Texas Windmills Make Schools Share With Poorer Districts

Giant turbines that give Texas the largest wind-generating capacity among U.S. states have forced seven school districts facing budget cuts to share new wealth from the equipment under the state’s education-finance system.

The Hermleigh Independent School District had to give up $2 million a year -- about the same as its annual budget -- after growth of local wind-driven generating capacity spurred a 10- fold increase in district property values per student, according to a report from Standard & Poor’s.

“You’re only allowed to generate so much revenue, and if you generate more, you have to give it to the state,” said Superintendent Gary Rotan from Hermleigh, about 250 miles (400 kilometers) west of Dallas. He cited the so-called Robin Hood provisions of the law. “Nobody likes to give away money.”

The district’s plight shows what many in the state’s $40 billion school-funding system have known for years: “It’s broken,” said Christy Rome, executive director of the Texas School Coalition in Austin. Her group represents districts that have shared $15 billion under the Robin Hood provision.

Texas ranks 44th in high school graduation rates among U.S. states, according to data compiled by the Legislative Budget Board. The state places 39th in per-pupil spending, averaging $9,128 for each of 4.85 million students, half of them Hispanic.

Dysfunctional System

What has proven to be a dysfunctional school-finance system will come under increased scrutiny as five consolidated lawsuits contesting budget cuts last year go to trial Oct. 22. State lawmakers, who engineered the $5.4 billion spending reduction, are hustling to fix it before a judge orders changes.

With the 2013 budget-writing session set to start in January, the Legislature and Governor Rick Perry are gearing up for a battle over whether to restore some cuts by dipping into a projected $8 billion reserve fund. Perry, a Republican, has ruled out use of the so-called Rainy Day fund. Lawmakers are also exploring new financing methods to provide additional money as a way to improve education quality.

State leaders, including Perry, have drawn criticism from supporters of increased school funding because of pledges they’ve made not to raise taxes and to preserve the reserve fund for emergencies .

“There is a faction in the state of Texas that wants to not invest in education,” said Representative Mike Villarreal, a Democrat from San Antonio, at an Oct. 2 briefing for reporters. “The root problem is our inadequate tax system. It’s just a matter of political will.”

Unpopular Effects

In a survey of Texans last year, 90 percent said public schools need more money and 85 percent said education wasn’t a high enough priority for lawmakers, according to the Texas Association of School Boards. Raising local taxes for schools was supported by 69 percent, though in some cases, any increase would have to be partly shared with other districts.

Besides the Robin Hood provision, put in place in response to an earlier court decision, school districts must contend with revenue-raising limits lawmakers imposed because of another judicial ruling.

While the Legislature decided that the state should pick up a larger percentage of education costs, it restricted local property-tax increases. Yet a business levy lawmakers restructured in 2006 to help provide more funding to public schools has consistently failed to meet revenue estimates. In fiscal 2012, which ended Aug. 31, it generated $2.71 billion, 6.9 percent below the budget forecast, according to state data.

Shrinking Windfalls

When once-poor school districts suddenly find themselves with new property wealth from wind-energy projects or expanded oil and gas drilling, they often have to give part of the money to poorer districts before investing in buildings or teachers.

The Robin Hood law, designed to equalize wealth between those districts with large property-tax bases and poorer areas, has grown into a bureaucracy that has more school systems giving money to the state than ever before. With 23 districts added to the list this year, more than a third of the total, or 374 out of 1,029, send new-found property tax revenue to the state.

Though 89 percent of the 2,575 students in the Port Isabel Independent School District are “economically disadvantaged,” the system sends $20 million a year to the state under the Robin Hood law because Gulf Coast resort property in the district classifies it as wealthy, said Superintendent Lisa Garcia.

Squeezing Schools

The lost revenue translates into larger class sizes and less money to spend helping students who struggle to meet state testing standards, Garcia said.

“It equates to less instructional material, older facilities and buses we can’t afford to replace,” she said. “We’re penalized for being a wealthy district but we have less to spend than surrounding districts.”

For a year, the E.On Ag (EOAN) wind farm on Roscoe, Texas, cotton fields boosted local school-district property taxes so much that the system had to share some of its revenue.

A year later, after the wind-powered turbines were depreciated for tax purposes, it rejoined the ranks of poor districts and bore its share of the $5.4 billion of spending cuts in the current budget, said Superintendent Kim Alexander. The district hasn’t replaced eight teachers dismissed in the 2003-2004 school year while enrollment has grown 59 percent to 465 students, he said.

“We haven’t been able to add back any teachers,” Alexander said from the district about 230 miles west of Dallas. “This is not a new problem.”

To contact the reporter on this story: Darrell Preston in Dallas at dpreston@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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