The state of Texas struggled with the issue of public education finance reform in its courts and its Legislature for over 25 years. The state's Supreme Court ruled in 1995 that the financing system created by Senate Bill 7 in 1993 is "constitutional" because unlike earlier legislative attempts, Senate Bill 7 sufficiently responded to the state constitution's requirement that the state provide "an efficient system of free public schools."
This report provides an analysis of the current funding structure in the state. It challenges the assertion that the system is "equitable" on the grounds that wealthier school districts still have access to greater tax revenues than poorer school districts. Under Senate Bill 7, school district funding levels are equitable up to a certain point, but wealthier districts are able to further enhance their local tax revenues within a prescribed range. The Supreme Court determined that the enhancement opportunities of rich districts are sufficiently restricted. One may argue, however, that the disparities are not yet sufficiently minimal.
The last part of this report explores several proposals that could contribute to a more equitable system. The common component of these proposals is a decreased reliance on the local property tax as a revenue source. The property tax allows revenue disparities between school districts in proportion to property wealth. A more equitable funding structure would remove property wealth as a major determinant of each school district's revenues.