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Austin ISD paid State $710.6M for recapture, $512.8M more than any other Texas district. Next year, Austin property owners will pay $761.3M

Austin ISD officials said they do not believe the State is having the district pay their fair share in recapture.

AUSTIN, Texas — Austin ISD reported Thursday that the district will have to pay $761.3 million to the State for recapture for the next school year, up $50.7 million from the year prior.

In 2020-21, AISD paid the State $710.6 million, which was $512.8 million more than any other school district in Texas. Houston ISD, the state's largest school district, paid the second-most for recapture with $197.8 million. Austin-area district Eanes ISD paid the sixth-most with $101.8 million.

An AISD official said in a statement Thursday that the district is paying more than what it should.

“That’s what makes our budget even more challenging,” Chief Financial Officer Ed Ramos said. “Our property values continue to escalate in the Austin area while our student enrollment is decreasing. We believe in paying our fair share in recapture but, currently, our share is not fair.”

According to AISD, the recapture payment drains nearly half of the district's budget: $1.7 billion. The state started the recapture system – commonly dubbed by some as "Robin Hood" –  in 1994. It required the state to remove local property tax dollars from districts with the highest levels of property wealth per student in an effort to provide more equal per-student funding across the state. In 1994, the State removed $127 million from 34 school districts in order to equalize funding for public education. Recapture has since grown to roughly 160 districts paying upwards of $3 billion. 

As noted above, Austin ISD pays well more than any other school district in Texas. This disparity in payment comes despite Austin ISD noting that 51.9% of the district’s population is considered "economically disadvantaged."

Austin ISD's recapture payment has grown from $181.1 million in 2015 to the $761.3 million it's slated to pay next year, a 320% increase. 

Austin ISD officials say the State is recapturing much more money than it needs. According to a report from Texas School Coalition, it recaptured an additional $1.4 billion that it did not allocate to schools and did not return to taxpayers.

There has been legislation passed to alleviate the property tax revenue punch to taxpayers. In 2019, lawmakers passed House Bill 3 (HB 3), which restructured how recapture is calculated. According to the Texas Education Agency (TEA) website, HB 3 reduces recapture in three primary ways

  1. The calculation of recapture is now based on local revenue in excess of entitlement instead of equalized wealth levels
    • CEI: Disparities between recapture and non-recapture districts caused by the CEI have been eliminated
    • Transportation: Costs for transportation are now funded equally between recapture and non-recapture districts
    • Entitlement prevails over recapture: Districts are now guaranteed that recapture will not reduce revenue below their entitlement level (TEC, Section 48.257, HB 3 Enrolled Page 92)
  2. Total entitlement increased – note the BA increase as well
    • New allotments were created (Early Education Allotment, CCMR Bonus, Teacher Incentive Allotment, etc.)
    • Existing allotments were expanded (State Compensatory Education, special education, bilingual/dual language)
  3. Lowered property tax rates
    • HB 3 lowered tax rates, resulting in fewer collections
    • HB 3 contains a mechanism to lower future property tax rates

For more information about HB 3, click here. To read the full recapture report from the Texas School Coalition, click here.

For context, the amount of money Austin ISD pays to the State for recapture is more than the cost to build the Indeed Tower ($580 million) and the Independent Tower ($145 million). 

Austin ISD announced 250 job cuts on Wednesday in an effort to balance the district's budget. The district has seen a general decline in enrollment numbers over the past few years, which has affected the amount of State funding AISD receives.

On Friday, the TEA gave KVUE a statement regarding the disparity between Austin ISD's recapture payments compared to other districts in Texas: 

"Chapter 48 of the Texas Education Code (TEC) ensures that no district retains local revenues that exceed their Tier One or Tier Two Copper Penny entitlements. Below is a table highlighting some major differences between Austin ISD and Houston ISD. Despite having just over 1/3 the number of students of Houston ISD, Austin ISD has over 3/4 the amount of M&O tax collections and more than twice the property wealth per weighted student (WADA) as Houston ISD. These are some of the differences that account for the disparity in the level of recapture between the two very different districts. Please note that the tier one entitlement already considers the number of students in various weighted instructional settings such as special education, bilingual/ELL, and compensatory education."

Credit: TEA

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