How Texas schools are currently funded
Published 2:58 pm, Monday, February 4, 2013
AUSTIN, Texas (AP) — In 2011, a still-sluggish state economy and a depletion of federal stimulus funding left the Texas Legislature facing a budget deficit worth $27 billion. Lawmakers voted to rewrite the funding formula to cut $4 billion from public schools while stripping away an additional $1.4 billion from educational grant programs for initiatives like pre-kindergarten in many parts of the state.
The latest school finance trial — the sixth of its kind since 1984 — centers on whether those cuts mean Texas is no longer meeting its state constitutional guarantee to provide, "A general diffusion of knowledge" via "an efficient system of public free schools."
Like past legal challenges to the way Texas funds its schools, however, this series of lawsuits also questions how equally the state's different school districts are funded.
Because Texas has no income tax, school districts rely heavily on local property taxes for resources — with allocations from the state Legislature helping to fill any funding gaps. Since 1993, a share-the-wealth system has been designed to ensure that school districts in wealthy areas distribute extra property tax revenue to districts in poor parts of the state, thereby equalizing funding levels.
Roughly 36 percent of Texas' 1,024 school districts are now required by law to share their property tax revenue with less fortunate districts under the "Robin Hood" scheme.
State law defines the difference between wealthy and poor districts by how much a district can raise in property tax compared with its average daily student attendance, adjusted to account for certain cost variations.
The tipping point in the calculation is $319,500 per weighted student — though up to $476,500 may be actually exempted based on a district's property tax rate. Schools that exceed that give money back to the state or partner with a poor district.
According to a Texas Education Agency, 23 school districts were added to the property wealthy category in 2012, increasing to a record 374 the number of districts statewide required to share their property tax revenue. Property wealthy school districts now give back more than $1 billion in local tax revenue annually.
Property-rich districts have several options for reducing their wealth level to the state limit. One option basically involves writing a check to the state to lower the district's balance to the legal limit.