Resolving Texas' School Finance Problem

This commentary originally ran in the McAllen Monitor print edition on April 25,2016.

The Texas Supreme Court could release their ruling any day (possibly today) on most-watched school finance trial. The question before the Court is whether the public school system is efficient. The decision could substantially affect public schools in McAllen and statewide. Regardless, public schools must be reformed so that they are student-centered and competitive.

The Court defines efficiency as “effective or productive of results and connotes the use of resources so as to produce results with little waste.” Put simply, quality education results from limiting waste based on actual tuition.

Unfortunately, numerous expert witnesses during the trial noted that it’s impossible to know the true public school tuition. Only the amount spent on education is known, which was $61 billion, or $12,761 per student, in the 2014-15 school year. Therefore, the current system will never improve unless Texans can identify the market tuition. 

I recently co-authored the paper Texas School Finance: Basics and Reformwith my colleagues at the Texas Public Policy Foundation. This paper provides taxpayers with clarity of a highly complex government-run school finance system. It also explains how Texas can achieve equity and efficiency in the education system by the student-centered, market-based approach of universal education saving accounts. 

With 4.8 million students enrolled at public schools compared with only 375,750 students at accredited private schools, public schools dominate the schooling market. Very little competition from other forms of schooling and the power of the public purse make the public school system essentially a government-run monopoly that reduces the consumers’ well-being.

In addition, the public school system fails to have an efficient tuition because of a third-party payer system. While Texans typically think that local property tax dollars fund public schools, the truth is that state funding formulas determine how multiple revenue sources are redistributed to all school districts. This process, known as “Robin Hood,” is based on providing equitable school district funding. 

Nevertheless, since the government funds schools, parents don’t know the true tuition because they don’t pay for it directly. Again, only the arbitrary amount the state spends is known.

Without market activity to determine the actual tuition, students will continue to receive subpar public schooling in many places statewide.

Fortunately, there is a solution: education freedom.

By providing this through education saving accounts, the market tuition can be known. Parents would receive an amount on a debit card that would be limited to education services to choose which ones best meet their child’s needs, allowing for a competitive, first-payer school system.

This means that market tuition at public schools as well as private and other education services must be posted for parents to determine their best option. These prices would create behavioral changes as parents and students seek out their best fit instead of being locked in a school based on their zip code.

The weighted tuition average at accredited private school organizations statewide is $7,848 per student. Therefore, the per student expenditure at public schools is 63 percent higher than at private schools, where there is an efficient tuition and mostly better outcomes.

Given competition, public and private tuition would likely converge at a level far below the current bloated amount of $12,761 and increase its quality, as has been shown in academic research. 

It’s time for parents to know the actual tuition of public schools and have the choice to meet their child’s needs through education saving accounts. Per the state’s constitution, efficiency and equity per student will be achieved. Students in McAllen and statewide will improve their education outcomes and help take Texas to the next level of economic opportunity for all. 

​http://www.texaspolicy.com/blog/detail/resolving-texas-school-finance-problems