With Tax Revenues Rising, Texas Plans to Spend Less, Not More, on Public Schools

School funding formulas are one of the most arcane and obscure elements of public policy one can imagine.  The only thing that comes close in my mind is the federal tax code.  The federal tax code does, however, have some rhyme or reason to it.  In those years in which I make more money, I pay more taxes.  In those years in which I make less, I pay less.  Yes, there are tax loopholes for certain capital gains, home depreciation, and the like, but the general rule remains the same.

School funding formulas can work in the opposite direction.  Just because more money comes in does not mean that schools will get more.  This is due largely to the way state government offsets its contribution to public education based on how much local districts raise in property taxes.  In some states, the more the local district raises, the less the state spends.  This might make some modicum of sense if we assume that the district has, and has had, the total amount of money it needs to meet the needs of students.  But it is a brutally harsh system if that assumption is incorrect.  It is like telling a malnourished kid that he will only get half a free school lunch today because the principal noticed that one of his friends gave him a biscuit for breakfast.  

Well, this would seem to be exactly what the state of Texas plans to do--take money from needy school districts because their local property tax revenues are projected to increase without ever asking whether those districts have what they really need.  

So lets start with the question of whether Texas schoolkids already have the resources they need.  Bruce Baker and his colleagues' recent study of how much it costs for children to achieve "average" outcomes (which is probably lower than "adequate" outcomes) found that Texas is in pretty bad shape.  In many states, twenty to forty percent of school districts have enough--and maybe more than enough--for students to achieve average outcomes.  This is true in even relatively poor states like South Carolina and Oklahoma.  It is the students in the bottom 60 to 80% of districts who are getting shortchanged. 

But in Texas, everyone seems to be short on cash.  According to the study, Texas districts that spend in the top 20% are still short $348 per pupil--not a huge number but a striking one given that these are the wealthy districts.  At the other end of the spectrum, the study finds that the poorest districts are short $12,682 per pupil.  That is the 5th largest deficit in the country.  Only Arizona, Alabama, California, and the District of Columbia have larger gaps.  

A few years ago, a Texas trial court examined whether funding levels in Texas were "adequate" to meet constitutional requirements.  Its conclusions all but predicted the results of the foregoing study.  The evidence in that case demonstrated that Texas schools were underfunded by $3.6 billion in 2010 and, after budget cuts, would be $6.1 billion underfunded in subsequent years. Prior state supreme courts had on several occasions ordered the state to fix gross underfunding, but in a surprising turn of events in 2016, the Texas Supreme Court decided that separation of powers concerns and new concerns about whether money matters dictated that it leave school funding to the legislature.  The decision is extremely hard to square with all the increasingly precise and compelling evidence regarding how much money really does matter, but that is another story.

With no check on school funding levels, what is Texas planning to do now?  A new story by the Texas Tribune offers this summary:

In its preliminary budget request ahead of next year's legislative session, the Texas Education Agency projected a drop in the state's general revenue for public education by more than $3.5 billion over the next couple of years, in part because the revenue from local property taxes is expected to skyrocket. General revenue only makes up part of the state's education funding.

Texas Education Commissioner Mike Morath confirmed this projection in front of a state budget panel Wednesday morning as he laid out the state agency's budget request through 2021.

The Foundation School Program, the main way of distributing state funds to Texas public schools, includes both state general revenue and local property tax revenue. Local property values are expected to grow by about 6.8 percent each year, and existing statute requires the state to use that money first before factoring in state funding.

Of course, advocates who understand school needs are none too happy about this. 

[They] have pushed state officials to put more money into public schools, instead of absorbing local tax revenue into the system.

"The state needs to kick in their fair share," said special education advocate and parent Heather Sheffield to the panel Wednesday. "Property taxpayers are fed up with the fact that the state is not funding public education."

Texas, unfortunately, is not an outlier.  As emphasized during teacher protests this past spring, most states continue to fund education at a lower level in real dollar terms today than they did a decade ago, which is strange given that their tax revenues are up.  And this heat map from Baker's study shows where the underfunded districts in the country are.  Anything not in green or light green is underfunded.  Unfortunately, there is a a lot of non-green on the map.

But what this new story on Texas does clearly reveal is how states minimize education spending and the seeming irrationality of it.  This suggests another problem: states don't appear to be willing to act in good faith toward education.  Putting precise funding levels aside, the mindset with which states approach education is as important as where they ultimately land, as the two questions are inextricably linked.  And so I warned this spring against thinking that state concessions to teacher protests represented a major change in policy. Yes, some new funds would flow to teachers, but the mindset toward education had not changed.  A handful of state leaders were showing that they remained dead-set on carrying out their agenda, regardless of the bumps in the road they confronted. 

Unfortunately, it is too often only courts that can trigger a fundamental shift, but Texas's court system seems to have abandoned its students.