School Sessions: How Are School Districts Funded In Texas?

Texas school districts have been kicked around and become a major political football in the state the last couple of decades.

A major source of frustration on both sides of the ball is the issue of funding of our state's public schools. As with many other topics in our nation as a whole, the sides have become so polarized that it is becoming increasingly impossible to find some sort of compromise.

The simple truth of school funding in Texas is that schools have little say in the funding formulas other than constantly having to adjust to what the powers that be decide. Over time, all this has done is create less and less opportunity for students in public school to receive a quality education due to a decreasing lack of overall funding for the classroom.

The facts are that Texas school districts are funded by three major sources: Federal, State, and Local. Two factors drive school finance in Texas: enrollment, and local property values.

A school district tax rate has two distinct components which, added together, make up the annual school tax rate:

• Maintenance and Operations (M&O) funds are used to fund the day-to-day operations of a school district, including teacher and staff salaries; utilities; student services and curriculum; professional development; and facility maintenance and management.
• Interest and Sinking (I&S) funds are generated from the sale of voter-approved bonds. These funds are restricted for use only for projects such as the construction of new facilities; additions and renovations to existing facilities; safety and security projects; and purchase of capital expense items such as buses and large technology expenses.

Money generated from a bond issue cannot be used to fund any item in the M&O budget. In order to increase funding for teacher salaries and day-to-day operations, a school district must pass a Tax Ratification Election (TRE) decided by its voters, similar to a bond election. Without that, a district is limited to its current M&O budget to fund salary increases and make adjustments to instructional funding.

Local school property taxes are set annually by M&O plus I&S tax rate approved by the district’s Board of Trustees. Actual property values are determined annually by local appraisal districts. School districts have zero control over and do not set local property values.

Repeat: a school district has zero control over the local property value of your home. A school board only sets and approves the school district tax rate.

Local property taxes make up roughly 90 percent of a school district's funding. State and federal contributions to the budget make up the remaining 10 percent.

The state funding allotment is based upon the number of students in the district and the composition of needs of those students. A district is allotted an amount per student for basic educational services (currently $6,160 per student, with no inflation factor). Additional allotments are given for students that require additional services and must be spent on those students. However, state funding decreases when local property tax values increase.

But there's another catch -- a school's allotment is affected by a formula called Average Daily Attendance (ADA). ADA is the average number of students who come to school on any given day.

When a student attends school, they not only increase their learning opportunities but they also increase the school district's state funding for the year. Conversely, when that student does not attend school, for whatever reason, the state funding is decreased.

Federal revenues are basically reimbursements only and will typically make up roughly five percent of a district's annual budget.

Sound confusing? This is just a birds-eye view of the complicated formulas for funding our public schools in Texas.

Try a deeper dive into the subject and you risk not seeing daylight for a long, long time.

-- David Weaver