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Equality And Inequality In Texas School Finance

Equality and Inequality In Texas School Finance

Executive Summary

There is considerable equality in educational resources among Texas school districts under the current system of education finance.
  • If inequality is measured on a scale of 0 to 1 (where 0 is perfect equality), funding for Texas school districts currently has an inequality measure of .15 - less than half the inequality in the distribution of family income in the U.S.

  • If small districts (fewer than 500 students) are ignored, the inequality measure is only .10.
One reason why there is so much equality is that the State of Texas redistributes enormous amounts of money to achieve that goal. Contrary to widespread opinion, most of the remaining inequality is due to differences in local property tax rates, rather than to differences in the value of taxable property.

In Edgewood v. Kirby, the Supreme Court talked about equality but ruled on fairness. Specifically, the Court said that school districts must have substantially equal revenues per student for the same tax effort. If this standard is strictly adhered to:
  • The State of Texas will have to redistribute $1.07 billion of current spending.

  • The school districts facing the biggest losses will be the large cities, including Houston (-$219 million), Dallas (-$105 million), Austin (-$51 million) and, San Antonio (-$28 million), and their suburbs.

  • The school districts realizing the largest gains include districts on the Texas/Mexico border with larger Hispanic populations.
Beyond the most visible districts, winners and losers are scattered randomly - with many low-spending districts losing funds and many high-spending districts gaining funds. Overall, a distribution system based exclusively on tax effort will produce more inequality than currently exists.
  • The measure of inequality within the Texas school system will rise from .15 to .20.

  • If small districts are ignored, the measure of inequality will rise from .10 to .16.
One reason why inequality increases under the Supreme Court ruling is that, in every wealth class, property tax rates among school districts vary widely. Currently, the state makes considerable effort to reduce the variation in revenues per student that these tax rate differentials create. The Supreme Court ruling requires the state to do less, leading to a system in which the distribution of revenue is determined by tax effort alone.

A complete copy of the study "Equality and Inequality In Texas School Finance" is available for $10. To order this study, please contact the NCPA at 972/386-6272.
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