Finance Framework
Breaking down the complexities of public school finance
Texas Ranks 38th in Student Funding — And the Gap Is Growing
Texas ranks 38th among the 50 states in funding per student. Up until the latest Legislative Session, the Basic Allotment for Students had not been increased since 2019. Even with the additional funds from the state, funding has not kept pace with rising costs for personnel, safety, insurance and utilities.
But to understand the challenge better, we have to start at the beginning with a tale of two buckets.
Two Budget Buckets
School budgets and tax rates are made up of two parts: Maintenance and Operations (M&O) and Interest and Sinking (I&S). The money generated from each part can only be used for specific types of expenses. The General Fund is the District’s primary operating fund.
M&O
Bucket
Funds from the Maintenance & Operations portion of the tax rate cover everyday costs like supplies, salaries, fuel and utilities. School districts are at the mercy of state funding and local tax collections for the lion’s share of their operating budget. In fact, AISD qualifies for very little federal funding.
If state funding doesn’t keep up with rising costs, a school district can ask voters for permission to raise the M&O tax rate This is called a Voter Approval Tax Ratification Election or VATRE.
I&S
Bucket
Funds from the Interest & Sinking portion of the tax rate can only be used to pay off bonds that were used to build or improve school buildings, buy land, or purchase large items like furniture and equipment.
I&S funds cannot be used for operational costs, such as salaries and benefits. I&S funds may be used to pay down outstanding debt. A school district can take on new debt only after voters approve a bond proposition.
Projections vs Reality
When you see economic growth in the city of Abilene and surrounding areas, you probably think Abilene ISD is benefitting from this growth. In some ways, we do. Property value growth impacts the district’s I&S side of the budget and creates capacity for future school construction and proposed bond elections.
When property values increase, state funding actually decreases. The state created a formula where they get to collect any additional revenues on the M&O side.
Abilene ISD’s Revenue Sources
Local Property Taxes
31%
The primary source of local revenue is tax collections. AISD receives about 31% of its revenue for the general operating budget from local tax collections and other local sources. For the 2024-25 adopted budget, local funding sources were expected to reach $44,441,631.
State Funding
67%
AISD anticipated $95,152,527 in state funding for 2024-25. Approximately 67% of the district’s revenue comes from the state. The Basic Allotment for students – $6,160 – had not changed since 2019. This year, the State Legislature increased it a mere $55 per student.
Federal Funding
2%
Federal funding for Texas school districts varies from district to district based on federal grants and formulas. In AISD, federal funds make up only about 2% of our total operating budget. Most of that comes from indirect costs tied to federal grants and programs related to special education services. When the budget was adopted, AISD expected to receive about $2.4 million in federal funding.