School Finance in a Nutshell for Texas Ag Coop Council

1. School Finance in a NutshellforTexas Ag Coop Council September 2005 F. Scott McCown, Executive Director mccown@cppp.org

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3. 3 School Funding in Next State Budget �State Aid� means funding for TEA/local school districts and TRS. K-12 gets about 40% of General Revenue spending (the biggest part of the GR budget), or about $11 billion per year �pupil� means average daily attendance: almost 4.3 million students by fiscal 2007 �Federal� is federal funds going to districts through TEA (No Child Left Behind, Special Ed, School Meals, Bilingual Ed, etc.) Average Daily Attendance: ADA estimates are those provided by the Texas Education Agency.� They include an estimate of growth for total ADA and also for each special population (Compensatory Education, Special Education, etc).� Total ADA is estimated to grow by 2% per year (over 80,000 students statewide).Property Values: Property values are increased by 4.85% in tax year 2004 and 5.03% in tax year 2005 to reflect the estimates provided by the Comptroller of Public Accounts for values in FY 2006 and 2007, respectively.� So per-pupil property tax revenue would increase by roughly 2.85% in 2004 and 3.03% in 2005.�State Aid� means funding for TEA/local school districts and TRS. K-12 gets about 40% of General Revenue spending (the biggest part of the GR budget), or about $11 billion per year �pupil� means average daily attendance: almost 4.3 million students by fiscal 2007 �Federal� is federal funds going to districts through TEA (No Child Left Behind, Special Ed, School Meals, Bilingual Ed, etc.) Average Daily Attendance: ADA estimates are those provided by the Texas Education Agency.� They include an estimate of growth for total ADA and also for each special population (Compensatory Education, Special Education, etc).� Total ADA is estimated to grow by 2% per year (over 80,000 students statewide).Property Values: Property values are increased by 4.85% in tax year 2004 and 5.03% in tax year 2005 to reflect the estimates provided by the Comptroller of Public Accounts for values in FY 2006 and 2007, respectively.� So per-pupil property tax revenue would increase by roughly 2.85% in 2004 and 3.03% in 2005.

4. 4 The Educational Challenge Large and rapidly growing child population -Second largest child population in U.S. -Largest growth between 2000-2003: 350,000 additional children 183,000 more than California -By 2040, school enrollment to double Expensive to educate -Just short of a quarter of Texas children live in poverty (8th) and another quarter live in homes that are economically disadvantaged

5. 5 Public Education Spending 2003-04 Texas spent $7,335 per student. Texas ranked 34th among the states. Average state spending was $8,208 about 12% higher than Texas. Costs of living adjustments are faulty. Austin 106.1% of U.S. Average Dallas 98.5% of U.S. Average Houston 96.1% of U.S. Average Texas had ranked 32 and average was about 10%.Texas had ranked 32 and average was about 10%.

6. 6 Price Tags:

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9. 9 Adding together sales, motor vehicle taxes, motor fuels, and sin taxes, you see that consumption taxes make up 80 percent of state tax collections. Consumption-based taxes are very regressive.Adding together sales, motor vehicle taxes, motor fuels, and sin taxes, you see that consumption taxes make up 80 percent of state tax collections. Consumption-based taxes are very regressive.

10. 10 Our Tax Base is Inadequate

11. 11 Here you see how regressive: the family in the bottom quintile has a much higher tax rate (as a % of income) than does the family at the other extreme. More than 3 times as much of their income goes to state/local taxes. �Services funded by poor people will be poorly funded.�Here you see how regressive: the family in the bottom quintile has a much higher tax rate (as a % of income) than does the family at the other extreme. More than 3 times as much of their income goes to state/local taxes. �Services funded by poor people will be poorly funded.�

12. 12 Not Taxing Where the Money Is Roughly 1.7 million families in each group. Average family income: ($20K, $51K, $83K, $128K, $292K) The top 20% have half the total income. For every dollar the bottom 20% make, the top 20% make $14.50 Roughly 1.7 million families in each group. Average family income: ($20K, $51K, $83K, $128K, $292K) The top 20% have half the total income. For every dollar the bottom 20% make, the top 20% make $14.50

13. 13 Three Ways for the Top To Avoid Paying More Force the poor to pay through regressive taxes Fund only the top by ending equity Fund only the top through vouchers

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15. More than 50% from an increase in sales tax and expansion of the tax base. About 30% from payroll tax of 1.15% only on workers earning less than $90,000 a year. About 12% from increasing the cigarette tax. More than 50% from an increase in sales tax and expansion of the tax base. About 30% from payroll tax of 1.15% only on workers earning less than $90,000 a year. About 12% from increasing the cigarette tax.

16. 16 Per capita personal income: This is an economic indicator that�s periodically released by the Bureau of Economic Analysis. What BEA does is take the total personal income of a state�s residents (net earnings (from wages/salaries, business losses), dividends/interest/rent, transfer payments) and divide that by the state�s population. PCPI is used (among other things) in determining the state�s match rates for Medicaid (the FMAP, or Federal Medical Assistance Percentage), foster care, child care. In the late 1990s, the state�s per capita personal income grew fast enough to rank Texas right about average (25th in 1998). But even with high PCPI, poverty rates remained high. In other words, the late 1990s showed that you can have a lot of money in the state, but if it�s increasingly concentrated in a few high-income households, no one else benefits all that much from economic growth. Both of these are based on Census Bureau definitions of what �taxes� are � they include licenses, occupational permits and fees, and a lot of other things that we wouldn�t even consider �taxes�. But even with these included, the state has one of the lowest tax bites (taxes as a percent of personal income) and also one of the most rapidly shrinking tax shares in the late 1990s. Since 2000, state taxes have lost more ground (as a % of personal income, and also in total) than have local taxes. Per capita personal income: This is an economic indicator that�s periodically released by the Bureau of Economic Analysis. What BEA does is take the total personal income of a state�s residents (net earnings (from wages/salaries, business losses), dividends/interest/rent, transfer payments) and divide that by the state�s population. PCPI is used (among other things) in determining the state�s match rates for Medicaid (the FMAP, or Federal Medical Assistance Percentage), foster care, child care. In the late 1990s, the state�s per capita personal income grew fast enough to rank Texas right about average (25th in 1998). But even with high PCPI, poverty rates remained high. In other words, the late 1990s showed that you can have a lot of money in the state, but if it�s increasingly concentrated in a few high-income households, no one else benefits all that much from economic growth. Both of these are based on Census Bureau definitions of what �taxes� are � they include licenses, occupational permits and fees, and a lot of other things that we wouldn�t even consider �taxes�. But even with these included, the state has one of the lowest tax bites (taxes as a percent of personal income) and also one of the most rapidly shrinking tax shares in the late 1990s. Since 2000, state taxes have lost more ground (as a % of personal income, and also in total) than have local taxes.

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