Allen ISD Recapture


    Background information about Chapter 49 of the Texas Education Code (TEC) which requires certain school districts to share local tax revenue.

    What is Chapter 49?

    Chapter 49 of the TEC makes provisions for certain school districts to share their local tax revenue with other school districts. The relative wealth of the school district is measured in terms of the taxable value of property that lies within the school district borders divided by the number of students in weighted average daily attendance (WADA). Chapter 49’s provisions are sometimes referred to as the “share the wealth” or “Robin Hood” plan because districts subject to Chapter 49 of the TEC are required to share their wealth with other school districts. The funds that are distributed by Chapter 49 districts are “recaptured” by the school finance system to assist with the financing of public education for all school districts.

    How did Chapter 49 come about?

    The current provisions found in Chapter 49 reflect a long history of school finance litigation that has focused on the equity of public education funding. The debate has long centered on disparities in educational resources between school districts. In 1971, Rodriguez v. San Antonio Independent School District focused attention on inequalities in funding among districts. The Rodriguez case initiated a series of efforts at school finance reform that has continued to influence the development of school finance policy in Texas. During the 1980s, equity litigation was strongly pursued by a group of school districts, led by the Edgewood Independent School District, resulting in four major state supreme court decisions. The Edgewood litigation prompted a number of attempts by the state legislature to address the equity problem. These included Senate Bill 1019 in 1989, Senate Bill 1 in 1990, and Senate Bill 351 in 1991; all were overturned by the courts as unconstitutional. In 1993, the Texas Legislature passed Senate Bill 7, which was based on the premise of providing all school districts with “substantially equal access to similar revenue per student at similar tax effort.” Providing districts with this equal access was achieved through a system that provides a guaranteed yield on each penny of M&O tax effort levied by districts and recaptures revenue on the tax collections of districts whose wealth per student exceeds the maximum wealth level. This system passed constitutional muster with the Texas Supreme Court.

    What is a Chapter 49 district?

    A “Chapter 49 district” is a district that is subject to the provisions of Chapter 49 of the TEC. The determination that a school district is subject to these provisions establishes two  maximum wealth levels. These wealth levels represent the maximum property tax base that a school district is allowed to retain at various levels of tax effort, as described in Texas Education Agency 18 Manual for Districts Subject to Wealth Equalization 2019-2020 School Year. 


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