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Legislative Update

Moak, Casey and Associates November 12, 2010. Legislative Update. The 82 nd Legislature. Leadership. All statewide executive offices remain the same Senate turnover was minimal Two new Senators replacing retiring members Balance between Republicans and Democrats unchanged

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Legislative Update

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  1. Moak, Casey and Associates November 12, 2010 Legislative Update

  2. The 82nd Legislature

  3. Leadership • All statewide executive offices remain the same • Senate turnover was minimal • Two new Senators replacing retiring members • Balance between Republicans and Democrats unchanged • 38 new Representatives in the House • Two of the 38 previously served • 31 incumbents defeated or retired • 99 Republicans, 51 Democrats

  4. Location of New House Members

  5. Issues • Speaker’s Race • Legislative issues that did not get much attention in the House last session • Voter ID • Border security / Arizona law • Vouchers • Appraisal caps • Taxpayer Bill of Rights

  6. House Newcomers’ Views on Public Education 6 made a specific or somewhat direct comment in favor of more local control 4 made favorable comments about supporting “vocational training” 3 made clear or implicit comments opposing vouchers, 1 made comments supporting more “school choice” 7 made anti-bureaucrat/anti-administration comments (one wants to restore the 65% rule) 4 made comments supporting merit pay for teachers 23 had no specific references to public ed on their web sites

  7. Redistricting

  8. Legislative calendar Pre-filing began November 8 First day of session January 11

  9. State Budget Outlook

  10. State Revenue • No new revenue estimate until January • Senator Watson’s request • Known current shortfalls in sales tax and business tax • Roughly $1.5 billion short in Sales Tax • About $0.5 billion short in Business Tax • Likely shortfall in revenue greater

  11. 2009 2008 2007 2010

  12. Public Education is 44% of total appropriated

  13. State Appropriations Reductions • Governor, Lt. Governor, and Speaker asked state agencies to reduce expenditures by 5% for biennium • $1.250 billion in cuts identified • Legislative appropriations requests must start with the reduced amount as the base • Directed agencies to create an alternative with a further 10% reduction • Worth about $3.5 billion if fully implemented

  14. Public Education is 7.7% of amount subject to cuts

  15. Major Agency LARs • Cost of Current Services as stated in requests • TEA shows increased cost of the FSP of $5.7 B, plus replace $3.25 B in ARRA funds • HHSC needs $1.5 billion in new funding, plus replace $3 billion in ARRA funds • DADS replaces $598 M in stimulus funds • TRS needs $411 M for current rates due to growth

  16. Appropriation Outlook

  17. Appropriation Outlook • 44% of $15.363 billion is $6.760 billion • Rainy Day Fund is expected to have a balance of $9.2 billion available

  18. School Finance Issues

  19. School Finance Issues Cuts for Current Biennium Legislative Options for School Finance School District Efficiency Proposals Tax Rate Elections

  20. Budget Cuts (Current Biennium) FSP exempted from 5 percent cuts for current biennium $135.5 million in cuts submitted by TEA $126.3 million accepted by LBB

  21. Budget Cuts (Current Biennium)

  22. Budget issues for 2012-13 biennium • Declining or flat property values combined with increased enrollments will increase state costs • Budget components for public education • Textbooks • Grant programs • Foundation School Program

  23. 2012-13 Biennium Budget Instructions for TEA 10 percent reduction from 2010-11 biennium base $42.6 billion foundation program exempted from reductions $261 million in cuts mainly to grant programs offered by TEA

  24. Programs Recommended for Elimination in LAR • Science Lab Grants ($35 million) • FSP Extended Year Program ($14 million) • Teacher Mentor Program ($13 million) • Middle School PE and Fitness ($11 million) • Rural School Technology Program ($7 million) • Steroid Testing ($1.8 million) • Texas Humanities ($1.5 million) • AVANCE ($850,000) • FSP Investment Capital Fund ($690,000)

  25. Programs Recommended for Reduction in LAR • Textbooks (10.9% of $441 million) • Student Success Initiative (14.6% of $291 million) • Texas High School Completion and Success (15% of $87 million) • Communities in Schools (10.9% of $32 million) • Assessment Program (4.4% of $114 million) • Education Service Centers (4.7% of $43 million) • Center for Improvement of Districts and Schools (10% of $4 million) • Industry Certification Exams (25.9% of $1.35 million)

  26. Programs largely protected in LAR Pre-Kindergarten Early Start ($209 million) DATE (slight reduction from $393 million base) AP Incentive Program ($28 million) LEP SSI ($19 million) Texas Reading and Math Initiatives ($16 million) Virtual Schools ($20 million) Teen Parenting ($20 million) Services for Students w/ Visual Impairments ($11 M) DAEP Funding ($9.5 million) Teach for America ($8 million) Seatbelt Program ($4 million)

  27. Legislative Views on Pub Ed Funding Having this majority ought to "make it easier to reduce spending in the non-priority areas,” Branch says. Just which areas meet a “non-priority” definition could prove to be next session’s greatest point of disagreement, but Branch identifies both education and health and human services — responsible for the bulk of state spending — as the places Republicans will likely look to chop. “Those areas are going to have to do their fair share,” he says. “And I think when it comes to education [versus] health and human services in terms of the traditional role of government, education has the priority.” - DMN, 11-4-10

  28. How might the legislature reduce funding for public education? • Shift costs to local school districts • Reductions to textbook program • Additional reductions to grant programs • Reductions to the Foundation School Program

  29. How might the legislature reduce funding for public education? • Increase district costs • TRS • TRS Care • Stop providing services, passing costs to districts • Textbooks • TEA base budget request did NOT include: $495 million for new materials (Prek, ESL, Grammar and English, Spelling, Handwriting); Supplemental Science materials

  30. How might the legislature reduce funding for public education? • Additional reductions to grant programs beyond those proposed in LAR • Pre-K: $209m • DATE: $370m • Technology Allotment: $266m • Student Success Initiative: $249m

  31. How might the legislature reduce funding for public education? • Reduce the State Cost of the Foundation School Program • Payment delay: $1.9 billion one time savings • Formula reductions / reductions to ASATR (ASATR = $2.5 B per year, more than 3/4 of districts receive) • Under-appropriate and rely on proration • Increase state compression percentage

  32. School District Efficiency Proposals • Comptroller Financial Allocation Study of Texas • Expected this fall • Likely to include web based database of performance and adjusted spending level for schools and districts • Education Research Group • Continued legislative interest in ERG model

  33. Tax Rate Elections

  34. Education Jobs Funding $830 million available for Texas Doggett amendment would require assurance of maintenance of education’s share of state budget next biennium, Title I distribution Texas submitted modified application, rejected by USDE Two opportunities for funds: repeal of Doggett amendment, delay until post legislative session

  35. Property Tax Issues

  36. Outline of Property Tax Issues Attorney General Opinions on Tax Rates Natural Disasters and Rollback Tax Rates Appraisal District Methods and Assistance Program (MAP) Reviews Adoption of Tax Rates in Excess of 50 Cents Appraisal Caps Taxpayer Bill of Rights

  37. Adoption of Tax Rates in Excess of 50 Cents Slower property value growth may squeeze school districts with high debt-tax rates Must demonstrate ability to service old and proposed debt at a 50-cent rate before new issue State funds pledged to meet 50-cent test must be transferred to Debt Service Fund before a rate in excess of 50 cents may be adopted

  38. Concluding Remarks

  39. Lynn M. Moak Daniel T. Casey Partners Amanda Brownson, Ph. D. Bob Popinski Maria Whitsett, Ph.D. Joe Wisnoski Associates Kathy Mathias Larry Groppel Ed. D. Thomas V. Alvis Ph. D. Consultants Chris Grammer Intern 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

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