An op-ed in Tuesday’s News-Journal demonstrated that, unlike a loaf of bread, half a truth is definitely not better than none.
In “A school finance detail that could cost local districts $1.8 billion,” the writer says the Senate’s plan to use current-year property values in determining state aid and recapture “would save the state $1.8 billion each year, but would mean a corresponding loss for local school districts.”
What she conveniently leaves out is that the Senate plan would put those savings back into higher formula funding for all school districts. This would be a major gain for all Gregg County school districts — every single one would be better off with that money added to the basic allotment — but it would be a loss for the wealthy school districts that she represents. While the percentage of value growth is a factor, it is a minor one compared with the impact of property wealth. Here is a simple example using rounded numbers of why this is the case:
Kilgore is a property-poor district with a wealth of about $300,000 per weighted student. As a result, it can raise $30 per weighted student for each penny of tax rate or $3,000 with a Tier 1 tax rate of $1.00. If its property values increase by 10%, it gains $3 per penny per weighted student or $300 from its Tier 1 local share tax.
Carthage is a nearby wealthy district with $750,000 per weighted student in property values. It can raise $75 per penny or $7,500 with its $1.00 rate. A 10% increase would give it $750 more dollars for that rate, and that money would be “outside the system” and not recaptured that year.
Here’s the relative importance of wealth compared to growth. If Carthage only grew by 5 percent, it would still receive $375 more from a $1 of tax rate — $75 more than Kilgore would raise — even though Kilgore had twice the rate of growth.
The really big winners from prior-year values are the members of that writer’s Texas School Coalition, like Highland Park. Here’s how they compare to Longview:
Highland Park is a wealthy district with more than $2,000,000 per weighted student in property values. It can raise more than $200 per penny or $20,000 with its $1 rate. A 10 percent value increase would give it $2,000 more for that rate, and that money would be “outside the system” and not recaptured that year. Longview is an average wealth district with about $400,000 per weighted student. It raises about $40 per penny, or $4,000 with a $1 tax rate and a 10 percent value increase would only give them $400, or only one-fifth of what Highland Park would benefit.
In other words, if Highland Park had only half the value growth of Longview, it would still gain more than twice as much money.
Every district in Gregg County would have been better off in every one of the past four years by anywhere from about $100 to more than $400 per student if the Legislature had already put the savings from using current-year values into the basic allotment. Let’s not go another year subsidizing Highland Park taxpayers.