With limited resources and fiscal strain, it is more important than ever for states and school districts to use available funds for education as efficiently and productively as possible. This is even more true today in order to educate young people to a higher standard of true readiness for college or career. This paper reviews both economic and education research to identify characteristics that typify enterprises that are efficient. It focuses on the principles of x-efficiency set out in the work of Henry Levin: (1) A clear objective outcome with measurable outcomes; (2) Incentives that are linked to success on the objective function; (3) Efficient access to useful information for decisions; (4) Adaptability to meet changing conditions; and (5) Use of the most productive technology consistent with cost constraints. The paper evaluates the degree to which Texas in its law and policy follows these principles in its use of resources in two areas crucial to the successful education of students: the effectiveness of teachers and the impact of the instructional materials they use. The paper focuses on Texas, but states across the country can draw upon findings presented here and apply them to their own policy discussions. Other states have clauses in their state constitutions mandating efficiency, and the methods used here to assess efficiency are likely to apply in these states too.