The Senate Finance Committee conducted its first hearing of the session on Wednesday, January 23.  The hearing on SB 1 (the budget) was focused on Article III (Education), and specifically TEA and the Higher Education Coordinating Board.

Senate Finance Chairman Tommy Williams (R-The Woodlands) laid out the Senate’s projected timeline on the budget.  He expects that the bill will be voted out of committee on March 13.  Chairman Williams expects the full Senate to adopt their version of the budget on March 18.

The Committee heard testimony from John Heleman, Chief Revenue Estimator for the Comptroller.  He explained the Biennial Revenue Estimate of $96.2 billion, plus the $8.8 billion surplus, for a total of $101.4 billion (after the $3.6 billion transfer to the Rainy Day Fund, which will climb to $11.8 without appropriation this biennium).

Overview of Overall Budget

Next, the Director of the Legislative Budget Board (LBB), Ursula Parks, testified on the overall budget and the supplemental appropriations bill (part of which was filed on Thursday as HB 10; the rest to be filed later).  That bill provides for a full reversal of the delayed August 2013 Foundation School Program (FSP) payment, which will cost the State $1.8 billion.  That bill also includes an additional $317 million to correct some mistakes made in forecasting last session.

Ms. Parks went on to explain that spending limits will guide budget conversations this session whereas the “pay as you go” limit was the concern two years ago.  Senator West (D-Dallas) asked if the proposed budget provided funding for the projected enrollment growth in schools as well as the enrollment growth that was not funded in the last biennium.  Ms. Parks assured Senator West that enrollment growth was indeed funded last session; it was just done at a lesser per-pupil rate than previous entitlements.  All of the LBB’s budget projections assume the per WADA rate funded under current law (which includes the Regular Program Adjustment Factor (RPAF) as well as the reduction Additional State Aid for Tax Reduction (ASATR)).

 Summary of Recommendations for the 2014-2015 Biennium Presentation

 Article III

Chairman Williams provided some highlights of issues he felt were of particular importance relative to Article III.  First, he emphasized that the proposed budget funds enrollment (at current law entitlements).  He then referenced the intent language from the last legislative session regarding the reduction of ASATR and increase of the Basic Allotment (BA) by explaining that the filed bill picks up where they left off.  The amount of reduction to ASATR and related increase to the BA are up for discussion, but Chairman Williams expressed his interest in ensuring that no district is negatively affected by the reduction to ASATR.  In fact, he asked LBB staff to prepare estimates for how much the BA would have to increase for various levels of ASATR reduction.  The LBB Manager for Article III, Jennifer Schiess, shared that a $200 million reduction to ASATR would have to be accompanied by a $1.6 billion increase to the BA in order for no district to see a negative impact. 

Chairman Williams went on to say that the $1.4 billion in grants and programs cut last session had not been restored in the filed version of the budget and that he felt it might be wise to put invest that $1.4 billion in the BA in order to fulfill the expressed intent of phasing out ASATR rather than restoring the grants and programs.

Ms. Schiess presented an overview of the provisions in Article III relating to TEA.  She reported that the proposed budget includes the assumption that district property values will grow by 3 percent in the next biennium.  LBB also assumes that 40 school districts will pass Tax Ratification Elections (TREs) each year of the biennium, which increases costs for the FSP. 

In terms of the reductions to entitlement that were applied last session, Ms. Schiess informed the Committee that bringing the RPAF back to 1 from the current 0.98 adjustment would cost $525 million per year.  She also spoke of ASATR and stated that the 0.9235 reduction applied to ASATR affected 810 school districts.

Schiess also described historic funding amounts for the Student Success Initiative (SSI), which was cut dramatically last session.  She stated that half of the funds appropriated for this purpose were used to purchase two state licenses to provide on-line accelerated instruction courses.  She also addressed the DATE grant, Pre-K grant, the data system project, and the proposed increase in funding for Communities in Schools.

Summary of Recommendations for Article III Presentation

Chairman Williams said that the pending lawsuit ties legislators’ hands, and that he feels it is difficult to add new money at this time other than to fund enrollment growth.  He also said that he feels following through on the stated legislative intent to buy down ASATR through increases to the Basic Allotment is a good public policy goal.

Senator Judith Zaffirini (D-Laredo) expressed interest in seeing the projected increase in property values on a geographic basis and questioned how much of those projected increases were related to oil and gas.

Commissioner of Education

Commissioner of Education Michael Williams testified before the Committee and explained the exceptional items requested by the Agency in priority order.  His first request was for $24 million to fund additional professional development for educators.  Second, the Commissioner expressed his hope that the further reductions to TEA administration of $2.6 million in the filed version of the bill could be restored to the levels from the current biennium.  Third, he requested $10 million to fund the Student Data System, and finally Commissioner Williams asked for an additional $22 million for assessments costs covered by federal funds in the current biennium that are no longer available.  The Commissioner did not request any restorations in funding for schools.

Revised Exceptional Items Request from TEA

Senator West asked the Commissioner what impact the $5.4 billion in funding cuts has had on schools.  The Commissioner said that youngsters are learning and that schools are doing their part and making progress with the dollars they have. 

West also addressed the SSI, which is funded at a level that is just 10 percent of what funding used to be, and asked why restoration of that funding was not on the list of priorities.  Commissioner Williams said that TEA was trying to do more with less, and explained the plans to expand on-line learning opportunities.  To that, West expressed concern over students without access to such opportunities.  Senator Robert Duncan (R-Lubbock) asked about past success of the SSI, and Commissioner Williams said that while kids may have reached the standard that year, the effects did not last into the next year, and that he believes we can be more effective with a different paradigm.

To Senator Zaffirini’s questions about why restoration of the Pre-K grants was not a priority, Commissioner Williams testified that as far as that program helping to close achievement gaps, Pre-K is a priority, but he believes that while lots of good programs exist, it would be prudent to wait to see what the courts say before working to restore dollars.

Following an examination of the budget for the Texas Higher Education Coordinating Board, the Finance Committee received public testimony on Article III.  TXSC Executive Director Christy Rome testified on behalf of the Coalition.  She asked legislators that if they are to honor the legislative intent from 2011 to reduce districts’ reliance on ASATR, that they do so in a manner that also honors the legislative intent from 2006 when ASATR was created and schools were told they would not receive any less funding as a result of the reduction in property taxes.  She asked that at the very least lawmakers restore the funding cuts made last session as a step toward providing the resources schools need to meet state expectations.  A copy of the written testimony submitted can be found at the link below.

TXSC Written testimony

 

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