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The Funding System for Public Schools in Texas

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The education agency of Texas submits billions of dollars in both federal and state funds that boosts several programs to benefit the public education. The funds for the public schools in Texas come from various sources including the grant organizations, federal coffers, the permanent school Fund Endowment among others. Therefore, the Texas public schools should not have lots of financial problems because they are administered with enough funds that are sufficient to see them through their activities and financial issues including infrastructure and development (Hanushek, 23). The ultimate aim of this paper is to examine briefly the history of public school funding in Texas, look at the current system, how it functions and how efficient it is. It also inspects the federal funds in general how they are shared out in different areas where it also observes a graph showing the state shares of the federal funds. It the checks the problems or the inefficiency encountered during the Texas funding periods as well as the challenges encountered after the funds have been distributed. It winds up by studying the importance of encompassing efficiency in the school funding process.

Brief History of school funding in Texas

It is the Gilmer-Aikin legislature act that set down the reorganization of the state education administration in 1949 at Texas.  The act also lead to the establishment of the “Minimum Foundation Program” that came up with the system of funding that issued revenue for education from both local and state sources (School Finance Library). The lawsuit of 1984 hasted the current system called “Robin Hood” and it was the same time that the districts of the schools suggested that there was inequity among school districts due to the process of funding that engaged property taxes. The lawsuit went all through the Texas Supreme Court after undergoing the other courts in Texas and the Supreme Court ruled the finance system out of the constitution in 1989. The Texas legislature however passed the Senate Bill 1 in 1990 that brought in more money to enhance equality but had no major significance (Patterson, 24). The Supreme court smacked down the SB1 and the legislature went ahead to pass the House Bill 351 in 1991 where there were 188 County Education Districts CEDs).  The CEDs were given the okay to charge state-permission property taxes and issued out the revenues to the member districts.

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The Texas legislature returned to work after the Supreme court smacked down the HB 351 and in 1993 the legislature then passed the Senate Bill 7 which appealed to property tax summon up provision that was referred to as Robin Hood. All this was meant to improve equity in the funding system between the lower-wealth districts and higher-wealth districts. The system was efficient and it was summoning up $1.2 billion every year from 134 school districts. Thus, it is difficult to bring down the Robin Hood provisions because it can be difficult to maintain funding support for schools. Before the Robin Hood system came in, there was dissatisfaction with recapture that increased in 1990s and the state funding mounting were not consistent with the cost of education in Texas (Legislative Appropriations). Therefore, the school boards were forced to raise the property tax rate in order to meet their revenue needs and in 2003 about 690 school districts were at the constitutional maximum tax rate of $1.50. It is then that there was a litigation to overturn the system due to high taxes and inadequate funding. That was then that the Robin Hood system developed and is still functioning up-to-date.

Texas School Funding: The Current System

The Texas schools funds come from the local funds, federal funds and state funds. Note that about 49 percent of the schools funds came from local funds in the 2002-2003 school year whereby 41 percent was from state funds and the rest from federal sources. These revenue normally varies from one district to the other because there is variation in the wealth of the local property sources and the student population. The current funding mechanisms are as follows.

Local Funds (Property Taxes)

Each school district is allowed to adopt two tax rates every year whereby the ‘interest and sinking fund’ tax rate and the ‘maintenance and operations’ tax rate is only charged when a district has debt (Hanushek, 34).  Note that the maintenance and operations taxes cannot go beyond $1.50 in every $100 of taxable value as per the current Texas law and at the same time, debt service cannot go beyond $0.50 in every $100 of taxable value. There was the need to relieve the finance debt by the debt service before September 1, 1992 but they are not covered.

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Below are the items in the Texas Education Agency budget request for the 20006-2007 period. It encompasses both Federal and State funds. Foundation School Program- Equalized Operations

Equalized facilities

Student success initiative

Programs for At-risk students

Instructional materials

Educational technology

Educator Recruitment, Retention and Support

The following is the list of exceptional items request (requests beyond the basic appropriations request to be filled if funds are available) (School Finance Library)

$373 million student success initiative

$387 million for textbooks

$301 million to mount guaranteed Yield

$180 million for Equalized Debt Allotment

$150 million for Instructional Facilities Allotment

Source, Legislative Appropriations Request for Fiscal Years 2006 and 2007, Texas Education Agency, and August 2004.

In general, the federal funds are suitable for special programs or to issue services to a precise group of students (Patterson, 52). Since they are crucial and precisely earmarked for these programs, they cannot be used reinstate state local dollars to fund a program. About half of the these funds enter into the school directly while the rest is used in the state for the regional education centers for service.

State share of Texas Public

It is the state that determines the fairness and the funding systems in schools as well as giving local support. However, the funding from the state has gone down instead of going up. The state has reduced its submission of funds for the past two decades from 52 percent to around 36 percent (Moore, 46). Note that each point of the percentage represents millions of dollars. As the state fails to pay in its responsibility to finance education, several school districts in Texas especially the districts with poor property capabilities, are stressed to hike the taxes and are not able to issue out the quality education that all students merit.

Challenges and inefficiency in the funding system

It is not the inefficiency in the system that brought about all these problems, it is the political decisions that cause all the mess. It is the current deficit of $12 billion of federal stimulus money that papered the shortfall two years ago. The deficit encompassed $3.8 billion of the federal money that had been set aside for public education but it was used for the supplant state funding which was not the intended purpose of the money.  The people behind all these mess are the politicians who do not care about the other people, they only concentrate on personal interests (School Finance Library). It was during that period that there was a sudden post election economic slowdown whereby most of the public and government money had been spent for election campaigns and other activities in preparation for the elections and it was the main cause for the shortfall in the education budget of Texas.

The other problem that was experienced that caused the current budget shortfall was the 2006 tax swap (Legislative Appropriations). The swap made the property taxes to come down from $1.50 to $1.00 per $100 of the charged value, giving the promises that a new business edges tax would make up the difference but it did not happen at all. The shortfall of the swap is still recurring a up to date whereby the tax swap is still recurring around $4.6 billion annually. Note that the two items mentioned make up two-thirds of the suggested slash to education. This major shortfall has been experienced in the education system of Texas and has greatly altered the funding process for the school districts in Texas.

Recommendation and conclusion

The only solution to this problem is to enhance efficiency in the funding and public education in general. Just like any other field, the education field has got several changes that can be made to enhance efficiency and transparency several of them can smoothen all the process without interfering with the academic efficiency (Moore, 45). The legislative should lay down the best strategies and very strong penalties for any person who interferes with the funding system of the schools in Texas. This is mostly seen in politicians who take the advantage of being in government and exploit the citizens including participating in corrupt practices. There should be a Bill Act that restricts them in participating in such actions. They should be put as the watchdogs of the school districts in Texas and other states in the nation. That is the basic and best way of solving the shortfalls that the school districts experiences when it comes to the funding system.

In conclusion, it is important to note that the finance system for the Texas public schools has been in and out of the court extensively for the past two decades. All the issues that arise in the funding system occur due to luck of equity in the funding process. Therefore, it is clear that there is the need for a new look at the equity questions that that come across the Texas funding system as well as the need for reviewing and making necessary changes to the existing system in order to enhance future system revisions. It is through understanding the importance of changing the funding formulas or go on with the current systems where policy and lawmakers can plan a trail for improvement (Moore, 61).

There is a great chance of improving the tracking of these inequities if the RTP index will be used to locate the availability of the funding process. This system will also limit the chances of the future Texas funding system to end up in court system, which happens due to the challenges that faces individuals or districts that are distinguished as not being tackled fairly. Under a democratic system, equitable and fair treatment under the legislative Acts is the expectation and the right of every citizen.

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