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School-reform measures approved by the Texas legislature in 1984 are a "bold step" toward preparing the state's schools for the future, but their inadequate funding threatens both educational quality and equity, a study has concluded.

The report, issued recently by the Lyndon B. Johnson School of Public Affairs, notes that HB 72, the omnibus school-reform law, has had immediate positive effects. It cites increases in teacher salaries, a shift in school funding from local property taxes to state taxes, and a reduction in the disparities between poor and wealthy districts as financing changes that were successful "even in the first year."

But it warns that the gains are in jeopardy unless the legislature provides funding increases. Without4more funds--which will require additional tax revenues--several issues, including equalization, are likely to persist, the report said.

The study, directed by W. Norton Grubb, an associate professor, validated the need for close monitoring of the effects of reform. Dropout rates, for example, could double or even triple as a consequence of the law's minimum standards for promotion, graduation, discipline, and extracurricular-activities eligibility.

The study, based on interviews with local officials and data from state agencies, was funded by grants from Texans for Quality Education and the Lyndon B. Johnson Foundation.

A copy of the report, entitled "The Initial Effects of House Bill 72 on Texas Public Schools: The Challenges of Equity and Effectiveness,'' is available for $10.50 from the Office of Publications, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, Drawer Y, University Station, Austin, Tex. 78713-7450.

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