Wanted to address some of the confusion about the Formula Transition Grant in House Bill 3. This is not anything new to the board or the finance team, or the state legislature for that matter.
The State wanted to avoid the “ASATR cliff” that was put into place after the 2005-2006 tax compression. In that iteration of school finance, the state put in a “hold harmless” provision so that (most) districts would not lose money in the then-new school finance system.
What happened, though, was that session after session, the state had to continually put money into ASATR, or “Additional State Aid for Tax Reduction” to keep school districts from falling off a financial cliff.
You can see in this Facebook post from 2015, it was still a concern for GCISD, even 10 years after the initial compression —
Fast forward to 2019 and HB3. To avoid another funding cliff in the HB3 “hold harmless” provision now known as the Formula Transition Grant (because that bill was not going to pass unless the vast majority of districts were indeed going to at least maintain funding if not receive substantially more, and the whole point of HB3 was to inject new money into the system for teacher raises and property tax reduction), the state put in a time limit, 2023-2024. After that year, the FTG goes away.
The state also incentivized school districts to get off the FTG as quickly as possible, by offering a golden penny but only with unanimous board approval. Depending on the formula (understand it is different amounts for every school district), that trade-off could result in a small short term funding loss, but on the long-term side, the golden penny is permanent, thus preventing a big funding shortfall at the end of the grant period in 23-24. The GCISD board opted to access the golden penny and avoid a sharp funding loss in the future.