HISD’s top priority as 85th Legislature convenes: School finance

As the 85th Texas Legislature convenes today in Austin, the state’s school finance system is the top priority on HISD’s legislative agenda, and the district will ask state lawmakers to make changes that would keep local tax dollars in Houston schools.

Under the state’s current school finance system, HISD is considered “property wealthy” and is subject to sending $162 million in local property taxes to the state – a process known as “recapture.” But on Election Day, Houstonians voted down the ballot measure that would have authorized the $162 million payment and future payments totaling more than $1 billion. This means that, starting in July, the Texas Education Agency can detach $18 billion worth of nonresidential, commercial property from HISD’s tax rolls and reassign those businesses to other school districts for taxing purposes. The TEA will continue to detach property every July for the foreseeable future.

So, what comes next?

HISD’s Board of Education urges the Legislature to stop the detachment and reassignment of commercial property in Houston before June and reduce its over-reliance on local property tax dollars to fund public education statewide, replacing those local tax dollars with state funds.

Specifically, HISD’s legislative agenda outlines steps on how to proceed, including:

  • Increasing the state-set “wealth” level, otherwise known as the basic allotment, which reduces recapture;
  • Reducing the tax penalty to local homeowners by recognizing half of the local homestead exemption dollars in the school funding formula, which results in about $60 million in recapture savings;
  • Counting full-day pre-K students in recapture calculations, resulting in $39 million in recapture savings; and
  • Allowing districts paying recapture to receive state transportation funding, resulting in roughly $12 million in revenue for HISD.

Community members who would like to voice an opinion on recapture and school finance can contact their state legislators and learn more about the issue using the resources on this page.

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