Abbott directs state comptroller to investigate school district finances

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(The Center Square) – Gov. Greg Abbott on Wednesday directed the state comptroller to formally review independent school district finances “to ensure taxpayer dollars reach teachers and students.”

“As Texas makes historic investments in public education, it is our collective responsibility to ensure that taxpayer dollars directly reach students, classrooms, and teachers, rather than central-office growth, administrative bloat, consultants, and the web of noninstructional bureaucracy,” he said. “Texans expect that their hard-earned dollars will be spent in compliance with the law. It is essential that the $104.9 billion of taxpayer funds spent on K-12 education is used for its intended purpose: supporting students and teachers to make Texas the top-performing state in education, rather than accelerating administrative bloat.”

Abbott sent a letter to Comptroller Don Huffines requesting his office investigate the spending of up to four independent school districts of varying size and geographic locations to determine if they are appropriately spending their funds. 

The letter requests that an investigation be launched with final reports submitted to his office by Dec. 31 “so that appropriate action can be taken and additional reforms may be considered by the 90th Legislature.”

Within minutes of the letter going out, Huffines sent out a news release stating his office “will launch a detailed review of select school districts to ensure they are spending taxpayer funds responsibly following a formal request” from the governor. 

Calling it the “Huffines Performance Review,” he says his office “will examine whether district spending complies with the law and reaches students, classrooms and teachers – rather than fueling administrative growth or non-instructional bureaucracy.”

“Texans must have confidence that their school tax dollars support educational opportunities for students, not layers of bureaucracy in central administrative offices,” he said. “We will document wasteful and inappropriate spending wherever we discover it and report our findings to the Legislature and the people of Texas.”

The review will be conducted “professionally and transparently to protect taxpayers and ensure Texas students can learn in the best schools in America.” It also won’t include school districts that have been taken over by the state “led by state-appointed boards,” he said. 

The directive comes after Abbott has been announcing education proposals on the campaign trail and after a record amount of funding has gone to public schools. 

Last year, Abbott and the Texas legislature advanced a record $8 billion in funding for public education, a record $4 billion for teacher pay raises to hire and retain teachers at a higher rate, and a record $1.8 billion for the Texas Teacher Incentive Allotment. The allotment provides funding for more than 65,000 teachers in more than 800 school districts. Based on merit, it enables teachers to earn more money. 

It’s the most money spent on public education in history, Abbott said.

While more money is being spent on public school education, not all property taxes paid to districts are staying in the districts due to a state “Robin Hood” recapture program. Under the current system, property taxes collected by a school district do not stay in the district if it receives more revenue than the basic allotment for per-student funding. In property tax rich districts, excess revenue districts receive isn’t returned to the taxpayer or kept by the district. The state determines how much the district keeps and sends to the state, known as “recapture.”

A new law in effect also impacts the control districts have over their own budgets. 

Raising questions about the legality of the law and arguing recapture is unconstitutional, Midland ISD sued. Its lawsuit could upend how public schools are funded and ultimately decide who controls how local property tax revenue is spent, The Center Square reported. 

Midland ISD’s constitutional challenge questions the legality of HB 3, which the state legislature passed and Abbott signed into law in 2019. Prior to HB 3, Midland ISD’s board and voters set the district’s M&O property tax rate. Their discretion to do so was eliminated by the law. 

“Texas law grants Midland ISD’s Board of Trustees the exclusive authority to govern the district, adopt a budget, set a tax rate, and appropriate funds,” but under HB 3, the TEA commissioner determines the M&O rate “with no discretion to adopt a different rate,” the lawsuit argues. This forces the district to adopt a budget the state controls. The TEA is now controlling “nearly every dollar. And it must certify tax-increase notices for tax decisions the Board itself did not make,” the lawsuit argues.

The state also dictates how the district can spend the remaining funds, “leaving the district's own board with almost no say over its own taxpayers' money,” the lawsuit says.

Huffines said his office will name the selected districts in the coming weeks, and the report will be completed on time.