Texas school districts still could feel ill effects of coronavirus pandemic on budgets next year

Apr 20, 2020 by

Coronavirus already has wreaked havoc on school districts — closing campuses for the remainder of the school year, shifting learning online, and exposing a wide digital divide between students who have ready access to the internet and those who do not. And that is only this year.

Next year, even if the restrictions are lifted, the coronavirus still could spark a budget crisis for traditional and charter school districts across Texas.

School finance officials and state leaders already are warning that the economic disruption caused by the pandemic, coupled with the ongoing oil slump, could result in a plunge in state revenues as sales taxes drop and commercial property values slip. Texas Comptroller Glenn Hagar already has said the state is in a recession.

As districts work to finish their 2020-2021 budgets for approval this summer, Rep. Dan Huberty, R-Humble, said it would be prudent for them to squirrel away some money, even if it is too early to tell how much of an impact the pandemic will have on funding next year.

“Talking to superintendents, my message to everybody is, let’s get through this year, let’s get to summer time, and next session we’ll need to watch things very closely,” Huberty said.

The state comptroller’s office is slated to give an updated economic forecast in June, but districts must approve their budgets in June or August, depending on when their fiscal years begin.

Districts across Texas already were working through seismic changes before schools and much of the country shut down last month, thanks to changes ushered in by a school finance overhaul passed by the 2019 Legislature.

The reform bill, HB 3, requires districts to base their upcoming budget on current year property values, instead of the previous year’s values. Districts receive a larger infusion of state money too, but the rate at which they can tax local property owners effectively will be capped by the state, said Catherine Knepp, an associate at the Moak, Casey & Associates school finance consulting group. How much local tax rates have to be lowered depends on the rate local property values rise and several other factors.

“Districts were still figuring out how to do that,” Knepp said, “Then enter coronavirus.”

For local revenues, Knepp said districts most likely to be impacted by the coronavirus closures will be those in which a larger share of their tax bases are commercial or industrial property rather than residential. About 60 percent of Deer Park ISD’s tax base, for example, comes from industrial properties that could suffer if the oil slump continues or if businesses there shut down entirely.

Pete Pape, assistant superintendent for business services in Deer Park ISD, said he already was concerned about the sustainability of the changes made in HB 3 before the coronavirus spread to the United States. Those concerns have been compounded with the current economic situation.

“When the Legislature meets, they all have what they want to get done. In a good year or biennium, you never have enough money,” Pape said. “This next one is going to be even less, so you wonder what are the priorities going to be?”

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Texas school districts still could feel ill effects of coronavirus pandemic on budgets next year – HoustonChronicle.com

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