September 21, 2016
To Improve Efficiency and Fairness in School Funding, Let ASATR Expire
Chandra Villanueva, [email protected]
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In order to have a fair and efficient system of school finance, all districts must receive funding through the same
system with the same rules.
ASATR (Additional State Aid for Tax Reduction) is a funding mechanism for school districts, created by the
Legislature in 2006, to ensure that no district would lose funding as a result of Maintenance and Operation
(M&O) tax rates being compressed by one-third. To implement this hold harmless provision, TEA set a target
revenue level for each district based on funding levels before the tax rate compression.
Districts that receive ASATR are considered “off-formula” meaning that funding levels are determined by the
historic measures used to establish the revenue target, as opposed to the various funding adjustments in the
Foundation School Program formulas. In essence, these districts are being funded by entirely separate school
finance system that is not tied to current costs or needs.
In its first year, nearly all districts (1,217) received this funding at a cost of $2.3 billion to the state. For the last
couple of sessions, the Legislature has decreased the number of districts “off-formula” by instituting an ASATR
reduction factor and through incremental increases in the basic allotment. For fiscal year 2017, it is estimated
that only 173 districts will still receive ASATR at a cost of $220 million to the state.
The Legislature should let ASATR expire at the end of 2017 for the following reasons:
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ASATR no longer fulfills its original purpose. ASATR was supposed to help districts transition after the
M&O tax rate compression. The vast majority of districts, 87 percent, are back “on-formula” funding and
do not benefit from ASATR.
The current distribution of districts still on ASATR is arbitrary. Because ASATR is tied to funding levels at
a historic point in time, there is no current justification for why those few districts continue to receive
additional funding.
ASATR adds another level of complication to an already complex system of school finance. Hold
harmless provisions based on historic data, like ASATR, require additional calculations that are not
aligned with current cost or need.
The Legislature should reinvest the $220 million in savings from the expiration of ASATR back into
public education:
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Increase the basic allotment –the state is again anticipating growth in local property tax revenue,
estimated to free-up nearly $2 billion state dollars. Combined with the $220 million from ASATR
expiring, these funds could be reinvested back into the school finance formulas by increasing the basic
allotment. An increase in the basic allotment would reduce the amount of funding lost by ASATR
districts.
Invest in early education –ASATR funds could be used to fulfill TEA’s exceptional item request of $118
million to increase funding for the HB 4 High Quality Pre-K Grant Program.
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Any changes to the school finance system should increase equity and efficiency within the system as a
whole, not protect the historic interests of a select few.
7020 Easy Wind Drive, Suite 200 • Austin, TX • T 512.320.0222 • F 512.320.0227 • CPPP.org
For more information or to request an interview, please contact Oliver Bernstein at [email protected] or
512.823.2875.
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About CPPP
The Center for Public Policy Priorities is an independent public policy organization that uses research, analysis
and advocacy to promote solutions that enable Texans of all backgrounds to reach their full potential. Learn
more at CPPP.org .
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Twitter: @CPPP_TX
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