NATIONAL FORUM OF EDUCATIONAL ADMINISTRATION AND SUPERVISION JOURNAL

VOLUME 31, NUMBER 3, 2014

THE RELATIONSHIP OF THE TEXAS

SCHOOL FOUNDATION PROGRAM
EQUITY TO STUDENT PERFORMANCE
AND SOCIOECONOMIC STATUS
Scott Niven
Red Oak Independent School District
Chuck Holt
Ray Thompson
Texas A&M University-Commerce
ABSTRACT
This study measured the level of fairness of financial resources available to
school districts in the state of Texas (e.g., Senate Bill 1 from the 81st Texas
legislature) by examining the per student resources available to all Texas public
schools during the 201112 and 201213 academic years. The fairness of
allocations was determined using industry standard horizontal equity formulas.
Vertical equity was assessed through a simple regression to better understand
the relationship between the greater of district target revenue or revenue at the
compressed rate and district levels of poverty. Additionally, this study
measured the significance of the correlation between district SES, student
academic achievement, and available per student financial resources using
multiple regression. Data from the 201112 academic year, which included the
Adequate Yearly Progress bridged Texas Assessment of Knowledge and Skills
(TAKS) scores for English and math from standardized testing in 2012.

Introduction

ublic school funding primarily comes from three sources: local

property taxes, state funds, and federal funding sources;
however, local property taxes and state revenue generate the
majority of funding (TTRA, 2012). From the inception of public
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education, people have questioned the fairness or equitability of

resource allocations to public schools as well as the amount or
adequacy of fund allocations to meet the requirements of state
constitutions and state legislative demands.
SB1 (2011), passed by the 82nd Legislature in 2011, reduced
funding of public education for the first time in over 60 years).
Specifically, funding was reduced by over $5.4 billion for the
biennium, which included $4.0 billion in the FSP through percentage
proration in the 201112 academic year and an equity formula in the
201213 academic year. Even though the formula for the 201213
academic year was designed to improve equity between school
districts, target revenues or revenues at compressed rates, per district,
ranged from a low of $3,626 to a high of $12,087 per Weighted
Average Daily Attendance (WADA). In fact, over $1.4 of the $5.4
billion reduction in public education came from special programs that,
in many cases, focused on low SES populations, or those with the
highest level of need for equity (TEA, 2011a). This reduction in public
education funds is alarming. Research indicates a clear link between
(1) student academic success and available resources and (2) low SES
students and success on state standardized tests (TEA, 2011b).
Sampson, Vaughn, and Holt (2013) noted that Judge John
Dietz addressed the efficiency issue of SB1(2011) by signing courts
ruling stating the school finance system violated the efficiency
provisions of Article VII of the Texas Constitution in that it fails to
provide substantially equal access to revenues necessary to provide a
general diffusion of knowledge; was not adequately funded and
therefore fails to make suitable provision for the support and
maintenance of the system in violation of Article VII of the Texas
Constitution; and finally the school finance system had created a state
advalorem tax in violation of Article VII of the Texas Constitution (p.
23).
Restoring state funding, which was cut in the prior legislative
session to public schools, became a priority in the 83 rd legislature. The

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Appropriations Act for 2014-15 was signed in June 2013. Article III of
the act includes $37,492.5 billion for public education, which
represents an 8.0 percent increase over the 2012-13 biennium
(Legislative Budget Board, 2013). Colbert (2013) reported that the
basic allotment will rise from $4,765 per pupil to $4,950 for Fiscal
Year 2013-14 and $5,040 for Fiscal Year 2014-15. Outside the FSP,
instructional materials allotment is increased by $230.6 from the 201213 biennial level of funding.
However, the equitability of distribution of funds continues to
be questioned. Judge John Dietz will open another round on public
school finance in January 2014 (Sampson et al., 2013). He will hear
evidence to determine if the public school finance system is
constitutional.
Significance of the Research
With respect to the economic downturn, structural deficit,
higher standards, and political turmoil, a better understanding of
financial issues that school districts face and correlations to student
performance is imperative. This study attempts to illustrate the
inequities between school districts and enlighten legislators on the
consequences of their decisions.
Purpose of the Study
The purpose of this study was to determine whether the
revenue structure created by HB 1 and modified by Legislative Act in
HB 3646 and SB 1 produced an inequitable structure that benefited
higher SES districts in the allocation of available resources. This study
examined the per pupil level of equity in the 2011-12 Texas FSP
through the target revenue structure as reflected in SB 1 and compared
it to the district Adequate Yearly Progress (AYP) bridged TAKS
standardized test scores in reading, English language arts (ELA), and
math.

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Review of the Literature

The question of the influence of per student funding on student
performance is not new. Proponents on both sides of this debate
believe their position is based on corroborative research. A
controversial study in 1968, by James Coleman, received a significant
amount of attention from researchers after concluding that actual
student resources had only a small effect on student achievement.
Other studies have been conducted using data from standardized
measures of student achievement with independent variables of
teacher, student, and district characteristics in an attempt to correlate
the effects of student outcomes (Lpez, 2007).
In 2002, Card and Payne studied the effects of court-required
equalization between wealthy and poor districts, nationwide, on
student college entrance tests across diverse family backgrounds.
These researchers concluded, There was evidence to support that
equalization of spending leads to a narrowing of test score outcomes
across family groups (p. 49). Loubert (2008) examined academic
achievement on standardized tests before and after court-mandated
increases in per student funding occurred. He concluded that courtmandated increases in funding from Dallas County, Texas propertyrich to property-poor school districts resulted in an increase in overall
student achievement.
Dee (2005) conducted a study in a response to school reform to
measure factors such as increased accountability, vouchers, or charter
schools, and characterizing schools with bureaucratic malfeasance and
exposing schools to competitive pressures that were enacted by state
and federal government. Dee believed the research on school quality
examined the effect of additional resources without regard to how
districts spent the money. Grissmer, Flanagan, and Williamson (1997),
concluded that money does not matter in student achievement.
The Education Trust (2008) cited the need for experienced and
qualified teachers in the classrooms of low-income and minority

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students as a primary factor to success. The Education Trust noted that

teacher experience and qualifications was the most important step to
closing the academic gap and ensuring student success.
Equity in Public School Funding
In modern societys mature system of public education, the
question is what constitutes fair and equitable distribution of resources
(Boone, 2009). According to King, Swanson, and Sweetland (2003),
the definitions of equity range from the politically conservative to the
politically liberal and terms include commutative equity, equal
distribution equity, restitution equity, and outcome or positivism
equity. Commutative equity is grounded in the belief that distribution
is simply based on property rights or ownership without any outside
interference. Distributive equity calls for government intervention to
correct inequitable conditions that have been created by the
government or by a formula put in place by the government.
Berne and Stiefel (1999) developed and updated a framework
to assess the history of equity in school finance. They suggested a
school finance equity analysis to address six key topics: (1) ex ante
versus ex post analysis; (2) unit analysis; (3) objects of interest; (4)
group of concern; (5) equity concepts; and (6) concept of adequacy
(p.7).
Districts within individual states have historically focused on
the unit of analysis; however, the implementation of No Child Left
Behind (NCLB) of 2001 (U.S. Department of Education, 2001)
established national educational goals. Based on the national
requirements of NCLB, one might question the United States Supreme
Courts decision in San Antonio v. Rodriguez (1973), which argued the
economic disparity between districts, but dismissed it as not being a
federal government issue. Another important factor in developing an
assessment of equity is determining the objects of interest or key
variables to be used and appropriately correlated with variables.

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Equity variables need not be confined to educational inputs, such as

dollars per pupil or types of curriculum enacted. Outcome variables,
such as measures of student achievement, could just as easily be
considered for the unit of analysis (Odden & Picus, 2008).
Determining the appropriate equity principle used for measurement is
imperative to an appropriate evaluation.
Determining adequacy has been a primary focus of some
public school financial litigation, particularly in relationship to the
outputs of student learning or achievement (Odden & Picus, 2008).
Adequacy is especially important concerning standards-based
educational reforms. Odden and Picus suggested, A major difference
in delineating equity and adequacy is that equity implies something of
a relative difference, while adequacy implies something of an absolute
difference (p. 76).
Methods and Procedures
Measurements of equity were conducted using the target
revenue or revenue at the compressed rate from the SB 1 (2011)
revenues per student for the 201112 academic year and estimates for
the 201213 academic year. The researcher determined values and
relationships between school district SES and district equity, as
determined through revenues from SB 1, property values per student,
and a met standard from the bridged TAKS scores for ELA and
math from AYP for 201112 (TEA, 2011a).
Researchers use several measures to gauge the dispersion of a
single object including range, coefficient of variation, McLoone index,
Verstegen index, and the Gini coefficient. Measures of relationships
among two or more objects include the correlation coefficient, slope,
and regression coefficient (King et al., 2003).This study used the
following equity statistics: Gini coefficient, McLoone index,
Verstegen index, correlation coefficient, and path analysis. The first
measure of equity was the Gini coefficient, which originates from the
field of economics and measures income inequality with a variance

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39

between 0 and 1 (King et al., 2003). The closer the variance is to 0, the
greater the level of equity. This index is taken from the Lorenz curve
and plots target revenues in proportion to population or ADA. The
McLoone index is a statistic that is unique to school finance and
designed to measure the bottom half, below the median, of a
distribution to indicate the degree of equality for observations below
the 50th percentile. Most school financial data sets range from 0.7-0.9;
a value higher than 0.95 is desirable (Odden & Picus, 2008). The
Verstegen index is the opposite of the McLoone index in that it
measures equality in the top half of a distribution with a value of 1.0
or greater. The closer the value is to 1.0, the higher the level of
equality within the top half of the distribution.
According to Verstegen (1996), disparities in funding have
increased for districts in the top half of the distribution while
inequality has diminished for districts in the lower half of the
distribution. The correlation coefficient, or Pearson product moment,
indicates a correspondence between two variables with a range of -1.0
to 1.0. The closer the value is to -1.0 or 1.0, the higher the relationship
between the two variables (King et al., 2003). In this study, vertical
equity was assessed through a regression model. Vertical equity is a
term used to describe the unequal treatment of unequals, or those
students who deserve more services or revenue (Odden & Picus,
2008). A critical step in determining vertical equity is identifying key
characteristics that can be used as a basis to legitimately distributing
more resources (Odden & Picus, 2008).
Setting, Participants and Data Collection
All data were collected from 1,024 public school districts in
the state of Texas and were collected electronically from publicly
available data located on the TEA public website (TEA, 2012). Also,
the researcher used data from an Excel data spreadsheet provided by
Moak, Casey & Associates (2012). Data included weighted average
daily attendance (WADA) and revenue estimates for 201213 from

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the smallest school district with a WADA of 22.49 and a total target
revenue of $110,028, to the largest district with a WADA of
255,247.15 and a total target revenue of $1,308,848,644 (Moak, Casey
& Associates). Sampling errors were eliminated by using the entire
population, which included 1,024 public school districts.
Data Analysis
The Microsoft Office 2010 Excel (2013) application was used
to analyze the data from the 1,024 Texas public school districts to
determine the level of equity computations of the Gini coefficient,
McLoone index, and Verstegen index. The relationships between the
greater of target revenue per student and revenue per student at the
compressed rates, district SES, district property values, and district
bridged TAKS scores were determined using the statistical software
IBM SPSS (Version 12.0). The revenue data for the equity
computation were obtained from the TEA (2012) and Moak, Casey &
Associates (2012). The IBM SPSS program was used for the all
regression analysis computations. Data for the regression analysis
computation were obtained from Moak, Casey & Associates and the
TEA public website.
Results
This research utilized qualitative methods to obtain answers for
each hypothesis. These questions would define the relationship of the
Texas School Foundation Program Equity to student performance and
socioeconomic status.
The research hypothesis (H1) tested The target revenue
system or revenue at the compressed rate will maintain at a high level
of inequity between school districts was accepted. The second
hypothesis (H2) tested The higher the districts target revenue or
revenue at the compressed rate, the higher the districts standardized

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41

test scores, was rejected. The third research hypothesis (H3) tested,
Higher standardized test scores will have a high correlation with a
lower district poverty rate or SES, was accepted. The fourth research
hypothesis (H4) tested, District property values will have a low
correlation to district standardized test scores, was accepted.
Conclusions and Implications
The assessment of the relationship between the greater of
target revenue per student or revenue at the compressed rate per
student, district property wealth per student, and bridged TAKS scores
from standardized tests offers valuable information for educational
practitioners and the legislative body. First, the current system of
school finance in the state of Texas maintains a high level of inequity.
Second, the growing poverty level in Texas only highlights the
significance of the results from the regression model. Third, the
regression model indicated that there is no significance between
district property values and educational achievement. The higher the
appraised value, the less state dollars a district receives. Finally, the
significance of the correlation between poverty and test scores is
particularly concerning because of the large numbers of Texans who
live in poverty. In 2010, 4.4 million or 18% of Texans lived in poverty
(Moak, Casey & Associates, 2012).
The implications of this study indicate significant issues in the
funding streams available to public school districts. Since the GilmerAiken Act of 1949 (as cited in Mossman, 2007) seven separate class
action suits concerning some component of funding have been
adjudicated. The most recent suit, West Orange Cove CISD v. Neeley
(2005), resulted in the creation of House Bill 1 (HB 1, 2006).
Modifications posed by Legislative Act in House Bill 3646 (HB 3646,
2009) and reduced by over $4 billion in FSP funding in Senate Bill 1
(SB 1, 2011), have created a situation that places public schools at
odds with the state legislature. This resulted in a new class action suit
in 2012. (TTRA, 2012).

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A significant factor in the litigation is the equity within the

public school financial system. The results of this study indicate that
equity, as measured by the population of 1,024 public school districts,
is outside acceptable measures. In fact, four of six tests indicated
unacceptable levels of equity within the public school finance system.
All Texas children are required to pass a battery of
standardized tests. This study examined the relationship between
standardized test scores, funding and property value per student, and
SES. The relationship models indicated a clear and significant link
between the results of standardized tests and district SES. Considering
the lack of equity, vertical equity, and significant relationships
between test scores and funding or property value, these findings
could indicate a need to review the funding formulas to reallocate
resources with the goal of ensuring that educationally disadvantaged
students who live in poverty receive an adequate share of revenue.
Finally, this study highlights the need for continued wise
investment of resources. Investing in a qualified teaching staff, strong
instructionally focused campus and district leadership, and focus on
professional development will help mitigate the educational gaps
created by societal strata.

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