Texas School Finance: Doing the Math on the State’s Biggest Expenditure
Published January 2019
This report uses data from a variety of state and federal sources to highlight and assess the most significant historical and future trends in Texas public education finance.
The Texas Education Agency (TEA) was the primary source of statewide public education data for this report because it houses the Public Education Information Management System (PEIMS). Through PEIMS, individual school districts are required to regularly report certain data regarding student and educator demographics, district finances and academic performance.
The Legislative Budget Board (LBB) supplemented the TEA data presented in this report with state and local revenue data from the FSP, which provides a broader perspective on the funding relationship between school districts and the state. In addition, some data gathered by the Comptroller’s Property Tax Assistance Division were used. The report also relies on Comptroller revenue data from other taxes.
Some data in this report are provided both in “current” dollars and “constant” dollars, adjusted for inflation using 2017 or 2018 as a base. The report assumes current trends will continue, such as inflation, population growth and increases in the number of economically disadvantaged students.
The LBB and TEA provide much of the primary data for public education finance in Texas, yet their analyses of data concerning the FSP have different goals and involve important differences in methodology.
LBB’s approach, as published in its biennial Fiscal Size-up report, focuses primarily on capturing potential impacts to the state budget. One major implication of this approach is that it does not report all local interest and sinking (I&S) tax collections, including only those affecting the state’s obligations under the Instructional Facilities Allotment and Existing Debt Allotment, two programs providing state aid for school facilities. In addition, LBB categorizes recaptured local property taxes as “local” revenue.
TEA’s reports, by contrast, usually include all local I&S tax collections. Moreover, TEA views recaptured local property taxes as a method of finance available to state government and therefore categorizes them as “state” revenue.
For the purposes of this report, as well as for more general discussions of school finance, the Comptroller’s office suggests a different approach to examining the state and local shares of public education spending. We believe an accurate depiction of the revenues that support the FSP requires the inclusion of all local tax collections, regardless of whether or not they affect the state budget. Furthermore, recaptured property taxes are raised from a local tax and accordingly are best characterized as a local contribution.
The Comptroller’s calculation of state and local shares over time is as follows:
|Fiscal Year||State Share||Local Share|
Sources: Texas Education Agency and Texas Comptroller of Public Accounts
Appendix II compares this analysis with those of the LBB and TEA.