Texas Public School Funding

The Target Revenue System

How does it affect Avalon ISD?

ByDavid Del Bosque, Superintendent

Avalon ISDSeptember 2010

School districts receive funding from three main sources: it is a shared arrangement

School District

Local Funding

(property taxes)

M&O –maintenance and operationI&S – debt tax

State Funding (sales taxes, business taxes )

Federal(smallest and usually

program specific)

Background – How we got here…West Orange-Cove vs. Neely (2005)

West Orange-

Cove vs.

Neely

•Districts filed a law suit contending the state had not met its constitutional duty by providing necessary funding for mandatory programs.

Schools at

cap

•Two thirds of school districts were within five cents of the $1.50 Maintenance and Operations tax maximum allowed.

Lack of

meaningful

discretion

•Court ruled that the $1.50 tax cap was in essence a state tax and removing meaningful discretion, thus unconstitutional and ordered a remedy.

Remedy House Bill 1

•The ruling resulted in a legislative response – House Bill 1 (2006)

House Bill 1

Property Tax

relief

•Reduced property tax by one-third and was phased in over a two-year period.

Compressed

Tax rate

•The first year of House Bill 1 the tax rate was compressed by multiplying the 2005 M&O tax by .8867. In Avalon’s case: $1.43 x .8867 reduced the tax rate to $1.267. This became the Compressed Tax Rate the first year of the plan.

•The second year of the plan the compressed rate was calculated by multiplying the 2005 M&O tax by .6667. In Avalon’s case, the CTR became $.9533 ($1.43x.6667)

Target Reven

ue

•The end result was House Bill 1 that created a “Target Revenue” concept. Target Revenue is “revenue per student.” In effect, revenue was frozen at the 2005 or 2006 levels, whichever year generated the most revenue.

House Bill 1Target Revenue Funding

• Since property taxes were reduced, the state “held harmless” the funding school districts received in order to ensure that they would not receive less funds because of the new measure.

Hold Harmless Target Revenue

• Ensures district will not lose funding. The state would make up the difference to reach the assigned Target Revenue.

Frozen

• Since revenue is frozen – if property values go up, the state contributions to the district go down proportionately dollar for dollar.

An inverse effect

• Per-student funding is based on the value of your home in 2006.

Outdated

• If the value of your home has increased, the state has been the beneficiary of the increase and not the school because of frozen target revenue.

Result

Target RevenueTarget Revenue Funding – The Great Disparity

Every school has an assigned Target

Revenue

Target Revenue is per-student based. The

“target revenue” is the amount of funding per

student

Target Revenue varies from a low of $3,898 to over $13,088 per weighted student

Avalon’s Target Revenue is $4,755 per

weighted student.

Of 1025 school districts in Texas,

Avalon has the 31st lowest funding per

student

As an example, Austin has a Target Revenue of $6,102 or $1,347

more per student or in effect, $26,940 more for every class of 20 weighted students

in Avalon.

• The system is arbitrary and district specific

• The system is inequitable – Avalon’s Target Revenue is in the lowest 3%.

• State Average – $5,455

• Austin - $6,102

• Avalon – $4,755

The Target Revenue System

• State Average – $5,455 County Average

• Austin - $6,102 $5,131– Midlothian – $5,617 – Waxahachie – $5,553– Milford – $5,193– Red Oak – $5,130– Ennis – $5,087– Maypearl – $5,034– Palmer – $5,012– Ferris – $4,975– Italy – $4,957– Avalon – $4,755

Ellis County Target Revenues

State average revenue per student $5,455Avalon revenue per weighted student $4,755

Difference - $700 per weighted student

Effect: an average classroom in Texas of 20 weighted students receives $14,940 more than Avalon

Disparity in Funding – Comparing Avalon ISD to State Average

Austin ISD $6,102Avalon ISD $4,755

Difference - $1,347 per weighted student

Effect : a typical classroom in Austin receives $26,940 more than Avalon

An Inequitable Funding System

Increasing state academic standards

Increasing number of

required courses (4x4, etc.)

Rising transportation

and utility costs

Rising food prices

Rising teacher salaries in area –

Avalon must remain competitive

State mandates (unfunded or under funded)

System Cost Drivers

Avalon has been a

“Recognized” district for five

consecutive years: 2006, 2007, 2008, 2009, 2010

U.S. News and World Report, in 2008 and 2010, listed Avalon

High School as one of

America’s Best High Schools.

Excellence at Avalon ISD

Avalon, and all districts, are expected to meet all new mandates and expectations – and WE HAVE!

The children of Avalon ISD deserve access to the same level of funding that other Texas students receive.

Our children’s hopes, dreams and aspirations are no different than any others. Yet, funding for these same hopes, dreams, and aspirations are funded differently.

Education is the great equalizer - school funding must be equitable in order to provide equal educational opportunity for all.

Reflection

• Contact your legislator to express concern for adequacy and fairness of the school funding system.

• Describe how the unfairness of the current system affects our children and taxpayers.

What can you do?

• Austin Independent School District. (2010, March 30). Austin Independent School District: FY 2010-11 Preliminary Budget [PowerPoint]. Retrieved July 31, 2010 from http://www.austinisd.org/inside/docs/AISD_Budget_Preliminary_Budget_ 20100330.ppt.

• 79th Texas Legislature, 3rd Special Session (2006). House Bill. Retrieved June 20, 2009, from http://www.legis.state.tx.us/ tlodocs/793/billtext/pdf/HB00001I.pdf.

• Equity Center. (2009, June 1). Summary of CCR for HB3646 and Impact Runs. Retrieved July 1, 2009, from http://www.equitycenter.org/legsession/ 81r/HB3646%20Runs/CCR/fy10%20 district% 20run.pdf.

• Equity Center. (2010, March). Basic Allotment: The Buck Starts Here. Equity Center News and Notes,29,2,1.

• NO. GV-100528. (2004, November 30). Findings of Fact and Conclusions of Law. 

• Retrieved November 15, 2009 from http://www.equitycenter.org/

• WestOrangeCove/Findings%20of%20Fact%20and%20Conclusion%20of%20Law.WOC.113004.pdf. 

• TASA and TASB. (2008). Report on School District Mandates. Austin: TASA and  TASB. August 4, 2009.

References

• Texas Association of School Boards. (2010, February). Issue Paper – Funding Texas  

• Public Schools: The Target Revenue Approach. Retrieved July 28, 2010, from http://offline.tasb.org/legislative/resources/documents/issue_targetrev.pdf.

• Texas Education Agency. (2010, April.) School Finance 101: Funding of Texas Public Schools. Retrieved July 14, 2010 from http://ritter.tea.state.tx.us/school.finance/ School_Finance_101.pdf.

•  Texas Taxpayers and Research Association. (2010, May). An Introduction to School Finance in Texas. Retrieved June 24, 2010 from http://www.ttara.org/docs/ IntroToSchoolFinance_Final.pdf

References