AISD funding situation dire, panel hears

On the second day back in school for students, Austin Independent School District Chief Financial Officer Nicole Conley briefed the Council Audit and Finance Committee on the severe financial challenges the district is facing.

Or, as Council Member Laura Morrison put it: “You refer to it as a challenge. But, for me, it seems like a community emergency.”

Conley said the state’s recapture provision, also known as the Robin Hood plan, has crippled AISD’s finances. She said while she understands the initial logic behind the recapture provision — money from so-called property-wealthy school districts is “recaptured” to help fund property-poor school districts — the plan hits AISD unjustifiably hard.

For starters, Conley said the AISD student population is 63 percent economically disadvantaged, which doesn’t seem like a statistic from a property-wealthy school district. Regardless, AISD has paid approximately $1.5 billion to the state since 2002 under the recapture provisions. AISD, Eanes ISD and Lake Travis ISD together make up 20 percent of the total statewide recapture payments.

For the FY 2015 budget, the state is expected to recapture $175 million in local school property taxes. If property taxes increase as projected, the state is predicted to recapture approximately $301 million by 2018. Conley said the revenue loss comes as the district is trying to rebound from a permanent $50 million state cut.

“Our situation continues to be very bleak and challenged,” Conley said.

In response to the district’s financial situation, Conley said AISD used reserves to help balance the budget for the past several years. After implementing $75 million in cuts and efficiencies over the past four years, Conley said AISD must now consider cutting programs she believes help the district’s graduation rate. Full-day pre-K and early college programs are among the nonstate funded initiatives potentially on the chopping block.

“We’ve gone after the low-hanging fruit, so we are sort of at bare bones conditions now,” Conley said. “We are at the painful options of really making the trade-offs that will have detrimental effects on the kind of educational opportunity we offer to our students.”

As for potential solutions, Conley said AISD is contemplating a future tax ratification election to help bring in additional revenue. However, she said the district is conscious of the increasing tax burden on Austinites. Conley also acknowledged that a tax ratification election could be difficult to sell to voters since half of any new tax revenue would go back to the state under the recapture law.

Conley’s presentation had a noticeable effect on the Council members who serve on the Audit and Finance Committee.

“I can hardly imagine trying to govern with the financial situation like you all are in,” Morrison said.

The presentation came a day after AISD and several elected officials held a news conference on the recapture issue. AISD Board President Vince Torres asked that the Austin City Council formally support the AISD position that the legislature reduce the money the state will recapture from the district in 2015.

In response, Morrison, Mayor Pro Tem Sheryl Cole and Council Member Kathie Tovo said they would be interested in adding the recapture issue to the city’s legislative agenda.

Audit and Finance Committee members also discussed the possibility of using city and county dollars to help fund AISD community programs. But Morrison said spreading public awareness on how much money the state recaptures from AISD should be a priority.

“I think that helping the community understand what is going on is part of the key to solving this issue,” Morrison said.