Texas Education Agency on the Money

As local revenues from property taxes have grown, the state share of funding for public schools has decreased. The disparity in state and local contributions to school funding is expected to continue growing unless state lawmakers act to balance out the costs of public education.

The Texas Education Agency will seek about $3.5 billion less in funding for public schools through 2021, according to a legislative appropriations request issued by the agency last week.

Public education in Texas is funded through a line item in the state budget called the Foundation School Program. In the past, the FSP has been paid through a roughly 50/50 split between state and local revenue sources. First, revenues are collected locally (i.e., through property taxes) to fund the state-mandated "basic allotment" total for school funding. If a district cannot hit the basic allotment on its own, the state provides the rest of the funding. In communities that exceed that baseline through local funding, the excess is sent back to the state for redistribution in what are known as "recapture payments."

As a result, the past decade has seen the share of school funding paid for by local taxes grow while the amount paid from the state has decreased. TEA has projected that by 2019 the state could pay as little as 38% of public school funding, while some policy analysts estimate that the figure could shrink to 32% by 2021. (TEA's budget requests are based on a projected 6.7% rise in property values.) The state could reinvest the money it saves from increased property tax revenues back into the school system, says Chandra Villa­nueva with the Center for Public Policy Prior­ities, but instead they "shuffle" the money around to other parts of the budget and use the savings to "pay for tax cuts." Villanueva said the state's declining contributions create a problem in "property wealthy" communities (such as Austin), where residents see rising property tax payments, but don't necessarily see that investment reflected in school outcomes.

Villanueva said the imbalance "creates a misperception" that school districts are failing students, when reduced funding from the state is also part of the problem. "If the state is concerned with their declining share [of school funding]," she said, "they should be taking the money from property value increases and reinvesting it into the education budget." TEA's proposed budget is just that: a proposal. By the time the next state budget is finalized, the amount requested for education could increase.