The looming school finance crisis

Fort Worth ISD - $45 million. Frisco ISD - $24 million. Austin ISD - $52 million. Across the state, school districts have passed deficit budgets in the millions for the 2023-2024 school year. With inflationary pressures increasing prices by nearly 19% since the COVID-19 pandemic, districts’ buying power has been dramatically reduced, straining budgets and causing district leaders to make challenging decisions.

Districts were hopeful that a comprehensive school finance bill would pass in the 88^th regular and special sessions to ease this financial strain, but all hopes were squandered when House Bill 1 (88-4) – the most recent package containing $7.5 billion of investments to public schools - effectively died on the House floor this November due to a fight over school vouchers. Unless another special session is called, districts may have to wait until the 2025 legislative session before receiving any kind of state aid, putting them in even tighter financial positions for the next two years. With COVID-19 federal dollars set to expire in 2024 - forecasting a severe “fiscal cliff”- district and state leaders will need to stay focused in working together this interim to increase baseline funding and strategically invest in evidence-based programming in the next regular session.

For years, districts and advocates have asked for the state to “fully fund” public schools, but the request seemed unclear and undefined. From a lawmaker’s perspective, the state has historically sent infusions of dollars into the Texas education system. In 2022, all-in, per-student annual funding in Texas reached an all-time high of $14,400,^[1] a near 42% increase in total funding from 2012. This increase is partially due to HB 3 (86R, 2019), the state’s largest school finance reform bill. HB 3 provided schools with nearly $11 billion in targeted investments in curriculum and instruction, tutoring and accelerated learning, college and career programs, high-quality educators, and early education to propel the state to new heights, arguably forging a new era in school finance reform that focuses on the distribution of equitable resources and the efficiency of programs to complement more general school funding increases.

However, student performance on the STAAR – the state’s benchmark for measuring student educational achievement - has arguably failed to reflect these remarkable investments. While students in grades 3-8 are returning to pre-COVID levels in English Language Arts and Reading (ELAR), performance has either declined or stagnated across all student groups in math, science and social studies. Additionally, significant racial disparities persist; for example, in ELAR, 39% of Black students are on grade level as opposed to 81% of Asian students, an astonishing 42% difference in performance.

In response to these disparate outcomes, districts have argued for more flexibility, complaining of sky-high inflation, staffing shortages, inflexible bureaucratic processes, and an increasingly polarizing political environment as constricting their ability to meet the individual needs of their students. To the districts’ point, the basic allotment (BA) - which is the foundation for student funding in Texas - is tragically low and fails to keep pace with inflation. Currently at $6,160, the BA would need to be increased by $1,000 to have the same impact as it did when HB 3 was passed. Since nearly every major district allotment is tied to the BA, its increase alone would provide districts with necessary funds to meet minimum requirements. Nevertheless, state leaders have a responsibility to ensure the efficient use of state funds. Districts should embrace reform efforts and be abundantly clear in their advocacy efforts by specifying how much and what type of funding they urgently need.

It seems that HB 3 (86R) married both district and state leaders’ strategies of funding adequacy and equity to achieve efficiency. HB 1 (88-4), absent of its language authorizing vouchers, was primed to follow in its footsteps. In fact, HB 1 (88-4) introduced at least 13 new or revised allotments, and nine different grant programs in addition to a $540 increase in the basic allotment. The bill had overhauled special education funding, provided more strategic teacher compensation, and ensured the basic allotment would continue to grow at the rate of inflation. If passed, the bill would have been the second largest investment in public schools in the state’s history.

As districts and lawmakers prepare for the 89^th legislative session, they should prioritize school funding over any other policy agenda. Moreover, they should work together on a comprehensive school finance package that would not only provide general increases in base funding but also strategically invest in the equitable distribution of these resources and programs. Perhaps then districts will be able to meet the differential needs of their students, thereby reducing achievement gaps, maximizing their investments, and improving student outcomes.

_{^[1] Morath, Mike. TEA presentation to the House Select Committee on Educational Opportunity and Enrichment. July 11, 2023. It should be noted that this number is inclusive of federal, local and state funding.}