Fixing the School Financing System in Texas

Issue Brief

Fixing the School Financing System in Texas

Creating an education funding system that puts students first.


Texas’ school finance system is broken at both the state and district levels, but policymakers have an opportunity to pursue fundamental fixes during the 85th Legislature. The Lone Star State can finally put an end to decades of litigation by moving away from its reliance on local property tax revenue, and a comprehensive student-based budgeting program can help ensure that funds are allocated equitably and transparently. Policymakers should also provide families with access to the education that best fits their needs by expanding the supply of high-quality options and empowering parents to have a voice in how their dollars are spent, which is especially critical as it relates to the state’s low-income student population.

This brief begins by explaining how Texas’ Foundation School Program delivers funding to districts, including a snapshot of the state’s legal and legislative history. Next, it provides an overview of how districts typically fund schools, which is followed by a summary of the system’s key shortcomings and three recommendations for policy change:

  1. Move Away from Relying on Local Revenues to Fund Public Education
  2. Adopt Student-Based Budgeting
  3. Expand Access to High-Quality Education Options

For more details, download the policy brief here.

Aaron Garth Smith is the director of education reform at Reason Foundation, a nonprofit think tank advancing free minds and free markets.