This column was originally featured in the Dallas Morning News.
When school budgets get tight, property-wealthy districts are often quick to blame the primary equity tool of the school finance system, recapture. However, recapture, also known as “Robin Hood,” is not the villain in this story. The real problem is the basic allotment, the base level of funding the Texas Legislature funds per student. The Legislature does not base what it pays for education on actual costs.
The basic allotment, the foundational building block for the whole school finance system, is an arbitrary number. It’s not connected to the cost of providing a quality education. In fact, it’s not based on anything at all. The Legislature underfunded the recommended amount in 1984 — pre-pandemic and pre-modern workforce. Since then, the Legislature has made random changes in irregular intervals. This arbitrary basic allotment also determines if a district is considered “property-wealthy” or “property-poor.”
In simple terms, the school finance formulas start with the basic allotment and then adjust it based on student characteristics of a district, such as how many students are economically disadvantaged, emergent bilingual or another recognized special population. The formula rightfully recognizes that some students require more expensive educational resources. The basic allotment with these adjustments determines the amount of funding the state allows each school to have for its operating budget.
Once the funding amount is determined, school districts tax local property to raise the necessary funds. If the local tax base is unable to meet the allowed funding amount, the district receives state aid. If local property tax revenue is greater than the allowed amount, the state “recaptures” the excess revenue to help fund education statewide.
Those who villainize recapture claim it doesn’t take a wealthy district’s low-income student population into account. We know that’s not true because the formula takes all low-income students into consideration.
But here’s the rub — in addition to the basic allotment being arbitrary, the amount of additional funding for low-income, emergent bilingual and other special student populations is also arbitrary and was set in 1984 with few changes since. This is why districts are unable to meet the needs of students, because the funding they receive doesn’t reflect their actual costs.
Our state education laws dedicate recaptured dollars to education, just not exclusively to property-poor districts. The amount of recapture revenue collected is roughly the same amount needed to support the network of charter schools across the state. Charter schools are non-taxing entities, yet they are fully funded by the state. Regardless of your opinion on charter schools, the revenue must come from somewhere.
Rapid expansion of charter schools is another reason recapture is growing across the state. Recapture is triggered when a district collects more property tax revenue per student than the state allows it to have. When a student leaves a traditional ISD for a charter school, the amount of property tax revenue that district collects per student increases. That means the district is more likely to collect excess property taxes than allowed by the state because the district has fewer students to support. School districts that have many charter schools within their boundaries, such as Houston ISD, end up paying recapture revenue due to the large number of students lost to charter schools.
Recapture is not the villain. The Legislature has never provided an adequate level of funding for our schools and refuses to make annual adjustments for inflation. As property values rise across the state and additional students move to charter schools, more districts will appear wealthy but, in reality, everyone is underfunded. Recapture is not the school finance villain — the Texas Legislature is the villain when it neglects our greatest public good and keeps schools underfunded.