Promoting freedom, innovation, and growth

Connect with IPI

Receive news, research, and updates

June 8, 2016

Broken School Finance System Creates an Opportunity for School Choice in Texas

 

It’s hard to imagine a school funding mechanism that is more broken than the one employed by Texas.

On May 13, the Texas Supreme Court upheld the constitutionality of the Texas public school finance scheme, but no one thinks it’s a good system. The court had some choice words: byzantine, imperfect, and Daedalian—the latter a reference to the mythic Athenian architect who built the labyrinth for King Minos designed to trap all who dared enter. None of those descriptors was meant to be complimentary.

Despite the criticism, the court correctly refused to intervene, finding that the antiquated system met the minimum constitutional requirements. Justice Don Willett, writing for the majority, demurred to the Legislature, noting that “it is not the Court’s role to second guess or micromanage Texas education policy or to issue edicts from on high increasing financial inputs in hopes of increasing educational outputs.”

But the court said the state’s 5 million school children “deserve transformational, top-to-bottom reforms that amount to more than Band-Aid on top of Band-Aid.”

Currently, public schools get local, state and federal funds. Tier I funding is provided by local property taxes and state funds. Districts are paid a set amount per student, which is calculated using the district’s average daily attendance and adjusted by factors such as the district's location in the state, the size of the district and the relative wealth of the people in the district.

Tier II funding allows districts to obtain additional funding by adopting a slightly higher tax rate and is based on the number of students in weighted average daily attendance. School districts call these extra taxes “golden pennies,” which are pure revenue, and “copper pennies,” which may be subject to recapture depending on how wealthy the district is.

If all this sounds rather complicated, that’s because it’s a tangled mess of disjointed and misaligned puzzle pieces—in other words, there is no way to fix it piecemeal.

School choice might just be the motivation legislators need to tackle the daunting task of education financing reform, and it's already one of the state's top priorities for the 2017 legislative session. However, legislators would be hard pressed to build school choice onto the current funding scheme.

Regardless of the specific implementation—school vouchers, education savings accounts, tax-credit scholarships or tax credits/deductions—school choice makes public education financing more dynamic because funds follow students to the schools and districts of their choice.

Tacking on school choice to the current system would only compound its problems.

As broken as education funding in Texas is, school choice is poised to be the carrot legislators need to make substantive changes to the current system.


 

  • TaxBytes-New

Copyright Institute for Policy Innovation 2017. All Rights Reserved Privacy Policy Contact IPI.

e-resources e-resources