The Gilmer Aikin Act, adopted by the Texas Legislature in 1949, established a public school finance system that, for the first time included funding from local tax bases. This revenue was to allow districts to supplement or enrich the program that the State provided. Over time, districts were forced to rely on local taxes for more than just supplementation, but to cover the cost of the basic operations. Districts were forced to increase their tax rates to fund the basic program when state funding did not keep pace.
Because Texas districts vary greatly in both size and property values, wealth per-student varied widely as well. In 1989, the Texas Supreme Court ruled in Edgewood I that the Texas system of school finance was inequitable. The State Legislature set out to remedy the problem with a new school finance system. After several failed attempts, the Supreme Court ruled in Edgewood IV that the system put in place by the Legislature in 1993 was constitutional. This new school finance system, commonly referred to as ‘Robin Hood,’ required that each property wealthy district help equalize funding by choosing from five different options by which they could “share their wealth.” By creating both a floor (or guaranteed yield), that each district could achieve, and a ceiling (or a wealth limit), that no district could exceed, the system was determined to have equalized funding.
The districts that send local property tax revenue away from their communities through a mechanism called ‘recapture’ are known as Chapter 41 school districts, named after the chapter in the Texas Education Code where these laws are found. In the beginning, only 34 school districts, serving less than 1 percent of the State’s students, were subject to recapture to equalize funding. In the 1993-94 school year, approximately $130 million was sent away from these 34 districts.
As property values increased, the State Legislature was forced to increase the floor in order to maintain the equity in the system. However, the State stopped trying to keep pace, and the funding elements did not increase as they had in the past. This decision caused the number of schools subject to Robin Hood to increase dramatically. Today, we have over 371 districts that qualify as Chapter 41 districts with 217 of those currently paying recapture. The annual amount of recapture paid by districts exceeds $2.6 billion. Absent legislative action, statewide recapture payments could exceed $3.8 billion by 2021.
Chapter 41 districts are locally funded through the revenue from the property tax base in their communities. That tie between the local community and local schools is important to every school district throughout Texas.
- 34 School Districts qualify as a Chapter 41 school district.
- $130 Million contributed by these local taxpayers to state school finance system.
- These 34 Districts contained 1 percent of the students in Texas public school system.
- Today, 371 school districts classified as Chapter 41 districts.
- They will contribute more than $2.6 Billion to the state school finance system this year, bringing total contribution to more than $24 billion since 1993.
- 25 percent of Texas students are enrolled in districts that send local tax revenue to the state.