Unintended Consequences

comancheUnintended Consequences:
Economic Development

The Glen Rose Story

Glen Rose Independent School District was one of the poorest school districts in Texas prior to construction of the Comanche Peak Nuclear Power Plant in Somervell County. No other county wanted the nuclear facility. Based solely on the property value of Comanche Peak, Glen Rose became a Chapter 41 school district and has sent the state more than $500 million of local tax money; enough revenue to operate the district for the next 30 years.

But property wealth does not always translate to student wealth. In Glen Rose, 50 percent of the students live at or below the federal poverty level and more than 10 percent are English Language learners, and both percentages are increasing each year.

Why should local taxpayers allow a nuclear facility, coal plant, refinery or other potentially hazardous industry into their school district when it will require them to live with the risks and the state will take up to 80 percent of their local taxes? Any number of school districts are more than happy to share the revenue from a nuclear facility, they just don’t want it in their backyard. The detrimental consequences the current school finance system holds for the Texas economy are obvious

Diminishing Local Control

About 20 percent of the 356 Chapter 41 school districts are now at the $1.17 tax rate, the maximum allowed by law. The finance system basically has become a statewide property tax, which is prohibited by the Texas Constitution. It has taken away local discretion because these districts are unable to fully fund the needs of their local students.

Despite rising property values, the amount of locally generated taxes the Chapter 41 school districts are allowed to retain is fixed even though enrollment and education costs are increasing. Chapter 41 Districts have no choice but to reduce the quality of education they offer. Also, Chapter 41 schools that are not at the maximum tax rate are reluctant to raise taxes knowing 50 percent or more of the new local money must be sent to the state. Again, these schools have less incentive to improve local educational quality and, in turn, there is less money flowing to the state finance system.

Without fiscal discretion, there is no local control.