Making the glass bigger: Accessing additional funds for public schools
In Texas, the Legislature is responsible for determining school funding. The state Legislature sets the local maintenance and operations (M&O) tax rates for school districts and establishes the basic allotment, a formula used to fund Texas public schools on a per-student basis. The basic allotment in Texas is currently $6,215 per student, an amount that has only increased by $55 since 2019.
Where does Texas school funding come from?
Raise Your Hand Texas uses the analogy of a glass of water to explain public school funding in Texas. The water in the glass represents the amount of funding the Texas Legislature allocates for each public school.
The "water", or funding, is sourced from local property taxes, along with state and federal funds. The size of each school district's glass, or the total funding it receives, is set almost entirely by the Texas Legislature.
When local property taxes increase, it is like filling up our glass with more water. However, as our glass fills, the state reduces its contribution, and if our glass overflows, the state reclaims some of the money. This process is called recapture.
How can Texas public schools access additional funding?
The Texas Legislature sets the amount of funding all public schools receive on a biennial basis. With funding directly tied to student enrollment and attendance, and an average daily allotment that has not been adjusted for inflation since 2019, public schools must explore alternative options to secure the additional funding needed to address budget deficits and funding challenges.
Public schools can generate additional funding beyond the basic allotment through bond elections and voter-approval tax rate elections.
Bond Elections
School districts looking to renovate school buildings or build new facilities are required to ask voters permission to sell bonds. A bond increases the district's interest and sinking (I&S) tax rate.
School districts can use bonds to pay for:
New facilities
Additions and renovations to current facilities
Purchasing land
Technology infrastructure
Equipment for new or existing buildings
Costs associated with managing construction
Bonds cannot be used for:
Staff salaries
Operating costs such as utility bills, supplies, fuel, or insurance
Voter-Approval Tax Rate Elections
A Voter-approval tax rate election (VATRE) allows districts to ask their voters to approve additional pennies on the district's tax rate. When the district approves a tax rate that exceeds the district's voter-approval tax rate, a VATRE is triggered.
A VATRE allows us to expand the size of our glass. With a larger glass:
We can increase funding without facing recapture
More local funds stay locally in our school district
With the larger glass, the state continues contributing funds, allowing the district's overall funding to increase.
Without increasing the size of our glass through a VATRE, any local tax increase would mean the state reduces its contribution. But with a VATRE, we keep more locally generated funds and gain additional state funding.
VATREs generate funds for people & programs. A VATRE approves an increase in the district's maintenance & operations (M&O) tax rate. M&O taxes fund the general operations of the school district such as:
Salaries
Utility bills
School supplies
Fuel
Safety and security
Nursing staff
Custodial services
Transportation
Additional Revenue Strategies
Because school funding is tied to attendance, enrollment and attendance go hand in hand. A district must have students enrolled to generate funding, but those students must also attend school for the district to receive that funding. As a result, districts may explore strategies that increase enrollment while ensuring they have the capacity to serve additional students without significantly increasing expenditures.
Transfer Students
School districts may accept students who live outside their district boundaries through a transfer application process. When there are open seats available, accepting transfer students can increase enrollment and provide an opportunity to generate additional state funding without significantly increasing expenditures.
Districts determine how many transfer students they can accept based on available space, class sizes and staffing needs. Districts also establish standards for acceptance, which may include expectations for academics, discipline and attendance. Students who are accepted must continue to meet those standards to remain enrolled.
When used strategically, accepting transfer students can help districts fill available seats, increase attendance-based funding and make better use of existing resources without compromising the educational experience or expectations for current students.
Virtual School
Texas school districts also have the option to establish a virtual school, allowing students to complete their education online through an approved instructional program. Students enrolled in a virtual program can generate state funding based on their participation and attendance.
A virtual school can provide another opportunity to increase the number of students a district serves. However, operating a virtual school comes with additional costs, including the online instructional program and the staff needed to support students. Districts must evaluate whether the additional revenue generated would exceed the costs required to operate the program.
