While the Texas economy has become more diversified over the last several decades, our state’s oil and gas sector continues to play an important role in the state’s economy in terms of GDP and employment. It also remains a significant contributor to the state’s budget, and more specifically, K-12 public education funding. Over the last several years, it has become increasingly apparent that changing oil prices translate into significant impacts on our state’s economy and the state’s budget. This is because Texas’ oil production, now driven mostly by shale production, is highly sensitive to changing world oil prices, as we have seen during the pandemic.
In particular, the state’s K-12 educational funding system, which remains heavily dependent on revenues generated from the state’s exploration and production activity, is linked to global energy market trends and world oil prices. As a result, there is a growing concern that the underlying revenue sources for public education could be at risk as world energy markets transition. This study arose from a concern that trends in oil market conditions could lead to significant economic impacts on the state and, in particular, to a risk that the underfunding of the K-12 education system might endanger the public education of the future youth of Texas.