Education Policy

Penny Power

How strong is your local penny of tax for schools compared to your neighbors across Texas?

As the state continues to decrease its support of public schools (the State now only covers about 38 percent of the cost), it’s important for communities to know how much bang they are getting for their buck from Texas’s school finance system.

IDRA’s Penny Power shows how much revenue your school district generates for each average penny of tax set by local taxpayers and rank orders 1,018 school districts across Texas. Search below on the maps to find out where your school district ranks.

Texas’s school finance system is impacted by various special interest laws, some that are related to student needs and others that are not. These factors impact the “Penny Power” in various ways, some increasing the power and others decreasing the power. For example, there are at least three different yields, or rates of revenue, generated by pennies of property tax:

  • the basic allotment (about $51.40 per penny),
  • Tier II-A (known as the “golden pennies,” which make up about $72 per penny), and
  • Tier II-B (known as the “copper pennies,” which make up about $31.95 per penny).

Other factors include: unrecaptured tax revenue (funneled outside the equity formulas), hold-harmless laws including additional state aid for tax relief (ASATR), optional homestead exemptions, cost of education index, prior year values, student characteristics, small- and mid-size adjustments, sparsity adjustment, high school allotment, and the new instructional facilities allotment.

Key Facts

  • The average Penny Power for school districts is $58.34, at an average tax rate of $1.08, and an average Maintenance and Operation (M&O)* per student (WADA) of $6,285 (simple average).
  • The average Penny Power for school districts receiving an extra payment from the state through ASATR is $68.92 with an average M&O per student (WADA) of $7,050 (simple average).
  • The strongest Penny Power is found in Kelton ISD (Wheeler County) at $174.65. Kelton’s M&O tax rate is $0.70, its M&O per student (WADA) is $12,340, and its property wealth/WADA is $4,827,604.
  • The weakest Penny Power is found in Knippa ISD (Uvalde County) at $46.00. Knippa’s M&O tax rate is $1.17, its M&O per student (WADA) is $5,382, and its property wealth/WADA is $136,449.

Conclusion

Despite some state effort to equalize funding levels, the wealthiest school districts tend to have much stronger Penny Power than the poorest districts. For example, the wealthiest 5 percent of school districts have a Penny Power of $73.07 compared to the poorest 5 percent of districts at $56.16. This allows those wealthier communities to tax much lower than the poorer districts while generating much more revenue for their students.

Texas must ask itself: How can education ever be the “great equalizer” in life for Texas children when it is funded so inequitably and inadequately across the state?

 

*Maintenance and Operation (M&O) taxes pay for administration and operational costs of schools (teachers, busses, classrooms, etc.) but not school facilities.



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Methodology: Total Maintenance and Operations (M&O) Revenue per Weighted Average Daily Attendance (WADA) divided by total number of M&O tax pennies. Data source: Estimates based on 2016-17 spreadsheet produced by the Texas Education Agency (Fall 2016)
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