The purpose of this study was to review and explore the concept of lease purchase financing for the construction of new facilities in Texas. It sought to determine the impact of lease purchase financing and the characteristics of those districts that have utilized lease purchase financing for the purpose of new school construction. A two pronged approach was used for the study, both quantitative and qualitative. The study examined all school districts that utilized lease purchasing and examined various traits of the districts. Data was acquired from the Texas Education Agency and the Texas Bond Review Board. The qualitative portion of the study included interviews with superintendents of nine different Texas school districts that have utilized lease purchase financing. The study concluded that lease purchase districts were generally small school districts that were property poor and have high property tax rates. The study also concluded that the major reason for districts to use lease purchase financing was to avoid having to hold an election in order to gain approval for the sale of traditional general obligation bonds. Another factor identified was the availability of state funds through the state Instructional Facility Allotment. The study also concluded that while districts sought to provide better programs for their students through better facilities, that students actually suffer due to instructional funds being used for the payment of long term debt.

The purpose of this study is to determine whether our present method of financing buildings for Texas public schools is sound or not, and if it is not, to find a method that will be sound.

The need to establish appropriate, adequate, and decent educational facilities for school children across the nation has been well-established. The ability of school districts in each state to build these facilities has varied widely in the past. Historically, most facilities funding ability for school districts has come from the local community and has been tied to property wealth and the ability of the community to raise significant tax dollars to pay for school buildings. Responding to an expanding need for increased facilities funding and school funding litigation, the state of Texas added facilities funding mechanisms for public school facilities construction in the late 1990s. The purpose of this study was to determine whether or not the methods of facilities funding were equitable in the state of Texas. In this study, equity values were framed around three equity concepts established in school funding equity literature. These three concepts were (1) horizontal equity defined as the equal treatment of equals, (2) vertical equity defined as the unequal treatment of unequals, and (3) wealth neutrality defined as the absence of a relationship between school district wealth and the equal opportunity of students. The sample comprised 1,039 school districts in the state of Texas. Well-established equity measures were administered to data including capital outlays, weighted per pupil capital outlays, instructional facilities allotments, and school district wealth. Horizontal equity measures included the McLoone index, the Verstegen index, the federal range ratio, and the coefficient of variation tests. The Odden-Picus Adequacy index (OPAI) was administered to determine levels of vertical equity. Finally, wealth neutrality was determined utilizing the Pearson product-moment correlation test. Findings indicated that there were poor horizontal equity levels both in the top half and bottom half of the distribution of capital outlay spenders. A coefficient of variation test was administered to determine overall horizontal equity. While it did not indicate poor overall horizontal equity, the existence of extreme outliers in both halves of the distribution indicated that the dispersion of spending at the top and bottom of the distribution were inequitable. In fact, over the three year period of the study, fifteen percent of the top spending districts spent between forty and fifty percent of all capital outlay expenditures. Vertical equity was tested by implementing a court mandated equalization standard of eighty-five percent. When the OPAI was administered at this equity level, vertical equity was poorer than horizontal equity. Finally, while some state implemented facilities funding mechanisms were wealth-neutral, the overall funding system, with its heavy reliance on bonded indebtedness, was not.