Frequently Asked Questions

Schools’ primary job is to educate students. However, to do so successfully, schools have to provide facilities that are conducive to learning, provide instructional materials, train teachers, transport students, feed students, keep students safe, provide guidance and counseling services as required by law, and much more. In the 2022-2023 school year, the most recent school year for which the state has final data, districts spent six times as much on direct instruction as the second largest category of expenditures which was facility maintenance and operations. Nearly 92% of expenditures in the 2022-2023 school year were on items that directly involve students. Below is a complete list of the share of expenditures by category for school districts in the 2022-2023 school year:

*Indicates an expenditure category that students are involved with or directly experience. 

School districts generally do not receive more money for operations expenses such as teacher and staff salaries, utilities, fuel, etc. when property taxes go up. Instead, schools are funded based on a formula in state law that says how much money each district is allowed to have, or how big the funding “bucket” is for a school district. This is known as a school district’s entitlement. That entitlement goes up based on increased enrollment, increased student needs, or an increase in the formula. The entitlement is funded first from local property taxes and then if there is any gap between taxes collected and the entitlement, the state provides funding to fill the gap. When property taxes go up, this does not increase the size of the “bucket” or entitlement. Instead, it just shrinks the amount of money the state has to kick in to meet the district’s entitlement. So when your property taxes go up, schools don’t receive more money, the state just has to pay less.

In Texas, developers aren't directly responsible for paying for schools because of how the funding system is structured. When new housing developments are built, local governments often don't receive enough property tax revenue to cover the costs of new schools or additional services for the growing number of students.

Most school funding comes from property taxes, and while developers do contribute taxes on the land and homes they build, it usually isn’t enough to cover the cost of new schools. Texas uses a system where property taxes from across the state are shared to ensure all districts have sufficient funding. As a result, the financial burden for schools falls on local taxpayers rather than developers.

No. Texas school districts spend less than 3% of their payroll budgets on central administrators. Additionally, the percentage of the payroll budget spent on Superintendents is smaller today than it was 10 years ago. In fact, less than 1% of the total base pay across the state is spent on the highest levels of leadership in school districts.

In Texas, the school property tax rate is split into two parts: I&S and M&O. Here’s what each one means:

1. I&S (Interest and Sinking): This part of the tax rate pays for things like school building projects (new schools, major renovations) or school district debt. So, when a district needs to borrow money to build new schools or improve old ones, the I&S portion of the tax goes toward paying off that loan, just like paying back a mortgage for a house.

2. M&O (Maintenance and Operations): This part is used to pay for the everyday costs of running the school district. It covers things like teacher salaries, utilities, supplies, and transportation. Basically, it’s what keeps the schools open and running day-to-day.

So, the difference is that I&S is for paying off debt from building or improving schools, while M&O is for covering the regular costs of running schools and supporting students.

Many school districts have done just that over the past several years. School districts have implemented zero-based budgeting processes in which every dollar is evaluated every year, rather than being automatically reallocated. Additionally, many districts have reduced services or closed campuses to improve efficiency though these changes result in significant impacts to local communities. In the end, 77% of school district budgets are spent on staff salaries. Cutting spending to fill the large inflation-created funding gaps would likely require schools to lay off staff, including teachers which account for the largest portion of school district budgets. This would result in larger class sizes, fewer educational opportunities and choices for students, and reduced services designed to support students who need additional help to be successful in school.

School district revenues are generally not collected evenly throughout the school year. As a result, districts must have funds on hand to pay for expenses in months when they don’t receive revenues. The Texas Education Agency financial accountability rating system for school districts requires districts to keep 60 days of operating expenses in cash on hand if they have a deficit budget. Additionally, the rating system requires that school districts have less than a 25% decrease in their fund balance over 3 years unless they have 75 days cash on hand in order to receive full points. This requirement accounts for much of the “reserve” funding school districts maintain.

In addition, school districts, like individual families, and the State of Texas, do usually maintain funds as a type of “savings account” for unexpected expenses. For example, many districts have had to deal with property damage as a result of severe weather and have to meet insurance deductibles prior to receiving coverage. These are one-time dollars that once spent in a given year are not replaced. Using this money to provide raises to teachers would only work until the entire “savings” account was spent. Because the largest portion of districts’ budgets is spent on teacher pay, using “savings” to pay teachers usually cannot be sustained for more than a year or two.

A district’s fund balance also impacts the district’s credit rating. Meeting the fund balance requirements of TEA’s financial accountability system helps districts receive the highest possible credit ratings and therefore better interest rates on school district bonds which ultimately saves taxpayers money.

In the most recent year of the state’s financial accountability rating system, 98.5% of school districts, representing 99.6% of the students educated in Texas public schools, met or exceeded the state’s standard for financial management. 

Additionally, there are over 1,000 independent school districts in the state of Texas responsible for educating over 5.5 million students (more than 90% of the students in the state of Texas). That means there are 1,000 different communities made up of diverse student populations with unique needs. The legislature structured the school funding formulas to recognize these differences by tying the whole system to the Basic Allotment. This means that whenever the legislature increases the Basic Allotment, more than 30% of that increase goes directly into the specific programs and priorities the legislature set. The rest of the funding can be used by school districts to address their unique needs. This common sense approach ensures that school districts spend money in accordance with the state’s priorities while still recognizing the significant variety of needs across Texas school districts.

WADA stands for Weighted Average Daily Attendance. In addition to the Basic Allotment, school districts receive additional funding based on the needs of various students, such as special education, bilingual students or students who have dyslexia. This additional funding is provided via weights set in state law that contribute to a district’s WADA. The bulk of a district’s funding comes from multiplying the Basic Allotment by a school district’s WADA.

Yes. In Texas, school districts are funded on a per student basis, so, as the student population in Texas has grown, so has the funding that goes into public education. The number of students in Texas who need specialized instruction has also increased which has resulted in additional funding for public education. However, these funding increases are set by a formula that has not been adjusted since 2019. Over that time, inflation has risen by more than 20%. While a school district might technically be receiving more funding because it has more students or more students who need specialized instruction, for most schools, the funding provided has not come close to keeping up with cost increases due to inflation.

New facilities, like football stadiums, are financed through bond dollars that can only be raised and spent with the approval of voters in the community via bond elections. Teacher salaries and other day-to-day expenses like utilities, transportation, property insurance, etc. are paid through maintenance and operations funds that are separate from bond funds. By state law, bond funds cannot be used to pay teachers more.