Houston Independent School District Legislative Agenda for the

1. Houston Independent School District Legislative Agenda for the 81st Session of the Texas Legislature Learning Labs presentation (January 13, 2009)

2. Overview of HISD 2

3. HISD’s Legislative Priorities • Prekindergarten Funding • Teacher Performance Pay • Accountability System • School Finance 3

4. Full-Day Prekindergarten Funding • HISD has invested local funds and received an expansion grant from TEA to increase access to full-day prekindergarten for eligible students. • Although the TEA grant helps with HISD’s efforts, the district believes that the state needs to provide formula-funding for full-day prekindergarten so that districts can have a consistent funding source. 4

5. Teacher Performance Pay • HISD has created the largest teacher-performance-pay program in the country and last year paid $22.6 million to its instructional staff. • The district is starting to see amazing improvements in student achievement that can be attributed to ASPIRE, which is our comprehensive approach to teacher support and effectiveness and includes a performance-pay component. • 157 HISD schools earned the highest academic ratings under the state’s accountability system, nearly double last year’s number. • The state should continue to support performance pay and provide an opportunity for districts with performance-pay programs to continue to see if this reform works. 5

6. Accountability System • The current accountability system currently focuses more on sanctions and less on support. As an example, the lowest performance of one group in one subject at a school campus determines the performance rating of the entire school. • The state should support an accountability system that is accurate, fair, transparent, and accounts for student growth. It should make use of methods that reduce the bias against large school districts with diverse student populations. 6

7. School Finance—Chapter 41 • HISD was designated a Chapter 41* district in 2007–2008. • In fiscal year 2008, HISD will be at the first level of recapture and will have a $3.5 million net revenue loss. * See page 8 of this presentation for a detailed explanation of “Chapter 41” 7

8. What is Chapter 41? Chapter 41 of the Texas Education Code makes provisions for certain school districts to share their local tax revenue with other school districts. For the purposes of the school finance system in Texas, districts are designated as either property wealthy or property poor. The relative wealth of the school district is measured in terms of the taxable value of property that lies within the school district borders divided by the number of students in weighted average daily attendance (WADA). Chapter 41’s provisions are sometimes referred to as the “share the wealth” or “Robin Hood” plan because districts that are deemed to be property wealthy are required to share their wealth with property-poor school districts. The funds that are distributed by the property-wealthy districts are “recaptured” by the school finance system to assist with the financing of public education in school districts that are property poor. What is a Chapter 41 district? A “Chapter 41 district” is a district that is subject to the provisions of Chapter 41 of the Texas Education Code. The determination that a school district is subject to these provisions is based on Section 41.002, Texas Education Code, which establishes three equalized wealth levels. These equalized wealth levels represent the maximum property tax base that a school district is allowed to retain at various levels of tax effort. A school district for which the wealth level exceeds the lowest of the equalized wealth levels is subject to the provisions of Chapter 41. Before the beginning of each school year, the Texas Education Agency (TEA) notifies school districts that will be subject to these provisions. From the Texas Education Agency’s Manual for Districts Subject to Wealth Equalization, 2008–2009 School Year 8

9. School Finance—Target Revenue • With a target revenue that is set at 2006–2007 revenue, the district will have difficulty covering costs associated with increasing academic standards, competitive salaries, and the day-to-day operation of schools. 9

10. Operational Cost Increases The costs associated with the day-to-day operations of the school district have increased tremendously. 7

11. Appropriations2003 to 2009 Based on TEA-reported data, 71.5 percent of HISD’s 2007 budget was dedicated to academic services; 28.5 percent went to operations. 8

12. Local and State Appraisal Values • HCAD has estimated HISD’s local appraisal roll value lower than the state’s property value study. • HISD has not had its local value certified by the comptroller for the last three years. • In fiscal year 2008, the district no longer qualified for the “two-year grace period,” whereby local appraisal roll value is used to estimate the total taxable value for an eligible school district even though the local appraisal roll values are invalid. • If these problems continue, HISD will receive less money as a result of local values being less for tax collection than the value the state uses for the state’s property value study. 9

13. School Finance Issues for the 81st Session • Target revenue amounts for districts need to be addressed. • An inflation adjustment needs to be included in the school finance system to assist districts with the rising cost of operating schools. • School finance formulas need to be updated to reflect the true cost of providing an education, particularly for increased academic expectations, transportation, and needs of at-risk students. • Property-value growth shifts money to the state, thereby decreasing the state share of public education. Reinvesting property-value increases in public education would maintain the state/local share percentage. • Recognition that the state value study process needs to be examined to ensure school districts are not harmed when local values for tax collection are less than the value the state uses for the state’s property value study. 13