Fate of the ‘Hold Harmless’ Funding Mechanism Could Affect the Bottom Line for School Districts

Texas lawmakers are about to spend a lot of time talking about how the state funds its public schools.

By Kate McGeeDecember 29, 2016 9:29 am| , , , ,

Audio will be available shortly. 

From KUT

About 10 years ago, the state legislature provided some property tax cuts by compressing property tax rates. But public schools in Texas depend on local property taxes for funding. School districts were worried what this might do to their bottom line. So, lawmakers put in something called a “hold harmless” provision.

“They promised districts they wouldn’t lose any funding as a result of that tax rate compression so they created this ASATR, Additional State Aid for Tax Reduction,” explained Chandra Villanueva, a school finance expert with state policy think tank the Center for Public Policy Priorities.

Instead of funding schools based on the formulas school districts currently use, schools were simply guaranteed the same amount of funding they got in 2006.

“That just set their funding frozen in time based on that level. So, it no longer matters how many economically disadvantaged students they have, how many [English language learners], all that matters is they get that historic level of funding,” Villanueva said.

Over the years, lawmakers have tacked on a variety of hold harmless provisions, and they’re political.

No lawmaker wants to head home after the legislative session and have to tell their school districts they lost money. That’s why when lawmakers put ASATR in place, most Texas school districts got funding from it because most districts were affected by the compressed tax rate.

But, slowly, districts were weaned off that system.

Most Central Texas districts don’t receive money through ASATR anymore, but nearly 175 school districts still do. That provision is set to expire in September and some districts say without money from ASATR, they’ll have to close their doors. For instance, Webb CISD outside Laredo gets nearly half of its maintenance and operations budget from ASATR.

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