Recapture, also known as Robin Hood, allows the State of Texas to remove local property tax dollars from public school districts. Legislators then use these dollars to help balance the rest of the state budget. Recapture began as a limited revenue source for education funding, but it has grown exponentially — now taking almost $3 billion in property taxes from Texas public school districts per year.
1. COST OF EDUCATION ADJUSTMENT: The formulas determining a district’s entitlement should adjust for the fact that it’s more expensive to educate students in certain parts of the state.
2. STOP THE SHELL GAME: Legislators should ensure that the dollars the state collects through recapture go to schools instead of other areas of the state budget.
3. TAXPARENCY: Property tax statements should clearly state how much of a property owner’s tax payment will be taken away by the state through recapture and how much will stay with local schools.
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In a 1993 response to court rulings calling for a more equitable school funding system, the Legislature began requiring school districts with higher levels of property wealth per student to pay recapture. Recapture is the process through which these districts send some of their local property-tax revenue to the state. The process is often referred to as Robin Hood. The intent of recapture is to help all school districts have roughly similar amounts of money to spend per child. But over time, recapture has grown considerably, and today recapture payments have grown so large that the state uses those dollars to support a considerable amount of the state’s funding obligation for education, therefore freeing up state funds to help balance the rest of the state budget.
The state took about $2.96 billion in local property tax dollars out of Texas communities during the 2020-21 school year through recapture, according to January 2022 data from the Texas Education Agency. Those recapture dollars came from 158 Texas school districts.
The system of funding public education relies heavily on local property taxes. And the more the system relies on property taxes, the more it relies on recapture. When property values increase, which they have in recent years, then more of a district’s local revenue becomes subject to recapture unless the district is growing by a proportional amount of students, or if the state chooses to increase its investment in public education or to invest more in property tax rate reduction.
Approximately 160 school districts are expected to pay recapture during the 2021-22 school year. Many of these districts, such as Austin ISD, Houston ISD and Dallas ISD, serve students that predominantly come from low-income families. These districts are limited in their ability to meet their students’ needs, because they have to send away much of what they collect in local property taxes. But if they reduce their tax rates, they will be penalized by the state, and be allowed to keep even less of their local funding. Districts are subject to recapture due to property wealth within the district, but property wealth often does not correlate to personal wealth among the families of students served by the district. Recapture districts can be found throughout the state. Some are very small, while others are some of the largest districts in the state. They are rural, urban, suburban, and every circumstance in-between.
It’s not that simple. If a district reduces its tax rate beyond reductions that are mandated in state law, the state reduces the district’s entitlement, which is the amount of money that the state says a district should have to educate each student. Therefore, a district that reduced its tax rate in order to pay less in recapture would likely pay about the same amount to the state in recapture, but it would have fewer dollars to educate students and pay teachers.