Adequate and equitable school funding

In 2011 the legislature cut per-pupil formula funding by $4 billion and cut discretionary grants to school districts by $1.4 billion. Since then, the legislature has only partially restored formula funding, relying chiefly on rising local property-tax collections rather than state effort. In fact, the state funding share has fallen sharply, to less than 40 percent, and average per-pupil funding remains below the pre-recession level of 2008. Though some of the grant funding was restored, most of the massive cuts enacted in 2011 continue for valuable programs such as full-day prekindergarten and the Student Success Initiative offering extra help for students struggling to pass state exams. The educational costs inflicted by Hurricane Harvey will only aggravate funding shortfalls.

Education FundingRestoring the pre-recession funding level of 2008 would require $3.2 billion more per year in additional funding. If Texas fails to invest at least at that level on a sustained basis to educate 5.3 million students in our public schools—60 percent of them economically disadvantaged and in need of intensive educational services—our state’s economic growth will be stunted, with average income of Texans declining significantly over the next 20-plus years. Texas already ranks next to last among the states in the percentage of adults 25 to 34 who are high school graduates.

School funding in Texas also remains profoundly inequitable from one school district to the next, with available resources still far too dependent on highly variable local property wealth. Schools in property-wealthy districts have tens of thousands of dollars more per classroom than property-poor districts to educate their students, at the same level of tax effort. This inequity is compounded by obsolete formulas that fail to adjust funding properly to account for variations in per-student costs based on special student needs (e.g., for low-income students, students with disabilities, English Language Learners) and for variations in the cost of education in different regions of the state. At the same time, even some high-wealth districts are hard-pressed to deliver adequate services for high concentrations of high-need students.

Action Needed

Use the state’s Economic Stabilization Fund (also known as the Rainy Day Fund), projected to have more than $11 billion available for 2019-2020, to help supply the state education funding our students need during the next biennium. For the long run, develop new state revenue sources that relieve the inordinate property-tax burden placed on local taxpayers and provide for a sustained, multi-year increase in per-pupil state funding of our schools, in addition to the amount needed to cover enrollment growth and inflation. New revenue sources should include: closure of property-tax loopholes that shift the burden from commercial to residential ratepayers; closure of other loopholes in business taxation; and sunset (termination) of unjustified sales-tax exemptions for business and professional services (while preserving “lifeline” exemptions for health care and child care). To achieve funding equity, update state funding formulas to reflect actual costs of educating all types of students in all parts of the state.