Presentation Transcript

1. Piecing It All Together82nd Legislative Regular and Special Session Reviewfor the Texas School Coalition

   Presented by Moak, Casey & Associates July 28, 2011
2. Agenda Where We Started The Budget School Finance Bills of Interest What the Future Holds Questions Moak, Casey & Associates
3. Legislative Session At-A-Glance MCA tracked 920 of the 6,304 (14.5%) bills and resolutions filed. Compared to 1,122 of the 8,074 (13.8%) bills and resolutions filed the prior session. Of the bills tracked this session, 130 passed. Compared to 137 bills the prior session. MCA attended over 75 hearings, sent out 350 emails alerts, modeled 50+ different school finance plans, and had over 207,000 views on our website. Moak, Casey & Associates
4. 2009 Revisited HB 3646: $2 billion formula addition with pay increase HB 3: Assessment and Accountability The school finance committee Emerging efficiency challenge The emerging economic crisis Moak, Casey & Associates
5. Interim Developments School Finance Study unsuccessful 2010 elections – the Conservative takeover Assessment/accountability plan Comptroller Efficiency study Eissler/ERG efficiency model Barrage of attacks over staffing, performance, cost increases and perceived inefficiency Moak, Casey & Associates
6. Emerging Budget Crisis Use of federal revenues for current operations State fund balances not replaced Recession impact on sales tax Structural deficit No new revenue policy Limited leadership response Initial $12 billion cut below current commitment Moak, Casey & Associates

7. The Budget

8. The 2010-11 State Budget Deficit The 2010-11 state budget had a deficit of $4+ billion Leadership instituted a series of agency cuts prior to the legislative session The Legislature enacted those reductions and voted to use RDF to fill hole: HB 4 by Pitts: enacts agency cuts and reduces 2011 appropriations by almost $800 million, including $90+ million to public education $550 million was appropriated in this bill to offset any additional FSP costs in the 2010-11 biennium HB 275 by Pitts appropriates $3.2 billion from the Economic Stabilization Fund Moak, Casey & Associates
9. The 2012-13 State BudgetHB 1 According to the Legislative Budget Board, the total All Funds appropriations for the 2012-13 biennium is $172.3 billion,a $15.2 billion, or 8.1%, decrease, from the 2010-11 biennium The General Revenue Funds appropriations amount is $86.9 billion for the 2012-13 biennium, a $1.6 billion, or 1.9%, decreaseover last biennium Moak, Casey & Associates
10. Rainy Day Fund (Economic Stabilization Fund) Created in 1988, RDF receives 75% of oil and gas revenue that exceeds 1987 level 50% of unencumbered GR fund balance at end of biennium Projected amount in RDF by August 2013: $9.7 billion 82nd Legislature used: $3.2 billion Remaining amount: $6.5 billion Medicaid commitment (informal) $4.8 billion Howard amendment defeated Moak, Casey & Associates
11. Moak, Casey & Associates
12. Function Reductions (other than TEA) Moak, Casey & Associates
13. Revenue Measures * *Mostly one-time measures that will not generate revenue in future years Moak, Casey & Associates
14. Pieces of the Budget Puzzle There are numerous bills that need to fit together to balance the 2012-13 budget: HB 1 (regular) by Pitts: state budget for 2012-13 SB 1 (special) by Ogden: fiscal matters bill that contains school finance changes and payment delay, along with tax speed-ups SB 2 (special) by Ogden: FSP funding in HB 1 was contingent upon school finance passing during regular session, this contains the same TEA appropriations as HB 1 Moak, Casey & Associates
15. Pieces of the Puzzle, cont’d. HB 257 (regular) by Hilderbran: Reduces unclaimed property dormancy allowing the state to generate $277 million HJR 109 (regular) by Orr: Allows General Land Office to distribute revenue from PSF land to Available School Fund, up to $300 million per biennium--needs voter approval in November SB 7 by Nelson: Saves approximately $467 million by restructuring Medicaid (expands HMOs to South Texas) Moak, Casey & Associates
16. Views on FSP Funding-Level Speaker Straus: “Texans may be surprised to learn that the state budget…will provide $1.6 billion more directly to our state’s public schools…in lean times and during one of the most difficult budget challenges our state has ever faced, legislators made Texas school children our highest priority.” Sen. Ogden: “While the FSP will have $4 billion less than school districts expected to receive under current law, the total dollars in the system will increase and I believe with this level of funding combined with the creativity and skills of our school superintendents, principals, teachers and parents, our students will be able to continue to advance in their academic progress.” Moak, Casey & Associates
17. FSP Funding (General Revenue) When considering just General Revenue, the Legislature appropriated $29.2 billion for the 2012-13 biennium, a $1.6 billion increase compared to 2010-11 However, during the last legislative session, $3.2 billion of federal assistance (SFSF) was used to fund the FSP, but that amount is zero for the 2012-13 biennium *Takes into account the $800 million FSP adjustment in Article IX and the August payment delay Moak, Casey & Associates
18. FSP Funding (All Funds) When looking at just the funding level for the FSP (Operations and Facilities), the 2012-13 amount totals $35.4 billion,a $1.8 billion decrease compared to 2010-11 However, this amount is $4 billion below what is required to fund Current Law formulas *Takes into account the $800 million FSP adjustment in Article IX and the August payment delay Moak, Casey & Associates
19. Total Funding for TEA (All Funds): Moak, Casey & Associates
20. Program Cuts and Reductions In addition to underfunding the FSP, the Legislature made over $1.3 billion in cuts to programs and grant funding: $271 million, Technology Allotment $223.3 million, Pre-Kindergarten Grant Program $269.7 million, SSI ($23.5m remains for 2012-13) $345.1 million, DATE ($40m remains for 2012-13) Up to $5m for implementing standards on educator quality Up to $10m for an educator mentor program Up to $1m for Humanities Texas $50 million, New Instructional Facilities Allotment Moak, Casey & Associates
21. Programs Eliminated Other programs eliminated: $35 million, Science Lab Grants $20 million, Middle School PE Grants $14.1 million, Optional Extended Year $10 million, School Bus Seat Belt Program New Round of Instructional Facilities Allotment Property Value Decline Protections ADA Decline Protections Moak, Casey & Associates
22. Programs Funded $25 million, Service Centers ($40.7m in 2010-11) New funding system: two-thirds of funding most flow based on geographic considerations and districts serving less than 1,600 students Sunset in 2015 $3.5 million, Campus Intervention and Campus Turnaround Teams ($1.5 million in 2010-11) Up to $1.5 million of which is for the development of financial and productivity tools Moak, Casey & Associates
23. Programs Funded, cont’d. $20m, Communities in Schools ($32m-2010-11) $13.8m, AP Incentives ($19.7m-2010-11) $17m, JJAEPs ($22.9m in 2010-11) $8m, Teach for America ($8m in 2010-11) $8m, Virtual Schools ($20.3m in 2010-11) $6m, Early College High School and TSTEM $1.3m, Steroid Testing ($2m in 2010-11) Moak, Casey & Associates
24. The Absolute Truth For the first time in 60 years, the legislature failed to finance current law Foundation Program current services state aid was decreased by $4 billion Special Program financing was decreased by $1.3 billion The total decrease was $5.3 billion when the cost of enrollment growth, property value decline, and other factors are taken into account Moak, Casey & Associates
25. Instructional Materials Funding HB 1 by Pitts: $608 million for continuing contracts and a portion of Proclamation 2011HB 4 by Pitts: $184 million for continuing contracts, science, and a portion of Proclamation 2011 Proclamation 2011: English Language Arts and Spanish Language Arts (2-5) Spelling (grades 1-6) Handwriting (grades 1-3) English Language Arts (grades 6-8) English I-IV ESL (grades k-8) Pre-kindergarten materials Moak, Casey & Associates
26. Texas Education Agency Agency operations funding decreased by $22 million, or17.2 percent, from the previous biennium The 2010-11 FTE cap for TEA was 1,038 The 2012-13 FTE cap for TEA is now 795 Moak, Casey & Associates
27. Teacher Retirement System TRS Pension Fund: The state contribution will be 6.0 percent in the first year of the biennium, but 6.4 percent in the second year ($100 million increase in second year). Active members rates will remain at 6.4 percent both years. SB 1811 contains provision to allow state to contribute less than active member for this biennium TRSCare: The state contribution will be 1.0 percent the first year and 0.5 percent the second year of the biennium Annual school district contribution remains at 0.55 percent Moak, Casey & Associates
28. Other TRS Issues SB 1669 by Duncan simplifies “Right to Work” provisions: No loss of annuity if retiree works as a substitute or in a part-time position To work full-time, the retiree must separate from service with all Texas public education employers for at least 12 months SB 1667 by Duncan requires members to notify TRS within five years of receiving annual service statement if service is not properly credited Moak, Casey & Associates
29. Ogden’s View on Next Session “I think it'll have a big headache in transportation. I think it'll have a big headache in the business tax. I think we'll have a big headache in school finance, maybe even fighting off lawsuits,” Ogden said. “In Medicaid, it's beyond a headache. It's a hemorrhage.” “The 2013 Legislature will see a lot of chickens coming home to roost,” said Ogden, who said he is unlikely to run for re-election. Moak, Casey & Associates

30. School Finance

31. School FinanceHow the Cuts Are Made 2011-12 school year “RPAF” 92.39% for most districts, 95.195% for “formula” districts that apply to commissioner for “smoothing” Target revenue unchanged Maximum tax rate districts EWL of $339,500 GL of $33.95 for pennies above Austin yield Average reduction of 5.2% compared to current law Gain limit repealed 2012-13 school year:  “RPAF” 98% for most districts, 95.195% for “formula” districts that applied to the commissioner for “smoothing” Target revenue reduced to 92.35% of its current level EWL and GL for pennies above Austin yield at current law levels Average reduction of 5.8% compared to current law Moak, Casey & Associates
32. Moak, Casey & Associates
33. Special Program Allotments Directs the SBOE to adjust special program spending requirements to align with overall reductions in FSP revenue for special education, compensatory education, bilingual education, career and technology Moak, Casey & Associates
34. Proration Proration will be calculated off state and local funds Makes ASATR funds eligible for proration, allows for increased recapture to reach required reductions under proration Maintains current-law proration entitlement for districts to be repaid reduced state aid that occurs due to proration Moak, Casey & Associates
35. Flexibility SB 8 (special session) by Shapiro Permits furlough up to 6 non-instructional days if funding is below 2010-11. Repeals prohibition on teacher salary reductions. Requires staff input/public meeting on salary reduction or furlough. Non-renewal notice 10th day before last day of instruction. No fitness assessments unless student is enrolled in PE. Voids a contract for failure to maintain certification. Replaces "last in-first out“ for termination of continuing contracts with teacher appraisal based process. Provides for alternative hearing process for non-renewals and certain financial exigency terminations. Gives TEA rule-making authority over financial exigency, allows for superintendent contract modifications Moak, Casey & Associates
36. What didn’t make it 22:1adjustments Vouchers Check registers Significant expansion of charter schools Private school participation in UIL Middle school reform Overhaul of teacher appraisal Special education voucher arrangements Pre-kindergarten accountability Moak, Casey & Associates

37. Other Bills of Interest

38. Noodling: Now Legal in the State of Texas Moak, Casey & Associates
39. The Official State Music of Texas: Western Swing Moak, Casey & Associates
40. Pork Chopping: Now Legal in the State of Texas Moak, Casey & Associates

41. Closing Remarks

42. Fundamentals $4 billion formula cut – down from projected $10 billion $1.3 billion in grant/textbooks cuts – down from $2 billion Reduction of funding systems gaps Limited property tax impact – TRE still funded New instructional materials system Accountability system modified (at issue) Chapter 21 reforms (at issue) Virtual Schools (at issue) Class Size (at issue) Vouchers (at issue) Moak, Casey & Associates
43. Litigation Potentials Moak, Casey & Associates
44. Beginning Again – 2013 Efforts Assessment –TEA/legislature Accountability – TEA/legislature/Sunset Commission Revenue Structure –LBB/Comptroller/Legislature School Finance –Special Committee Efficiency and Productivity – Comptroller/ERG/ERC TRS and compensation –TEA/LBB Grant programs – Special Committee Instructional materials - TEA Economic development-Special Committee State & regional structures-TEA/Sunset Commission Moak, Casey & Associates
45. Lynn M. Moak Daniel T. Casey Partners Joe Wisnoski Amanda Brownson, Ph. D. Bob Popinski Maria Whitsett, Ph. D. Larry Throm Chris Grammer Kathy Mathias Larry Groppel, Ed. D. Thomas V. Alvis, Ph. D. Consultants Susan Moak Kari Ruehman Administrative Staff 400 West 15th Street, Suite 1410, Austin, Texas 78701-1648 Ph. (512) 485-7878 Fax (512) 485-7888 www.moakcasey.com