The Political Economy of Education Finance: The Case of Texas

Texas has one of the largest primary and secondary school systems in the United States. Funding equity has been a concern in the state courts, and significant legislative actions have been taken. We examine two votes taken in the Texas State Legislature in 1993 and 2006 that follow the directives from a series of education finance equity legal cases, collectively known as "Edgeworth Independent School District, et al. v. Kirby, et al." The first Edgeworth cases directed the legislature to develop a more equitable education funding system and, as a result, the 1993 vote on Senate Bill 7 (SB7) created a system of "recapture" in which a few of the richest school districts were subject to redistribution of their property tax revenue to the poorest districts. This funding system, known as the "Robin Hood" law, increased significantly the level of redistribution across the Texas school districts. Over time, the list of school districts required to transfer funds to poor schools districts quadrupled. The property-rich school districts across the state reached the maximum property tax rates specified in the law, which these school districts argued effectively made the tax a "statewide" property tax rate, unconstitutional under Texas law. The Texas Supreme Court found the education finance system "adequate" but unconstitutional based on the effective statewide property tax. The court finding ultimately reopened the door for the unequalized funding that existed prior to "Edgeworth" and SB7, as the legislature responded through the passage of House Bill 1 (HB1) in 2006. HB1 reduced property taxes and allowed wealthy districts to supplement the minimum foundation program with higher taxes without state recapture, reducing the finance equity created by SB7. We estimate a legislative voting model on the passage of HB1 and SB7 in both houses of the Texas state legislature. We include several measures of whether the legislator's district benefitted from the drop in inequity in the 1993 law and the rise in inequity in the 2006 law. As predicted, the legislator was more likely to vote against a fall in inequity if the district had greater household income. A similar hypothesis involving college grads receives very little empirical support. Democratic legislators, who generally support a district's poorer households, were much more likely than Republican legislators to support reductions in inequity. Similarly, legislators representing liberal districts were more likely to support proposals to reduce inequality in school spending.