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Details how replacing part of local property taxes with state aid shifts revenue sources without increasing total funding for schools. Explains the elimination of tax equity tied to unified tax effort, the recapture mechanism, and how Tier I M&O tax rate compression alters district rates based on property value growth. Assesses strain on the state budget and need for freezing inequitable property tax cuts while addressing learning losses and special education and English learner supports.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/a-new-division-in-school-finance-high-taxing-vs-low-taxing-school-districts/583632/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/a-new-division-in-school-finance-high-taxing-vs-low-taxing-school-districts/583632.png","ImageObject",300,407,{"name":92,"@type":93},"Jacob","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-30","2026-10-15",true,{"@type":102,"interactionType":103,"userInteractionCount":39},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"What did Texas HB 3 change in school finance?","Question",{"text":112,"@type":113},"HB 3 expands property tax cuts and replaces some lost local revenue with state aid, mainly general revenue, while not increasing the overall level of school funding.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"Why does the document argue HB 3 reduces funding equity?",{"text":117,"@type":113},"It claims HB 3 eliminates a core tax equity principle by making district revenue outcomes depend more on property value growth than on similar tax effort at unified rates.",{"name":119,"@type":110,"acceptedAnswer":120},"How does Tier I M&O tax rate compression work under HB 3?",{"text":121,"@type":113},"HB 3 reduces the Tier I Maintenance & Operation property tax rate and sets future compression based on statewide property value growth estimates exceeding 2.5%.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},583632,1792211485,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":39,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":34,"language":139,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":140,"faqs":141,"seo_title":142,"seo_description":67,"update_tm":143,"read_time":144,"preview_page_count":4},962084931830,"https://ap-avatar.wpscdn.com/davatar_a8503ba1806abce46bf441b54a3ca4cd","January 2021  \nA New Division in School Finance  \nHigh-Taxing vs Low-Taxing School Districts Chandra Kring Villanueva  \nIn 2019, the Texas Legislature passed House Bill 3 (HB 3)—an $11.6 billion school finance reform law that dedicated over $6 billion toward investments in education and $5 billion toward replacing school property taxes with state aid. The property tax cut portion of HB 3 is set to expand each year, costing the state more money annually without sending any additional funding into classrooms.  \nWhile HB 3 makes an ongoing financial commitment to property tax cuts, no similar promises are made to the children of Texas to keep pace with rising future education costs, reform special education funding, or improve funding for the 80 percent of English learners 1 left behind in HB 3.  \nMost concerning is the elimination of the fundamental tax equity principle that school districts must receive similar revenue for similar tax effort, which is measured in school property tax rates. The largest portion of the total school district tax rate is now based on the amount of property value growth within the district, rather than everyone taxing at the same unified rate. School districts with high property value growth will see rates plummet while those with slower growth will see their rates remain stagnant. Because all districts will still be entitled to similar levels of revenue for that portion of the property tax, regardless of tax rate, the state is now requiring school districts with less robust economic growth to subsidize lower tax rates for school districts seeing the fastest economic growth.  \nThe costly property tax cuts in HB 3 will put a strain on the state’s 2022-2023 budget and limit resources available for keeping school funding whole as our districts work through the COVID-19 crisis and accompanying instability in enrollment and attendance. The first priority of the 2021 Legislature should be to ensure our schools have stable funding throughout this school year and the coming biennium, and add any additional resources needed to combat losses of learning and pivots in service delivery. To accomplish this, the Legislature should freeze the costly and inequitable property tax cuts for the biennium and put our students first.  \nThe connection between property taxes and funding public schools  \nFunding for Texas schools comes from state revenue and local property tax collections. Each school district’s demographics are run through a complex set of formulas to determine the set amount of funding that school receives for operations. Revenue collected from property taxes is used first to meet the set funding amount. If a district is unable to generate all its funding locally, the state provides aid. Districts that collect local revenue beyond the state’s set amount send the excess back to the state for redistribution to other districts and charter schools – this is known as recapture.  \nPrior to HB 3, when local economies were strong, property tax collections increased, and the state was able to reduce its contribution to schools while ensuring that schools still received the promised amount  \nof state/local total revenue. The school finance system therefore allowed the state to take advantage of higher local property value growth, which state budget writers plan for in their funding projections. As a result, the state’s share of school funding would decline each year.  \n\n| 70%\u003Cbr>60%\u003Cbr>50%\u003Cbr>40%\u003Cbr>30%\u003Cbr>20%\u003Cbr>10%\u003Cbr>0% | After HB 3 Investments State/Local Share Remains Uneven\u003Cbr>\u003Cbr>2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* |\n| --- | --- |\n|  State Share  Local Share |  |\n\nSource: Legislative Budget Board and Texas Education Agency; *estimates  \nIn a radical change, under HB 3, the state does not fully reduce its contribution to schools when property tax revenues increase. Instead, school districts must decrease their local tax rates once they hit a certain level of property value g","cbCaikJYKbZy6LlJ","https://ap.wps.com/l/cbCaikJYKbZy6LlJ","pdf",760134,"English","# A New Division in School Finance\n## High-Taxing vs Low-Taxing School Districts\n## The connection between property taxes and funding public schools\n## After HB 3: uneven state/local share\n## Statewide Tax Rate Compression","[{\"question\":\"What did Texas HB 3 change in school finance?\",\"answer\":\"HB 3 expands property tax cuts and replaces some lost local revenue with state aid, mainly general revenue, while not increasing the overall level of school funding.\"},{\"question\":\"Why does the document argue HB 3 reduces funding equity?\",\"answer\":\"It claims HB 3 eliminates a core tax equity principle by making district revenue outcomes depend more on property value growth than on similar tax effort at unified rates.\"},{\"question\":\"How does Tier I M\\u0026O tax rate compression work under HB 3?\",\"answer\":\"HB 3 reduces the Tier I Maintenance \\u0026 Operation property tax rate and sets future compression based on statewide property value growth estimates exceeding 2.5%.\"}]","A New Division in School Finance - High-Taxing vs Low-Taxing School Districts | PDF",1792047932,18]