Providing for a system of free public schools is the unquestioned responsibility of the State of Texas. In fact, it is not even a point open to argument—the Texas Constitution says it is “a duty of the Legislature of the State.” Likewise, the duty to provide that system in an efficient and equitable manner, for both the provision of funds available for each child’s education and the resources generated by whatever tax system the state chooses to generate those funds, has been established by our Constitution and delineated by our courts.

In order to accomplish that task, Texas chose to establish a system of local school districts to provide educational opportunities. The state also chose to establish a local property tax in combination with various state taxes and sources of revenue to provide the funding.

Contrary to what some may think, the establishment of local school districts and their authority to raise revenue from local property taxes—even what types of property and the extent to which they can or must be exempted from property taxation—was not decreed by God as in inalienable right, but has in fact, always been a function of and controlled by the state.

After the Constitution of 1876 was set in place, the state legislature chose to organize schools districts into two basic groups. Incorporated cities were charged with establishing schools within the city limits, constructing school buildings and levying taxes to support the schools. Areas that did not qualify as incorporated cities had to use a system of community schools in which parents and guardians were required to organize districts yearly by applying to the county judge who then appointed the local trustees. For community school districts local taxation was rendered impossible because the district boundaries changed every year! In due season, the legislature passed additional laws designed to fix that problem.

Since 1876 the Texas Legislature has passed legislation establishing city districts, community districts, urban independent districts, rural common districts, rural high school districts, independent school districts, dormant school districts, and consolidated independent school districts. There were even times in our history when, depending upon the type of district you lived in, different maximum levels of local taxation were established. All this was done by the legislature as it attempted to establish a system of free public schools to meet the needs of Texas.

In fact, a major component of the landmark Gilmer-Aikin legislation in 1949 was aimed at eliminating loopholes in previous legislation that had allowed certain districts to exist over the years as tax havens. Referred to as dormant if they failed to operate a school for two consecutive years, these districts provided the ultimate tax haven. They had no students and no school—and no local property taxes!

The chart on page 3 demonstrates how the number of school districts in Texas changed over the years as the state legislature, on numerous occasions, changed how school districts and local property taxes were structured in attempting to meet our needs.

(continued on page 3)

Is Texas a Wealthy State?Depends on which children and taxpayers you’re asking

News & NotesVol. 29, No. 6 October 2010

Standing Up For Texas Children

October 2010 Equity Center News & NotesPage 2

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The point of this brief lesson in Texas History is to show that in order to fund a system of free public schools, all the wealth of Texas and all fiscal resources must be included. The concept that the taxable property wealth that happens to lie within a particular, arbitrary set of school district boundary lines—like a Comanche Peak nuclear power plant—belongs only to that portion of Texans who happen to reside within that zip code is just plain wrong. Don’t allow yourself to be convinced otherwise! This misunderstanding has contributed to the development of our current funding structure that is so terribly inefficient and unfair to both Texas children and taxpayers.

Instead, what is rightly required of the legislature by the state constitution is to establish a system for funding free public schools that efficiently uses all the state’s resources, and once and for all, finally creates a system of funding and organization that is property-wealth neutral.

The use of tools such as school districts, local property taxation and recapture are just that. They are the historical tools the state has chosen to use in an effort to accomplish the goals of the writers of the Texas Constitution—an efficient system of free public schools for all Texas children. Because the state currently makes such inefficient use of these tools, children and taxpayers are either blessed or cursed based simply on the zip code they happen to call home.

Is Texas a Wealthy State?(continued from FRONT)

October 2010 Equity Center News & NotesPage 3

The concept that the taxable property wealth that

happens to lie within a particular, arbitrary set of

school district boundary lines—like a Comanche

Peak nuclear power plant—belongs only to that

portion of Texans who happen to reside within

that zip code is just plain wrong.

October 2010 Equity Center News & NotesPage 4

Tax High, Spend Low? or Tax Low, Spend High?Unfortunately, You Don’t Get to Choose

There is an old joke about an out-going superintendent leaving three envelopes in his replacement’s desk drawer to be opened whenever she found herself in trouble. The message in the first envelope was to blame her predecessor; the second was to blame the Texas Education Agency; and the third was to prepare three envelopes.

When people inherit a bad situation, it is only fair to temporarily excuse them from blame. It might also be true that external forces have impeded corrections. But, after some point in time, the responsibility for those bad things that remain must fall at the feet of those currently in charge.

The same can be said about the current State Legislature and the untenable public school finance system we have today. We know that the system was not designed from scratch to be how we find it now. We understand that external constraints have made it difficult to correct the inefficiencies and inequities that continue to exist.

But, the Legislature has known for some time that serious equity problems are there and that millions of Texas children have been adversely affected. After all, Rodriquez vs. San Antonio ISD was filed in federal court over 50 years ago (June 30, 1968).

Ownership of the flawed system now belongs to the current Legislature, and, instead of addressing what needs to be done to fix the system of unfair treatment of Texas children and taxpayers, they have been protective of it.

The charts on the page 5 illustrate the realities of ‘tax high, spend low’ and ‘tax low, spend high’. There are vast differences in the revenue per weighted student that districts receive. In Chart A, districts are sorted by their state and local revenue per WADA per penny of tax rate. They are divided into two groups—the first group contains the 820 districts (80%) with the lowest yields and the second group has 385 (20%) with the highest. The upper 20% of districts on average receive $7,434 revenue per student at an average tax rate of $1.015 while the lower 80% of districts receive only $5,700 per student and at a tax rate of $1.068—a difference of $1,734 less per student and at a tax rate that is 5 cents higher! In Chart B, the differences are even greater with the upper 10% of districts averaging $2,613 more per student than the remaining 90% of districts—and this time with a 6 cent lower tax rate.

Much has been said about the state implementing rules and regulations to make school districts more efficient and effective. The best place to begin that task is with the state’s system of funding those schools. Until funding is equitable, it’s unreasonable to hold low-funded districts to the same standards that are applied to districts funded at very high levels. Don’t you agree?

The State of Texas has designed and now protects a system of public school finance that arbitrarily denies children in some

districts access to the same educational opportunities it makes readily available to children in other districts—

even when they tax at the highest M&O tax rates the system will allow.

$5,787

$8,400

$1.06

$1.02

$1.03

$1.04

$1.05

$1.06

$1.07

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

ed M

&O Tax R

ate 

venu

e pe

r Stude

nt (W

ADA)

Comparison:  M&O Revenue vs. Adopted M&O Tax Rate2009‐10 (After Recapture)

Revenue per WADA Adopted M&O Tax Rate

$5,787

$8,400

$1.06

$1.00

$0.98

$0.99

$1.00

$1.01

$1.02

$1.03

$1.04

$1.05

$1.06

$1.07

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

$8,000

$8,500

90% of Districts 10% of Districts

Adop

ted M&O Tax R

ate 

State & Lo

cal R

even

ue per St

uden

t (WAD

A)

Districts, Sorted by Revenue per Penny per WADA

Comparison:  M&O Revenue vs. Adopted M&O Tax Rate2009‐10 (After Recapture)

Revenue per WADA Adopted M&O Tax Rate

$5,700

$7,434$1.068

$1.03

$1.04

$1.05

$1.06

$1.07

$5,500

$6,000

$6,500

$7,000

$7,500

ed M

&O Tax R

ates

venu

e pe

r Stude

nt (W

ADA)

Comparison:  M&O Revenue vs. Adopted M&O Tax Rate2009‐10 (After Recapture)

Revenue per WADA Adopted M&O Tax Rate

$5,700

$7,434$1.068

$1.015

$1.00

$1.01

$1.02

$1.03

$1.04

$1.05

$1.06

$1.07

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

$7,000

$7,500

80% of Districts 20% of Districts

Adop

ted M&O Tax R

ates

State & Lo

cal R

even

ue per St

uden

t (WAD

A)

Districts, Sorted by Revenue per Penny per WADA

Comparison:  M&O Revenue vs. Adopted M&O Tax Rate2009‐10 (After Recapture)

Revenue per WADA Adopted M&O Tax Rate

October 2010 Equity Center News & NotesPage 5

CHART B

CHART A

October 2010 Equity Center News & NotesPage 6

Who Pays for Inequity?Taxpayers and their Children!

As educators and supporters of public education, we most often express concern for school funding inequities because of the negative impact they have on the educational opportunities available to children in low-funded districts. Yet, there is another, seldom mentioned group that also suffers from the gross inequities in our current system—the taxpayers in those same districts.

Taxpayers also have a right under the Texas Constitution for equal treatment. In fact, that guarantee was a major focus of the Texas Supreme Court in the original Edgewood I litigation. In their decision, the court equated “efficiency” with taxpayer equity, or “equal yield for equal effort.”

The phrase “tax effort” simply means “tax rate.” When a district adopts a tax rate, it is making the same tax effort as all other districts with that rate.

The Texas Constitution, State Law, and Texas Supreme Court decisions all certainly seem to require an efficient (i.e. equitable) system (including property taxes) for funding public education. The table below shows just how far away from fair and efficient we actually are. No rational, fair-minded person would even attempt to claim that the current system, from which this data comes, meets the state policy above.

To make comparisons of the tax burdens faced by taxpayers in different districts, we will look at district yields. In this case, the yield is the amount of state and local revenue the district generates per weighted student (WADA) for each penny of Maintenance and Operations (M&O) tax effort.

Sec. 42.001. STATE POLICY. (a) It is the policy of this state that the provision of public education is a state responsibility and that a thorough and efficient system be provided and substantially financed through state revenue sources so that each student enrolled in the public school system shall have access to programs and services that are appropriate to the student's educational needs and that are substantially equal to those available to any similar student, notwithstanding varying local economic factors.

(b) The public school finance system of this state shall adhere to a standard of neutrality that provides for substantially equal access to similar revenue per student at similar tax effort, considering all state and local tax revenues of districts after acknowledging all legitimate student and district cost differences. - Texas Education Code, emphasis added.

Yields per WADA per Penny

Number of Districts

ADA WADAAdopted M&O Tax Rate (ATR)

District Wealth

State/Local Revenue per WADA at ATR*

Yield per WADA per Penny of Tax 

Effort

Highest 100 92,871 131,532 0.987 1,341,006 8,200 85.72

Lowest 100 230,584 328,696 1.142 145,537 5,526 48.38*After  Recapture

October 2010 Equity Center News & NotesPage 7

At the Equity Center’s 29th Annual Joint Meeting of the Membership and Board of Directors breakfast on June 28, 2010, Dr. Catherine Clark was awarded the Champion of Equity award. Dr. Clark is the Associate Executive Director of Governance Services at the Texas Association of School Boards (TASB) and has worked for over 20 years on school finance issues in Texas.

When presenting the award, Dr. Wayne Pierce described Catherine as someone who stands up consistently on behalf of the children in school districts that are being cheated by the state system. Her work on school finance always reflects her integrity and her desire to do the right thing. Wayne concluded the presentation by saying that, “over the years, whenever there was a crunch and nobody wanted to stand up with the Equity Center and talk about important issues, you could count on Catherine Clark to speak up on behalf of your children and how important it is that they be given the same educational opportunities as all children across the state.”

When receiving the award, Catherine applauded the important work the Equity Center does to help districts fight for fair funding, and she emphasized that Equity Center members are in the right organization to accomplish these goals.

Dr. Clark joins an honorable group of past Champion of Equity award winners, with some including Lt. Gov. Bill Ratliff, Judge Scott McCown, Al Kauffman, Bill Grusendorf, Joe Smith and Dr. Albert Cortez.

Dr. Catherine Clark Receives Champion of Equity Award

If you compare the 100 districts with the highest yields to the 100 with the lowest yields, the average district in the top 100 raised $8,200/WADA at less than a $1.00 tax rate. That is a yield of $85.72/penny. The average district in the bottom 100 raised only $5,526 at an average tax rate of over $1.14. That is a yield of only $48.38—about half what the average top 100 district can raise.

The difference in the yields per WADA in this comparison exceeds $2,600/WADA, and in spite of substantially higher tax rates! In other words, the taxpayers in the average lowest yield 100 districts paid nearly a 20% higher tax rate, yet those in the average highest yield 100 districts accessed almost 50% more revenue with the lower tax rate.

Let’s say a tax-paying parent of public school children asked the following questions (based on the data in our chart). How would a state legislator respond?

1) Why isn’t the school that my children attend being funded at $9,800 per WADA? Our tax rate is about 16% higher than the average district among the highest yield 100 districts, so why shouldn’t my children get the benefit of 16% higher funding?

2) Why isn’t my M&O tax rate $0.65? That’s the tax rate it would take the average district in the highest yield 100 districts to raise the same amount of state and local revenue the Texas school finance system provides for my children.

 

Are you on FACEBOOK? If so, search for the Equity Center and “LIKE” us. You’ll then get updates from us on your News Feed. During Session, this will be one of the primary ways we

update members with the very latest information!

 

Dr. Wayne Pierce and Dr. Catherine Clark

October 2010 Equity Center News & NotesPage 8

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