Texas' school finance system is overfunded and fundamentally flawed. Taxpayers now spend nearly $95 billion annually on K-12 education, yet student outcomes continue to decline. The maze of state funding formulas is outdated and complex and should be improved, if not abolished. ​

HB 3: A Step Forward, But Texas Can Do Better

I support the concepts of HB 3 because it expands school choice, but Texas must do more to ensure every family has access to educational freedom. HB 3 would cover less than 1.5 percent of Texas’ 6.3 million students, leaving 90 percent trapped in the government school system.

HB 3 has an escalator that would gradually cover students on a waitlist. However, the current legislature can’t appropriate the amount needed to fund the waitlist with the included funding mechanism, as it will be up to each legislature.

HB 3 imposes too many restrictions on accredited institutions and education-related purchases, making it more bureaucratic and costly than necessary.

Meanwhile, HB 2, part of the “Texas Two-Step” package, seeks to invest over $8 billion in government schools. It raises the basic allotment by $220 for every student above the $6,160 amount enacted by HB 3 in 2019, reinforcing the monopoly instead of fostering improvement.

HB 3 is a better approach than SB 2, the school choice bill in the Senate, because it is more universal and does not require students to switch from public to private schools to qualify. However, it must be improved to empower families and not further entrench the broken system.

How to Fund Universal ESAs and Reduce Property Taxes

Texas should replace the outdated school finance model with a universal, parent-directed ESA program.

As an example of an ideal scenario, every Texas student should receive a $12,000 ESA at a cost to taxpayers of $75 billion (or closer to $15,000 if we used the entire $95 billion on government schools today) to use on approved educational expenses. These would include Traditional public school costs, Private school tuition, Charter school costs, Homeschooling materials, Tutoring and special education services, and Career training and college prep.

By shifting from a district-based to a student-based model, Texas can empower families with the freedom to choose the best education for their children.

Texas should transition to universal ESAs for all 6.3 million students, replacing the inefficient government school finance model. This would save taxpayers nearly $20 billion annually and reduce M&O property taxes by two-thirds.

Most funding would come from state-collected revenue, primarily sales taxes. This approach ensures a more efficient use of taxpayer dollars, a direct funding model that prioritizes students, not bureaucracy, and lower property taxes while providing sufficient education funding. Rather than continuing to fund a failing monopoly, Texas should use existing state revenue to empower parents directly and ensure every child has access to a quality education.

The Impact of School Choice on Teachers and the Economy

Expanding school choice is not only about helping students—it also benefits teachers and the economy. Today, teachers are stuck in a monopsony system where government schools control salaries, limiting their ability to negotiate higher wages.

By introducing real competition, teachers would have more bargaining power and higher salaries based on market demand. My estimates show that teachers would see at least a $14,000 increase in pay and some high quality teachers could see an increase as much as $28,000.

School choice fosters competition and innovation, leading to better student outcomes, economic growth, and respect for parental rights.

How to Improve HB 3 and What to Avoid

• Pass HB 3 with improvements to make it universal and remove unnecessary restrictions.
• Kill HB 2 and other measures that funnel more money into the state’s arcane school finance formulas, which already overfund government schools.
• Ensure government schools receive no more than the current law requires. They do not deserve additional funding while continuing to fail students.

Conclusion: Texas Must Lead in Education Reform

The future of Texas education depends on empowering families, not expanding bureaucracy. A universal ESA system is the fiscally responsible, pro-student, and pro-taxpayer solution.

• Provides every Texas student with $12,000 to pursue the best education
• Eliminates waste and reduces inefficient government spending
• Cuts M&O property taxes by two-thirds
• Saves taxpayers $20 billion per year
• Increases teacher pay through competition

Texas can lead the nation in school choice and education reform. The committee should pass HB 3 with necessary improvements as outlined above, reject HB 2, and ensure no more money is funneled into an already bloated government school monopoly. 

Thank you for your time and consideration.
​
Vance Ginn, Ph.D., is president of Ginn Economic Consulting, a contributor at over 20 think tanks, including Americans for Tax Reform and Texans for Fiscal Responsibility, and a board member of Texas Policy Research. Dr. Ginn was previously a lecturer at multiple higher education institutions, chief economist at the Texas Public Policy Foundation, and chief economist at the first Trump White House's Office of Management and Budget, June 2019 to May 2020. He earned his doctorate in economics at Texas Tech University. Follow him on X.com at @VanceGinn and get his research at vanceginn.com. ​

Other states are aggressively cutting taxes and putting income taxes on a path to elimination, meaning Texas cannot afford to sit back and assume it will always be the country's economic powerhouse. States like Louisiana, Iowa, and North Carolina have made structural changes to lower tax burdens, making their economies more competitive. If Texas continues growing government instead of cutting taxes, it risks losing its economic edge. The best way to remain a leader is to cut spending, eliminate school district M&O property taxes, and reject tax shifts that only move the burden around rather than reduce it. One tax shift that must be rejected is raising the homestead exemption. Lawmakers have already increased it to $100,000, yet property tax bills continue rising. This highlights that exemptions do not solve the problem—they only shift the tax burden onto renters, businesses, and other property owners. Instead of playing favorites with exemptions, the state should focus on eliminating school district M&O property taxes through compression, which benefits all taxpayers.

Additionally, the loopholes in SB 2 from 2019 must be closed to ensure that tax relief is real and long-lasting. Local governments have exploited these loopholes to continue raising taxes without voter approval. The Legislature should take the following steps to fix these issues:

1. Cover all property tax collections from new and existing properties to prevent local governments from hiding tax increases behind new developments.
2. Eliminate natural disaster exemptions that allow local officials to raise taxes without voter approval under the pretense of an emergency.
3. Use the no-new-revenue rate as the baseline for tax changes, ensuring that any tax increase is transparent and subject to voter approval.
4. Require at least a two-thirds vote by any local governing body to raise property taxes, making it harder for politicians to increase taxes without broad support.

Without these reforms, Texans will continue seeing their property tax bills rise no matter how much relief the state provides. Local governments have become too aggressive in raising taxes and spending without restraint, and unless these issues are addressed, they will continue exploiting technicalities to tax Texans more. Texas must commit to cutting state and local spending, compressing school district M&O property taxes until they are eliminated, and preventing local governments from shifting the tax burden elsewhere. This will provide permanent tax relief, keep Texas competitive, and ensure that families can afford to own their homes without fearing rising property taxes.

Instead of expanding government, lawmakers should cut waste, eliminate fraud, and return money to taxpayers. Texas should not hoard billions in tax dollars while families struggle with rising costs. The state should also reduce severance taxes on oil and gas companies, ensuring that Texas remains the world's energy leader and that money stays in the pockets of those who earned it. Texans deserve real tax relief, not more political games. HB 8 must be strengthened to prevent local governments from undoing tax cuts, enforcing strict spending caps, and dedicating more surplus money to eliminating school property taxes. Now is the time to act and make Texas the best place to live, work, and raise a family.

Vance Ginn, Ph.D., is president of Ginn Economic Consulting and a contributor to more than 20 think tanks, including Americans for Tax Reform and Texans for Fiscal Responsibility. Dr. Ginn was previously a lecturer at multiple higher education institutions, chief economist at the Texas Public Policy Foundation, and chief economist at the first Trump White House's Office of Management and Budget. He earned his doctorate in economics at Texas Tech University. Follow him on X.com at @VanceGinn and get more of his research at vanceginn.com. ​

Chairman Bettencourt and members of the committee,

Thank you for holding this hearing. I am Dr. Vance Ginn, president of Ginn Economic Consulting, Texan, and father who is concerned about Texas's housing affordability crisis. While the state can’t address general inflation and interest rates, as those have been failures of Washington, policymakers can tackle restrictive local zoning and high property taxes.

First, restrictive zoning regulations restrict the housing supply, driving up housing prices faster than many can afford. 

• Reducing these housing restrictions imposed by mostly local governments can increase the housing supply, helping lower prices. Less restrictive zoning isn’t just good policy; it’s essential for making Texas affordable. The high cost of rent control, zoning rules, and other government failures highlight the importance of free-market solutions.

Second, regarding the 11th most burdensome property taxes, achieving affordable housing means committing to eliminating them. ​

Originally posted at The Sentinal. Read my full testimony here or watch it at YouTube below at minute 38:00.

​Kansas is spending too much and needs to reform the way it creates the yearly budget, was the message Dr. Vance Ginn — a senior fellow at the Kansas Policy Institute, told a state legislature committee on Oct. 2, 2024.

Dr. Vance Ginn
​
Ginn, who was also the former chief economist in the White House Office of Management and Budget and is president of Ginn Economic Consulting, told the Special Committee on Budget Process and Development the “main problem of government” is how much is spent.

“Unfortunately, in Kansas, there’s too much that’s being spent,” he said. “I know that’s why you’re looking at budget process reforms and how to spend less over time to make sure that you have the best use of taxpayer money that’s coming out of the productive private sector.”

Ginn pointed to Colorado as a good example.

“When you look at Colorado, which has (gone) from red to purple to blue over time, one of the things that’s helped them to restrain spending, no matter what the political situation has been, is their Taxpayer Bill of Rights,” Ginn said. “TABOR, as it’s called, is a spending limit that limits the growth of the budget to no more than population growth plus inflation, which is a good measure of the average taxpayer’s ability to pay for government spending.

“Now it’s been weakened a little bit over time by some courts and by politicians and things of that nature, but it still has been able to hold their spending to population and inflation and keep taxes down lower than it otherwise would be.”

Ginn noted that other countries are doing something similar as well.

“We’ve also seen spending limits work in other countries. Sweden and others. The Swiss debt break is another example of that, ” he said. “So it’s not just the states, which I think is important, as we’re talking about here in Kansas today, but also to look at what other countries have done.”

Ginn also suggested looking at a longer-term budget — if perhaps not as long as the federal government’s 10-year budget projections.

“I don’t know how far in advance you want to go, but maybe a couple of years, two or three years, I think looks good to figure out what’s happening for the future,” he said. “How are the trends looking for different areas of the budget, whether you look at health care, education, transportation, I think those things are really important. It’s something that’s been able to work in Florida to help to restrain the spending over time.”

Ginn suggested other measures as well, including independent efficiency audits, such as Texas uses, to help find waste within state departments.

He also said the state should look at an annual budget analysis.

“So you have the budget that’s passed, but then look at it throughout each year to ensure that those dollars are being spent wisely and that we’re getting the effectiveness — the intended goals are being met for each one of these programs as well,” he said.

Ginn is also an advocate of “zero-based” and “priority-based budgeting,” as well.

“I think it is really important to adopt priority-based budgeting,” Ginn said. “Zero-based budgeting is important. Start from scratch and build your way up. It’s kind of costly, it’s time consuming to do some of those things. But there’s also performance-based budgeting to make sure that you’re getting the performance out of these. So a combination of those is priority-based budgeting, which I think, if you’re looking at the annual reviews, would be a great opportunity for you all to make some suggestions, make some changes.”

Spending per resident in 2022Kansas spent $4,941 per resident in 2022, excluding federal and debt-related spending, as reported by the National Association of State Budget Officers. By comparison, Colorado spent $3,935 per resident. Missouri ($3,110) and Oklahoma ($3,404) also spent a lot less per resident to provide the same services as Kansas. Only Nebraska spent more, at $5,268 per resident.

Just getting to Colorado’s level of efficiency would save taxpayers almost $3 billion annually.

Responsible Kansas Budget would meet many of Ginn’s suggestions
Ginn pushed something KPI has proposed for two years now.

“The Responsible Kansas Budget” is a model to achieve a sustainable budget through tax-and-expenditure limits based on transparency and performance-based budgeting, which will rein in government spending to avoid deficits.

In 2022, KPI released its first edition of the Responsible Kansas Budget for 2023. The model proposed a limit on All Funds (state funds plus federal funds) appropriations in 2023 at $21.0 billion based on limiting spending increases to the combined rate of population growth and inflation. Instead, the Legislature approved an All-Funds budget of $22.9 billion—nearly $2 billion more than the RKB. 

The RKB uses a simple calculation of finding the growth rate of the state’s resident population and adding it to the growth rate of the state’s Consumer Price Index [a common measure of inflation] to set maximum appropriation limits.

Indeed, from fiscal 2005, through fiscal 2023, state appropriations grew from $7.2 billion to 17.1 billion.

Had the RKB’s appropriation limits been in place, the growth would have been to “only” $11.4 billion, saving Kansas taxpayers roughly $5.7 billion.

Originally published at Texans for Fiscal Responsibility and full testimony there. 

​The following piece is taken from Dr. Vance Ginn’s Testimony to the Texas House Select Committee on Sustainable Property Tax Relief:

Over the last decade, the Texas Legislature has made some progress in providing property tax relief, but the housing affordability crisis demands more action. Moreover, property taxes are not just a financial burden but are fundamentally immoral as they force Texans to perpetually rent from the government, functioning as unrealized capital gains and wealth taxes paid annually. This system makes it difficult for many families to build or pass on a legacy. As noted in the following three charts, property taxes have risen too fast for too long.