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TAMU POLS 207 - State Financing
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Lecture 21 Outline of Last LectureI. Two Important Financing Concepts = Interdependence and Diversity II. Types of Taxes a. Property Taxes b. General Sales Taxes c. Income Taxesd. Excise Taxes e. Severance Taxes f. User Fees g. Lotteries III. Criteria for Evaluating Taxes = Equity, Yield vs. CostIV. The Texas Budget and the Source of Revenue for Texas Outline of Current LectureV. Three Major Guiding Principles of Texas Fiscal Policy VI. Texas Taxing Policies VII. Texas Spending Policies VIII. State Education Policy IX. Financing State SchoolsX. Centralizing of School Funding XI. Texas Independent School Districts – Characteristics and the Governing BodyXII. Education Finance in Texas – State Funding, Local Funding, Edgewood v. KirbyCurrent LectureTOPIC: 3 MAJOR GUIDING PRINCIPLES OF TEXAS FISCAL POLICY 3 Major Guiding Principles of Texas Fiscal Policy- 1) Hostility towards state indebtednesso 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 programso therefore TX spends little on social programTexas 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!)TEXAS USBottom 20% 14% 12% POLS 207 1st EditionMiddle Class 8-9% 10%Top 1% 4% 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 Districtso 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 fromo 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 1973o 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 schoolso 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 Educationo 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 cannotbe 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 ASFo 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 Fundingo heavily from property taxeso in Texas, this is the largest share of paying for educationo 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


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TAMU POLS 207 - State Financing

Type: Lecture Note
Pages: 4
Documents in this Course
CHAPTER 1

CHAPTER 1

129 pages

Finance

Finance

4 pages

Chapter 9

Chapter 9

13 pages

Exam 1

Exam 1

5 pages

Exam 3

Exam 3

23 pages

Exam 2

Exam 2

18 pages

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