Texas Governor Requires School Districts in the State to Spend 65% of Their Funds in the Classroom

Published October 1, 2005

After the state legislature failed in two special sessions this summer to pass school finance reform measures, Texas Gov. Rick Perry (R) issued an executive order in August requiring every school district in the state to spend at least 65 percent of its funds directly on classroom instruction. Perry said improving classroom performance is too important to set aside until lawmakers overcome their differences.

“While I hope to one day reach a legislative consensus on school finance, we can no longer delay taking action that will benefit schoolchildren, parents, and taxpayers,” Perry said in an August 22 news release. “They deserve better than unfulfilled promises and continued delays. They deserve immediate action.”

If each district complies with the 65 percent formula, classrooms across the state could see $1.6 billion in additional funding without a tax increase, said Kathy Walt, the governor’s press secretary. State Sen. Jeff Wentworth (R-San Antonio) was one legislator who welcomed the formula. During the regular legislative session this spring, he sponsored an amendment that would have required the same thing, had it succeeded.

Court-Ordered Reform

The state was directed to reform its education finance structure this February by a district court decision finding the current system unconstitutional because “school districts lack meaningful discretion to set local tax rates and because the cost of providing an adequate education exceeds the funds available to districts through current funding formulas,” according to an analysis conducted by the Texas House of Representatives Research Organization.

U.S. District Judge John Dietz also found the system for funding school facilities violates constitutional standards for equity between property-wealthy and property-poor school districts. The state appealed directly to the Texas Supreme Court, which is expected to issue a ruling sometime this year.

Group Effort

Not all of the state’s districts needed to improve their classroom spending, said Peggy Venable, director of the Texas chapter of the watchdog group Americans for Prosperity. “As reported by the school districts themselves, 217 school districts currently spend 65 percent or more on classroom instruction, but we want to see the other 800-plus independent school districts focus more dollars on instruction,” she said.

According to the order, “Texas public schools will be required to spend an increasingly greater share of funds on direct classroom instruction as defined by the National Center for Education Statistics (NCES) until the goal of 65 percent is reached.” The NCES has defined direct classroom instruction as “instructional expenditures for activities directly associated with the interaction between teachers and students” including teacher salaries and benefits, textbooks, and supplies, according to its Web site.

Perry has directed Texas Education Agency Commissioner Shirley Neeley to design and implement a new financial accountability and reporting system for Texas schools. Neeley has assembled a task force of 13 school superintendents and two regional office staff members, and has invited representatives from organizations she had not named at press time as ad hoc members. The task force’s purpose is to define which instructional costs are to be used when determining whether Texas school districts are spending 65 percent of their operating costs on instruction.

“My executive order will give taxpayers the accountability they deserve because it opens every school district’s financial books to public scrutiny,” Perry said. “Taxpayers may find they have the best-run schools in the state of Texas, or they may find areas where their schools should be getting more for their money. With greater transparency in our schools, parents will be empowered to demand change if needed at the local level.”

Increased Transparency

Not all educators across the state are so sure the order is going to work. Lonnie Hollingsworth Jr., director of legal services and governmental relations for the Texas Classroom Teachers Association (TCTA), said he has misgivings about the 65 percent rule.

“While we certainly agree in concept with the notion of directing more dollars to the classroom as in the 65 percent requirement, we have found that similar measures enacted in the past and which we supported have been easily thwarted by creative coding of administrative functions at the local level,” he explained.

Gayle Fallon, president of the Houston Federation of Teachers (HFT), agreed district administrators can be creative when coding expenditures, noting, “some items listed as classroom expenditures may not really be spent on actual classroom instruction.

“HFT no longer wants the districts to be able to transfer their bloated staff support services into hidden budget line items titled ‘central office curriculum or staff development expenses’ that result in campuses carrying the burden of that expense,” Fallon said.

Greater Accountability

In addition to the 65 percent formula, Perry’s executive order calls for other sweeping reforms, such as greater transparency in reporting of funds used for non-instruction expenditures such as counseling, technology, funds for maintenance and construction, and dues for clubs and organizations.

Also included is better transparency in reporting funds for lobbying, consulting, public relations service fees, and legal fees–including fees spent on lawsuits against the state–and clear, concise reporting of money available in school districts’ rainy day savings accounts, Walt said.

Transparency in campus-level spending and reporting is just what Texas Eagle Forum President Cathie Adams says her organization will work toward.

“I am very pleased that Governor Perry and his Commissioner of Education firmly believe that more education dollars should be spent in the classroom,” Adams said. “It is a travesty that hundreds of thousands of dollars were previously spent on nonacademic expenses such as lobbyists and seminars, rather than in our children’s classrooms.”

Connie Sadowski ([email protected]) is director of the Education Options Resource Center at the Austin CEO Foundation.

For more information …

More information about the 65 percent requirement is available at http://firstclasseducation.org.

For a report on Louisiana’s adoption of the 65 percent requirement, see “La. Lawmakers OK 65 Percent Education Funding Measure,” School Reform News, July 2005, http://www.heartland.org/Article.cfm?artId=17374.

For more information on classroom spending in Texas, see the district-by-district information available online at http://www3.cpa.state.tx.us/districts.nsf/.