Revenue Contributing Schools: Maintaining Local Control
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The Gilmer-Aikin Act, adopted by the Texas Legislature in 1949, established a public school finance system that, for the first time, included funding from local tax bases. This revenue was to be used for local enrichment. More than 60 years ago, local control was recognized as the key for local districts to flourish. The same remains true today.
The current school finance system, however, is making it extremely difficult for local communities to devote any extra resources to the educational needs of Texas schoolchildren.
About 20 percent of the 374Revenue-Contributing School Districts are now at the $1.17 tax rate, the maximum allowed by law. The finance system basically has become a statewide property tax, which is prohibited by the Texas Constitution. It has taken away local discretion because these districts are unable to fully fund the needs of their local students.
Despite rising property values, the amount of locally generated taxes Revenue-Contributing School Districts are allowed to retain is fixed even though enrollment and education costs are increasing. Revenue-Contributing Districts have no choice but to reduce the quality of education they offer. Also, Revenue-Contributing Schools that are not at the maximum tax rate are reluctant to raise taxes knowing 50 percent or more of the new local money must be sent to the state. Again, these schools have less incentive to improve local educational quality and, in turn, there is less money flowing to the state finance system.
Without fiscal discretion, there is no local control.
Since the Texas Legislature reduced property taxes by one-third in 2006 (from $1.50 to $1.00) there has been a school finance revenue deficit each year. The legislature adds new funding formulas, increasing the number of Revenue-Contributing School Districts, which, will increasing revenue in the short-term, spreads the loss of local control to more and more districts.
Districts must have meaningful discretion to make decisions that reflect the values of their local community. Local discretion is lost, however, when Revenue-Contributing School payments to the state reach 50 percent or more.
Convincing parents and taxpayers in Revenue-Contributing School Districts that it is in their best interest to send 50 percent or more of the tax revenue to state is not a hard sell – it is an impossible sell. If Texas punishes Revenue-Contributing Schools, all schoolchildren suffer.