Markets Get Disrupted – School Funding Doesn’t Have To

A new study from Rice University’s Baker Institute for Public Policy predicts that Texas’ reliance on taxes from oil and gas production to fund public education could result in multi-billion budget shortfalls. This follows a similar study by Texas 2036 and the Center for Houston’s Future which also found that public education funding is dangerously vulnerable to fluctuations in global oil and gas markets.

Fortunately, such shortfalls are avoidable. As we explained in March of this year, Texas has the ability to future-proof education funding against oil market volatility by making structural improvements to the Permanent School Fund and Emergency Stabilization Fund, as well as improvements to revenue forecasting. Longer-term options include establishing a commission to explore further diversification of the state’s tax revenue base while minimizing the impact on economic growth and opportunity.

In fact, the Texas Legislature took critical steps towards shoring up education funding earlier this year.

With the passage of Senate Bill 1232 (87R) by Sen. Larry Taylor and Rep. Greg Bonnen, the Legislature helped ensure that the state’s investments are properly diversified, managed efficiently, and best prepared to handle potential volatility in oil and gas royalty payments. This will ensure that the newly established Permanent School Fund Corporation is prepared to help fund our schools for decades to come, even in the face of transitions and disruptions in energy markets.

At Texas 2036, we’re dedicated to promoting innovative thinking like SB 1232 that secure the sustained investments needed to provide all Texas students a quality education that prepares them for success in the future economy.

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