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Texas School Finance: Doing the Math on the State’s Biggest Expenditure
Published January 2019
Introduction
Public education is one of the most important functions of Texas state government and currently represents the biggest share — 38.9 percent — of Texas’ general revenue spending.3 The state and more than a thousand local school districts share the responsibility for providing all Texas schoolchildren with the opportunity to acquire the knowledge they need to thrive in a modern society.
The Texas Constitution requires the state to make suitable provisions for the support and maintenance of public education. For decades, the school finance system has faced repeated constitutional challenges on the basis of equity and efficiency, but despite misgivings, the Texas Supreme Court has ruled that the current system remains constitutional in these respects.
Our challenge today is different.
The need for education funding has never been higher. Texas’ school-aged population and the number of higher-need students are growing dramatically. Upkeep and expansion of facilities are expensive; maintenance and operations costs are rising.
The funding we provide, however, increasingly comes from local property tax revenue, requiring less from the state but burdening local taxpayers more and more each year. Texas property owners are demanding tax relief, but any substantial reduction in local property taxes would require significant increases in state funding.
In essence, it’s a simple math problem: X + Y = Z, where Z represents the total amount of school funding called for by the state’s educational funding formulas. X and Y are the state and local components; since the equation must balance, any increase in X reduces Y. And vice versa.
This balancing act is a natural consequence of our public education funding system — and one that is proving increasingly difficult to sustain.
This report examines the Texas school finance system from a number of angles, including its historical context as well as current trends in school funding.