School Finance 101
Texas School Finance can seem complicated and confusing, but it doesn’t have to be. All great learning starts with the basics. Before you can learn to read or write, you need to know the letters and sounds that create words and eventually, full sentences. The very same principles apply to school budgets. You, too, can become fluent in finance!
The incredible finance team at Allen ISD is well-versed in school finance and is here to break down some of the more complex aspects to give an easy to understand explanation of how money is received and spent to educate students.
Where does the money come from?
Texas public schools are funded by three main sources:
Local funding
State funding
Federal funding
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How is Allen ISD funded?
A whopping 85% of Allen ISD’s funding comes from local property taxes. This means the bulk of the responsibility for funding Allen ISD schools comes from local residential and commercial taxpayers. Only 14% of the district’s resources actually come from state funding, and 1% comes from federal funding.
Simply put, we, the local community of Allen ISD, are paying most of the funds to educate our children every day, which is why it is so important that you know how these funds are being used!
What is ADA?
In Texas, school districts receive a basic allotment per student that is based on average daily attendance, sometimes referred to as ADA. This means that state funding is dependent on student attendance, not on enrollment. So if students aren’t attending school regularly, they won’t be counted in the state formulas, and schools receive less funding than they would if attendance was up.
Low Student Attendance = Less State Funding
Additional services means additional funding
Additionally, the district receives extra funds for a student that requires special services, such as:
- special education,
- gifted and talented services,
- early childhood education or
- career and technical education (CTE) programs.
This shows the state’s understanding that districts serve students who need additional support and are likely to need additional financial support to provide those valuable services.
Students Needing Additional Services = Additional State Funding
Inflation and rising costs vs. flat funding
The basic allotment for Texas students – $6,160 per student – has not changed since 2019. Inflation in the State of Texas has increased by 23% between January 2019 to January 2024*. NOTE: Inflation refers to the general increase in prices of goods and services over time.
You have probably experienced inflation impacting your own household budget as the overall cost of living rises because of increasing costs for food, gas and services. Sometimes things cost more because of supply and demand.
Public schools experience these same rising costs and supply issues. Without increases in the basic allotment, Allen ISD budgets are stretched thin to provide the same level of educational excellence that our community expects while also fighting inflationary costs.
*Source: Texas Comptroller
Did you know?
Texas currently ranks 40th among US states when it comes to school funding per student. Texas trails the national average by over $3,433 per student.
Source: National Center for Education Statistics
What's in a budget?
School budgets/tax rates are made up of two parts and the money generated from each part can only be used for very specific types of expenses.
Maintenance and Operations (M&O)
This portion of the budget/tax rate helps pay for daily costs to fund the operations of schools like employee salaries and benefits, utilities, fuel and supplies. These funds impact daily teaching and learning and most of what you think about in the school day.
Interest and Sinking (I&S)
This portion of the budget/tax rate can only be used to pay off bonds sold for construction and capital improvements. I&S funds cannot be used for operational costs, such as instructional salaries and benefits. I&S funds may be used to pay down bonded debt. A school district can take on new debt only after voters approve a school bond proposition.
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Learn how Chapter 49 Recapture affects Allen ISD’s school budget
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Now that you have an understanding of how school districts are funded, let’s take a closer look at Allen ISD’s budget, funding sources, and expenses!