Study: Texas Must Focus on Productivity

Published May 1, 2004

A new study by the Texas Public Policy Foundation (TPPF) challenges assertions that poor student achievement in Texas is the result of inadequate funding and that higher taxes are the best way to improve achievement.

The Texas legislature is considering proposals for changing the state’s education funding system. Any new system of taxation, the TPPF authors contend, should preserve local control and promote parental choice.

The education funding system in Texas is known as “Robin Hood” because it requires wealthier school districts to share property tax receipts with poorer districts. According to the February 2004 TPPF study, “Effective, Efficient, Fair: Paying for Public Education in Texas,” the adverse effects of most of the tax change proposals are unlikely to be outweighed by benefits from increased funding to education.

“The current tax system is sufficiently flexible and provides adequate revenue growth for public schools,” conclude the study’s authors, Ohio University economics professor Richard Vedder and Buckeye Institute Research Director Joshua Hall. “Education spending and education productivity are the real problems that challenge Texas.”

Some Texas districts already have relatively high productivity: They have higher than average achievement and lower than average spending. The study identifies the 15 most efficient districts in the state.

The Texhoma Independent School District, for example, had 93 percent of its students pass all Texas Assessment of Knowledge and Skills (TAKS) tests with a $4,358 per-pupil expenditure, compared to state averages of 68 percent and more than $8,000. More than half of the district’s students are categorized as economically disadvantaged, and more than a quarter are Limited English Proficient, making the district’s success all the more remarkable.

Instead of asking, “How can we funnel more resources toward students who do not learn much at present?” Vedder and Hall suggest the right question to ask is: “How can we get poor learners to perform better academically?”

Using multiple regression analysis, the authors found:

  • Out-of-school factors have the strongest influence on student achievement. Higher adult education correlates with higher student achievement, and higher poverty rates correlate with lower achievement.
  • The in-school factor that relates most strongly to achievement is student attendance. Higher attendance correlates with higher achievement.
  • Expenditures have a weak relationship to achievement; however, districts that derive a greater share of their expenditures from local property taxes have higher achievement.
  • While teacher experience has a slightly positive correlation with achievement, teacher salaries are not related to student achievement. Higher rates of teacher turnover are related to lower achievement.
  • Larger student-teacher ratios correlate with higher achievement.

Given these findings and those of other research, the authors make the following policy recommendations:

  • Fund students directly, rather than schools and school districts.
  • Allow districts to derive more of their funding from local revenues.
  • Create incentives for greater school-level efficiency, rather than increasing expenditures or funding. Avoid top-down mandates.
  • Pay teachers according to merit, based on student achievement.
  • Strengthen accountability systems, rewarding good performance and punishing poor performance.
  • Introduce competition and parental choice.

In their analysis of various tax increase proposals, the authors assert the adverse impact of those proposals–lower economic growth, personal income, job creation, and employment–would outweigh any benefit achieved by increased education funding. Of the tax plans, a sales tax would have the least pernicious effect on the economy and individual economic well being.

If lawmakers decide they must increase taxes, the authors recommend expanding the sales tax base and reducing the sales tax rate. They caution against replacing local tax dollars with state tax dollars because that would weaken the link between taxpayers and their local schools.

The authors propose an innovative way to preserve local control while giving parents greater freedom to choose the best education for their children. Under the plan, local property taxes would provide students with a free “core” of instruction. However, parents also would be given state dollars as vouchers to purchase elective instruction from a provider of their choice, including the district.

Krista Kafer is senior policy analyst for education at The Heritage Foundation. Her email address is [email protected].

For more information …

Richard Vedder and Joshua Hall’s March 2004 report from the Texas Public Policy Foundation, “Effective, Efficient, Fair: Paying for Public Education in Texas,” is available online at