POLS 207 1st Edition Lecture 21 Outline of Last Lecture I Two Important Financing Concepts Interdependence and Diversity II Types of Taxes a Property Taxes b General Sales Taxes c Income Taxes d Excise Taxes e Severance Taxes f User Fees g Lotteries III Criteria for Evaluating Taxes Equity Yield vs Cost IV The Texas Budget and the Source of Revenue for Texas Outline of Current Lecture V Three Major Guiding Principles of Texas Fiscal Policy VI Texas Taxing Policies VII Texas Spending Policies VIII State Education Policy IX Financing State Schools X Centralizing of School Funding XI Texas Independent School Districts Characteristics and the Governing Body XII Education Finance in Texas State Funding Local Funding Edgewood v Kirby Current Lecture TOPIC 3 MAJOR GUIDING PRINCIPLES OF TEXAS FISCAL POLICY 3 Major Guiding Principles of Texas Fiscal Policy 1 Hostility towards state indebtedness o not wanted to take on state debt 2 Insistence on maintaining low taxes 3 Insistence on low spending on most social programs o traditionalist moralistic individualistic o traditionalist individualistic spend least on social programs o therefore TX spends little on social program Texas Taxing Policies Tax Capacity vs Tax Effort Regressive nature of tax structure Texas has more regressive nature higher taxes effect the poor more Overall state and local taxes in US are regressive and even more so in TEXAS see chart Bottom 20 TEXAS 14 US 12 Middle Class Top 1 8 9 4 10 8 Why is Texas regressive o lack of income tax in Texas 1 of 7 states o typically income taxes graduated and flat make states less regressive o Texas relies more on sales tax which is a regressive tax Prohibition on Income Tax in Texas means state legislature cannot on its own institute an income tax because it would require a vote of the public in order to institute an income tax in Texas Texas Spending Policies similar to most states largest areas of spending o Education 42 44 o Health and Human Services 30 o Highway Maintenance Construction 10 o Public Safety and Corrections 30 of state revenue comes from federal gov 30 funding goes to Health Human Services Connection bulk of what TX spends on Health Human Services is from federal gov State Education Policy role of local govs School Boards School Districts o about 14 000 School Districts in the US 90 of which are independent school districts most states have independent school districts a few have county schools few city schools because not everyone lives in cities o Governed by School Boards which can levy taxes spend money etc mostly run by superintendent hired by the school board school boards are elected from people in the community o State Boards of Education every state has a state board of education which makes a lot of the big guidelines that effect school districts decide what is the curriculum what books are used what certification teachers need Education is mostly run by local governments some from state gov little from federal gov Financing State Schools Where the money comes from o State government s share about 50 largest chunk o Local government s share about 44 o Federal government s share about 6 Today Centralization of School Funding in the past property taxes funded majority of education Why do state governments pay more than local government today o funding inequities local districts with higher property value had more school funding o property tax revolts problem of property taxes is that it is not tied to income if property value goes up but income doesn t you are paying larger of income California revolts started started placing caps on property taxes so local govs lose some funding so state govs have to help fund schools more states are not equal on how much they spend per student Texas is 49th some people challenge the inequalities before the Supreme Court o San Antonio Independent School District vs Rodriguez 1973 o Supreme Court rules that there is nothing unconstitutional about inequalities in funding o no federal guarantee of equalized education based on US Constitution State Courts sometimes saying o some state constitutions are different o state courts including those in Texas would rule that funding inequities in the state are unconstitutional TEXAS Independent School Districts Independent School Districts ISDs o Characteristics over 1000 ISDs that run education from K 12 grade Range in size very small to very large in terms of number of students wealth etc over 4 million attend public schools o Governing Body 7 9 members on the School Board Board of Trustees MOST COMMON term is 2 years on the School Board NONPARTISAN Elections Education Finance in Texas Funding Sources for Education o local 47 picks up biggest cost in TEXAS comes from property taxes o state 42 o federal 10 note bigger share of education in Texas is picked up by federal gov average 6 o notice local picks up biggest chunk in Texas vs state in National State Funding o PSF Permanent School Fund back in 1850s Texas sets aside land money to be a permanent school fund that cannot be spent the money was the principle that cannot be spend but the interest can be spent the land given in 1850s and some during Reconstruction generates income that goes into PSF Principal has reached about 28 billion that we do not spend income interest dividends from this amount is spent on education by going into ASF o ASF Available School Fund money is given out to schools from the ASF based on students average data of attendance basically how many students you have in attendance from interest on PSF and from taxes on fuel only ASF money goes to school districts o Foundation School Program ASF is based on students in attendance Foundation School Program helps poorer school districts meet the minimum standards set by states teachers pay building conditions etc Local Funding o heavily from property taxes o in Texas this is the largest share of paying for education o property values are not equal everywhere the state o if property values are very high in your school district you have more money available for education and can charge lower taxes o if property values are lower have to charger higher taxes Edgewood v Kirby o Texas Supreme Court decided funding inequalities for education are unconstitutional o solution Robin Hood School Finance Program Plan 1990s helped address unequal funding in Texas shifted money from wealthier school districts to poorer school districts how cap property values in a district cap
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