Texas Legislature reviewing Hurricane Harvey school costs

When Hurricane Harvey struck the Gulf Coast last August, it caused extensive damage to school facilities in districts that educate about 1.4 million students. The physical and economic damage left in its wake has required some students to attend school in other districts during repairs at their home campuses, while also increasing the number considered academically at-risk and eligible for additional state funding.

Texas is required under the Education Code to reimburse certain costs school districts have incurred from the hurricane, although reimbursement of other storm-related costs is at the Legislature’s discretion.

Speaking at recent hearings of the House Public Education Committee and Senate Finance Committee, the commissioner of education discussed both categories of Harvey-related expenses. For fiscal 2018-19, the Texas Education Agency (TEA) estimates the cost of required reimbursements to be $426 million, with optional costs ranging from $860 million to $1.36 billion. The 86th Texas Legislature could consider some of the costs in a supplemental appropriations bill when it meets during the regular session in 2019.

Enrollment shifts. For districts and charter schools that lost student enrollment due to the hurricane, a one-time adjustment for the current school year is designed to hold them harmless for the declines that otherwise would reduce their state funding under Foundation School Program (FSP) formulas. Education Code, sec. 42.005(d) authorizes the commissioner to adjust the average daily attendance of a school district that is significantly affected by a disaster, flood, or extreme weather event. The commissioner estimates that such adjustments will cost the state $99 million in additional state aid and lost revenue from property-wealthy districts affected by the hurricane that send some of their local tax dollars to the state under the “recapture” system.

TEA is tracking about 17,000 students who changed districts due to Harvey. As of February 20, the agency had approved 76 districts for the funding adjustment.

Property value decline. The hearings focused on several issues related to property valuations in the 60-county disaster area. State funding requirements are different for districts that ordered a reappraisal of property after the hurricane and those that did not.

Districts that reappraised. Tax Code, sec. 23.02 authorizes the governing body of a tax unit that is located partly or entirely inside an official disaster area to order the market-value reappraisal of damaged property immediately after the disaster.

TEA is aware of 12 school boards, including Katy ISD and Spring Branch ISD, that have voted to reappraise 2017 property values in their districts. The agency estimates that local collections of school maintenance and operations tax revenue in these districts will be about $150 million less than anticipated, an amount for which the Legislature could choose to hold these districts harmless during the 2017-18 school year.

TEA says that beginning with the 2018-19 school year, however, it is required by Education Code, sec. 42.2523 to increase state aid to those districts at an estimated state cost of $150 million, based on an assumed 7 percent decline in reappraised value.

Districts that did not reappraise. The Legislature is not obligated to increase state aid to districts that did not order reappraisals but could collect less school tax revenue due to delayed and uncollected tax payments from storm-stricken property owners. Lawmakers could decide to hold those districts harmless at a potential cost of $150 million for the current school year. According to TEA, continuing to hold these districts harmless for the 2018-19 school year would cost between $500 million and $1 billion, which could help them avert budget cuts and teacher layoffs.

Facilities repair. Costs to replace school facilities damaged by Harvey are estimated by TEA to be $907 million. Insurance and the Federal Emergency Management Agency (FEMA) are expected to cover 90 percent of the anticipated losses. Districts that make recapture payments may reduce or eliminate these payments for facility damage costs not covered by insurance or FEMA, at an estimated state cost of $30 million during the 2018-19 school year. The Education Code does not guarantee facilities assistance to districts not subject to recapture. For those districts, TEA estimates a cost of $60 million in fiscal 2019 that the Legislature could consider reimbursing.

Compensatory education. An increase in the number of students eligible for the national school lunch program as a result of Hurricane Harvey will require additional state funding under the compensatory education allotment in Education Code, sec. 42.152. Enrollment in the free and reduced-price lunch program is used to calculate how much extra per-student funding a district is entitled to receive through the compensatory education allotment. The Texas Department of Agriculture, which administers the school lunch program, estimates an additional 80,500 students will qualify this school year. TEA estimates the state cost of the increase at $103 million for the current school year and $44 million for the 2018-19 school year.

By Janet Elliott

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