Despite skyrocketing property values, tri-county schools struggle to stay afloat

Many public schools across the state of Texas, including tri-county area schools, are experiencing financial strain. Local superintendents cite an increase in property values and the state’s Robin Hood policy. Illustration by crowcrumbs.

TRI-COUNTY — When the Marfa ISD School Board met in August to approve the 2022-23 budget, it was not without complaints over the nearly $1 million dollars — out of their $4.8 million budget — the district is projected to pay back to the state under its recapture, or Robin Hood, policy. 

Marfa is considered a “rich” district based on property taxes, and has “excess wealth” per pupil, therefore pays money back to the state out of their maintenance and operations (M&O) funds, which the state redistributes to property poor districts. 

But a walk through the school campuses does not reveal a district saddled with “excess wealth” — leaky roofs, inoperable water fountains, and smells of mold signal deteriorating facilities. There is a disconnect between the state’s labeling of the district and the reality for those who attend it, said Superintendent Oscar Aguero.

“We’re trying to do school in buildings that were built decades ago, yet we’re falling under this rich district and having to pay money back. They’re taking away money that we could use to fix things that would make school run a lot better,” said Aguero. 

This isn’t just the case in Marfa, Aguero said — it is a region-wide problem. “From Marfa and from Fort Davis, and a little bit of Alpine, they’re literally taking the last pennies out of our pocket,” he said.

Recently, Marfa school board members voted to pull $50,000 out of their reserves for a new water heater and roof repairs to the gym and science wing. In Texas, the drivers of school funding are enrollment, property values and tax collection. Marfa pays into recapture due to high property values and fewer children enrolled in the district. “As our attendance was going down, our values skyrocketed,” Aguero explains. 

Marfa’s tourism boom has led to more secondary homeowners flooding the real estate market, causing property values to climb. Home valuations went up 65% this past year, and have gone up 361% since 2014, according to the Presidio County Appraisal District (PCAD). 

Absentee homeowners snapping up sparsely available housing has led to a local affordable housing shortage, with many opting to operate highly profitable short-term rentals (STRs) in lieu of long-term rental agreements. The city’s policies and regulations regarding STRs were a topic of discussion in recent council meetings, read coverage of those events in this week’s paper.

The PCAD is aware of 118 STRs operating in the city of Marfa, which it says has a total of around 1,102 homes and 154 mobile homes. A third party data collection agency, which is currently in discussions with the city, reported to city employees there could be up to 210 STRs in Marfa. 

But more home buyers does not necessarily equate to more full-time residents or students utilizing the school district. MISD is currently hovering at around 260 students enrolled, compared to the ‘80s and ‘90s when the student population was around 700. Plus, many students never re-enrolled after the height of the COVID-19 pandemic, said Aguero, who estimated MISD lost around 50 kids during that time.

The houses are selling, said Aguero. “But when it’s not bringing in a kid with it, it doesn’t help. If we had one kid in every house, we’d still have 700 kids in our district.” 

And student enrollment and attendance numbers are used to determine the amount of funding from the state. For small districts like Marfa, the addition of just 10 students each bringing in the minimum state aid of $6,160 a year could amount to a full salary for an additional teacher, for example. 

Chandra Villanueva, economic opportunity program director with Every Texan, an Austin-based nonprofit public policy organization which focuses on improving equity in education and workforce development, said Austin, too, is experiencing declining enrollment, skyrocketing housing prices and hefty recapture payments. She anticipates school funding will be one of the major topics of discussion among lawmakers in the upcoming 2023 Legislative Session. 

Villanueva said declining enrollment is a serious issue for some districts because while the student body may be fewer, populations often don’t drop enough to close a campus, causing costs per student to go up. 

“It actually makes things more expensive, especially for rural districts, because instead of having 30 kids to a classroom, you have 15 or 20, but you still have to offer that grade,” said Villanueva. 

At their fall budget meeting, school board members remarked on how state aid funneling into the school has declined over the years, now making up around $250,000, or roughly 5%, of their overall budget. This year, the assistance of restricted, one-time COVID relief funds helped the district pass a balanced budget. Public schools in Texas are funded from three primary sources: local school district property taxes, state funds and federal funds. As property values in Texas have increased, the state has contributed less to public schools. 

As it stands, said Villanueva, recapture, or Robin Hood, is taking the blame for the larger issue of an inherently flawed public school funding formula. Villanueva authored a recent report on misconceptions of the state’s controversial recapture policy, which states that while recapture has grown to a projected total of $3 billion in 2023 up from $1.2 billion in 2014, it makes up a small part, an estimated 6% in 2023, of overall school funding. 

“If our schools were adequately funded, we wouldn’t have the level of recapture we have,” said Villanueva. “It’s easy to blame recapture because you see those dollars physically leaving your district, but it’s harder to imagine what the funding levels should look like to begin with.” 

The state currently contributes the minimum allotment of $6,160 per student annually (an increase that rose from $5,140 in 2019 after remaining stagnant for many years) and considers a host of factors when deciding how much money a school is entitled to including geography, attendance, and percentages of economically disadvantaged and English as a Second Language (ESL) students. 

“We have a school finance system that is multi, multi complex,” said Dr. Doug Karr, who served as Presidio ISD superintendent from 2004 to 2007 and is now working as a consultant for districts in the Lubbock area. “It’s hard to make the Rotary Club understand in a 20-minute presentation.” 

The school funding formula affects each district differently. But in Marfa, Aguero said the factors contributing to the formula, and their overall funding, he’d like to change are a higher basic allotment per student, more money for ESL learners and students with disabilities as well as adjustments that account for inflation and rising property taxes. 

“I’d love to see the finance system in the state of Texas go, ‘Okay, every district is not the same, so we can’t have this one formula for every district’,” said Aguero. 

While the formula causes districts like Marfa to rely more on local property taxes and less on state aid to fund their campuses, in order to pass bond projects — large-scale infrastructure initiatives  — they must also rely on a school property tax increase. Marfa ISD recently put a $57 million bond on the ballot this November for the construction of a new K-12 campus. It’s a decision that the school board argues is necessary, but may not garner enough public support to pass. At a meeting held in September, school board trustees said recent feedback from the community was overwhelmingly negative, with those against the bond citing financial concerns and inflation. One trustee said people were telling him, “It’ll never pass.”

The bond — the subject of a series of community meetings this past summer — would, for example, increase school property taxes on a $200,000 home by a rate of $46.67 a month or or $560 annually over the course of 30 years. The district would raise its interest and sinking (I&S) tax rate to pay for the bond. Unlike the district’s M&O pot, I&S funds are not subject to recapture, meaning the district would keep all of its bond dollars. 

A new K-12 campus would hold 300 students and address ongoing concerns over school security by housing all students under one roof, some board members argue. Bond monies would also go toward the construction of a new career and technology addition to the high school.

Last November, Texas voters rejected the majority of school district bonds on the ballot for the first time in a decade, and this past May saw only a slight majority of bonds pass. Still, Aguero said, the district’s current facilities are structured and rigid, reflecting educational values of the past and holding back contemporary instruction. Roomier, station-based elementary classrooms and a newly-outfitted career and technical education (CTE) center that are a part of the bond would help bring Marfa’s schools into the 21st century, he said.

“I always tell people we’re training kids for jobs that haven’t even been invented yet. Trying to do that in the system we’re on right now is very difficult,” said Aguero. “Our buildings are designed for the old school, face this way, we’re not leaving this room [methodologies].” 

Marfa ISD isn’t the only local district experiencing a similar hike in property values coupled with declining enrollment. Fort Davis ISD is made up of around 181 students, is currently operating on a $3 million budget — which, due to less revenue, leaves them with a $620,00 deficit — and is projected to pay $20,000 in recapture this year. FDISD Superintendent Graydon Hicks said his district was in serious financial trouble and warned of a grim future for small rural districts should shares of state and federal aid continue to decrease. 

“Like other small districts across the state, the numbers aren’t working for us. It gives me no satisfaction to predict that within the next two to four years, upwards of 10 to 20 percent of our smaller districts, including Fort Davis, will be facing financial ruin,” said Hicks in a recent letter to the editor.

Alpine ISD Superintendent Dr. Michelle Rinehart said over the past five years the district has seen a slight decline in enrollment, but saw an increase this year. Alpine ISD recently became a “property rich” district and paid into Robin Hood for the first time last year. This year, they are expecting to pay around $18,000 in recapture. To illustrate what she called an unfair funding formula, Rinehart points to Rankin ISD, located two hours away from Alpine, which has a student population of 312 — around one third of Alpine’s student population of 960 — yet is operating on a much larger budget. 

“There are still inequities in the funding formula that benefit these oil rich or other property rich districts, that allow them to, even though they’re sending a lot back, to keep more. If we were funded at the same per pupil level, we would be looking at a $33 million budget versus an $11 million budget,” said Rinehart. 

Aguero said unlike nearby Rankin, Wink and Fort Stockton school districts, tri-county districts are not bolstered by property taxes from profitable energy industries, and by and large single family homes are making up the most of the district’s property tax collections. Rankin is estimated to pay $50 million in recapture this year, to which Aguero argues, “that truly is their excess.” 

“We don’t have oil or gas or wind. Ours is truly the community paying this recapture,” said Aguero. 

Jeff Davis County’s Valentine ISD, which is considered a “property poor” district and enrolls around 35 students, is projected to receive $1 million in state aid for 2022-23. Districts that do not pay into recapture receive state aid, but it is not explicitly stated how much comes from the state’s collected recapture funds. 

Brewster County’s Marathon ISD does not pay into recapture but benefits from a “sparsity adjustment,” in the Texas Education Code, due to the fact that it offers a K-12 school, is 30 miles away from the nearest school district and has less than 130 students. Those factors allow them to receive a base allotment of 130 students enrolled even though their actual enrollment is closer to 55 to 60 students. 

“Funding at our actual student enrollment ADA [average daily attendance] of 55 to 60 students would not provide sufficient funding to meet our student or district needs, which is why we closely monitor the sparsity adjustment funding during each legislative session to see if it is being discussed and if so, how proposed changes would impact our state revenues,” said Victoria Sanchez, Marathon ISD business manager. 

In 2019, the Legislature passed House Bill 3, which was designed to reduce districts’ recapture payments, cut taxes, and provide more money for public schools. Villanueva said while the bill increased basic allotment per student, the move covered one year of inflation and has since remained stagnant. 

“They did some tweaks around the edges that were good for one year, but it’s not keeping pace with the changing costs, teacher salaries and the cost of living,” said Villanueva. 

Attracting teachers to a rural area where salaries are lower and housing is sparse is a challenge facing many districts. Marfa, just this year, is able to offer $1,500 over the state minimum teacher salary. Marfa ISD owns seven rental properties, six of which are currently rented to teachers, but Aguero said what the district really needs is the construction of a 20-unit apartment complex with affordable units that families and teachers could move into. 

Villanueva said it’s time to start thinking more holistically about what it costs to sustain education systems in different parts of the state and factor in housing. 

“It costs more to live in Marfa than it does in some of those surrounding communities, and so it’s harder to attract and retain teachers because if they can’t pay rent or buy a house — because everybody’s coming from outside and driving up real estate costs — how are you going to keep teachers? You should have a mechanism that directs more money for teacher salaries,” said Villanueva. 

The student population of Marfa ISD is considered 78% economically disadvantaged and is around 95% Hispanic, but Marfa’s ESL population, a consideration which brings in more governmental support, is only around 18%, said Aguero, most families immigrating from Mexico opt to stay in Presidio or head up to Fort Stockton, where homes are cheaper and there are more job opportunities. 

Aguero and Karr said for the most part people utilizing the school district are old Marfa families who have been here for generations. 

“What you’re basically left with at the school is pretty much the same kind of population of kids that the Marfa community has always had. Its people who live there and work there. They work for ranchers, they work for the tomato farms out between Marfa and Fort Davis,” said Karr. “It’s not your folks out of Santa Fe, New Mexico, that come down with a pocket full of money.” 

But whether or not future generations of those longtime families can afford to live, work and continue to send their kids to Marfa ISD is up for debate. School bonds, because they are paid off overtime — in Marfa’s case the $57 million bond would be paid off over 30 years — are considered to be generationally equitable, spreading out the burden of paying for a new school among generations who will use it. 

While it might seem like an influx of money and property wealth driven by arts and culture tourism would simply benefit the town, similar to the local housing and workforce shortages, the impacts the tourism industry has had on Marfa are complicated, said Karr. 

“We can pack the town on Labor Day weekend with all of the tourism that you want to pack the town with. The bottom line is it doesn’t help the school one iota when they open back up on Tuesday morning after Labor Day. It’s just a disconnect between what really drives Marfa and what drives the school system in terms of funding,” said Karr.

Aguero said financially speaking, Marfa’s tourism economy doesn’t positively impact the school district. But local nonprofits and other entities like the Chinati Foundation and Marfa Live Arts, which give back to the school in terms of programming and donated time, do. 

“Our kids get to put pieces of art in Chinati when they’re in sixth grade. Our kids get to see their own plays presented and made into real life. Prior to COVID, our kids were shooting rockets with Blue Origin,” said Aguero. “They were doing things that you didn’t get to do in other places, but you don’t see that on the finance side.” 

It is worth noting that hotels –– Cibolo Creek Ranch, Hotel Saint George and Hotel Paisano –– are among Marfa ISD’s largest taxpayers. Marfa ISD brought in $4.9 million in property taxes last year and is projected to bring in $5.6 million in 2022-23, according to Aguero. Marfa ISD’s taxable jurisdiction makes up the majority of Presidio County, with Presidio ISD’s jurisdiction consisting of a strip of land along the border. 

A map showing school district boundaries in Presidio County hangs at the appraisal district office. Marfa ISD covers the majority of the county. Staff photo by Mary Cantrell.

Students in Redford, for example, are technically zoned to go to Marfa schools, despite being located only 20 minutes away from Presidio. Aguero said on average Marfa ISD pays tuition to send around 20 kids a year to be educated in Presidio, an effort that costs them around $70,000 to $80,000. Aguero has looked into the possibility of redrawing the district lines to give more land to Presidio ISD in order to lower Marfa’s recapture payments, he said. 

While Marfa ISD is property rich, has a small student body and is largely reliant on property tax revenue for their annual budget, Presidio ISD is property poor, has a large student population and is dependent on state and federal funding, said Karr. Last school year, Presidio ISD received around $9.5 million in state aid. 

“You could not have two more diametrically opposed school districts than you’ve got on the north end and the south end of Presidio County,” said Karr. “[Presidio ISD] is becoming wealthier by the day, but even in spite of that Presidio is still dependent to the tune of about 80% on state aid for their existence.” 

While the majority of Marfa ISD’s taxable jurisdiction is Presidio County ranch land, area ranches, due to significant agricultural exemptions, contribute less money into the district than single family homes. According to the PCAD, area ranch land totals around $12 million in net taxable value compared to $214 million taxable value for single family homes.

School district property value studies, which are conducted annually by the state comptroller’s office, determine the taxable value of property within a school district. School districts fail the study if they are not 95% or more in line with the state’s determined taxable values, something that can happen if appraised values are lower than what properties are really selling for. Recapture payments districts make are based on taxes they actually brought in. 

This past year, Marfa ISD passed its property value study, but Presidio ISD failed. The PCAD recently got a letter from the state comptroller notifying them that they have been identified as a “targeted district” and will be more closely monitored, due to failing too many property value studies within the past three years. Alpine ISD also failed its property value study this year. Rinehart said the discrepancy amounted to $600,000 the school district did not receive in funds. 

“That’s money we don’t have that we are entitled to in the state’s funding formula that we don’t receive in order to educate kids,” said Rinehart. “The school finance area is very complex, but if we could address some of these discrepancies in multiple areas, we’re talking about big shifts that could result in us receiving the amount of funding that we need.”

Each legislative session, Aguero works with the Texas Association of School Administrators to speak to state representatives and senators, which he plans to continue to do for the coming session, but said as a small, rural district it can be hard to get any real attention. Rinehart, too, plans to get involved and advocate for Alpine ISD on the legislative level, and said rural districts might band together to be more effective moving forward. 

 “I do believe that it’s easier for many reasons for the legislature to hear from superintendents that are based geographically closer to Austin, but we have totally different challenges out here,” said Rinehart. “We don’t have a lot of the same social capital or political clout that exists in other districts.” 

Villanueva said she is concerned over state surplus-driven tax cuts, school vouchers — which would allow state funding to be used for private school tuition — and an overall climate in state leadership which she said is “extremely hostile to education.” 

“There’s been almost zero discussion about increasing school funding or addressing the gaps in school funding,” said Villanueva. “All they want to talk about is decreasing tax rates even further.”

Senator César Blanco, who represents Marfa, said he intends to fight back against private school vouchers and advocate for more incentives for teachers in rural communities, an increase in the basic allotment per student and for the inclusion of a formula adjustment “to meet the unique needs of rural school districts.” He said he intends to help find a way to prioritize both tax cuts and public education. 

“The best way to provide real and lasting property tax relief is to increase the state’s share of public-school funding to over 50%,” said Blanco in a statement to The Big Bend Sentinel. “With a surplus of $27 billion next session, we have a golden opportunity to make big and bold investments in our kids, schools, and communities.”

For Aguero, discussions over school funding hinge on an important question — “What is the minimum a school should have?” — with well-off neighboring districts offering agricultural programs, nursing and a barbecue competition team. In the recent past, Marfa ISD has cut Montessori and band programs over funding concerns. 

He said Marfa ISD would like to expand on its existing CTE programs of welding and robotics, but is stymied by dysfunctional facilities.

“We’re trying to push some IT things because that’s a lot of direction that people are going, some STEM [science, technology, engineering and mathematics]. But how do you provide all that, but yet are losing money in the system?” said Aguero.