Senators: Tap Rainy Day Fund to Restore Cuts to Schools, TEXAS Grants & Expand Medicaid

(Austin, Texas)—Senators Rodney Ellis (D-Houston), Wendy Davis (D-Fort Worth), Eddie Lucio (D-Brownsville) and Jose Rodriguez (D-El Paso) today filed SB 1377 and SB 1378, legislation that would tap the $12 billion Rainy Day Fund to restore devastating cuts to education and financial aid from last session, and to pay for a down-payment to expand Medicaid.

The senators stated emphatically that this funding is not a "recurring expense" but simply filling in the giant holes dug by last session's cuts. In fact, the failure to restore funding permanently enshrines those deep cuts as the new funding baseline for our children's schools.

SB 1377 and SB 1378 tap the nearly $12 billion Rainy Day Fund to fill the gaps caused by draconian budget cuts in 2011. Both SB 1377 and SB 1378 draw $4 billion from the fund and add it to the Foundation School Program. SB 1378 also draws $500 million for TEXAS Grants and other financial aid programs, and $50.4 million to expand Medicaid.

"Last session, the Rainy Day Fund, our schools and our children were held hostage to politics," said Ellis. "It is long past time to use our savings and restore funding. We repeatedly hear that the cuts made to our kids' schools were only done due to the historic shortfall we faced last session. Well the emergency has passed, and filling in the giant hole created by the legislature will be a one-time expense to get us back to where were before the cuts. So let's be clear, fixing a mistake is not 'new spending', it's simply redeeming our promises to our schoolchildren and parents."

"The leadership's failure to take responsibility to assist their own school districts is an indication that they have turned their backs on Texas families," said Davis. "Our schools are hurting. While they're struggling to make ends meet and are forced to lay off teachers and consider tax and fee hikes, the state has been sitting on millions of dollars that rightly belong to them."

"Education is enshrined in the Texas Constitution," said Rodriguez. "If we can put Rainy Day funds toward physical infrastructure, as has been proposed for water and transportation, which I support, we certainly can use our savings to shore up our most vital resource, education."
"Throughout my legislative career I have worked to improve the education of Texas children," said Lucio. "I am proud to joint-author legislation to better fund Texas public schools. Expanding Medicaid just makes fiscal sense. Today, too many uninsured Texans use emergency rooms as their only source of treatment. This is a burden on our states' hospitals. The positive impact of today's legislation will be felt most in the Valley. The Valley population is growing, yet the region has substantially higher poverty rates than Texas or the United States as a whole. Expanding access to health care for more Texans will also decrease the costs insurance consumers pay in premiums."

Last session, the legislature cut $5.4 billion from Texas schools and slashed funding for financial aid programs like TEXAS Grants. In real terms, those cuts harmed Texas schoolchildren and families:

• Texas now ranks 49th in spending on public schools, and spends $3,000 less per student than the national average. Mississippi spends more per student than Texas.
• Texas now spends about $66,000 less per elementary school classroom than the national average.
• Statewide, the number of elementary classes exceeding the 22-student class size cap set in law soared from 2,238 to 8,479.
• Overall, 25,000 school district employees lost their jobs, 11,000 of them teachers.
• Texas teachers now earn $8,200 less than those in other states, dropping Texas from 31st to 38th in average teacher pay.

The $50.4 million for Medicaid expansion will implement a Legislative Budget Board recommendation and provide the state's share of the cost of expanding coverage to the maximum extent allowed under the Affordable Care Act. The Legislative Budget Board estimates that Medicaid Expansion will cost $50.4 million in GR for this biennium and draw down $4 billion in federal match. For this expansion, Texas will receive a 100 percent match for the first three years and the match will be gradually reduced to 90 percent of funding thereafter.

Last session, those in charge set a precedent: the Rainy Day Fund could not be used even under the direst fiscal circumstances. Texas could not address an immediate, obvious crisis just in case another, bigger crisis came down the road. Of course, the legislature had voted to use virtually the entire fund four times in the past, including:

• In 1991, the Legislature spent the entire balance on public schools ($28.8 million).
• In 1993, the Legislature spent the entire balance on criminal justice matters ($197 million).
• In 2003, the Legislature appropriated "almost every penny" of the balance the Comptroller forecasted through 2005. In fact, $295 million was taken from the fund to create the Governor's Texas Enterprise Fund.
• In 2005, the Legislature appropriated $1.9 billion from the Rainy Day Fund, using almost every penny of the $2 billion available. Money was taken from the fund to create the Governor's Emerging Technology Fund.
• In 2007, Governor Rick Perry even proposed using the balance in the Rainy Day Fund to pay for more tax cuts for special interests.

This session, the same leaders who forbid using the Rainy Day Fund to pay for schools and health care have proposed taking $1 billion out to pay for new roads and another $2 billion to fund the state water plan.

According to a recent Frederickpolls research poll for the Texas State Teachers Association, the vast majority of Texans support tapping the Rainy Day Fund to repair the damage we did to our children's schools and invest in the future.

  (Source: Frederickpolls, February 2013)

"I know that Texas faces a severe water shortage as we move deeper in the 21st century, and we have a funding crisis in transportation," said Ellis. "But the bottom line is if we are now allowed to use the Rainy Day Fund as intended, we need to put our kids and families on equal footing with our cars and creeks. Let's restore the cuts to our children's schools and fulfill our promise to our kids."

For more information contact:

Jeremy Warren (Ellis)	Rick Svatora (Davis)	Sito Negron (Rodriguez)	Daniel Collins (Lucio)
(512) 463-0113	(512) 463-0110	(512) 463-0129	(512) 463-0127