In this episode, our panelists discuss the “Legacy Education Fund,” a new, proposed idea about a public education endowment that could move Texas beyond two-year budget cycles and establish a lasting investment in our public schools.
This episode of Intersect Ed was taped on the morning of Friday, November 14, 2025, just a few blocks from the Capitol, during the 2025 Texas Tribune Festival. Our panelists discussed the “Legacy Education Fund,” a new, proposed idea about a public education endowment that could move Texas beyond two-year budget cycles and establish a lasting investment in our public schools.
Host Morgan Smith was joined by David DeMatthews, a professor in the Department of Educational Leadership and Policy at The University of Texas at Austin, Mark Estrada, the Superintendent of Lockhart ISD, and Libby Cohen, the Executive Director of Raise Your Hand Texas.
Morgan Smith:
Welcome to a very special live recording of the Intersect Ed podcast where the stories of public education policy and practice meet. I’m your host, Morgan Smith.
Today, the morning of November 14th, I am joined by three guests in Austin at the Texas Tribune Festival to discuss an innovative, long-term strategy aimed at increasing revenue for Texas public schools, an education endowment fund. Let’s meet our guests now.
Libby Cohen:
This is Libby Cohen, executive director of Raise Your Hand Texas.
David DeMatthews:
David DeMatthews. I am a professor in the College of Communication at the University of Texas at Austin.
Mark Estrada:
Mark Estrada, superintendent of schools in the Lockhart Independent School District.
Morgan Smith:
Hi everyone. Thanks for being here this morning. We're really excited to be up here on stage to discuss a possible new strategy for funding public education, an education endowment fund. So Libby, I wanted to start with you to see if you could describe the concept behind the Legacy Education Fund as we've been calling it, and talk a little bit about why now is the right time to be having this conversation.
Libby Cohen:
Thanks, Morgan, and I'm excited to be here and to be here with esteemed colleagues like Mark and David. So looking forward to the conversation.
So the Legacy Education Fund would be a new endowment for public education in Texas that would provide a continuously increasing source of revenue for public schools. So the use of an endowment to fund public education is not revolutionary. It's something that happens in lots of states all across the country. In fact, Texas does have an endowment already, the Permanent School Fund. The really important twist here is that we'd like to structure this endowment such that the money that it brings to public schools would actually grow over time, which is different from any of the existing revenue sources currently on the books for Texas public schools. So we can talk as we go on a little bit about the difference between supplemental funding and supplanting funding, which is a big term in legislative school funding speak, but that's really the key here, is that continuously increasing source of funding for public schools.
Why is now the right time? Well, Texas has been doing great economically, and we have unusually robust reserves and unusually high general revenue that we've enjoyed over the last several sessions. So we see this in a couple different places. First, Texas's Economic Stabilization Fund, or our Rainy Day Fund is getting ready to hit its cap for the first time in its history. This was founded in the 1980s when I first showed up and started working in the Texas legislative world. It was at, I think 11 and a half billion dollars. This was back in 2019 and the sort of feeling then was, oh my gosh, 11 and a half billion dollars. That's a huge rainy day fund. It is now at 28 and a half billion dollars. So Texas has significant funds in its bank account that open up possibilities to invest, to create additional resources for priorities that exist now and we know are going to exist into the future as opposed to continuing to again have sort of a savings count that at this point is overflowing. That's not the only source of potential funding here. Texas also has significant budget surpluses the last couple sessions, which suggests that there are any number of funding streams that this endowment could pull from, just created a new endowment to support water infrastructure this session that is taking a percentage of sales tax. So there are a number of potential sources that we could look at, but in a moment of economic plenty, it would be wise for the state to think about how to do some really meaningful planning and investing for the future.
Morgan Smith:
And what exactly would it take for the legislature to create something like this?
Libby Cohen:
Yeah, so it's a heavy lift for the legislature to create a new dedicated, permanent source of revenue. They have to pass enabling legislation to put a constitutional amendment on the ballot. We just had our constitutional election a couple of weeks ago, so that's fresh on everyone's mind, what that looks like. But that requires a two-thirds vote in both the House and the Senate. So it is a high threshold of political will that we need before we can then send a proposition like this to Texas voters.
Morgan Smith:
And we'll continue to kind of get into the details of what this fund might look like. But I wanted to turn to David, our education policy professor here, to give us a big picture look at how does funding in Texas public schools compare to other states and what kind of research is out there that links funding to student achievement?
David DeMatthews:
Sure. So that's a great question. Funding really does matter, and Texas really is kind of lagging behind the rest of the country. And when we talk about comparisons for school finance purposes, we tend to look at it in three different buckets. So adequacy, so the extent to which there's enough money in the system to give every student the opportunity to reach a baseline level standard. There's effort. And so obviously some states have more robust economies, have rainy day funds and resources. Other states don't have that same degree of effort for a variety of reasons. And then there is an equity measure. And so it's not just about the average funding per child, but in schools or districts where children have more intensive needs, is there resources to match those needs in schools? And so in Texas, we generally are in the bottom 10 states in terms of both adequacy, so that kind of basic funding level, the effort based on how much resources we have, and our state does have a great deal of resources. And in terms of equity, all of those have been historic struggles in the state. We kind of fluctuate on these measures. Different economists, different ed policy researchers have different measurement tools. But all in all, we have a good amount of resources in our state. We are not dedicating the same sort of resources to public education that we see in a lot of other states, despite the fact that for Texas, it wouldn't be that much of a financial strain.
Morgan Smith:
And how much does funding matter when it comes to student achievement?
David DeMatthews:
It matters a lot. So there has been a few very popular economists that will travel the country talking about how funding doesn't matter, but it's a really pretty straightforward finding. Researchers both in education and in economics consistently find that funding does matter. They find a direct relationship between how well schools are funded and student achievement outcomes, but it also matters how you spend that money. And so just because you have resources doesn't automatically mean that test scores go up, right? The state, districts, schools, teachers, they all have to make wise decisions with those funds, but it truly matters and it matters beyond just kind of talking about STAAR scores. And I feel like a lot of times in Texas, we get so caught up on STAAR scores. And even though funding matters for STAAR, it also matters for students with disabilities in our state. We have really struggled to ensure that their high quality special educators in every school, the state has reported for more than two decades to the Department of Education staffing shortages for special education teachers and the related service providers that could provide a variety of more intensive services for students.
And so we have a large group of students with the most intense need. And because of, in part, poor investments, we're struggling to get a qualified workforce and keep them on the job. And so funding provides an opportunity both to improve technology, improve the access to quality resources, but also ensuring that there is a stable, qualified workforce that can work together. They can grow. Schools need time. Teachers need time to build relationships, to coordinate, to serve students with the most intensive needs. And so for a while now, we've really been in Texas with serving students with the greatest needs because those investments just haven't been there. And when in states that make those investments, guess what? We see better outcomes for all students, but we also see them for students that have the most intensive needs. So those resources, they really matter.
Morgan Smith:
And Mark, you're a superintendent. The things we're discussing up here are realities for you every day and these types of decisions. Can you tell us a little bit about Lockhart ISD and just what your thoughts are on the Legacy Education Fund if you think this is something that could help Texas Public Schools?
Mark Estrada:
Yes. First, thank you for the opportunity. I'm happy to be here and talk about what's happening across school districts across the state and Lockhart ISD. I mean, there are countless things happening that are great today in classrooms. Our teachers are working incredibly hard. Our principals are working incredibly hard. Our students, of course, are doing and accomplishing great things. And I think that's true in public schools across the state, and I think it's the reason why I'm so passionate about the need for continued investment when something you see every day working, when you see kids being highly successful, teachers being successful, you can't help but be encouraged to want to do more and continue to make those investments because at the same time, we need to do more. Lockhart ISD is a growing district. We're just outside of Austin, Texas, and while we're close to Austin, we're also pretty far from Austin in terms of resources and those types of things.
But I think that in my reflection, we need more predictability. I think that that is something that is a big challenge for school districts. I'll give you a quick example. Every February it's my birthday, so I'm kind of happy about it, but I also have great anxiety because I don't know when I wake up what our property value appraisal study is going to say, and if we're going to lose a substantial amount of money that year that we're already. In every year, the Texas funding system is so complicated. There are so many wrinkles and turns that it's not like we just create a budget and then we know and we can predict how much money is coming. There's such complexity to it that I think that we have to provide more predictability in it. I think that the legacy fund is ambitious, but in my personal opinion, maybe not ambitious enough.
When I hear Dr. Matthews talk about that we're in the bottom 10 across the United States in supporting our public schools financially. Libby, when you're talking about the access to funds that the state has, and I know I read about it all the time, we see state leadership constantly saying, we're the eighth strongest economy in the world. If we're a nation, that is kind of hard to hear that and then see that we're in the bottom in investment of public education. So I just think that we have to recognize the great things that our teachers are doing and stop taking them for granted. Stop, I heard you say one time, exploiting teachers' goodwill and passion, and calling for the job and really supporting them with the financial needs that they deserve.
Morgan Smith:
Yeah. Libby, I can think of a lot of questions about how a funding mechanism might work, what agency would administer it, how would the actual funding work? Would it be attendance based? Is there a role for the private sector anywhere? Talk about some of the opportunities that policymakers have to come up with a strategy that's just very tailored to their goals for public education in Texas.
Libby Cohen:
Certainly, you're exactly right that there would be a lot of questions and details for the legislature to figure out and Raise Your Hand has been very intentional about wanting to hold space to have a really robust conversation about how this fund could be used to the best effect rather than trying to be overly prescriptive about what this has to look like. That said, I think the most important conversation that lawmakers would have to have would be what the money would go towards, what efforts should be supported, and there are any number of really worthy and important needs within our public education system. So just to pick up on sort of two themes that Mark and David have mentioned, could you use a fund like this to actually ensure more predictability year to year for school districts, especially some of those for whom those differences in property value appraisals can be really meaningful?
Special education, one of the most important and some of the most inspiring work that public schools do is providing meaningful education opportunities to every single kid in Texas, including kids with learning differences, kids with all kinds of disabilities. That's some of the best work that happens in public schools, and it's also expensive. The state made progress in the last legislative session towards increasing special education funding, but it left a big gap still to be covered. That's an interesting thing to think about for something like this. Finally, there are any number of education policies or interventions that the state has identified as a priority for itself over the last several legislative sessions. The biggest one that we saw this last session was teacher pay when the state created a new allotment to support teacher pay across the state, and really thinking about that from several different facets, thinking about that from a geographic point of view and trying to address some of the geographic disparities in teacher pay.
Thinking about that from a tenure and longevity point of view, and also thinking about what merit pay could look like in the teaching profession. Teacher pay is a substantial long-term project. It's another one where Texas has lagged behind the rest of the country and making sure that we can continue to fund new teacher pay allotments and instruments in a way that increases over time would be a really worthy and sort of aligned to legislative priorities use of this funding. Continuing to support early education interventions that the legislature has invested in, as those expand. Continuing to support some of the classroom to career connection efforts that the state has started to invest in would also be really meaningful. So there is no lack of positive avenues for this spending, and I think that's really the conversation that's the most important one for lawmakers to be having.
Morgan Smith:
Yeah, and I'm wondering, Mark, if you had any thoughts on ways that lawmakers could structure this fund to make it most effective to support in supporting public schools?
Mark Estrada:
Absolutely. I heard a very important word that I'll start with enrollment based. I think that the need for enrollment based funding in Texas and having a mechanism is incredibly important that will do so much to allow school districts to properly budget and plan for serving the students that they serve.
Morgan Smith:
And that's distinguished from attendance based funding?
Mark Estrada:
Correct. So receiving funding based on the number of students enrolled versus how many show up. Currently in Lockhart ISD, we may have 95% of our kids show up that day. So we don't get 5% of that budget yet. All the expenses are still there. We don't get to tell 5% of our teachers to go home that day. They're still working as we need them. So that enrollment base is incredibly important. Having weights by student need, I think is another thing that a conversation would need to happen because there are students with different needs and sometimes the funding needs to support that. I think that regionally, one of the things that I've learned as I talk to colleagues across the state is that the cost of living is different in different regions. In Texas, one service may cost Lockhart a different amount of money than it may cost someone in West Texas or in Dallas or in Houston. So acknowledging that I think is important in any new funding system that we may create. I think being thoughtful and intentional about how inflation impacts school budgets is something that we've learned the last five years especially of how important that is to create a system that is being mindful of that fact. And I think last but certainly not least, is that this funding has to be supplemental providing funding that is just supplanting in other ways and shifting dollars, but the net value to school districts stays the same, I think that has to be addressed from the beginning.
Morgan Smith:
And David, there are some people out there, I don't know if they're in this room or not, but who might see an idea like the Legacy Education Fund floated and say, wait a second. I saw headlines that the legislature just gave public schools a historic $ 8.5 billion increase. Why do they need more money? Can you break down for us just what that increase actually meant in practical terms for Texas public schools?
David DeMatthews:
Sure. So it's important to take the $8.5 billion, which it's something, it's helpful to get something, especially if districts have been starved for a while. And if costs have been increasing, if we've been having more challenges, staffing positions. But a large part of that, $8.5 billion went to teacher raises and staff salaries, which is really important. We want to recognize the value and contribution, and really, we want to elevate the teaching profession as much as possible. Even with that investment. Texas still lags behind most states in terms of average teacher pay, and obviously cost of living in Texas has changed quite significantly in the last six years, even since there was a big school funding increase. And so a big portion of it went there. This wasn't really flexible for a lot of school districts, but it was helpful. There's been additional investments into special education because really the state system has really been struggling in a variety of ways.
There was an illegal cap on special education for some time in Texas that led to a big investigation. The pandemic kind of interrupted a lot of special education services. And so now across the state, we're still seeing a lot of students, potential students with disabilities, unable to get a timely evaluation. And so we desperately needed these investments not to have a quality system, but just to even get to a baseline place where we're actually complying with federal law. And even from what I'm seeing now, I still don't think that we're positioned well. I think it's really hard for districts to get the people they need. And so that $2 billion is helpful, but still not enough. And so there's been some other adjustments, a more marginal adjustment to the basic allotment. But if you look across the state, what are you seeing? You're seeing - still budget deficits - all throughout the state in big urban districts and suburban districts, and high-growth districts.
It's just a variety of financial problems. And unfortunately, Texas is so big. So I feel like some of our policymakers like to brag about how big these dollar amounts are. But in reality, other states, smaller states with less robust economies, are actually putting far more effort into funding their schools. I mean, Mississippi is outpacing Texas. We wouldn't stand for that in football, but unfortunately, this is the system that we have. And so it's a great start because schools have been starved. There's been inflation and pandemic. There's been these scandals around this special education cap. But for those who hear that high dollar amount, it is a lot. $8.5 billion is a lot of money. It's just not enough for the 1,200 school districts, the 9,000 schools, the 5.5 million children in our schools who are attending schools now that have been resource-starved for quite a long time, and in a state that has not kept pace, not only with rival states with robust economies, but some of the poorest states in the United States.
Libby Cohen:
Can I actually jump in? So I had the opportunity to be on a high school campus not too far from here in Bexar County a couple of weeks ago that I think really interestingly illustrates how the latest round of public school funding has kind of shaped life on a campus. So David pointed to the fact that about half the funding, the biggest piece of that funding by far was a teacher pay raise, which is a really good thing. So how this is playing out on this particular high school campus is teachers got a raise, which is great, at the same time with only a $55 increase in the basic allotment. That district, in order to cope with the fact that a new operational funding hasn't been able to keep up with the rising cost of all the operations, has had to increase their teacher-to-student ratio.
So yes, teachers got a raise, but they also just got more students in their classroom. And because of the way that changing that teacher-student ratio impacts scheduling, all the teachers just lost a planning period, which means that the teachers on this particular campus now have a planning period only every other day. So yes, they got a raise, and that's good, but in the same year, they got more kids in their class and had planning hours taken away from them, which means they're going to do more work at home. So, we have a long way to go despite the fact that we had substantial investment this time around.
Morgan Smith:
Yeah. Mark, can you offer a little insight? What has the funding increased looked like in your school district?
Mark Estrada:
I was going to jump in because when I hear the $55 in Lockhart ISD, and this is one of my major concerns with the Texas system, it's so complicated. We didn't receive that $55. Not to get into the weeds too much, but essentially what they did was supplant those funds by changing the yield on the golden pennies, which we had. And we're a property-poor district. So for districts like Lockhart, and I think there were maybe a hundred other districts around the state, we actually didn't receive that $55. It was a net wash for us because of our property values and because of our status with our golden pennies. So I would've loved to get the $55, but unfortunately, we did not receive it.
Other things that I think were helpful - special ed funding to help us with the valuations, I think that was a great thing. Funding for ROTC. There are other kind of weighted funding, but we won't see some of that money until 2026-27. So again, all the needs are still there. We were incredibly happy for our teachers to get a raise, but in Lockhart in particular, I'm not sure if that's why you invited me, but we didn't even receive that, which I think everyone just assumes that every district's the same. But in our current system, every district is not treated the same and is incredibly complicated, too complicated, maybe by design.
Morgan Smith:
I think we're coming towards the end of our time up here, but I wanted to see Mark again, turning to you, what could your district be doing more of? What are the biggest priorities that could be supported if you had the resources?
Mark Estrada:
Yeah, I mean, as I think I speak for my colleagues and other school districts across the state, we have to continue. It is hard because our teachers just received a raise, so we don't want to seem ungrateful for that. But the reality is teachers, especially in the more urban areas, they can't afford to live in the places where they're working. And even with the raise, teachers are leaving because they cannot afford to raise a family. They cannot afford to live in these towns. So we have to continue to increase the amount of funds that we're compensating our teachers and the benefits that we're providing them. Smaller class sizes has to be a priority, not just at the secondary level, but at elementary as well. I think that for a district like Lockhart who's fast growth, we continue to, that becomes hard to predict how many kids are going to show up.
So we're staffing based on last year's numbers and predicted enrollment increases. But sometimes more kids show up and we're having to strategize on that because we don't have the funds that we can say, okay, we're going to add all these teachers because this many kids are going to come. I think that response intervention, academic response intervention, behavioral response intervention is a great need across the state, especially after the pandemic and the learning loss that happened there. We have to continue to invest to support our kids. Bilingual education, special education are two groups of students who I worry about. Are we doing everything possible to ensure that their needs are being met? And we have to continue to do that as well as long-term maintenance and preventative capital improvements to our facilities. We currently have a school in Lockhart that just celebrated its 75th year, and I think we've done a good job of honoring the taxpayer funds on that building.
We still have kids learning there, but it's hard when your budget is so thin to replace HVAC systems just to make, and ensure that our kids and staff have a campus that they can be proud to learn. In our current budget, it makes it very challenging. I think we need to be strategic on how we're working with universities, how we're working with everyone to develop a pipeline of teachers, grow your own programs, those types of things, because that's a major area of concern. And then the last thing, insurance. There's not a superintendent that I talk to that isn't concerned about insurance and from a cost perspective, but also as a benefit to our staff. And I think that funding is needed so that we can provide the benefits that our teachers and our staff need in the school systems.
Morgan Smith:
Yeah. Well, thank you guys so much for talking with me here today. And thank you to our audience as well. I really appreciate it.
Thank you for listening. To continue to stay informed on critical public education issues, you can sign up online for Raise Your Hand’s Across the Lawn newsletter at www.RaiseYourHandTexas.org/Get-Involved.
Today’s sound engineer is Brian Diggs, our executive producer is Anne Lasseigne Tiedt, and our episode producers are Amelia Folkes, Amanda Phillips, Derek Castillo, Jay Moreno, and Joel Goudeau.