In Texas, most school district operations, including teacher salaries and educational programs, are financed through state funding or local property tax revenues. As the local tax base increases, the school district receives less money from the state.
With the 2002-2003 school year, Round Rock ISD became subject to Chapter 41, the state’s wealth equalization school finance law commonly known as the “Robin Hood” plan.
This web page provides additional information on Chapter 41, its projected effect on Round Rock ISD, how the district is preparing for the loss of funds, and a way for citizens to contact state legislators regarding school finance issues.
What is Chapter 41?
Chapter 41, commonly known as the “Robin Hood” plan, is part of the Texas Education Code governing school funding that was enacted by the Texas Legislature to equalize wealth for educational spending. The provision is intended to “recapture” local tax dollars from “property rich” districts and redistribute the funds to “property poor” districts.
When do school districts reach Chapter 41 status?
A school district is considered property wealthy and subject to Chapter 41 status when its property value (the taxable value of all of the homes, apartments, businesses, land, and other taxable property in the district) divided by the number of students in the district using the “weighted average daily attendance” (WADA) formula, exceeds a state set threshold, currently set at $305,000. Local tax values above that amount become subject to equalization. Round Rock ISD became a Chapter 41 district in Fiscal Year 2002-03.
For Chapter 41 purposes, wealth is NOT determined by a district’s tax rate, the tax revenue generated, the income level of district residents. There is no way for school district officials to affect the district’s status and districts cannot opt out of Chapter 41 or refuse to make the recapture payment.
Who came up with the Robin Hood Plan?
The Chapter 41 law was created in 1993 by the Texas Legislature to equalize educational funding among school districts across the state. At the time, there was great disparity in the educational resources available for students who lived in districts without much property value and those living in wealthy districts. The courts said that wasn’t fair and legislators responded with this plan to take money from so-called wealthy districts and distribute it to poorer school districts.
The primary complaint with the system is that the money from Chapter 41 districts is being used to supplement state funding. The state now pays much less for education per pupil than the local districts. Chapter 41 districts argue that too much of the burden for educating students statewide falls on them.
Why is Chapter 41 a problem for Round Rock ISD?
The state’s Robin Hood plan means that there are fewer tax dollars available for the district’s maintenance and operations budget, which funds instructional programs, salaries, and operating expenses.
The loss of these funds has resulted in a number of decisions to reduce costs and raise revenue, including increasing staff ratios (resulting in fewer, larger classes); reducing the number of administrators; instituting an extracurricular activity fee; and raising the tax rate.
Why doesn’t Round Rock ISD just lower the property values or the tax rate to get out of Chapter 41?
For Chapter 41 purposes, wealth is determined by the assessed values of all the property within the district. Property values are determined by county tax appraisers, not by school districts. The appraisers use their experienced judgment and reported property sales to determine property values. For example, if a house sells for $200,000, appraisers will consider that a house of comparable size in that neighborhood would also be worth $200,000. All the new businesses, shopping centers, homes, and apartment buildings that are in RRISD contribute to the district’s wealth.
The tax rate (and tax revenue generated) has no effect on a district’s Chapter 41 status. Only the property values and the number of students attending school are considered in the Chapter 41 formula. Chapter 41 often causes districts to raise their tax rates because more revenue must be generated to offset the Chapter 41 payment. That payment must come from the district’s operating budget, which also funds salaries, academic, extracurricular and co-curricular programs, and other daily operations.
Districts by law are not allowed to raise their maintenance and operations tax rate above $1.50 per $100 in valuation. Once that cap is reached, districts have no choice but to cut programs or staff because the Chapter 41 liability must be paid regardless of how much revenue can be generated.
What happens to the Chapter 41 payment that RRISD sends in to the state?
The “recapture” payments submitted by Chapter 41 school districts become part of the revenue flow used to fund education in Texas. School districts receive state funding–or submit funding to the state through Chapter 41–based on the average number of students attending their schools and their property values. As values per student increase, state funding decreases.
Is there a requirement that a district receiving Chapter 41 funding be at the maximum tax rate or meet some accountability requirements?
No. The funds that school districts receive from the state are not labeled as coming from Chapter 41 recapture payments. The Chapter 41 payments simply become a revenue source used by the state to fund education. There is no requirement that districts be at the maximum tax rate or that they meet some kind of accountability or quality standard to receive state funding.
Round Rock ISD is considered a “wealthy” district but many families in Round Rock live paycheck to paycheck. Do we just bring all the districts down to the same level by taking away programs that our kids in Round Rock are benefiting from just because other districts don’t have these programs?
For Chapter 41 purposes, wealth is determined by the property values in the district (the assessed values of all homes, apartments, shopping centers, businesses, etc.) divided by the average number of students attending our schools. The income level of residents is not considered. The purpose is equalization among school districts and some legislators have said that the things Chapter 41 districts are worried about losing have never been offered in other areas—so yes, the intent is to put all districts basically on the same level.
The Round Rock ISD Board of Trustees and administrators are determined that students in our district will continue to get a good education, despite the budget challenges. They will consider every option to give students the opportunities they need.
What Can I Do About Chapter 41?
Only the Texas Legislature can change the law. There is general consensus that the system of educational funding in the state is not satisfactory and should be addressed by the Texas Legislature. The 2003 Texas Legislature approved a bill requiring that the “Robin Hood” system be revoked by 2005 but did not specify how education should be financed instead. Concerned citizens are encouraged to contact their state representatives and senators with questions and suggestions.