United Methodist Women’s Legislative Conference

January 28, 2013

Public Education in the 83rd Legislative Session
 The state budget  School finance challenges and

opportunities  Educational need  The potential impact of litigation

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The State Budget

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The Recovering Economy
 Population growth
 8% of population 19% of growth

 Job growth
 Employment above pre-recession levels  Texas unemployment rate down to 6.1%

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1/27/2013

Major Tax Revenue Sources, All Funds,2012-2013 Biennium
Certification Growth Estimate New BRE Growth Rate

Revenue Source

Sales Tax Motor Vehicle Sales Tax
Franchise Tax

10.3% 13.3%
4.9%

22.4% 30.2%
18.7%

Natural Gas Production Oil Production
All Taxes
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24.8% 1.5%
8.6%

41.5% 78.4%
22.0%

$2,100.0 $2,050.0

Improved State Sales Tax Collections
1-Year Moving Average Sales Tax Collections
2009 2012

$2,000.0
$1,950.0 $1,900.0 $1,850.0 $1,800.0 $1,750.0 $1,700.0 $1,650.0 $1,600.0

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Projected Ending Balances
(in thousands)
Economic Stabilization Fund General Revenue Fund

Original BRE Forecast 8-31-13 Balance
Previous Forecast 8-31-13 Balance New Forecast 8-31-13 Balance

($4,273,557)
$1,605,546 $8,845,531

$9,405,307
$7,320,728 $8,065,362

New Forecast 8-31-15 Balance

Approx. $5,500,000*

$11,756,442

• Assumes House version of General Appropriations Act as filed. Senate version spends about $174 million less than House.
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Property Value Growth
 Significant growth ahead
 Residential  Oil and gas  Refinery and energy growth

 Property value growth offsets cost of enrollment

growth and reduces state costs

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2012-13 Supplemental Appropriations
Agency 2013 Supplemental

Texas Education Agency – Reverse $1.750 Payment Delay Texas Education Agency – Shortfall* 0.300 Health and Human Services 3.500 Commission Department of Aging and Disability 1.000 Services Other 0.200 Amounts in billions, and represent all funds other than federal. Subtotal of overestimating savings from payment delay. Does not include $6.750 * Result
other supplemental needs.
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Education Is Not the Only Crisis
 Water
 $2 billion loan program under consideration

 Transportation
 $4 billion request

 Healthcare
 Rising costs for current and future biennium  Decisions relative to Medicaid will influence cost

requirements

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State Spending Limit
 Pay-as-You Go Limit (Art. III, Sec. 49a)
 Requires Comptroller to certify appropriations  4/5ths vote required to override failure to certify

 Limitation on the Growth of Appropriations (Art.

VIII, Sec. 22)
 Applies to appropriations from state taxes not

dedicated by the Constitution  Limits increases to growth in total personal income in the state
 Applies to about $70 billion of current GR budget

 Can be overridden with majority vote
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School Finance Challenges and Opportunities

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School Finance Challenges
 Lack of interest in working on finance issues

without Supreme Court decision  Lack of certainty over relationship between student learning and educational investment  We don’t know what to do  Texas schools are doing well enough

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Wait for the Courts?
 Courts unlikely to provide solution, only

indicate whether the current system is or isn’t constitutional  School finance challenges are on-going, longterm – work should be constant and incremental

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Does Money Matter?
Revenue per WADA under the 2010-11 Current Law Definition of WADA, Districts > 1,000 ADA

Current Law
Performance WADA Revenue / Measure # Districts # ADA # WADA Ratio WADA % Satisfactory all 9th grade EOCs <= 40% 198 1,740,074 2,399,798 1.3791 $5,592 41% to 52% 133 1,023,584 1,361,689 1.3303 $5,693 53% to 64% 102 988,226 1,250,037 1.2649 $5,757 65% and Greater 45 454,125 548,898 1.2087 $6,207

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We Don’t Know What to Do
Sec. 42.007. EQUALIZED FUNDING ELEMENTS. (a) The Legislative Budget Board shall adopt rules, subject to appropriate notice and opportunity for public comment, for the calculation for each year of a biennium of the qualified funding elements, in accordance with Subsection (c), necessary to achieve the state policy under Section 42.001. (b) Before each regular session of the legislature, the board shall, as determined by the board, report the equalized funding elements to the commissioner and the legislature. (c) The funding elements must include: (1) a basic allotment for the purposes of Section 42.101 that, when combined with the guaranteed yield component provided by Subchapter F, represents the cost per student of a regular education program that meets all mandates of law and regulation; (2) adjustments designed to reflect the variation in known resource costs and costs of education beyond the control of school districts;
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We Don’t Know What to Do
 LBB Studies have not taken place
 Interim Committees prior to last two legislative

sessions have not provided clear recommendations  2003 Study indicated need for additional investment  Studies for litigation by various experts agree on need for investment
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Texas Schools are Doing Well Enough
 Although TAKS scores improved over time,

new assessment scores proving significant challenge for high school students  Although disaggregated NAEP scores are at or above average, overall scores show need for improvement  SAT, ACT show need for growth

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Educational Need

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Cumulative Exit-Level TAKS Test Passing Rates (20062010) Compared to 2012 STAAR Results for 9th Grade* (by year of First Attempt, All Tests Taken)

*EOCs include Algebra I, English I Reading, English I Writing, Biology and World Geography

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TAKS PROGRAM Subject Area Tested Reading/Eng. Lang. Arts Mathematics Writing Science Social Studies STAAR PROGRAM Subject/Courses Tested
Reading/Eng. I, II, III Writing / Eng. I, II, III Mathematics/Algebra I, Geometry, Algebra II Science/Biology, Chemistry, Physics Soc. Studies/World Geog., World History, US History

3
√ √

4
√ √ √

5
√ √ √

Enrolled Grade Level 6 7 8
√ √ √ √ √ √ √ √ √

9
√ √

10
√ √ √ √

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√* √* √* √*

√* = Test must be passed for graduation.

3

Enrolled Grade Level 4 5 6 7
√ √ √ √ √ √ √ √ √ √

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EOC Tests** 9 10 11
√* √* √* √* √* √* √* √*, *** √* *** √*, *** √* √*

√ √ √

√* √* √*

√* = Performance must be at/above minimum level to contribute to cumulative scores in each of the four core areas. th **EOC tests are taken by pre-9 grade students if they are completing the relevant courses for high school credit. ***For Recommended Plan, students must achieve Level II: Satisfactory) on Algebra II and English III Reading and Writing tests; for Distinguished/Advanced Plan, students must perform at Level III: Advanced on these two tests.

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November 2012 21

Figure 30. % of Points Needed to Reach Various Performance Standards on STAAR Exams
Source: TEA Raw Score Conversion Tables. Information subject to change for future administrations based on postequating of live data following each administration.

2015-16 and beyond 2011-12 & 2012-13 2013-14 and 2014-15 Final Standard Standard Recommended Subject English I Reading (paper) English I Reading (online) Writing I Algebra I Min. Sat. Adv. Min. 82% 80% 92% 78% 55% 54% 65% 44% Sat. 61% 57% 69% 50% Adv. 82% 80% 92% 78% Min Sat. Adv. 82% 80% 92% 78%

48% 54% 46% 52% 60% 65% 31% 37%

59% 64% 57% 63% 68% 73% 57% 63%

Biology
World Geography

31% 37%
40% 46%

83%
84%

44%
53%

50%
57%

83%
84%

56% 61%
65% 69%

83%
84%

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October 2012

Relationship between Performance and Percent Economically Disadvantaged
2010-11 % Economic Disadvantaged vs. % Commended - Math Districts > 1,000 ADA
% Economic Disadvatnaged

2010-11 % Economic Disadvantaged vs. % At or Above Criterion - SAT/ACT Districts > 1,000 ADA

120
100

% Economic Disadvatnaged

120 100 80 60 40 20 0 0 20 40 60 80 % At or Above Criterion - SAT/ACT 100
R² = 0.6097

80
60

40 20
0
R² = 0.5736

0

20

40
% Commended - Math

60

80

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1/27/2013

The potential impact of litigation

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Constitutional Provisions
 Two provisions of the Texas Constitution are at the center

of school finance litigation. The first, Article VII, section 1 – the “education” clause-provides: “A general diffusion of knowledge being essential to the preservation of liberties and rights of the people, it shall be the duty of the Legislature to establish and make suitable provision for the support and maintenance of an efficient system of public free schools.” TEX. CONST. art. VII § 1.  The second, Article VIII, section 1-e, provides: “No State ad valorem taxes shall be levied upon any property within this State.”
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Litigation Timing
 Six groups have filed  Closing of evidence expected January 31  Closing remarks February 4, possible oral ruling    

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from the bench Written order expected late February / Early March Appeal (potentially directly to Supreme Court) Supreme Court Decision - late 2013 to early 2014 If the plaintiffs are successful, legislative response potentially during special session prior to 2014-15 or during the 2015 regular session 2012 Moak, Casey & Associates November

Lynn M. Moak Daniel T. Casey
Partners

Amanda Brownson, Ph. D. Dee Carney Curtis Culwell, Ed. D. Chris Grammer Bob Popinski Larry Throm Maria Whitsett, Ph.D.
Joe Wisnoski Associates

Susan Moak Kari Ruehman
Administrative Staff

Thomas V. Alvis Ph. D. Larry Groppel Ed. D. Kathy Mathias Mary McKeown-Moak, Ph. D. Alicia Thomas, Ph. D.
Consultants

400 West 15th Street, Suite 1410, Austin, Texas 78701-1648 Ph. (512) 485-7878 Fax (512) 485-7888 www.moakcasey.com
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