Do Texas Charter Schools Receive More Funding Than the State’s School Districts?
3594005 © Brandon Seidel |


Do Texas Charter Schools Receive More Funding Than the State’s School Districts?

Charter schools receive about $813 less per pupil on average than traditional public schools, a discrepancy that is driven by facilities funding.

Since Texas’ 87th Legislative session kicked off in January, state policymakers have been bombarded with a variety of misleading talking points about charter school funding.

Most notably, a commentary in San Antonio Express-News claimed that Texas charter schools receive $1,150 more education dollars per student compared with their local school district. Although it isn’t exactly clear how this figure was calculated, there’s no doubt that it falls short of providing a fair assessment of the facts.

To understand why this is the case it helps to take a quick look under the hood of how the Texas education funding system operates.

Texas allocates educations dollars based on two primary funding components. The first component is maintenance and operations revenue, which provides the bulk of education funding and pays for budget items like staff salaries, supplies, and administration costs.

Charter schools receive this funding in largely the same manner as traditional public school districts, but with a few key differences. Most notably, all charter schools receive a small and mid-sized allotment—about $1,058 per pupil—which is otherwise reserved for traditional school districts with fewer than 1,600 or fewer than 5,000 students, respectively.

Herein lies the source of the charter funding advantage confusion. Because the majority of charter school students reside within the boundaries of large school districts that aren’t eligible for this allotment, some are quick to claim that this means charters get more funding. And if you were to only look at maintenance and operations dollars, they’d be right: our analysis shows that in 2019 charter schools in Texas received an average of $692 more maintenance and operations funding per pupil than traditional public schools.

So it’s true, when a student leaves a large district such as Houston Independent School District or Dallas Independent School District and enrolls in a charter school, Texas’ funding formula often gives them a funding boost. But this isn’t where the funding story ends—far from it.

The other primary component of Texas’ school finance system is facilities funding. To fund facilities, capital projects, and to pay off bond debt, school districts mostly rely on local taxes. Statewide in Texas, local taxes for facilities funding averaged $1,505 per pupil in 2019, although this number varied by district. For example, Houston ISD raised slightly less while both Austin ISD and Dallas ISD exceeded $1,700 per pupil. In total, these local facilities dollars account for more than 12 percent of Texas’ state and local education revenue, and the vast majority of school districts levying this tax.

Because charter schools can’t levy local taxes—and facilities dollars don’t follow students from school districts to charters—they don’t receive any local facilities funding. Charter schools also aren’t eligible for the state’s two primary facilities grant programs, which 38 percent of public school districts receive. To help remedy this, lawmakers created a program during the 85th Legislature that provides charters with an average of $196 per pupil for charter facilities, but this falls well short of what school districts typically generate.

When all pertinent sources of state and local education revenue are considered, Reason Foundation’s analysis indicates that charter schools receive about $813 less per pupil on average than traditional public schools, a discrepancy that is driven by facilities funding.

Importantly, this finding is consistent with an earlier analysis by Texas Education Agency and also holds true when controlling for cost factors such as student demographics, enrollment, and location.

In fact, a recent paper by David Knight and Laurence Toenjes found evidence suggesting that Texas charters actually have higher costs than traditional public schools.

Unfortunately, there’s little reason to believe that the misleading comparisons from anti-charter activists will stop anytime soon. As such, policymakers should pose a simple question to any lobbyist or school district official claiming that Texas’ charters have a funding advantage: if that’s the case, then why don’t we fund all schools exactly as charters are funded?

Surely, if charter schools were actually better funded, they’d take this deal without hesitation. There’s little doubt that charter leaders would jump at the chance to be funded exactly as traditional public schools are.