Size matters: Texas penalizes smaller school districts

Published 1:14 pm Monday, January 23, 2017

By Kenric Ward

Are smaller schools better schools? Texas is doing its worst to make sure they’re not.

The Lone Star State last year slapped a $244.7 million penalty on districts that had fewer than 1,600 students and spanned less than 300 square miles.

In all, 467 independent school districts were penalized because they failed to consolidate into larger systems.

Schools sued over the unequal funding formula, but the Texas Supreme Court upheld the policy.

“Our Byzantine school funding system is undeniably imperfect, with immense room for improvement. But it satisfies minimum constitutional requirements,” Justice Don Willett wrote.

State Rep. Dustin Burrows, R-Lubbock, says lawmakers need to stop abusing the districts, noting that the state penalty, which started as a 25 percent funding reduction, now tops 37 percent.

Four rural school systems in his district were penalized more than $32 million last year: $808,724 for Idalou ISD, $747,612 for New Deal ISD, $837,694 for Roosevelt ISD and $820,766 for Slaton ISD.

Burrows introduced HB 565 to equalize small- and large-district funding statewide.

Barry Haenisch, executive director of the Texas Association of Community Schools, said several districts are within a few square miles of meeting the 300-square-mile threshold. “A couple of square miles is costing them a half-million dollars every year,” Haenisch told

Julee Becker, superintendent of Slaton ISD, said the penalty is creating a teacher shortage there as instructors move on to bigger, wealthier districts.

The base salary for a Slaton teacher is $32,000 annually versus $43,000 in Lubbock, she told KAMC News.

The Texas penalty is predicated on the notion that smaller districts are less efficient. Among the 300 Texas districts that impose the highest allowable local property tax rate, the majority are smaller districts.

“When they launched this [penalty] in the 1970s, politicians wanted consolidation, so they tried to starve out the smaller districts,” said Ray Freeman, executive director of the Equity Center, a nonpartisan education research and advocacy group based in Austin.

Though school districts are creations of the state, Texas lawmakers have not taken direct steps to shut down the smaller ones.

“If you’re going to allow districts to exist, you need to fund them,” Freeman argues.

Smaller districts may lack economies of scale to provide a full range of specialized and high-tech classes, but their administrative cost ratios tend to be lower than larger K-12 systems, which are typically unionized.

Haenisch pointed out that one Panhandle school administrator serves as superintendent, principal, substitute teacher and even fill-in bus driver.

“Most small districts are running at maximum efficiency because their limited number of students requires them to make critical decisions on every dollar received. This is especially true with personnel,” he said.

Large urban districts ring up bigger overhead with multiple layers of non-instructional staff.

San Antonio Independent School District, for example, floated $450 million in additional debt last year and raised its taxes to the maximum rate – even as the urban system has multiple campuses on the state’s “inadequate” list.

In Port Aransas, meantime, that small beach town’s school district took a $703,000 hit from the state penalty.

“That’s 10 percent of our budget,” noted Superintendent Sharon McKinney, who bridled at the idea that consolidation is always more efficient.

“When you’re on an island, consolidation doesn’t make a lick of sense,” she told the Port Aransas South Jetty.

Asserting that the state’s complicated school funding formulas pick “winners and losers,” Freeman said, “It’s almost like we have 1,018 different formulas for 1,018 school districts.”

Freeman said the state could balance the “loss” of scrapping its small-district penalty by equalizing funding across the board.

Small, independently operated charter schools do not incur the state penalty.

Kenric Ward writes for the Texas Bureau of Contact him at and follow him on Twitter @Kenricward.