The Ripple Effect of Increasing the Basic Allotment in Texas

February 14, 2023  

Three school funding challenges, one solution

Texas ranks in the bottom 10 for per pupil funding

The public education system in Texas is one of the largest in the nation, with more than 1,200 school districts and public charter schools and just under 9,000 school campuses. Our schools employ more than 700,000 people—approximately half of whom are teachers—to educate 5.4 million Texas students.

And yet, while we are among the largest and most diverse collection of public schools in the country, we are also one of the lowest funded. Texas ranks in the bottom 10 nationwide for per-student funding, around $4,000 under the national average.

In addition to lacking overall investments in students and schools, we have some structural challenges with our school funding system. Three challenges in particular—addressing rising inflation, funding teacher pay raises, and reducing recapture—can all be addressed by one school funding solution. The solution is raising the basic allotment. 

By increasing the foundational per-student funding element known as the basic allotment (BA), the Texas Legislature can also address three other challenges that are holding our schools back.

School Funding Challenge #1: Addressing Inflation 

Due to sharp rises in inflation, school districts are struggling financially. Even though schools received additional funding as a result of House Bill 3 (2019), that funding advantage has eroded. Many schools are reporting financial crises due to inflation and the rising cost of living in communities across Texas. 

The Basic Allotment Solution: By increasing the basic allotment, all public school districts and public charter schools would receive increased funding to offset higher costs. Even better than a simple increase would be if the state commits to a permanent inflationary adjustment, so school districts and the legislature don’t have to revisit the issue every legislative session. 

School Funding Challenge #2: Funding Teacher Pay Raises 

The teacher workforce crisis has been well documented. Teachers are overworked and underpaid, and the pandemic exacerbated long-standing challenges for the profession. Teachers report they need significant salary increases and improved work environments to stay in the field. 

The Basic Allotment Solution: Current state law requires 30% of any increase to the basic allotment must be used to increase educator pay. Increasing the basic allotment would give all school districts and charter schools additional funding to boost teacher salaries. 

School Funding Challenge #3: Reducing Recapture

Teacher in front of classroom at Texas middle school.

The state’s system of recapture (sometimes referred to as Robin Hood) attempts to balance out the vastly different amounts of revenue school districts collect from local property taxes. The state employs a set of funding formulas using local taxes and state aid to determine how much total revenue a school district is allowed. In some instances, local taxes alone exceed the entitlement amount and the state is allowed to recapture any excess revenue from local taxes. 

Because property values in Texas continue to rise in many regions, districts are sending historically high amounts of funding back to the state in recapture payments, and the state is contributing less to the overall funding pool. 

The Basic Allotment Solution: When the state contributes more to education funding through the basic allotment, the amount of recapture funding the state collects goes down. This is because raising the basic allotment also raises the equalized wealth level, the cutoff point over which districts must pay recapture. Another way of thinking about it is that a rising tide (higher basic allotment) lifts all boats (funding for all districts). 

The Texas Legislature Must Act 

In order to address these funding challenges, the Texas Legislature should increase the basic allotment by $1,000. That would, at minimum, return school districts to the purchasing power they had in 2019, prior to sharp rises in inflation. This increase would contribute to funding teacher pay increases and allow our schools to properly budget, plan, and pay for the services our local communities expect. 

Additionally, the legislature should adopt a permanent inflationary adjustment for the basic allotment to future-proof school districts against sharply rising inflation and the effects it has on paying staff, purchasing goods, and serving students. 

The “basic allotment solution” will support school districts so they can support teachers and students. In turn, the success of our students will build the future of our economy and communities.

The Texas Legislature should increase the basic allotment by $1,000, while accounting for a permanent inflationary adjustment.

Basic Allotment Basics
  • The basic allotment (BA) is the amount of funding each school district or charter school receives for each student who attends. 
  • The BA is the baseline multiplier for many special funding allotments, such as Special Education, Career & Technology (CTE), Bilingual Education, and Gifted & Talented (G/T). When the BA is increased, the funding for each special program is also increased. 
  • The BA funding amount is set in state law. Currently, the basic allotment is $6,160 per student. 
  • The BA is not derived from the actual cost of educating a student. 
  • The higher the BA, the less districts will owe in recapture payments (also known as Robin Hood). 

Tags: policy school finance Teacher Workforce

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