Finance
COVID-19 upended Texas schools’ finances. Now they’re calling for a new funding system.
PFLUGERVILLE, Texas – Throughout a triumphant 2019 ceremony at Parmer Lane Elementary in Austin, Gov. Greg Abbott sat on a small stage in entrance of a big Texas flag as he signed an enormous overhaul of the state’s public college finance system.
The brand new laws injected $6.5 billion into public training spending, plus about $5.1 billion dedicated to reducing Texans’ property tax payments. It included elevating the overall quantity the state offers colleges per pupil by about 20%, setting apart funds for trainer raises and lowering the sum of money rich districts must ship to poorer ones underneath the state’s recapture program, informally generally known as “Robin Hood.”
“You may not overstate the magnitude of the legislation that I’m about to signal as a result of this can be a monumental second in public training historical past within the state of Texas,” mentioned Abbott, flanked by a few dozen Republican and Democratic lawmakers. “This one legislation does extra to advance training in Texas than any legislation I’ve seen in my grownup lifetime.”
4 years later, that very same college the place the legislation was signed is certainly one of a number of campuses within the Pflugerville Impartial College District underneath menace of being closed. The district, which anticipated a $17 million windfall from the 2019 legislation, is now grappling with a $12 million funds deficit underneath the stress of mounting inflation and its still-high monetary dues to the state.
The pandemic additionally had a direct affect on enrollment and, maybe extra considerably, pupil attendance, an important metric that helps decide how a lot cash college districts get from the state. In Texas, if a pupil misses college, their district’s attendance common goes down and so does the sum of money it receives. And in a post-COVID-19 world wherein dad and mom are faster to maintain their kids dwelling in the event that they’re feeling sick, some districts’ funds have turn out to be extra risky than ever.
Districts like Pflugerville now consider the funding method must be based mostly not on attendance however on enrollment — which they view as a extra secure benchmark — to higher mirror colleges’ actuality after the pandemic. As a brand new legislative session begins with an unprecedented $188.2 billion accessible to pay for state enterprise, college leaders are hopeful however unsure if lawmakers could have the urge for food for one more formidable revamp of the varsity finance system.
“[Enrollment-based] funding would assist us proper now,” Doug Killian, superintendent of Pflugerville ISD, informed The Texas Tribune. “I’m hoping for the Legislature to avoid wasting us, however I actually don’t have that perception that they’re going to do what they should do.”
Monetary strains
Each weekday, Esmeralda Alvarado walks her son to Parmer Lane Elementary with sufficient time to get to work. Alvarado is acquainted with the neighborhood, which supplies her a way of peace when her son and his 13-year-old sister stroll again dwelling on their very own within the afternoons.
She was shocked to listen to Parmer Lane may shut. It will throw off her household’s day by day routine and perhaps value her her job, she mentioned.
However she was additionally pissed off. Her property taxes have solely gone up within the 18 years she has owned her dwelling, but her college district is struggling.
“We’re paying for our colleges, and now I gained’t have my very own college near my home,” Alvarado mentioned.
Pflugerville ISD, which serves households within the suburban metropolis of Pflugerville, north of Austin, introduced final month that Parmer Lane Elementary might shut because the district appears to save cash. A lot of the district’s 10 proposed plans to remain afloat name for shuttering two to a few elementary colleges which are positioned in older buildings and have low enrollment and attendance charges. Just one proposal would lead to no college closures and commerce them for heavy rezoning.
Mother and father have additionally expressed considerations in regards to the potential closures’ affect on class sizes, lengthy college bus drives and fairness. All the colleges being thought-about for closure have a excessive proportion of Black and Hispanic college students and are labeled as Title 1 colleges, which means they’ve a excessive inhabitants of economically deprived college students.
Terrance L. Inexperienced, an affiliate professor on the College of Texas at Austin, mentioned colleges that shut due to financial struggles are often majority Hispanic or Black, disrupting many years of group constructing and resulting in unfavorable pupil outcomes in studying and math.
“In these communities, colleges usually signify a spot of hope, pleasure and goals. So, when colleges are closed, it not solely impacts college students, households, academics and workers members, it additionally reverberates via the whole group,” Inexperienced wrote in his analysis findings.
His analysis has additionally discovered that districts that shut colleges as a result of monetary causes don’t actually get monetary savings in the long term as a result of they incur new transportation prices and infrequently proceed paying for the upkeep of the previous buildings.
“The info is evident that you just don’t get monetary savings except you’re prepared to fireplace an entire bunch [of faculty],” he informed the Tribune.
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Killian mentioned the district will do all the pieces to make it an equitable transition since — in the intervening time — he sees no possibility apart from to shut some colleges to save cash. Since final college 12 months, the district has made cuts throughout division budgets, lowered administrative workers and stopped filling positions. Killian mentioned the district can’t discover wherever else to chop.
“There’s not loads of low-hanging fruit anymore, and so we’re having to have a look at how we workers, what campuses are open [and] whether or not or not they’ve sufficient children in them to make them as effectively staffed as doable,” he mentioned.
Killian describes the Pflugerville ISD’s deficit as a “good storm.”
The primary issue is the state’s recapture program, which requires the state to take funding from college districts with greater property values inside their boundaries, like Pflugerville ISD, and provides it to poorer college districts that may’t elevate a lot cash. Regardless that the 2019 college finance legislation lessened the recapture burden on property-rich districts, Pflugerville ISD nonetheless has to make a $12 million fee to the state this college 12 months.
Killian mentioned the legislation was good and did give the varsity district extra money, however inflation has eroded its worth: The sum of money colleges get per pupil went up 4 years in the past, but it surely has stayed the identical whereas the price of dwelling retains rising.
Then there’s the pandemic, Killian mentioned, which altered the best way folks take into consideration education and poked holes within the state’s college funding system.
Beneath the present method, colleges get cash from the state based mostly on their attendance price, which measures what number of children really present up throughout a college 12 months. Pflugerville’s present attendance price is about 91%; it was about 94% earlier than the pandemic. A distinction of some proportion factors within the attendance price can imply thousands and thousands of {dollars} in losses for a college district.
With the present attendance-based funding, colleges have a tough time budgeting the appropriate method as a result of attendance is unpredictable, particularly amid a pandemic, mentioned Amanda Brownson, government director of coverage and analysis on the Texas Affiliation of College Enterprise Officers.
“Now, as waves of COVID and waves of flu run via a district, attendance charges fall, they usually’re falling greater than they used to fall,” she mentioned. “Frankly, folks most likely used to return to highschool somewhat bit sick. They don’t anymore.”
And Pflugerville isn’t the one college fighting attendance.
Within the El Paso Impartial College District, officers closed colleges between 2019 and 2020 as a result of funds deficits that stemmed from declining enrollment and attendance charges.
Within the McAllen Impartial College District, superintendent J.A. Gonzalez mentioned his district might have an additional $6.7 million this 12 months if it weren’t for an attendance price of about 94%, the bottom determine it’s had since COVID-19 hit.
Gonzalez mentioned children are lacking college extra actually because COVID-19 scares are nonetheless frequent, the flu and RSV are additionally making rounds and, mentally, some children and fogeys are struggling to get plugged in since coming again to highschool full time.
“It’s simply an attention-grabbing phenomenon that occurred throughout our society,” Gonzalez mentioned. “After COVID, folks obtained used to working remotely, or folks obtained used to staying dwelling or folks obtained used to a unique way of life.”
A brand new combat for a brand new method
In November, state Rep. Gina Hinojosa, D-Austin, filed Home Invoice 31, which might take away common day by day attendance from the state’s funding method and exchange it with common enrollment in an effort to get extra money to highschool districts.
The common day by day attendance is calculated by the sum of kids current every college day divided by days of instruction that colleges are required to provide. The college district then will get $6,160 per pupil in that common.
Beneath Hinojosa’s invoice, colleges would seemingly be funded based mostly on an enrollment snapshot from the earlier college 12 months. Supporters of the change consider it must be extra favorable for districts as a result of it wouldn’t punish them for college students lacking college.
“The final idea is, ‘Let’s not shortchange our youngsters in colleges; let’s absolutely fund our colleges based mostly on the enrollment that our colleges need to anticipate and pay for,’” she mentioned.
Hinojosa estimates that switching the funding method to enrollment would value the state an additional $5 billion on the subsequent state funds cycle.
“Anyone who has their children in public colleges is aware of that our colleges desperately want a minimum of that form of funding,” she mentioned. “Our public colleges are actually struggling proper now, and we have to be responsive as a state to make sure that they will survive and thrive.”
Nonetheless, it’s unclear whether or not lawmakers will wish to replace the funding system once more, particularly as Abbott, Lt. Gov. Dan Patrick and different Republicans have mentioned they’ll assist “college selection” this session, a time period used to explain packages that give dad and mom state cash to pay for personal education. Critics say such measures take away cash from the general public training system.
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State Rep. Gary VanDeaver, R-New Boston, who’s on the Home Public Training Committee, believes colleges want an incentive to maintain children going to class, which he mentioned the present attendance-based funding mannequin supplies. Rolling out a brand new enrollment funding mannequin would even be expensive, he mentioned.
“I don’t know that I’d give [Hinojosa’s bill] nice odds of creating it throughout the end line,” he mentioned.
VanDeaver mentioned he’d be extra in favor of elevating the fundamental allotment this session as an alternative of reinventing the funding mannequin. Doing so would give colleges extra money and likewise enable them to provide academics raises, he mentioned.
Killian, Gonzalez and different superintendents would like to maneuver away from the attendance-based method — as most different states within the nation have already got — however they mentioned they’d take the fundamental allotment improve if that’s on the desk as an alternative.
Both method, it’s going to seemingly be too late to assist Pflugerville ISD with its present monetary struggles. The district desires to decide about what steps to take, and whether or not they’ll contain college closures, by February.
Earlier than then, the Pflugerville group could have an opportunity to suggest to Killian and the remainder of the varsity board options on find out how to hold the faculties open.
Rena Clegg, who has a baby at Parmer Lane and likewise taught on the college, laments that a spot beloved by households and recognized for its variety and togetherness may shut due to the district’s cash issues.
“It’s simply a type of locations the place everyone is a household, and it doesn’t matter what occurs, they’re going to destroy one thing that’s been constructed there,” Clegg mentioned.
Finance
US SEC obtained record financial remedies in fiscal 2024, agency says
NEW YORK (Reuters) -The U.S. Securities and Exchange Commission obtained $8.2 billion in financial remedies, the highest amount in its history, in fiscal 2024, the agency said in a statement on Friday.
The SEC filed 583 enforcement actions in the year that ended in September, down 26% from a year earlier, it said in a statement.
The $8.2 billion in financial remedies included $6.1 billion in disgorgement and prejudgment interest, a record, and $2.1 billion in civil penalties, the second-highest amount on record, according to the SEC’s statement.
Much of the total financial remedies came from a single action: a $4.5 billion settlement with the now-bankrupt crypto firm Terraform Labs, following a unanimous jury verdict against the firm and its founder Do Kwon. The SEC is expected to collect little of that settlement amount because it agreed to be paid only after Terraform satisfies crypto loss claims as part of its bankruptcy wind-down.
The SEC also obtained orders barring 124 individuals from serving as officers and directors of public companies, the second-highest number of such prohibitions in a decade. Holding individuals accountable for misconduct has been a priority of the agency under Chair Gary Gensler, who is stepping down in January.
“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” Gensler said in a statement about the agency’s 2024 enforcement results.
(Reporting by Chris Prentice; Editing by Leslie Adler and Jonathan Oatis)
Finance
Cop29: $250bn climate finance offer from rich world an insult, critics say
Developing countries have reacted angrily to an offer of $250bn in finance from the rich world – considerably less than they are demanding – to help them tackle the climate crisis.
The offer was contained in the draft text of an agreement published on Friday afternoon at the Cop29 climate summit in Azerbaijan, where talks are likely to carry on past a 6pm deadline.
Juan Carlos Monterrey Gómez, Panama’s climate envoy, told the Guardian: “This is definitely not enough. What we need is at least $5tn a year, but what we have asked for is just $1.3tn. That is 1% of global GDP. That should not be too much when you’re talking about saving the planet we all live on.”
He said $250bn divided among all the developing countries in need amounted to very little. “It comes to nothing when you split it. We have bills in the billions to pay after droughts and flooding. What the heck will $250bn do? It won’t put us on a path to 1.5C. More like 3C.”
According to the new text of a deal, developing countries would receive a total of at least $1.3tn a year in climate finance by 2035, which is in line with the demands most submitted before this two-week conference. That would be made up of the $250bn from developed countries, plus other sources of finance including private investment.
Poor nations wanted much more of the headline finance to come directly from rich countries, preferably in the form of grants rather than loans.
Civil society groups criticised the offer, variously describing it as “a joke”, “an embarrassment”, “an insult”, and the global north “playing poker with people’s lives”.
Mohamed Adow, a co-founder of Power Shift Africa, a thinktank, said: “Our expectations were low, but this is a slap in the face. No developing country will fall for this. It’s not clear what kind of trick the presidency is trying to pull. They’ve already disappointed everyone, but they have now angered and offended the developing world.”
The $250bn figure is significantly lower than the $300bn-a-year offer that some developed countries were mulling at the talks, to the Guardian’s knowledge.
The offer from developed countries, funded from their national budgets and overseas aid, is supposed to form the inner core of a “layered” finance settlement, accompanied by a middle layer of new forms of finance such as new taxes on fossil fuels and high-carbon activities, carbon trading and “innovative” forms of finance; and an outermost layer of investment from the private sector, into projects such as solar and windfarms.
These layers would add up to $1.3tn a year, which is the amount that economists have calculated is needed in external finance for developing countries to tackle the climate crisis. Many activists have demanded more: figures of $5tn or $7tn a year have been put forward by some groups, based on the historical responsibilities of developed countries for causing the climate crisis.
This latest text is the second from an increasingly embattled Cop presidency. Azerbaijan was widely criticised for its first draft on Thursday.
There will now be further negotiations among countries and possibly a new or several new iterations of this draft text.
Avinash Persaud, a former adviser to the Barbados prime minister, Mia Mottley, and now an adviser to the president of the Inter-American Bank, said: “There is no deal to come out of Baku that will not leave a bad taste in everyone’s mouth, but we are within sight of a landing zone for the first time all year.”
Finance
US Treasury Selects BNY as Financial Agent for Direct Express Program | PYMNTS.com
The Bank of New York Mellon (BNY) will serve as the financial agent for the Direct Express program, which provides 3.4 million Americans with a prepaid debit card to receive monthly federal benefits.
The U.S. Department of the Treasury’s Bureau of the Fiscal Service said in a Thursday (Nov. 21) press release that it selected BNY for this role after evaluating proposals from multiple financial institutions and seeing the bank’s offering of features and customer service options.
The new agreement will begin Jan. 3 and will last five years, according to the release.
“Since 2008, the Direct Express program has paid federal beneficiaries seamlessly, inclusively and securely, while sparing taxpayers and customers the costs and risk associated with cashing paper checks,” Fiscal Service Commissioner Tim Gribben said in the release. “This new agreement will further our goals of delivering a modern customer experience and strengthening Treasury’s commitment to paying the right person, in the right amount, at the right time.”
With this agreement, BNY will add to the cardholder experience features like online/digital funds access, bill pay, cardless ATM access, omnichannel chat and text customer service, online dispute filing and in-person authentication options, the bank said in a Thursday press release.
“Drawing on our leading platform capabilities, we look forward to advancing the program’s goal of providing high-quality financial services to individuals and communities throughout the U.S.,” Jennifer Barker, global head of treasury services and depositary receipts at BNY, said in the release.
Seventy-seven percent of the recipients of disbursements opt for instant payments when given the option, according to the PYMNTS Intelligence and Ingo Payments collaboration, “Measuring Consumers’ Growing Interest in Instant Payouts.”
That’s because consumers looking for disbursements — paychecks, government payments, insurance settlements, investment earnings — want their money quickly, the report found.
In October, the Treasury Department credited the Office of Payment Integrity, within the Bureau of the Fiscal Service, with enhancing its fraud prevention capabilities and expanding offerings to new and existing customers.
The department said its “technology and data-driven” approach allowed it to prevent and recover more than $4 billion in fraud and improper payments, up from $652 million in 2023.
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