Texas Legislators are expected to debate private school vouchers and related public school funding during the upcoming session.
Before that begins in January, here’s a primer on how the state funds its public schools:
They are funded by a mix of local tax revenue and state dollars. Sometimes the government also awards large grants to schools, like the Elementary and Secondary Schools Emergency Relief funds during the COVID-19 pandemic to help with the cost burdens of the pandemic.
Several components go into the complex formula the Texas Education Agency uses to determine how much schools receive from the state. Here are the main revenue sources:
Local revenue
School districts set a local property tax to collect from residents who live in the districts to help fund the district. The Foundation School Program establishes the amount of state and local money due to schools under finance laws, Director of State Funding for the Texas Education Agency Amy Copeland said.
The local taxes have two main functions: facilities and operation. Property taxes are made up of an M&O, maintenance and operations, rate and an I&S, interest and sinking, rate. The M&O rate covers the costs for maintenance of the schools and operations to run the campuses. The I&S rate helps the district pay off debt, usually related to bonds for building schools.
In Fort Worth ISD, the total tax rate is below Arlington ISD but above Dallas ISD:
| M&O Rate | I&S Rate | Total Tax Rate | |
| Fort Worth ISD | $0.9896 | $0.2920 | $1.2816 |
| Arlington ISD | $1.0080 | $0.3007 | $1.3087 |
| Dallas ISD | $0.9936 | $0.2420 | $1.235 |
The state uses the property tax rate and appraisal values as part of its formula, Copeland said. The current taxable value of the property in Fort Worth ISD is $52.1 billion. According to district documents, the average taxes due on a residence in the district is $2,010.19.
Part of the formula assumes districts are collecting a local property tax, Copeland said. If what the district collects is less than what it is entitled to by the state, then the state will make up the difference in the form of aid. The taxes collected by a district are considered Tier One funding by TEA.
Roughly 65% of the revenue in the 2022-23 budget comes from local revenue.
State revenue
Schools submit an Average Daily Attendance to the agency and receive a starting rate of $9,557 per student at the school, Copeland said. That amount can increase if the student is bilingual, in special education programs, those enrolled in Career and Technology Education programs and several other caveats.
Fort Worth ISD is part of the Senate Bill 1882 program, which means it also gets extra allotment for students on SB 1882 campuses. The bill allows districts to partner with outside entities to operate those campuses as charter schools.
This student allocation is Tier Two, or the state portion, of the funding formula, Copeland said.
“The whole system is meant to ensure that school districts, regardless of property wealth, … received substantially equal access to similar revenue per student at a similar tax effort,” she said. “After considering all those state and local revenues and acknowledging legitimate student and district differences in costs.”
Every year in October, districts across the state have Snapshot Day, which is a day attendance is collected and sent to the state to determine its Average Daily Attendance and allotment.
Property taxes and Average Daily Attendance funding combine for the largest chunk of revenue for the district.
“It’s not an enrollment based system. It’s an attendance based system,” Copeland said. “So this is why you see a lot of school districts noting the importance of kids who are in school, not just because it’s required by law, because it drives dollars to the classroom.”
Recapture
A state law referred to as the Robin Hood Law dictates that, if a district goes over its Tier One entitlement, it has to send money back to the state, Copeland said.
This year, Fort Worth ISD had to send money back for the first time. It cost the district $2 million. The money that goes back to the state is redistributed to poorer districts.
Copeland said property value growth can cause districts to exceed their entitlement. This explains what happened in Fort Worth ISD. The total taxable value of property in the district increased by around 10%, which caused the state to have to compress the M&O tax rate.
The state set a cap for entitlement at a tax rate of 81.96 cents. Property values increasing and enrollment decreasing led to the recapture of funds for Fort Worth ISD.
Kristen Barton is an education reporter for the Fort Worth Report. Contact her at kristen.barton@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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