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Pierce: School finance equity begins by eliminating inefficiency

By Wayne Pierce
Sept. 2, 2016 at 11:36 p.m.


Our inefficient public school funding system results in significant lost funding to the majority of districts and an increased burden on their taxpayers. It may be a cliché, but it remains true: There are no free lunches — someone always pays.

Our basic system is geared to reflect differences in the cost of providing education across the state. The statutory objective is that all districts willing to exert the same tax effort would be able to provide appropriate educational opportunities of similar quality for all children. This principle is the foundation of the Texas Supreme Court's first school funding decision and was reiterated in the most recent decision: Districts must have substantially similar revenues per pupil at similar levels of tax effort.

Along the way, this principle was lost. "Band-aids" and "quick fixes" took the place of good policy decisions. Our system became increasingly complex and inefficient, unreasonably favoring some while detrimental to all others.

When a district receives funding that is not based on actual, state-recognized costs, every other district and its taxpayers are forced to foot the bill — either through higher taxes or lost opportunities for their children. In non-privileged districts across the state, taxpayers are taxed at higher rates and still receive less funding for their children. Texas loses when we fail to use the state's resources in responsible, efficient and productive ways that benefit all Texans and their children.

Our system provides hundreds of millions of precious and limited taxpayer dollars every biennium that serve no cost-based purpose. For example, our system has a "temporary, transitional" hold-harmless provision that has been in effect since 1993 — starting its 24th year. It is now permanently in law and has a formula that makes it grow, even though it is not related to any known cost. Another funding source called the early agreement credit is based, incredibly, on whether a district signs a piece of paper before or after a certain date — again, not reflecting a known cost.

Target revenue, another hold-harmless provision, guarantees districts the same funding levels they had more than a decade ago, regardless of needs. This no longer applies to most districts, but for some, it provides big money. This biennium alone, target revenue will cost taxpayers nearly $600 million. Although this coming school year is set in statute to be its last, there is already a move to continue the funding into the future.

This is funding by habit, not by cost. Not by need. We used to do it, so we must continue to do it.

These and other inefficiencies result in many districts receiving tens of thousands of dollars more per typical classroom of 22 children not justified by a greater need, even when taxing at rates below the state average. In some cases, the advantage is over $100,00 per classroom. This waste is borne by taxpayers in other districts whose children do not benefit.

Before we can even begin to decide whether these districts need these additional funds to meet state standards, we must first make the hard decision to eliminate the inefficiencies that have become imbedded in the system today. After that, whatever funds are legitimately necessary must be provided in a responsible way — and they must be provided to all Texas children, not just some.

It's time to step back and look at the system objectively. We cannot continue making funding decisions solely based on district runs; instead, we must address the cost-based needs associated with educating kids with different educational needs and the cost-based needs of varying districts. An efficient and productive funding system is one based on cost and devoid of waste. We cannot afford to have it any other way.

We are hopeful the conversation will start here in the coming legislative session. The result should be a system that makes sense to everyone and benefits each taxpayer and child across the state in a fair and equitable way.

— Wayne Pierce is executive director of the Equity Center, an Austin school finance research and advocacy organization founded in 1982.

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