A School Finance Commission to Study Texas’ Funding Formula


A School Finance Commission to Study Texas’ Funding Formula

Public testimony before the Texas Senate Education Committee on Senate Bill 16

RE: Senate Bill 16    Relating to the establishment of a school finance commission to study Texas’ funding formula and recommend improvements.

My name is Aaron Smith and I am a policy analyst with Reason Foundation, a non-profit think that conducts public policy research in several areas including education. While Reason is based in Los Angeles, I reside in Houston where I previously spent over five years working for YES Prep Public Charter Schools as senior director of analytics. Much of our work at Reason Foundation is focused on school finance. Specifically, we advocate for states and districts to adopt student-centered funding, which is based on five key principles:

1) Equity: Funding should be based on student need.

2) Portability: Dollars should follow students to the school of their choice.

3) Transparency: Funding systems should be streamlined and accompanied by robust, user-friendly reporting mechanisms.

4) School Autonomy: Dollars should be pushed down to the school level so principals are empowered to make resource allocation decisions.

5) Accountability: Educators should be held accountable for outcomes, not staffing positions or other inputs.

We recently released a policy brief that identified seven key problems with Texas’ funding system and while there isn’t time to detail each of these issues today, I believe that the commission provided by SB 16 would put school finance precisely where it needs to be: front and center. The fact is that nibbling around the edges of reform won’t solve what ails our funding system—we need big, bold ideas.

One such idea that a commission could explore is moving away from Texas’ reliance on local education revenues entirely. Funding education with property taxes violates the principles of student-centered funding by not only creating widespread inequities that often shortchange disadvantaged students, but also erecting barriers to portability and choice. While it’s counterintuitive, centralizing education funding is the best way to facilitate decentralized options such as inter-district transfers, charters and education savings accounts. In this school finance model, ‘local control’ is no longer synonymous with district control but rather ‘parental control.’ While this might sound like a radical idea, local dollars account for only 2% of education revenues in Hawaii where policymakers have enacted bold reforms to create a more equitable and transparent system.

It is painfully obvious that a school finance formula that failed to meet the needs of the 20th century is even less suited for the 21st century. The least we can do for kids is explore ways to address the root of this problem so we can finally move toward a student-centered system.