An assessment of Texas school finance reform: The health of school funding since 2006



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An Assessment of Texas School Finance Reform: The Health of School Funding Since 2006 (May 2013)

Dustin Scott Barton, B.S., Texas Tech University; M.Ed. Sul Ross State University

Chair of Advisory Committee: Dr. Clint Carpenter

The constitutionally-required need to establish a system of school funding for school districts in Texas with the aim of providing equity and adequacy while removing inefficiency and arbitrariness is well-documented.  The mechanisms by which school districts receive funding have been embroiled in litigation for 40 years.  Historically, the relationship between property wealth per student and the revenue a school district has the ability to generate has caused inequities in the school finance system.  The heavy reliance on local property taxes to raise revenue for school districts combined with reform efforts as a result of litigation and legislation have struggled to make progress towards reducing inequality among the state’s school districts.  Additionally, school districts face external pressures to meet accountability standards as measured by student performance on standardized assessments with the amount of funding they receive as determined by the Texas Education Agency’s (TEA) Foundation School Program (FSP).  The purpose of this study was the assessment of the provision of an equitable system of education by analyzing current methods through which financial resources are allocated to school districts in Texas by focusing on equity measures and student performance on standardized assessments.
The sample was comprised of the 1025 school districts in Texas.  In this study three equity principles were selected to determine the equity within a school funding system: fiscal neutrality, horizontal equity, and vertical equity.  The measurement of fiscal neutrality was accomplished through the use of multiple regression analysis, which factored in local property wealth and school district Maintenance & Operations (M&O) taxes and its affect on a school district’s total local and state revenue.  Horizontal equity was assessed through the measurement of multiple equity measures including range, restricted range, coefficient of variation, Gini Coefficient, McLoone Index, and Verstegen Index.  Vertical equity was also investigated using multiple regression analysis to assess vertical equity provisions in the FSP.  Analysis included school district characteristics related to student populations and a school district’s finances to determine their effect on student performance on standardized assessments.
Fiscal neutrality regression analysis revealed property wealth per weighted average daily attendance (WADA) accounted for a significant amount of variation of the revenue a school district is able to generate, thus violating the principle of fiscal neutrality.  For those school districts who tax above the maximum statutory amount of $1.04, their M&O tax rate explained a significant amount of variation in the revenue per WADA at the compressed rate they received.  For the assessment of horizontal equity, findings clearly point to a system in which inequity exists in the top half of distribution as determined through the Verstegen Index.  Vertical equity analysis through hierarchical regression predicted a school district’s decreased performance on the Texas Assessment of Knowledge and Skills (TAKS) are primarily linked to students who are classified as economically-disadvantaged and at-risk.  As a whole, school districts with higher percentages of students who are considered most difficult to educate are not meeting performance standards with current vertical equity provisions.



School finance, Vertical equity, Horizontal equity, Fiscal neutrality, Revenue per weighted average daily attendance, Foundation school subject, Funding and performance