AP NEWS

School finance proposals positive but far from solving problem

March 30, 2019

The Texas school finance system should guarantee every student the same educational opportunity in schools that are funded to meet increasing state and federal requirements. And every district should have the same ability, regardless of its tax rate, to provide every student with that education, while considering the needs of the student and the district itself.

The proposals now before the Texas Legislature address the state’s inequitable and inadequate system in different ways. Most of the proposals have merit. But we must not lose sight of our long-term goals, and we must strive for a system that will be resilient in both good and bad economic times.

The underlying issues

Districts do not have an equal opportunity to educate their students. Few of the more than 1,000 school districts in Texas have the funds to provide the quality education that the Texas Constitution and Legislature require.

Local property taxes provide most of the funding for the Texas school system; the state provides additional support from its general revenues. This shared system of finance has surface appeal — both school districts and the state have the responsibility and duty to provide for their students’ education.

The equity problem in Texas is caused by a combination of the great reliance Texas places on school district property taxes and the wildly varying amounts of property — and property value — per student in Texas districts. Because of differing property values, a penny tax rate will raise only $5 per student in some districts in Texas but $200 per student in wealthy districts. So at a $1 tax rate, the low-wealth district will raise $500 per student and the wealthy district $20,000 per student.

This means that the poor district has no real flexibility to raise money to support its schools, while the wealthy district can tax at very low rates and still fund its programs. These differences would not matter if Texas did not place so much of the burden on local taxpayers — about 60 percent of total revenue for schools comes from their property taxes. The state has tried to compensate for these differences by sending more state money to low-wealth districts than to the high-wealth districts.

Historically, the fundraising disparities among school districts have thrust poor districts into a cycle of poverty. Because low-wealth districts had both higher tax rates and lower revenues per student, they were less attractive to businesses and to higher-value residential projects. The lack of these higher-tax-generating businesses and homes hampered the ability of the districts to generate funds — decreasing the districts’ attractiveness even more.

The other major problem in Texas school finance is the funding level — it’s far below what is necessary to educate our students. Texas ranks around 40th of the 50 states in per-student funding. Yet given its growth, size and concentration of high-needs students, Texas has the greatest need for funds.

Texas has never done a thorough study of the revenue needed per pupil to meet the state’s standards. Experts conclude the revenue is $1,000 to $3,000 per student lower than what is needed to meet the state’s increasingly high standards. The need is $13,000 per student per year, and the reality is only $10,000.

Meanwhile, federal, state and local governments have put additional duties on districts to provide for students, a challenge given Texas’ comparatively low levels of social services.

Proposals in the Legislature

These proposals contain a mix of changes to the system, including property tax reductions; property tax caps; required increases in school employee salaries; per-student increases; increases in per-pupil funding in special programs; and studies of the actual costs of providing an education in Texas.

The proposed property tax reductions require minor cuts in the tax rates that school districts can charge, replacing the lost funds with state money. And most proposals increase funding for districts at any tax rate. Those provisions would be positive for students, while helping districts and their taxpayers.

However, a strict cap on property tax revenues will remove the ability of districts to enhance their programs to meet student needs, causing long-term damage to the education system.

Higher salaries for employees will help the districts hire and retain better teachers and other employees, benefiting all students. However, requiring that the funds go directly to the teachers instead of through the state formula wastes money on wealthier districts that could pay for the raises with a minor tax rate increase.

Increasing state funding for all schools is the most equitable way to spend that money, and the proposals to do that are positive. Unfortunately, those proposals can be tied to special provisions that retain advantages for wealthy districts and remove some of the special considerations for educating students in expensive areas of the state.

Prekindergarten for low-income students and English learners is long overdue in Texas and is universally seen as a positive for long-term progress and equality of opportunity. Proposed funding for dual-language programs is also positive. But few of the proposals will increase the funding for all students who are below grade level or have special identified needs.

Surprisingly, Texas has not conducted a thorough study of how much it would cost for a high-quality school system that meets federal, state and local requirements. Some proposals do require that study — and it should be conducted.

Increasing per-student funding would cut the amount in property taxes that wealthy districts have to share with other districts, which is called recapture. This is a boon for several districts and legislators. However, removing recapture has two negative characteristics. Recapture makes the system much more equitable and efficient, directly addressing the inequities that led to the first two state school finance losses in the Texas Supreme Court, in 1989 and 1991. And recapture enriches the entire state system by providing, on average, $200 to $300 per student for the rest of the state’s districts.

The give-and-take of the political process will play out, resulting in a mix of proposals that have some educational and political support. But I fear that what we do now, amid a positive economic forecast, will not survive the next economic downturn.

What should be done

The long-term goal is simple. The state should provide every district with the same ability to raise the necessary funds for its students — at any tax rate — after considering all the costs of the district and its particular mix of students.

At the least, funding levels should be determined by a thorough study of the needs of Texas, and the additional costs of special programs should be brought up-to-date and consistently reviewed.

Our children, our state and our future deserve it.

Al Kauffman is a law professor at the St. Mary’s University School of Law, teaching courses in education, constitutional law, and federal and state procedure. He was the lead attorney for the Edgewood plaintiff school districts in the school finance cases from 1984 to 2002.