Emails, Joe Wisnoski, associate, Moak, Casey, and Associates, March 21-22, 2018

From: Selby, Gardner (CMG-Austin)

Subject: A fresh inquiry for a fact-check

 

I write afresh regarding what happens (and what’s going to happen) to recapture payments submitted by property-rich school districts.

 

We’re fact-checking the claim in this recent tweet: The state is set to recapture an additional $500 million in Robin Hood payments from taxpayers and not one penny of it will go to public education in Texas. Instead, the state government is confiscating our property tax dollars to pay its own bills.”

 

Is this statement accurate? Why or why not?

 

What law or other guidance speaks to what happens to recapture monies?

 

Other comments or suggested research resources?

 

As ever, we rely on attributable on-the-record information for our stories. We’re trying to complete this fact-check this week.

 

g.

 

Want our fact checks first? Follow us on Twitter.

W. Gardner Selby

Reporter / News

Austin American-Statesman

PolitiFact Texas

1:07 p.m.

The general appropriations act for the current biennium shows an appropriation of recapture of $2,049,900,000 for fiscal 2018, and $2,521,000,000 for fiscal 2019.  That is an increase of $471,100,000 for fiscal 2019.

 

All recapture funds are appropriated to finance the Foundation School Program.  The statement is false to the extent that it implies recapture funds are directly spent on functions of state government other than public education.

 

The statement is true in the context that the amount of recapture paid has no direct impact on the amount of state aid paid to school districts.  State aid earned by school districts is based on formulas set in statute, and the amount of recapture in and of itself does not impact those formulas directly.  Recapture is a method of finance for the appropriation for the Foundation School Program, so increased recapture means the state needs to draw less money from other sources to total up to the amount of Foundation School Program state aid, like state general revenue.  If recapture decreases, the state would need to draw more from other sources.  All other things being equal, higher recapture alleviates the need for the legislature to use general revenue on public education formula funding, and allows those funds to be used elsewhere in the state’s budget.  Of course, it is rare that all other things remain equal.  One could argue that forecasted recapture is taken into account by the legislature when they decide how much can be spent on the Foundation School Program, but there is nothing in statute that links the amount of recapture to any of the funding elements for the FSP.

 

Joe Wisnoski

Moak, Casey, and Associates

From: Selby, Gardner (CMG-Austin)

Sent: Wednesday, March 21, 2018 2:53 PM

Subject: More

 

I fielded this elaboration from the candidate. I believe he means $1.6 billion in the $1.6 million reference. Does this resonate with you? Why or why not?

 

FROM MIKE COLLIER:

 

What I say specifically is that the increase in recapture, $500 million, does not go to any school.

 

If you go to page III-1 of the budget, you will see that the state funding of public education declines by $1.6 million, This is the general revenue line ($19.1B in 2018 and $17.5B in 2019).  At the same time, recapture payments increase from $2.0B in 2018 to $2.5B (this is appropriated receipts in other income line).  So despite higher recapture payments, overall funding is down.

 

The only way anyone could argue that $500 million increase in recapture payments was staying in schools would be to show an overall increase in school funding by $500 million.  

5:08 p.m.

His comment is in line with the view that I expressed in the second part of my original response, that the higher recapture does not add to the funding, it just offsets state general revenue, and allows the state to spend GR elsewhere.

 

There are other reasons for the estimated general revenue to go down from year to year, such as the interplay between the instructional materials allotment (mostly appropriated in the first year of the biennium), which comes from the available school fund, and the per capita allocation of the ASF, which is also a method of finance for the Foundation School Program.

 

It's complicated.  Hard to make it a simple answer because of all the interactions and multiple sources of funding.  If you want to have a taste of how the legislature struggles with this, listen to the first hour or so of the School Finance Commission workgroup on expenditures yesterday at the link below:

 

http://www.house.state.tx.us/video-audio/capitol-events/

 

Joe Wisnoski

Moak, Casey, and Associates

 

(NOT WISNOSKI) From: Tom Canby

Sent: Thursday, March 22, 2018 9:55 AM

To: Selby, Gardner (CMG-Austin)

Subject: RE: A fresh inquiry for a fact-check

TASBO concurs with Joe Wisnoski’s overall comments and wishes to provide additional information and insights below.

 

Relevant information on this PolitiFact topic are found in the Texas Commission on Public School Finance presentation by the Texas Education Agency on February 8, 2018, School Finance Trends, showing state and local revenue sources in slide 7 excerpted below that I have summarized in the table below the chart.

 

 

Billions of Dollars

Methods of Finance for the Foundation School Program (FSP) for the 2016-2017 and 2018-2019 Biennia

2016-2017 Biennium

2018-2019 Biennium

Increase/Decrease

Lottery Proceeds

$2.4

$2.6

$0.2

Available School Fund & PSF

$2.8

$3.5

$0.7

Property Tax Relief Fund & Other

$3.0

$3.6

$0.6

State General Revenue & FSF

$31.2

$29.4

$1.8

Total State Sources

$39.4

$39.1

$0.3

 

 

 

 

Local Property Tax Collections

$53.8

$59.8

$6.0

Appropriated Receipts (Recapture)

$3.8

$4.6

$0.8

Total Property Taxes

$57.6

$64.4

$6.8

 

Considering the average increase Texas public school student enrollment is 80 thousand students per school year, these summary figures clearly show how the General Appropriations Act reliance on property tax collections plus the expected $4.6 billion in recapture or an increase of $800 million in recapture for the biennium, to fund student enrollment growth during the 2018-2019 biennium. The projected increase in recapture of $800 million combined with the expected decrease of $300 million other revenue sources (excluding property taxes) does indicate a state-level public policy strategy that effectively allows the state to direct increased amounts of non-property tax revenue sources to fund the overall increase in the state of Texas’ budget for all non-public school related purposes from the 2016-2017 biennium to the 2018-2019 biennium.

 

Please let us know if you have additional questions.

 

 

 

Thanks,

Tom

 

 

Tom Canby | Associate Executive Director

Texas Association of School Business Officials

From: Selby, Gardner (CMG-Austin)

Sent: Thursday, March 22, 2018 8:04 AM

Subject: RE: A fresh inquiry for a fact-check

 

Does this strategy solely show up in the 2018-19 biennium or has it played out a few times before—by which, I think I mean, recapture amounts escalate in the second year as general revenue decreases?

 

Also, I am still having trouble reconciling this with the clear stipulation in law that recapture funds go to the Foundation School Program.

 

G.

10:50 a.m.

March 22, 2018

I think a better way to look at the relationship is that general revenue naturally decreases as a function of, or because of, increased recapture, all other things being equal.

 

The legislature could choose to keep general revenue spending at the same level as the previous biennium by increasing formula elements (and at least arguably is required to increase the Austin yield), but this biennium did not choose to spend as much general revenue as the past.  Nothing in statute or the constitution requires the legislature to maintain general revenue spending  from one biennium to the next.  Recapture increases and other state revenue source increases allowed the formulas to be maintained (or increased in the case of the Austin yield), and the state to pocket a savings to general revenue that allowed it to spend elsewhere in the state budget.

 

Joe Wisnoski

Moak, Casey, and Associates