Post-Harvey, Houston Faces ‘Perfect Storm’ Of Budget Damage

Post-Harvey, Houston Faces ‘Perfect Storm’ of Budget Damage

The Houston Independent School District is experiencing a financial challenge as a result of Hurricane Harvey and a budget shortfall of $200 million for the upcoming year. In addition, the district is obligated to make significant payments to the state, known as Robin Hood payments, which will be redirected to poorer districts, according to the Houston Chronicle.

The Chronicle explains that the deficit in the budget is a consequence of a decrease in tax revenue due to properties damaged by the hurricane, as well as the high cost of the Robin Hood payments. These payments, officially referred to as recapture payments, are collected by the state from districts with substantial income from property taxes and then distributed to districts with lower income.

The district has estimated that this year’s recapture payment for Houston could reach as high as $269 million, according to a statement issued by the district’s superintendent, Richard Carranza. Carranza refers to the situation as an unavoidable "perfect financial storm" in a statement released on Tuesday.

Rene Barajas, the chief financial officer for the district, told the Chronicle that although the payments may be reduced due to the impact of the hurricane, the reduction in payments will not match the decrease in property taxes caused by Harvey, which could lead to a shortfall in the district’s finances.

Furthermore, the district is faced with the task of reconstructing four schools that were severely damaged by Harvey, at a cost of $126 million.

To cope with the tight budget situation, officials have announced plans to implement cuts at almost all levels of the school system, as reported by the Chronicle. These plans include centralizing certain processes, regulating staffing across different campuses, and making significant changes to the city’s network of magnet schools. Additionally, officials have proposed a $116 million reduction in the budget for central administration, operations, and facilities.

Carranza acknowledges that these changes will have negative consequences, but emphasizes that conversations about them have begun early to ensure quality and equitable education for all students.

Meanwhile, in Austin, Texas, a bipartisan committee held its first meeting on Tuesday to discuss how schools should be financed following a 2016 ruling by the Texas Supreme Court. The court ruled that the current system, which relies mostly on property taxes, requires comprehensive reforms. The committee is expected to present recommendations to the legislature and governor by the end of the year.

Adding to the financial challenges, 10 Houston schools are at risk of being labeled as "underperforming" for the fifth consecutive year, which could result in a state takeover. However, district administrators have proposed significant changes for these schools, as well as five other low-performing schools. State law allows districts to retain control if they allow external organizations such as charter schools, nonprofits, or higher education institutions to take over struggling schools.

The district officials have stated that they may either close the schools and reopen them with limited grades and entirely new staff and programs, or entrust the hiring and curriculum control to a higher education institution or nonprofit organization.

The option of allowing charter operators to take over the struggling schools has been dismissed by the district officials.

In response to claims on Twitter that the district would be "turned over to a charter system," the superintendent, Richard A. Carranza, assured that this would not happen and urged everyone to wait for further details before believing any speculation.