Dewhurst Makes Bold Statement

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Maok, Casey’s latest version of the House cuts to Public Education can be found at: www.texasisd.com

Lt. Gov. Dewhurst Makes Bold Statement

At a Legislative Conference in New Braunfels, last Friday, Lt. Gov. Dewhurst stated that spending on Public Education can be maintained and even increased in the next 2-year budget.  Dewhurst is counting on selling state land, reducing some expenses and raising other revenue to prevent the catastrophic cuts to Texas school districts.  Dewhurst believes the Foundation School Program can be funded “at the same appropriate level we’re funding right this second”.   A Senate Subcommittee is currently working to find revenue to meet expenses for the next biennium.

The House version of a State Budget slashes Public Education funding by $8 Billion.  Many in the House believe that Public Schools need to “tighten their belt” and cut their budgets just like businesses have to do when their company experiences a downturn in the economy.  While this is a noble claim by some legislators, public education is not a “business”.  It is not a company.  Public Education is managed by a team of elected officials from a local community whose primary revenue comes from taxation of its citizens.   There are no clients, customers, contracts, or profit margins in Public Education.  Public Education is governed by legislative law, judge’s orders, education codes, administrative codes, the State Board of Education, Local Board policy, State Board policy, societal demands, community values, and the Texas Education Agency.  While business principles can and should be applied to the management of a Public School system, the organization and structure of public education is very different from business.  Public Education is a supplier for every business and company.  It remains the single largest supplier of citizens, employees, and employers for communities and the state. 

 In many Texas communities, Public School employees work for the largest employer in the town – the Independent School District.  Under the House version of the State Budget, 335,000 employees(70,000 public school employees),  will hit the streets looking for jobs.   Jobs that are not available in the Texas economy.  The unemployment rate in Texas could move from one of the lowest in the United States to one of the highest in the U.S. in just two years.  If the 335,000 employees forced from their jobs earned an average of $30,000.00 per year, the economy of Texas will lose more than $10 Billion in household earnings over the 2-year period.

As a Senate-House Budget Showdown is certainty, there is hope that all in the Chambers will consider the short and long term effects of their decisions.

Education Continues

While many leaders in the business world would be overwhelmed with the magnitude of focus, energy and input needed to address the State Budget Shortfall.  School leaders must maintain a focus on the maintenance of buildings, development of curriculum, expenses from the current school budget, and the well being of students and staff. Communities count on schools to educate and prepare the future generation that will live, work and lead in towns and cities.  The education community will continue to do its part to prepare students for citizenship, workmanship, and leadership.

The Senate Hybrid Model

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The Senate Hybrid Model

This is a closer look at the Senate Hybrid Model for Public Education Funding.  It is important to note that for FY 2012 and FY 2013, the CL WADA, is a projection of district WADA for the 2 year period.

Current Law(CL) Total M&O Revenue is equal to the CL WADA multiplied by the CL Revenue per WADA.

Every school district should look closely at the FY 12 and FY 13 CL WADA and CL Revenue per WADA to determine if the numbers used in the runs are accurate.  Below is an example from one school district:

Fiscal Year 2012 HYBRID Model Numbers

Current Law (CL) WADA –                                                  6188

Current Law (CL) Total M&O Revenue -                          $33,777,173        

Current Law(CL)  Revenue Per WADA -                            $5,458

Change in Total M&O Revenue –                                     ($2,614,361)       

Total M&O Revenue per CL WADA -                                $5,036

Change in Total M&O Revenue per CL WADA –            ($422)

% change in Total M&O Revenue -                                   -7.7%

2012 True Total Revenue to Operate                              $31,162,768  (Multiply $5,036 times 6188)

Fiscal Year 2013 HYBRID Model Numbers

Current Law (CL) WADA –                                                  6144

Current Law (CL) Total M&O Revenue -                         $33,576,453

Current Law (CL) Revenue Per WADA -                           $5,465

Change in Total M&O Revenue –                                    ($2,972,195)

Total M&O Revenue per CL WADA -                                $4,981

Change in Total M&O Revenue per CL WADA –            ($484)

% change in Total M&O Revenue -                                   -8.9%

2013 True Total Revenue to Operate                              $30,603,264  (Multiply $4,981 times 6144)

From FY 2012 to FY 2013 the true loss in Revenue will be          ($559,504)

For every school district, the loss in revenue will change by an increase in WADA.  Below is an example of the change in revenue based on an increase in WADA:

If 2013 CL WADA remains the same as 2012 CL WADA (6188) then the

Total Revenue to Operate becomes                                $30,822,428        

Then, from FY 2012 to FY 2013 the decrease in Revenue will be               ($340,340)

If 2013 CL WADA is increased by 113 from (6144) to (6257) then the

Total Revenue to Operate becomes                                $31,166,117

Then, from FY 2012 to FY 2013 the increase in Revenue will be                $3349

If 2013 CL WADA is increased by 256 from (6144) to (6400) then the

Total Revenue to Operate becomes                                $31,878,400

Then, from FY 2012 to FY 2013 the increase in Revenue will be                $715,632

WADA is a significant factor for revenue potential. Develop and implement plans to increase WADA!

Rainy Day Fund, Comptroller, Legislators

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The Rainy Day Fund, Comptroller Finds Money, Legislators Work to Lower Deficit

Governor Perry has agreed in principle to use about $3.2 billion from the Rainy Day Fund to meet the needs of the current budget (2009-11).  Since the state’s deficit represented funds needed for the ’09-’11 budget and funds needed for the ’11-’13 budget, the Governor has improved conditions and the outlook for Public Education.  Governor Perry has stated that no rainy day funds will be used for operational purposes in 2011-13.  Therefore, most agree that use of the Rainy Day Fund for the current budget cycle is a “best case scenario”.  At this time, it appears that no additional Rainy Day Funds will be used to lower the anticipated deficit for 2011-13.

The State Comptroller has found an additional $300 million in tax revenues for the 2011-13 State Budget.  No one should be surprised that additional funds have been found, by the Comptroller, and that additional funds will be found.  The Comptroller is part of the Legislative process and will continue to adjust her estimate of revenue for the next biennium.

Senator Ogden and Senator Shapiro continue to work behind closed doors to reduce the deficit.  Working with other Senators, Senator Shapiro is working to reduce the current deficit of $9 Billion for Public Education to $4 Billion.

House Appropriations Committee Chairman Jim Pitts, R-Waxahachie, faces tremendous pressure from fiscal conservatives  after his showdown with Governor Perry about usage of the Rainy Day Fund.  Pitts has not backed down from his belief that use of the Rainy Day Fund is essential. 

 Pitts is also working on a measure to reduce the shortfall in the next two-year budget period by a slight delay in state payments which would push them into the following fiscal period. That would make available $2.4 billion, the largest part from delaying payments to school districts.

Pitts other idea would yield $3 billion through tax collection changes, including a requirement for the state's business tax to be paid quarterly.

The House Appropriations Committee recommends 2 Major Items:

a.       Increased funding to the Foundation School Program by $2 billion, contingent on the passage of House Bill 275(Use of Rainy Day Fund)

b.      $6.6 million cut from education service centers

Senators Discuss School Funding Models

One model would phase-out the hold-harmless provision over six years while increasing the basic allotment.

The second model anticipates stepping up school funding reductions over the next two years so that $1.5 billion would be reduced from school funding in 2012 and $2.5 billion would be cut in 2013 to achieve the committee’s goal of $4 billion in biennial savings.

Sen. Shapiro asked the LBB and TEA to come back with one more model. The model would have:

                $2.0 billion in cuts over the next two years;

no additional cuts after FY2013;

an illustration of how to grow the system with new money until 2017 when the state would achieve 85% equity.

Another $400 million that is set aside in the Senate budget bill, to be distributed by TEA through grants, could be placed into the Foundation School Program to reduce the deficit.

Both the House and Senate will continue to look for ways to reduce the deficit.  The state of Texas has a large budget and there are many avenues to close the gap between revenue and expenditures. 

Implement Reductions, Find Revenue

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LBB Estimates, Equity Center Formulas, Moak Casey Forecasts

WADA is the Key, Prepare to use Fund Balance

As School Districts continue to make estimates of the impact of less State Revenue, two key elements of the budget discussion must be considered by all.  Naturally, the single most dominate discussion at the local level of every school district focuses on reductions in spending.  The range of reductions is wide and deep and everyone is preparing to address the loss in state revenue with staff cuts, operational cuts, and lowering expenses. 

The second discussion that must take place in every school district and community is finding revenue for their budget.  Every forecast, formula, and estimate used to determine school district revenue for the next biennium is based on WADA.  WADA is the Weighted Average Daily Attendance.  The total amount of loss in revenue is derived from a reduction in the per student state appropriation based on WADA.  While many school districts are facing huge deficits, the ability to lessen the deficit lies in the ability to increase WADA.  Nearly every school district has the ability to increase WADA while maintaining current spending levels.  Increasing WADA does not necessarily equate to an increase spending.  Every school district should perform an analysis of the impact of loss in state revenue based on an increase in WADA.

Another revenue source that must be considered by all school districts is Fund Balance.  Governor Perry is of the opinion that nearly $12 Billion has been collected by local school districts and is held in ISD accounts.  Governor Perry has called on school districts to prepare to use their “Rainy Day Fund” to assist in operating schools over the next biennium while state revenues are down.  While there is a viable argument over the difference in “Rainy Day Fund” and “Fund Balance, the fact is that most school districts have a fund balance.  The Legislator will surely find some way to lessen the budget impact on local school districts but the Legislator will also call on local school districts to use some of their own Fund Balance to make ends meet.  Discussions of available funds, from Fund Balance, for operational purposes should be held at the highest level of all school districts.

Ideas for Legislators

School Personnel understand education, the cost of education, the day-to-day operations involved in education and the impact of education on a community, state and nation.  Sometimes Legislators don’t.

Educating Legislators, about education, is as important as it has ever been.  Providing ideas and solutions to Legislators will be the avenue to reaching a solution.  Maintain contact with your legislator with ideas, thoughts, and possibilities.  Here are a few ideas to express:

Raise the local tax effort ceiling so that school districts can raise revenue

Reduce the number of school days and contract days for the next biennium

Impose a 2-year moratorium on the state testing program for students in grades 3, 5, 6, 7, 9, 10, and 12

Use the state’s Rainy Day Fund to lessen the effect on education

Thought

Focus on the promise and possibility of today.