Earlier this month, a small movement by some school districts to withhold their property tax “recapture” payments to the state seemed to be taking hold. At least three North Texas districts were considering the idea, but two have put the idea on hold.
As of two weeks ago, two districts had voted to withhold their payments—nearby Keller ISD and the Houston-adjacent district of Spring Branch. Carroll ISD and Grapevine-Colleyville ISD then placed a discussion about the prospect on their respective school board agendas. After Gov. Greg Abbott announced his plan to call a special session focused on school funding, those districts are now walking back the idea.
Recapture is a way the state distributes the part of property tax bills that is collected by local school districts. “Property-rich” schools that collect more in property taxes pay a portion of their tax revenue to the state, where it is placed in the general fund to be redistributed to property-poor schools.
When a district’s property values per student exceed the threshold set by the Texas Legislature, school districts are required to “equalize” their wealth. They typically do that by purchasing attendance credits. But many of these districts are running short on cash.
Last week, Grapevine-Colleyville school board president Shannon Braun said the district would be postponing its decision in favor of a more “diplomatic” approach. Carroll also punted. They plan to use the coming October special session in Austin to speak with lawmakers before putting the idea to a vote.
“I just want to make sure that if we’re gonna make a punch that it’s effective and it’s the right time,” she said.
In 1994, the first year districts were required to pay recapture funds, the state collected $127 million from 34 districts. In 2021, the state collected more than $3 billion from over 170 districts. Dallas ISD became subject to recapture in 2009.
Last week’s Carroll ISD school board meeting echoed Braun’s sentiment. Board president Cameron Bryan told his fellow trustees that the discussion started because they’re running out of money: “we’re broke, pretty much.”
“We’re stuck at $6,160 per student, and anything that we collect in property taxes over that goes back to the state,” he said. “We’ve had 15 percent plus inflation since 2019.”
Both Braun and Bryan say their districts have questions about how the money they send to the state is distributed. Braun said earlier this month that she’d like to see information provided to taxpayers on their property tax bill that explains how much of their district property taxes go to recapture.
Bryan told the board he and other districts have questions about where that recapture money is going.
“I just got numbers today that shows 194 recapture districts paid in this past school year a whopping $4.5 billion to $6 billion in recapture,” he told the board last week. “Most experts say that wealth equalization, which is the purpose of recapture, costs the state roughly $2 billion. So the question is … where is the difference going? There’s $2.5 billion that has been over-collected from 194 ISDS.”
Bryan told his colleagues that he hopes the discussions with lawmakers prior to the October special session result in some of that money going back to districts that are subject to recapture.
Withholding recapture payments comes with considerable risk. If a district does not pay, the state can reallocate some of its tax base to other school districts. But the district in question would still be required to operate schools and provide services in those areas, just with less tax revenue. Recapture payments are not due until next summer, which also means that the May elections could result in remaking school boards with trustees who decide to walk back their prior resolutions, too.
Both Braun and Bryan say withholding recapture payments isn’t off the table—they’re waiting to see what happens in Austin. “We might move forward,” Braun said last week. “But this gives other districts time to get their ducks in a row, too.”
Abbott says the next session will happen at some point next month, with a focus on school finance and vouchers.
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