Center for American Progress

RELEASE: School Finance Systems in Texas Perpetuate Inequitable Student Spending
Press Release

RELEASE: School Finance Systems in Texas Perpetuate Inequitable Student Spending

Read the full report.

Washington, D.C. — Today a new report from the Center for American Progress tackles the serious issue of public school funding inequity by identifying often-overlooked features of school funding systems that exacerbate inequities in per-pupil spending rather than reduce them.

“Inequitable funding of U.S. public schools contributes significantly to the under achievement of our low-income and minority students. It’s something we have to fix if we are to progress as a society,” said Cynthia G. Brown, Vice President of Education Policy at the Center for American Progress.

The report, “The Stealth Inequities of School Funding,” focuses on six states—Illinois, Texas, New York, Pennsylvania, Missouri, and North Carolina—where combined state and local revenues and school resources are significantly lower in higher-poverty districts than they are in lower-poverty districts.

Key findings from the report about student spending in Texas include: 

  • The state of Texas has one of the largest spending gaps between low-poverty and high-poverty districts in the country—a difference of more than $1,100 per pupil, after factoring in differences in costs.
  • Texas has a regressive distribution of state funding, with a significant amount of general foundation aid provided to the state’s lowest-need districts, while failing to bring the highest-need districts up to the level of low-poverty districts. For example, funding from the Additional State Aid for Tax Reduction, in conjunction with the state’s Target Revenue system, reinforces persistent inequities by providing more state education dollars to wealthier towns. In fact, in 2012, the wealthiest districts received almost $1,500 more per pupil than the lowest-wealth districts.
  • More than half of all local and state revenue for funding comes from local sources. This dependence on local revenue has a significant impact on funding inequality:  The wealthiest districts are able to raise on average almost $3,400 more per pupil than lower-wealth districts from property taxes.
  • 94 percent of the inequality in local revenues is attributable to property taxes, meaning that Texas’s reliance on such taxes is almost entirely responsible for that $3,400 difference.

The report’s first chapter, written by Rutgers University professor Bruce Baker, explores how state aid formulas—often designed to promote equity and adequacy—can work against their own stated objectives. What makes these patterns more offensive is that these states are taking billions of statewide taxpayer dollars and channeling them back to lower-poverty districts, which are much less in need of state funding support. For example, in 2010-11, Missouri’s Classroom Trust Fund provided more than $400 per pupil to every district in the state, regardless of the district’s wealth. Baker points out that each of these states could achieve far more equitable distribution of resources and far more adequate educational opportunities in high-poverty settings if these resources were allocated based on student need.

In the second chapter, New York University associate professor Sean Corcoran takes a closer look at the role local revenues play in resource disparities across low- and high-poverty school districts. Corcoran begins by identifying how local education revenues are raised in the United States, specifically the significant role that property taxes, more so than other types of taxes or fees, play in creating inequalities in funding. He then explores the state rules, parameters, and institutions governing how localities raise education dollars in order to identify factors beyond the ability to pay that influence variation in local revenues across school districts. For example, newly legislated restrictions on the growth of local property taxes are likely to constrain poorer districts more than wealthier ones if they are less able to obtain the political support needed to obtain an override.

Read the report: The Stealth Inequities of School Funding” by Bruce D. Baker and Sean P. Corcoran

To speak with a CAP expert on this topic, please contact Katie Peters at