student. Could you start us off here by explaining how the basic allotment works in conjunction with the rest of school funding.

Bob Popinski: Yeah, absolutely. The basic allotment is actually the building block of how we fund our students and our schools, and pay for our teachers and the operations of everything that goes on within a campus and a school district.

So back in 2019, when they went through a lot of school funding changes, they set the basic allotment at $6,160. That’s the basic building block per student. Now, if you have special characteristics, say you’re a special education needs student or you qualify for free reduced lunch or you’re in the bilingual program or you’re in the gifted and talented program, you get additional dollars attached to that way. And so as you use that basic building block, you create what’s known as an entitlement and that entitlement varies from school district to school district. But on average, it’s about $10,000 per student. Now, it could be a couple $1,000 more in a school district or a couple $1,000 less in a school district. But on average it’s $10,000. So that’s kind of where we start. That $6,106 has kind of been set in stone for school districts for the last three years. 

And so there’s really only a few ways to increase revenue for your students. You could either go out for a tax rate election or you could get additional revenue through enrollment increases or attendance. So we’re really dependent on the state to do one thing and that’s increase the basic allotment. So it flows through the rest of the formulas so that our school districts can actually give teachers pay raises and staff pay raises and operate the schools with our 5.4 million kids and over 375,000 teachers.

Morgan: So David, what does the basic allotment mean to you in practical terms as you’re working on a school budget? And why don’t you also give our listeners a sense for where budget matters stand in Richardson.

David Pate: On where budget matters stand for Richardson, our demographers are predicting that we’re going to lose about 8000 students over the next 10 years. And we adopted a $26 million deficit for fiscal year, 22-23. And, for us, right now we’re trying to figure out how we’re going to provide raises to teachers, how we’re going to provide for our cost increases. So the basic allotment, it is the major driver. 

When we’re looking at 16% or 17% cost increases, we’re having difficulty staffing. We’re competing with quite a few districts here in the North Texas area for staff trying to raise our teachers starting salary.

For instance, in our case, which we are different from all the other districts on this measure here in Dallas County, about 40% of our students are not economically disadvantaged. And then we’ve got another 20% of our students are not only economically disadvantaged, but they’re living in the highest level of poverty according to the state measures. And so trying to meet the needs of those two groups in a situation where costs are increasing in revenue is declining is very challenging.

Morgan: So you use the basic allotment, you pay for teacher salaries, you pay for support staff like classroom aides, cafeteria workers, bus drivers, I mean, the basic allotment really is the biggest part of your budget.

David: Yes, it funds the basic needs of the district.

Morgan: Laura, I want to bring you in here because you experience the hardships that districts go through when they have budget shortfalls from the parent side. Can you tell us what happened in 2018 when your child was a junior in high school in the Austin Independent School District?

Laura: Sure thing. Thank you, Morgan. Yes, my three kids went through Austin ISD and my youngest was a junior at McCallum High School here in Austin. And she came home from school and said, “Mom, kids are crying in the halls and people are up in arms. We’re worried they’re going to close our Fine Arts Academy,” which is this beloved institution, one of many choices within Austin ISD. And a few of us got together to try to understand what was going on and it ended up being that Austin was facing a $30 million budget deficit and looking at things to cut. And that’s when several of us decided to get together and try to help parents and community members understand how school funding works because that $30 million budget deficit was something Austin was facing. But really, it was a result of how our state funds our public schools. 

And so that’s when Just Fund It started. And it was interesting because parents don’t always think about funding. There are things that kids and parents think about every day. But funding was really hitting us at home because it was getting to the point where it was threatening just basic programs that we all rely on and parents pay, they see these growing property tax bills and think when they are paying them to the school district that they are either going to their district or a different school district through our recapture Robin Hood, what you want to call it, what people didn’t understand is we’re paying billions of dollars in that are then being just not given to any school district, they’re going to the bottom line or to the surplus in this case. 

And I believe, Bob may be able to tell you better, but I think it’s $8.2 billion of local school property taxes that have been paid in by parents that are going to the surplus. So we thought there was some educating that had to be done to help parents understand, to learn how to advocate, and also to educate legislators on how far behind we really are and that parents and students care that their schools are funded.

Morgan: Well, so that brings us back around to the legislature. Bob, Governor Greg Abbott has been very vocal on education issues this session and one thing I’ve been hearing a lot from him and some other lawmakers as they talk about public schools is this idea that they have more money than they’ve ever had before. Is that true? And how do we square that with what we’re hearing from parents and educators around the state?

Bob: I think if you look at what your own household budget has done over the last three years, you can get a good glimpse of what’s happening to a school district in terms of just purchasing power being the same as it was in 2019.

Since 2019, inflation has gone up double digits, and the Comptroller has estimated inflation has gone up 12.5%. In some cases, it’s even more than that. If you look at individual things that you’re spending your money on. For some districts, fuel has gone up 40% if not more, insurance for their building and their buses have gone up double digits, food service, 25% in some instances. Even health insurance has gone up drastically and construction has gone up 50%. And so school districts are in a pinch just to keep up with inflation. And so if you look at what’s needed to kind of keep up with that basic allotment of $6,160 for the same purchasing power they had back in 2019, it needs to be $1,000 higher.

And so that’s what we’re aiming for, is to make sure that the basic allotment actually keeps pace with inflation and so with that, we’re recommending that they invest more into public education. And, Laura is right. It’s kind of the basics of school finance – if you don’t want to kind of get into the weeds, is that as local property values increase, that means local taxpayers are paying more for the overall school entitlement and the state has to pay less. So the state, because the local value increases, saved roughly $8.2 billion last biennium for last state’s budget and we want them to reinvest that back into our 5.4 million students.

Morgan: So let’s talk about inflation for a second. We’ve mentioned the last time the state increased the basic allotment in 2019. That’s four years ago now. And then depending on what measure you use, there’s been between 12% to 16% inflation. David, can you give us some specific examples of how that’s affected your budgeting process in Richardson?

David: Yes, our utility costs have been increasing substantially and Bob mentioned property insurance. That’s one of the things that for us that we just recently did property insurance and it increased $900,000. So that increase of $900,000 is about 13 teachers for us.

Morgan: Wow. So Bob, if I’m understanding correctly, there’s not a mechanism that adjusts state funding for schools based on inflation. School districts have to come back every so often and ask for more money. And it kind of sounds like you’re just asking to be funded at the same levels as you were in 2019, accounting for inflation.

Bob: At a minimum, absolutely.

Morgan: Yeah, at a minimum.

Bob: I think because we’re $1,000 below where we needed to be from 2019 because of inflation, that doesn’t even consider that Texas is in the bottom 10. We’re $4,000 behind the national average. And so what we’re recommending is not only to catch up for where we need to be, but actually create an inflation adjustment so that school district don’t have to come back every other year during a legislative session and say, “Hey, look, we, we need more funding just to keep pace with what’s going on out in the world so that we can cover all of our expenses, so that we can give teachers a pay raise.”

If you look at the Charles Butt Foundation poll from earlier in the year, 77% of our teachers are considering leaving the profession, and pay is a big important factor in that. We’re $7,500 below the national average and inflation is catching up with our teachers’ pockets books as well. Living expenses, being able to afford a home in some of these cities across the state. It’s very difficult to keep teachers in the profession and school districts need to be able to compete.

Morgan: Laura, I want to come back to you because through your work with Just Fund It and other grassroots education efforts, you have so much experience helping parents and community members develop political literacy around these issues. 

Can you tell us a little bit about what is at stake here if the legislature doesn’t provide an increase to the basic allotment this session?

Laura: I mean, it’s hard to overstate it. There’s just so much at stake. I mean the ability of our public schools to educate 5.4 million kids. We need more funding to keep up with kids around the country. We did increase funding in 2019, but everyone else did too and the national averages moved up and we are really no better than we were then and worse off because of the inflation situation that you just heard about. I mean, our schools need funds to address student needs so they can thrive.

And as we mentioned before, funding is a little tricky because it’s not felt directly, people feel it and then they blame the district and, there may be issues within a district but really it’s so confusing. Administrators work so hard to shield students and teachers as much as possible and do whatever they can with the limited resources they have. And we are ranked better than we are funded in terms of actual output, but it just shows that we have been really squeezing our educators to do what they can with so little resources and it’s unsustainable.

It’s being felt more and more by teachers and students and families from teacher burnout to overcrowded classrooms. We need counselors and mental health resources and more. And so all of this really comes back to increasing the basic allotment to make sure every single kid in the state of Texas has what they need to thrive.

I’ll mention that well-regarded economist, Dr. Ray Perryman, updated a study on the return on investment of every single dollar in public ed. And it’s, it’s almost unbelievable.

It’s the single best investment the state could make. And what they found was every dollar the state invests in Public Ed yields a lifetime economic benefit of almost $57. which includes benefits to the private sector, personal income. I mean, it’s literally the highest return on investment of any public or private sector investment. And then just lastly I’ll say, when we started Just Fund It we made a very clear point of doing something different.

That we were not going to let the legislature do what they’re so good at doing, which is dividing to conquer, dividing rich against poor, large, against small urban, against rural.

And that we fight for every single kid in the state of Texas to be better than bottom-of-the-barrel funding. The way you do that is by increasing the basic allotment. 

Morgan: Please, David, why don’t you give us a sense for what’s at stake in Richardson?

David: Well, so as we’ve been going through our budget meetings with the board, really since January, we’ve been presenting options for the opportunities we have to increase revenue here in the district. And there’s really three options for us. We’re one of three districts in Dallas County that still offers a local optional homestead exemption. That is an option our board could exercise and eliminate that. That would give us one-time funding of about $7.8 million.

We can open our enrollment to students that are not residents of the district and that’s going to generate somewhere between about $7,000 to $10,000 per student depending on the specific educational attributes of those students, whether they’re, in generating bilingual funding or CTE funding, etc. And, that really just depends on how many students want to choose to come here who don’t live here. We could have called a V A T R E. Our voters approved a tax ratification election back in November of 2018, which was then compressed.

So we’ve got about a little over three cents. We could go back to the voters, which would generate about $3 million net to recapture. And then it’s really a matter of, what can we do to reduce expenditures? When we start backing out the things that we have to do. So, I’ve got to pay the utility bill and I’ve gotta have property insurance. I’ve got to pay the Dallas Central Appraisal District. When you start backing out those kinds of activities, you’re left really with people. And so, we had a staffing study performed and we’re presenting that information to the board and it will be tough making any of these decisions.

Everybody is attached to their individual campus and the staff in those campuses, those are their friends and neighbors. And so any time you start talking about making cuts in the school district, it’s difficult.

Morgan: Yeah, I mean, it sounds like you’re doing what good school administrators do and is trying to kind of consider all options before you start kind of hitting things that are really going to affect the people in your district community. So we set up top that there’s plenty of money to go around this session. What Bob is the challenge to getting this accomplished? 

Bob: Texas has a pretty substantial two-year budget. A lot of moving pieces. There’s other programs other than public education, but public education is one of the largest expenses our state has. It’s a $70 billion per year system when you take into account state and local revenue. Right now we have a house budget that’s moving through the process. They’re going to hear that pretty soon. We have a Senate budget that’s moving through the process and they both have $5 billion in there for public education.

Now, you remember what I said, we need at least $1,000 increase in the basic allotment just to keep pace with inflation. The price tag on $1,000 basic allotment increase is about $14 billion for the state budget and both sides right now are putting in $5 billion and it’s not just for the basic allotment. There’s a lot of other programs that they’re funding on top of that. So what actually flows to school districts and to our students is going to be a lot less than that for operating expenses. And so we need to make sure that our members know as they continue these budget discussions that we’re woefully short of where we need to be. And, so as they start moving through the process with less than 60 days left here, I think the more school districts and teachers and the general public and community leaders speak up that schools actually need more funding just to keep pace with inflation, is very important. We’ve got a long way to go in the session. And so I think it’s time that our members hear from our communities.

Morgan: Well, thank you. We’re going to have to end here today.

Thanks to Laura Yeager, Bob Popinski, and David Pate for being here and to you our audience for listening. And I also want to let you know that to stay informed on school finance and other critical education issues

Today’s episode was written and narrated by me, Morgan Smith. Our Sound Engineer is Brian Diggs and Executive Producer is Anne Lasseigne Tiedt.

As the 88th Session progresses, you can sign up online for Raise Your Hand Texas’ Across the Lawn weekly newsletter and you can find that at www.raiseyourhandtexas.org/get-involved.