A new report from the Texas Taxpayers and Research Association (TTARA), a pro-business group, projects big bucks will keep flowing into the state’s Rainy Day Fund (RDF) as far as the eye can see, thanks to the ongoing surge in oil and gas production in Texas. The Rainy Day Fund (formally known as the Economic Stabilization Fund) receives 75 percent of all state oil and gas production taxes above the level collected in 1987. That means billions of dollars are coming into the RDF every biennium, up to a cap equaling 10 percent of the state’s general revenue fund.
During the 2013 legislative session, Texas AFT urged lawmakers to use this reserve to help restore education funding levels, which were cut by $5.4 billion in 2011. But legislative leaders and the governor said the Rainy Day revenue should not be used for anything but one-time expenditures. Hence, they contended, it would be inappropriate to use the RDF for ongoing operating costs of public schools. Then they turned right around and said it was perfectly okay to use Rainy Day Fund money for ongoing expenses of water development and highways, but not for education. The upshot was that the legislature fell significantly short of fully restoring the education funding levels cut two years earlier.
Texas AFT’s view has been that the use of the RDF for physical infrastructure, including water and highway projects, is reasonable—but the same goes for human infrastructure needs, including education. In fact, one key proposal we backed would have provided $2 billion apiece for water, transportation, and education.
The legislature now has put $2 billion for water projects from the RDF up for a constitutional-amendment vote on November 5, and additional billions of dollars for highways would be authorized by another constitutional amendment if approved by the voters in November 2014. But legislative majorities blocked any comparable investment of the RDF in our public schools.
Here is where the new projections of future revenue flowing into the RDF become important. According to TTARA, even if both the water and highway funding from the RDF are approved by the voters, the RDF will refill so fast that the next legislature will have $11.6 billion in RDF funds available for use.
That sum would more than suffice to finish the job of restoring funding that was cut from public education in 2011. In fact, it would be enough to lift average per-pupil funding in fiscal 2016-2017 by $600-plus, taking us all the way back up to the pre-recession, pre-cuts funding level achieved in 2008. The state could do that and still leave nearly half the Rainy Day Fund untouched, if TTARA’s projections pan out.
As candidates come forward to run for the legislature in 2014, Texas AFT will be asking them if they will vote to use the RDF for public education. With RDF funding for water and highways already addressed before the next legislative session starts, 2015 should be the year when the Rainy Day Fund comes to the aid of Texas public education.