Who determines how much funding Texas public schools receive?

The Texas Legislature establishes the formulas that set the level of public education funding per student that all Texas school districts are entitled to have for the maintenance and operations (M&O) of the school district. Once these entitlements are established, the formulas are used to determine how much a school district can generate locally (local share) through property taxes before making up the difference with state funds (state share). The state share is funded through the Foundation School Program (FSP).  

When local M&O tax collections exceed the funding level formulas set by the legislature, the excess in local tax collections for M&O is sent to the state and is called “Recapture.” Recaptured funds are collected in the Foundation School Program (FSP) which is used to distribute the state share of public education funding. 

Recaptured funds do not automatically increase the level of public education funding – only the legislature can do that.

How do local property taxes fund public education in Texas?

Texas school districts levy a property tax rate that contains two separate parts. The tax rate is the sum of these two parts:

1. Maintenance & Operations (M&O)

• Pays for day-to-day schooling: teacher/staff salaries, campus maintenance, utilities, transportation, programs, etc.
• This is the portion that interacts most with the state-s funding formulas and recapture.

2. Interest & Sinking (I&S)

• Pays debt service on bonds voters approved for land purchases, building renovations and construction, technology, and buses only. These tax collections cannot be used to fund a school district’s maintenance and operations.
• This portion is not subject to recapture; it is tied to local bond repayment. 

How does the state use the recaptured local tax collections?

When the local tax collections for maintenance and operations in the school district exceed its state entitlement, the district is required to pay a portion of its local tax collections as recapture to the state of Texas. The recaptured funds contribute to the state’s overall education funding pool. The recaptured local tax collections are used to help balance the funding each district receives. By recapturing funds from school districts, the state reduces the amount of money it needs to allocate directly to those districts, freeing up more resources to fund other state priorities. This can create budgetary savings for the state.

Where do your local school district property tax collections go?

Taxpayers deserve to know how much of the money paid in local school taxes is removed by the state and how the state uses the resulting savings. We know how much each school district pays in recapture, but we do not know how the state uses the resulting savings as this requires legislative action. We have worked for the last decade to create this level of transparency, but the legislature has not required such transparency of itself yet.

Recaptured local property taxes that are sent to the state reduce the state’s demand for other state revenue that would be required for the state to contribute to public education through the Foundation School Program.