AUSTIN, TX – The Texas Education Endowment proposal emerges as a significant response to the escalating public school crisis in Texas. Amidst rising inflation, declining enrollment, and stagnant state funding, a prominent education advocacy group is proposing a new, long-term solution: a substantial education endowment. This initiative, championed by Raise Your Hand Texas, aims to provide a stable financial future for the state’s 5.5 million public school students, moving beyond the traditional two-year budget cycle that has left many districts in deficit. The Texas Education Endowment is a top trending news topic as lawmakers and educators debate the state’s financial commitment to public education, and a potential answer to the public education crisis.
The Escalating Financial Strain on Texas Schools and the Need for a Texas Education Endowment
The financial landscape for Texas public schools is increasingly bleak. According to a 2024 survey by the Texas Association of School Business Officials (TASBO), nearly 80% of surveyed districts are facing challenges with deficit budgets or insufficient resources. While less than a third reported deficits in fiscal year 2023, over half anticipate them for FY2024, with more than 50% planning budget cuts for FY2025. Currently, 43% of districts are undergoing significant cuts (Source: 3). The ongoing public school crisis necessitates innovative solutions, including the consideration of a Texas Education Endowment.
Several factors contribute to this crisis. State funding for public education has remained largely stagnant since 2019, with no increase to the critical “basic allotment”—the foundational per-student funding amount. This lack of adjustment has been compounded by decades-high inflation, which has driven up costs for essential items such as fuel, utilities, insurance, and supplies. The Texas School Coalition highlights that inflation impact schools, driving up mandatory school costs, while public school employees face rising expenses at home, making it harder to remain in the profession (Source: 33). For instance, the Carrollton-Farmers Branch Independent School District (CFBISD) reported a $42 million shortfall due to inflation and declining enrollment, noting that per-student funding, effectively stagnant since 2019, has decreased in real terms (Source: 27). A Texas Education Endowment could help mitigate these impacts.
Enrollment declines also play a significant role in Texas school funding, as funding formulas are largely tied to student attendance. A drop of just 10 students can mean a loss of $100,000 in funding for smaller districts, potentially impacting staffing and classroom availability (Source: 3). This issue highlights the ongoing challenges in Texas school funding.
Compounding these issues are the expiration of federal ESSER (COVID-19) funds and unfunded state mandates. Furthermore, the state’s recapture program, which transfers funds from wealthier districts to poorer ones, adds another layer of financial complexity to Texas school funding. The consequence of these pressures is stark: many districts are making difficult decisions, including staff reductions, program cuts, and even campus closures, to balance their budgets (Sources: 3, 10). The Texas Education Endowment is proposed to address these persistent budget shortfalls and the underlying Texas budget deficit.
A Bold Proposal: The Education Endowment Fund
In response to these persistent challenges, Raise Your Hand Texas has put forth a proposal to establish a “Legacy Education Fund,” a dedicated education endowment designed to provide a stable, long-term funding stream for Texas public schools (Sources: 2, 5, 10, 15). This education endowment proposal is a direct response to the public school crisis.
The core of the proposal involves seeding the endowment with $10 billion from the state’s Economic Stabilization Fund, commonly known as the Rainy Day Fund, which is projected to be near its legal cap. This initial investment is intended to grow through professional management, generating consistent returns. Raise Your Hand Texas estimates that the Texas Education Endowment could distribute over $560 million annually within its first five years, increasing to approximately $650 million by year ten (Sources: 2, 10). This establishes the potential of an education endowment fund.
The primary objective of an education endowment is to create a reliable financial cushion, insulating school funding from the annual political battles and economic uncertainties inherent in the state’s biennial budget cycle. This stability would allow school districts to engage in long-term strategic planning, invest in critical areas, and potentially increase per-student funding and teacher salaries, making Texas more competitive with other states in educational investment (Sources: 2, 5, 10, 15). The Texas Education Endowment is envisioned to be a transformative addition to Texas school funding.
Libby Cohen, executive director of Raise Your Hand Texas, emphasized the need to move beyond “temporary fixes” and establish a “bold, enduring investment in the future of every Texas student.” The proposed Texas Education Endowment would not replace the state’s existing Permanent School Fund (PSF), a multi-billion dollar trust that primarily guarantees local school district bonds and contributes to appropriations, but would serve as a new, additional source of revenue (Sources: 5, 10, 38).
Political Hurdles and Stakeholder Reactions to the Texas Education Endowment
The proposal for an education endowment has garnered interest from some Democratic lawmakers, who view it as a potential avenue for greater budget stability for schools (Sources: 2, 10). Representative Mihaela Plesa, D-Dallas, has noted the importance of “durability” for school districts to avoid ongoing deficits (Source: 10). The Texas Education Endowment is a key part of the discussion around improving Texas school funding.
However, securing Republican support for the Texas Education Endowment is seen as crucial, and the path forward is fraught with political challenges. While Governor Greg Abbott has championed workforce training, his administration has often linked increased public school funding to private school voucher programs, a stance that has historically stalled broader education funding packages (Sources: 12, 40). Some critics, including those like former Texas Education Agency official Robert Shaheen, question the premise of the crisis, arguing that declining enrollment, not a lack of state funding, is the primary issue and that the Rainy Day Fund should be preserved for true emergencies (Source: 10).
Concerns have also been raised by some legislators and education advocates about the potential for politicization in managing a large endowment, especially if constitutional amendments are required for its establishment (Source: 9). Critics argue that the focus should remain on immediate, structural reforms to improve educational quality rather than on creating a large, potentially risky financial instrument like the proposed Texas Education Endowment (Source: 9).
The Texas State Technical College (TSTC) recently received voter approval for an $850 million endowment, demonstrating a precedent for such mechanisms, though critics voiced concerns about transparency and oversight in that instance (Sources: 29, 30).
The Broader Context of Texas School Finance and the Texas Education Endowment
Texas’ approach to school finance has a long and complex history, marked by various reforms aimed at equity and adequacy. The state has established land grants, permanent funds, and intricate funding formulas over centuries. However, legislative action on funding has been inconsistent. For example, the 82nd Legislature in 2011 made significant cuts to public education funding due to a recession, and while some funding was restored later, it did not always reach districts in the same manner it was cut (Source: 25). The Texas Education Endowment seeks to correct these historical inconsistencies in Texas school funding.
In 2019, House Bill 3 provided a significant boost of $6.4 billion in new state funding and introduced property tax reforms (Source: 25). However, the $8.5 billion increase approved in the 2025 legislative session, while substantial, has been deemed insufficient by many district officials to offset inflation and address years of underfunding (Sources: 10, 15, 35). The Texas Tribune reported that while the funding increase was welcomed, lawmakers imposed stricter guardrails on how districts could use the money, which some leaders felt eroded local control (Source: 35). The Texas Education Endowment proposal aims to provide a more flexible and stable financial solution than these annual budget increases.
Organizations like the Texas School Coalition and Philanthropy Advocates have consistently worked to influence policy, advocating for sustainable and adequate funding systems (Sources: 4, 8, 11). The debate over school funding is often intertwined with broader political discussions, including school vouchers and accountability measures, which the Texas Education Endowment seeks to address by providing a dedicated, long-term funding source.
Looking Ahead: The Promise of a Texas Education Endowment
The proposal for a Texas Education Endowment presents a potential path toward long-term financial stability for Texas public schools, addressing the immediate pressures of inflation, enrollment shifts, and stagnant state appropriations. However, its success hinges on navigating a complex political landscape, securing bipartisan support, and addressing concerns about financial management and transparency. As Texas continues to grow, the fundamental question of how to adequately and equitably fund its public education system remains a critical and trending issue for the state’s future, making the Texas Education Endowment a vital consideration.
