State+Formula+Insights

The three basic issues that affect the state formula are:

1. Property Value Decline (limits loss of funding) When the economy experiences a recession there will be decline in actual property values, this in turn will directly impact the amount of property tax that a school can receive per property. Property taxes are a major factor in school budgets. As property values decline, so does the amount of revenue that can be generated through the main vein of school district's finance. In most urban districts, property values have decreased, due to the lack of economic development and beautification efforts have been non-existent. The suburban flight has left the inner structure of the inner-city reeling due to the fact that most residents are no longer in property that has major value and the amount taxed in most cases is considerably less than in past years. However, the salaries, benefits, and needs of the district have increased. The districts may have less funding to lose as a result, but the gap exists between actual cost and generated capital from property taxes.

2. ADA decline (limits loss of funding) As the amount of students decline, so does the amount of money generated from the state. Urban districts that are experiencing suburban flight have major budget issues due to the loss of ADA funds. Successful school districts have had to make tough decisions over the years as the number of students continue to decline. Major cities such as San Antonio, Dallas and Houston have schools that are under-utilized because the students are no longer living in the boundary. The cost of maintaining the schools outweigh the amount of revenue generated by the ADA and other sources. The school districts have become a victim of their own success. As the students, who are initially served, grow up and out of the school system, the area is not being repopulated with other kids to maintain adequate numbers to justify the amount of capital needed to run the schools (i.e. the school's population was 2700 kids 15 years ago and now they are struggling to get 1200 in the building). The loss of capital due to ADA is major, especially when the cost of running the school is on the steady increase. The suburban districts are not far behind; in 10 - 15 years... they will experience the same dilemma.

3. Compensatory Education and Chapter 41 The need for the compensatory education allotment is critical. As our country continues to experience a recession, we have experienced more cases of "situational poverty". As parent lose jobs, their income is affected and students who have never had to suffer are now experiencing a life change. For the first time in their lives they need assistance with free or reduced lunch. The school districts are being caught off guard due to the fact, this same child or population of children was not considered in previous years in the Compensatory Education allotment of funds. Situational poverty is acute and it give little to no warning and in most cases the state has not funded these students because the poverty may not have occurred until July or August of the current school year. This will impact a district's ability to maintain test scores and meet the minimum standards set forth by the state. Therefore it is imperative that the numbers are accurate and reported timely.

Chapter 41 has had a huge impact on the state formula as well. In consideration of Chapter 41 and compensatory education, the complications of situational poverty in suburban districts combined with the loss of Chapter 41 funds make it a challenge to meet the needs of the "non-traditional" free and reduced lunch student that is identified after the funds have been distributed for compensatory education and usually after the Chapter 41 funds have been collected. The families are often hesitant to admit that jobs have been lost and life changes are occuring.