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Editorials / Columns
The Texas school finance system is so complex that few people have a clear understanding of how their children’s school district is financed and how does it compare with other districts with regard to the available resources and funds.
Funding for public education in Texas comes primarily from local and state sources. Local revenue is derived from taxes on district property wealth. The majority of state funds are distributed to districts through a system known as the Foundation School Program.
The FSP uses special formulas to determine education costs for each district. The financing of these costs is shared between the state and the local district.
The distribution of most state aid to school districts is governed by two basic components: tier 1 state aid, and the guaranteed yield program, known as tier 2. In addition, two new programs, sometimes referred to as tier 3, provide state aid to districts for making debt payments.
Because school districts rely on property taxes as their local source of revenue, local revenues at similar tax rates vary widely across the state as property values or wealth varies.
To offset variations in local revenue, the Foundation School Program employs state money as an equalizing agent. Districts receive state aid based on their property wealth per student. The higher the district’s property wealth, the less state money that district receives.
Property wealth is defined as the value of taxable property divided by a special count of students. The system counts students based on their special educational needs. Students who require extra services or those who have special needs are eligible for more funding. The Cost of Education Index assigns weights to these special programs.
For example, students in career and technology education have a weight of 37 and receive an extra 37 percent of funds compared to students in regular education.
Also, the index gives low-income students and those in small districts more weight. The three tiers of FSP are funded in different ways and different rules apply to each.
Tier 1 and 2 levels of funding generate money for maintenance and operation of the school district. The law prohibits districts to levy a tax rate above $1.50 per $100 of assessed property wealth.
Tier 1 component of school funding represents the cost of providing basic educational services for students in each district. Tier 1 provides funding for regular education, special education, compensatory education, bilingual education, gifted and talented education, career and technology education and transportation.
Currently, the FSP requires districts to raise a minimum of $2,537 per student for basic education costs.Transportation costs are then added to this basic allotment. In 1998-1999, this amount was approximately $3,400.
To participate in the Foundation School Program, local districts are required to levy a tax rate of $.86 per $100 of their property wealth.
Districts with sufficient wealth to generate the entire allotment on their own receive no state funds in tier 1. The property wealth of these districts usually exceeds $295,000 per student.
However, districts that cannot generate the entire amount from local revenues receive state aid to make up the difference between their local revenue per student and the total tier 1 allotment.
The guaranteed yield program provides funds for educational services beyond the basic program financed through tier 1.
The tax rate at this level of funding, often called tier 2, is discretionary. Districts may levy up to $.64 of tax rate in tier 2, but they are not required to do so. Every penny of tax rate above the $.86 yields $24.70 of revenue per weighted student from a combination of local and state sources.
That means going up to this level of financing enables low-wealth districts, those with property wealth below $247,000, to earn up to an additional $1,580 per student in a combination of local revenue and state aid.
Districts with wealth above $247,000 and below $295,000 per weighted student will generate the tier 2 yield entirely with local taxes. However, they are allowed to collect up to about $1,890 per student in this level of funding. That is because, according to the Texas Supreme Court, the system should only substantially equalize school funding.A disparity of up to $600 per student is tolerated.
In tier 3, the state aid provided to poorer districts equalizes the ability of districts for debt payment, construction and lease/purchase of new instructional facilities. Each penny of taxes in this tier generates $35 per student in state and local revenues combined. However, state aid will equalize funding for this tier only up to a tax rate of $.12. If the district goes above the $.12 tax rate, it will receive no more state aid for the extra tax effort.
Wealth equalization is another feature of the Foundation School Program that attempts to lessen disparities in access to funds for public education across districts. The state equalizes funding through a mechanism called recapture, the recovery of financial resources from districts defined by the state as high property wealth. Resources are recovered for the purpose of sharing them with low-wealth districts.
Districts with wealth above $295,000 have to choose at least one of five wealth-reducing options. According to Texas Education Agency, the state administrative agent supervising the public education system, property-rich districts most often select to pay for the education costs of students in nearby low-wealth school districts.
According to TEA, 83 districts had to return money to state in 1999-2000, which varied from $3,000 to $2 million. The recapture money generated about $522 million of additional funds for the low-wealth districts annually.
© Copyright World Internet News 2006-07
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