Current Issues Facing School Finance

Current Issues Facing Educational Funding in Texas

General Diffusion of Knowledge

The Texas Constitution requires a public education system to support the General Diffusion of Knowledge (GDK). There is not a Constitutional or statutory definition of GDK. Many people had defined GDK as the accreditation and accountability rating requirements that currently apply to public schools. Judge Dietz, in his ruling in West Orange-Cove v. Neeley, identified the entire education system with all its requirements and mandates as being needed for a GDK.

Adequate Funding

No definition or measure of adequacy exists in Texas law or rule. Recently, researchers and policy experts have begun to consider adequate funding to be the level of resources needed so that all students can meet all the state and federal requirements for testing, school attendance, and graduation. Some believe that adequate funding should also include the cost of school district operations, meaning adherence to all laws and rules. At least three studies to determine adequacy of funding have been recently conducted using Texas data. The results of these studies were presented at trial in West Orange-Cove v. Neeley. In his ruling, September 2004, the trial court judge found that the Texas education system was not adequately funded.

Fiscal capacity

Out of about 1,032 school districts, about 700 are at or approaching the $1.50 M&O limit while Texas ' public school system continues to grow by approximately 70,000 students per year.

With some districts facing job cuts and salary cuts and others simply unable to provide for the influx of new students in high-growth areas of the state, school districts generally agree the system needs to be restructured because they lack the fiscal capacity to respond to changing enrollments and changing requirements of state and federal law.

Local Discretion

Local discretion is the ability of school districts to raise additional revenue to meet unique district and community needs. If a school district experiences a costly problem like building mold, the district will need discretion to raise additional funds for mold remediation and temporary housing of students who are temporarily displaced. Other discretional expenditures may be related to community desires. For example, school district patrons may want a theater facility at the high school. Or they may want to introduce foreign language study in elementary school. To raise funds, districts need some local discretion to raise revenue through taxation----or else have the ability to draw down state funds for such purposes.

Spending

According to Rankings & Estimates, produced by the National Education Association Research group (May 2004), current expenditures per pupil in Texas are $7,330 for 2003-04. The national average, by comparison, is $8,156. This ranks Texas 32nd among the states in spending per pupil. “Current expenditures” in this publication include operating expenditures (salaries, books, material, transportation, energy, etc), capital outlay, and debt service.