Transcript School Finance 101

School Finance 101
Your name
Your school district
Date
Contact Information
School Funding Sources
Shared Arrangement
• The local share: property tax revenue
• The state share: sales tax revenue, business
taxes, lottery proceeds, fuel tax, etc.
• The federal share: ESEA, Title I (and other
grant programs); IDEA, Special Education,
other federal funds
Sources of Revenue
School Year 2007-08
• Funds from these three sources amount to
$44.3 Billion
– Local share = 45.7%
– State share = 44.8%
– Federal funds = 9.5%
Basic Principles of
School Finance
Equity
• Equal access to resources for public education for
all school districts, regardless of property wealth
(known as ‘fiscal neutrality’)
– The Foundation Program formulas in law help Texas
approach this equity goal
• Each student has access to programs appropriate
for their educational needs and that are
substantially equal to those available to similar
students in other school districts
Basic Principles
Meaningful Discretion
• Meaningful discretion is the ability of a school
board to set tax rates and provide resources to
educate students at or above state
requirements
• The requirement for meaningful discretion is a
key component of the Texas Supreme Court
ruling on school finance (2005)
Hold Harmless
• In 2006, the Legislature compressed local
property tax rates by 1/3, providing tax relief
• To make up for the lost education revenues due
to tax compression, the state guaranteed to hold
harmless each district at the higher of its 2005 or
2006 funding levels per student
• Hold harmless state funding, plus teacher salary
increase funds, a high school allotment, and
some other elements form the Revenue Target
for each school district
Where Are We Now?
• The state is currently in the 4th year of using
Revenue Targets
– Over 740 districts are funded with targets
– Almost 300 districts are funded using the
foundation program formulas
• Revenue Targets are out-of-date
Where Are We Now?
• Funding with Revenue Targets is less equitable
than formula funding
• Per-student Revenue Targets range from a law
of $3,600 to over $12,000 per student
– The average is about $5,075
Where Are We Now?
Most important
Neither Revenue Targets nor foundation
program formulas are linked to the chose of
achieving academic performance
requirements in law today. The connection
between what schools must do and the
resources available to accomplish those goals
is missing.
Tax Rate Increases
• Districts may raise property tax rates by an
additional 17 cents above the compressed
rate
• The first 4 cents can be levied by the school
board without an election. The pennies are
guarantee to generate the same level of
revenue as Austin ISD, and without recapture
Tax Rate Increases
• Two more pennies of tax also yield the same
revenue as Austin ISD, but voters must
approve the board’s action to adopt these two
pennies
• The remaining 11 cents also require voter
approval and yield less revenue per penny.
Recapture applies to these taxes.
Tax Rate Increases
Aside from money provided for
student enrollment growth, the only
way for districts to access additional
funding is by asking local voters to
approve a tax rate increase or asking
the Legislature for more resources.
Effect of Property Value Increases
• There is an inverse relationship between
local property tax revenue and state
funding for schools:
– If property values increase in a district, the
state’s obligation to provide funding to that
district decreases.
What Drives Rising Costs?
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Teacher and other educator salaries
Transportation costs and utilities
Rising food prices
Competition for auxiliary staff and rising
salaries for those staff
• Higher academic standards
• Increased high school graduation
requirements
Current Funding Problems
• The funding system established in 2006 was
intended to be temporary
• The school finance system is not adjusted for
current instructional requirements and
performance standards
• The finance system is no longer appropriately
adjusted for regional cost differences
Current Funding Problems
• Target Revenue system exacerbates inequities
• Out-of-date state funding levels push property
taxes higher
• If there is no fix in the 2011 session, the
system will continue through to the 2012-13
school year (7 years)
Solutions
• Conduct a state study in 2012 to examine the
true cost of education, taking state standards
and requirements into consideration
• Increase general revenue support for school
districts to move more districts off Target
Revenue and back on to the foundation
program formulas
• Permit school districts more flexibility to set
tax rates
What Next?
–Contact your legislators to express
concern for the adequacy and fairness
of the school funding system
–Describe the local situation to your
legislators so that they have a clear
picture of the needs in your district.