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Ad valorum – Latin for "according to value." This is a method of taxation that uses the value of the taxable item to determine the amount of tax.

"Adequate" Funding – The amount of money schools would need to meet minimum, or "adequate" state education requirements, with "adequate" being defined by the state.

ADA – Average Daily Attendance – The average number of students that are at school on a normal school day. Schools calculate this number by dividing the total number of students who attend school each day of the school year, by the number of instructional days in the school year. For example, if 100 students attended school for 100 days, the total cumulative number comes to 10,000. If there are 200 class days in a school year, then the ADA is 50 students (10,000÷200 days).

Available School Fund – Interest and other income generated by the state's Permanent School Fund. This fund can be used only to support public education and must be distributed based on the "scholastic population" (number of students) in a county.

Basic Allotment – The specific amount of money a school district gets per student to provide state-required education for Texas students. In other words, the amount of funding (or allotment) a district receives is based on the number of students the district serves.

Chapter 41 District – A school district with property wealth that is greater than $305,000 per weighted student is considered to be a property wealthy school. These districts are subject to the recapture provisions in the Texas school finance system. This type of district is defined in Chapter 41 of the Texas Education Code, because specific finance-related rules that apply to them are contained in that section of the Texas Education Code.

Cost of Education Index (CEI) – A way to adjust for the fact that the cost of doing business in some cities is higher than in others. The index takes into account five types of costs that are out of a school district's control: (a) the average beginning salary of teachers in nearby school districts, (b) the percent of economically-disadvantaged students in the district, (c) district size (in terms of ADA), (d) location in a rural county (with a population less than 40,000), and (e) whether the district is classified as an "independent town" or "rural." The CEI is based on a 1991 analysis of differences in payroll costs among districts. It is applied as an adjustment to a district's Basic Allotment.

County Tax Appraisal Districts – The political subdivision in each county that is responsible for appraising property for ad valorem tax purposes and whose estimates are used by counties and the state to levy local taxes.

Edgewood Litigation – A series of four lawsuits that challenged the inequalities in the Texas school finance system, known as Edgewood I (1989), Edgewood II(1991), Edgewood III (1992) and Edgewood IV (1995).

Equality – The use of equal dollars per student.

Equalized Wealth Level – When a school district has more property wealth per weighted Average Daily Attendance (ADA) then the equalized wealth level it is subject to recapture provisions of Chapter 41 of the Education Code.

Equity – When talking about school finance in Texas, equity means requiring substantially equal access to similar revenue per student at similar levels of tax effort. Equity is defined as "equal treatment of equals" or ensuring that schools are provided equitable amounts of money to educate students, including taking into account that students with different needs require differing levels of funding to address those needs.

Facilities Funding – Small amounts of state money that have been allocated for school construction and related expenses. The state legislature sets the amount of state funds that can be spent by school districts.

General Revenue – Monies that are collected by the state of Texas available for schools (teachers, maintenance of schools, etc.) and other services, such as state highways. This revenue comes from state taxes and other state-generated income.

Guaranteed Yield – The amount that the state "guarantees" will be provided for districts for every penny of tax effort that they collect at the local school district level. Used by the state of Texas to equalize the amount of money raised by districts that have different levels of property wealth. For example if the Guaranteed Yield is $25 per penny of tax effort, all districts are guaranteed that amount per penny of local tax effort. If district A raises only $5, the state provides the additional $20 needed to reach the guarantee; if district B raises $15, the state provides an additional $10 to that school system.

Hold Harmless – Provisions that guaranteed school districts will continue to receive at least as much state funding as they got before legislative changes in school funding formulas.

Local Enrichment – Local enrichment refers to extra money raised by school districts beyond the minimum funding provided by the state system. Unequal local enrichment has been considered to be a weakness and monumental flaw of the Texas system of school finance. Local enrichment can be equalized or unequalized. If it is unequalized, for example, a local school may be able to raise only $10 per student from its local property taxes, while a wealthy district may raise $100 per student. In equalized enrichment, the state would provide the difference to the poorer district so that it is even with the wealthier one. If local enrichment is not equalized, then some schools can spend several hundred dollars more for their students, and some can spend several thousand dollars more.

Local Share – Each district is required to pay a portion of the cost of local education based on the amount of value of taxable property in each district. That share is determined by the state of Texas.

Maintenance and Operation – M&O taxes pay for administration and operational costs of the schools (teachers, busses, classrooms, etc.) but not school facilities. The state limits M&O taxes to $1.50 per $100 valuation.

Permanent School Fund – A special collection of state funding and land set asides that have been used since the mid-1800s to support public education in Texas.

Progressive Tax – A kind of taxation that is based on wealth. The more money one has the more one pays. Federal income tax is an example of a progressive tax. This is the opposite of regressive tax.

Property Poor Districts – Districts that cannot raise enough revenue to provide even a minimum education without state funding.

Property Tax – The property tax is an ad valorem tax. Schools charge and collect property taxes (as do cities, counties and other taxing districts).

Property Rich Districts – School districts that have a property wealth level above the "equalized wealth level ($305,000 of taxable value per weighted student)," (also referred to as "Chapter 41" school districts). Put another way, this refers to districts that are so wealthy that they do not need to get any money from the state to run their schools.

Property Value – An estimate of the value of property if it were sold on the open market.

Recapture – The provision of the Texas school finance system that was created in 1993 in response to court rulings that found the system inequitable and, thus, unconstitutional. Currently, property wealth in the state's wealthiest districts is used to help support educational equity across the whole system. A school district with a wealth level of $505,000 keeps all the local tax money for the first $305,000 in its wealth base; however for the remaining $150,000 of wealth, it must share the revenue with the state.

Regressive Tax – A tax in which the proportion of one's income that one pays in taxes is larger for people that are poor. An example of a regressive tax is the sales tax.

"Robin Hood" Plan – Name given to the school finance system that requires wealthy school districts to share their locally-generated property tax money with the state of Texas to help pay for public education for all children. The name is a myth because the finance system does not "take from the rich and give to the poor," it spreads the funds from property taxes across more than 800 districts around the state. The system benefits more than 90 percent of students.

Rodríguez vs. San Antonio Independent School District – Federal lawsuit that was filed alleging that the Texas school finance system was unconstitutional. Mr. Rodríguez was an Edgewood school district resident and parent who was the lead plaintiff in the suit. The U.S Supreme Court eventually ruled that education was not a fundamental right protected by the U.S. Constitution and therefore an issue to be resolved within each state.

Sales Tax – A tax that is charged based on how much a person pays for an item or service. A sales tax is an example of a regressive tax in that poor people pay a larger share of what they earn on such taxes than richer people. For example, if a poor person pays $1,000 in sales taxes in a year but only earns $10,000 in that year, 10 percent of his or her income is used to pay that tax; even if a richer person pays $2,000 in taxes but makes $200,000 in a year, this amounts to only 1 percent of his or her income in taxes.

State Income Tax – A tax that is charged based on how much money a person earns. Income tax is an example of a progressive tax because if you earn more, you pay more and if you earn less, you pay less. Texas is one of the few states in the United States that does not have a state income tax. This state income tax could be used to fund public education. State income taxes can be deducted from total income reported on federal income tax returns.

State-Local Shares – The state funding system is based on the idea that recognizes that education can be jointly paid for by the state and local school systems. The local share is based on the ability of a local community to pay for its public schools. Some communities are well off with high-value homes, businesses, and oil or minerals; other communities have smaller homes and businesses. The state share is the difference between the cost of educating children in a district, minus the local share that the state requires schools to pay for.

Tier I – The part of the state education finance system that covers basic costs for providing a minimum education in Texas. To get their Tier I state funding, districts must levy a local property tax of at least 86 cents on each $100 of property value.

Tier II – The portion of the Texas finance system that allows school districts to raise and spend more than the minimum provided by Tier I. It allows individual districts to raise additional funds based on extra individual tax efforts. The maximum Tier II tax effort that a district can raise is 64¢ (since Texas "caps," or limits, local property taxes at a maximum of $1.50).

Tier III – allows districts to raise funds for existing school facilities with the state guaranteeing a certain amount of funds for each extra penny of local bonded debt tax effort.

Unequalized Enrichment – A term used to describe money that is unequally available to school districts because of differences in local property wealth per student, and that is not equalized by state funding. This gives certain school districts differing amounts of additional funds for enhancing educational opportunity beyond the basic programs provided by the equalized foundation school program and equalized enrichment.

WADA – Weighted Average Daily Attendance - The state practice of providing extra money for schools based on the number of special needs students enrolled in a school district. The basic allotment is adjusted to take into account district and student characteristics such as limited English proficiency, disability and poverty. Under Texas finance formula, students who are low income, those who are learning English, children who are gifted, and those who have certain disabilities earn extra money for their school district. These different groups are given a "weight" meaning that they count like one whole student plus a bit more. For example, low-income students are counted as 1.2 students, and students who do not speak English are counted as 1.1 students. To determine a district's WADA, the state adds all of these and treats them like extra students who enroll in that school system. For example, a district may have 100 total students but all the extra credit it receives for students with special needs may add up to a total of 120, so the state gives that district enough money to educate 120 students. The extra weight is provided because schools often need to provide additional, specialized services for students with special needs.

Weights – Students differ greatly in their educational needs, based on their unique learning rates, abilities, motivations, etc. The costs associated with meeting these needs vary widely (i.e., it is more expensive to provide vocational education than it is to offer a traditional academic program). The state finance system assigns an extra weight for each student with certain special needs and uses this to deliver extra money to school districts to help pay those extra costs.