Special Report


January 04, 2005 1 min read

In September 2004, Texas lost a battle in the West Orange-Cove Consolidated ISD v. Nelson case: A district court judge ruled that the state’s school finance system was unconstitutional. Texas has one year to revise the school finance system, although the state has announced that it will appeal the decision. Texas allocates money to districts through a foundation formula. The basic cost per student is $2,537 in fiscal 2005, which is determined by the legislature. Local districts are required to contribute a property tax of 86 cents for every $100 in property value to receive state funds. Districts that can generate more than the foundation level in local revenue are not eligible for foundation aid, but still receive at least $375 per pupil from a constitutionally dedicated fund. The formula is adjusted for special education students, English-language learners, geographic cost of living, geographic isolation, small schools, compensatory education, vocational education students, and gifted-and-talented students. The state also provides additional aid to match local tax effort above the required levy, and districts can obtain state aid for help in making bond payments. Texas is one of just a handful of states with “recapture” provisions in their formulas. If a district’s per-pupil adjusted property wealth is greater than $305,000, it must do one of the following: consolidate with another district, share revenue with another district, return revenue to the state, educate students from another district, or consolidate its tax base with another district’s.

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