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Education-Finance Formula Is Biased, Texas Court Rules

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A Texas court has ruled that inequalities in the state's school-finance system amount to illegal discrimination against students in property-poor districts.

In a decision that could have grave consequences for the hard-pressed Texas treasury, Judge Harley Clark found the state in violation of its own constitution for failing to eliminate widespread financial disparities among its 1,063 school districts.

"The court does not detect in the evidence or the law a compelling reason or objective that would justify continuation of this discrimination,'' he wrote.

Mr. Clark, judge of the state district court in Travis County, has ordered the existing finance law "set aside,'' and has asked the plaintiffs to recommend an appropriate remedy in the case.

The decision, handed down last week, promises to create a thorny problem for the Texas legislature--which only three years ago passed a sweeping school-finance reform law that added billions of dollars in state aid, most of it directed to the poorest districts.

Under the new law's Foundation School Program, the state set a basic funding allotment for each student, with the size of that sum adjusted to reflect local costs and the number of students enrolled in vocational and other special programs. Small and rural districts also receive a special allowance.

Overall, the state pays for slightly less than 70 percent of the program's cost, but the specific share for each district is heavily weighted in favor of districts with little property wealth.

Although recent studies have found significant improvements under the new law, critics contend that the legislature did not go far enough, and that the system still works to protect wealthier districts in the suburbs of major cities.

"The state has simply understated the true cost of basic education,'' said Albert Kaufman, a lawyer for the San Antonio-based Mexican American Legal Defense and Education Fund.

Mr. Kaufman and other critics have argued that the funding formula also fails to give adequate weight to the needs of poor districts, which often have more students enrolled in compensatory, bilingual, and other special programs.

They have also pointed out that the formula contains no money for buildings and other facilities, a sensitive point at a time when the state has ordered across-the-board reductions in class sizes in the early grades.

In 1985, MALDEF and a number of the state's low-wealth districts reopened a suit they had filed in the early 1980's, before passage of the new law. The earlier suit was widely credited with forcing a reluctant legislature into approving the reforms, after the Texas attorney general publicly conceded that the state was bound to lose in court.

This time around, however, the state education agency has mounted a stiff defense, arguing that the new finance law makes equal resources available to the vast majority of the state's school districts, with only a few extremely wealthy and extremely poor districts left outside the middle range.

"The few districts that comprise the extremes of wealth and poverty should not cause the entire system of school finance to be deemed unconstitutional,'' argued William N. Kirby, the state's commissioner of education.

In his ruling, however, Judge Clark said the plaintiffs had demonstrated ample evidence of continuing discrimination. "The 200 school districts at the upper end of the wealth spectrum spent over twice as much per student ... as the 200 districts at the lower end of the wealth spectrum,'' he wrote.

Judge Clark was especially critical of the state's contention that the remaining financial inequalities are largely irrelevant to the quality of education--and thus do not violate the state constitution's guarantee of an "efficient'' system of public schools.

"This court ... does not sit to resolve disputes over educational theory, but to enforce our constitution, '' the judge wrote. "The question of discrimination in educational quality ... looks to what the state provides its children and their school districts, not what the students or the districts are able to do with what they receive.''

State education officials immediately announced their intention to appeal the judge's decision. Under Texas law, the state could ask that such an appeal be sent directly to the state Supreme Court for final adjudication. Mr. Kaufman, the plaintiffs' lawyer, declined to say whether he would agree to such a move, which could eliminate a year or more of protracted litigation.

Although Mr. Kaufman has delined to discuss his intentions in proposing a remedy to Judge Clark, state policymakers are already fearful that the judge will order huge increases in state aid.

The state is already facing the need for a $400 million increase in the foundation program to pay for increased school enrollment. At the same time, the state's Republican Governor, William P. Clements, has called for an overall cut in education spending to help close a budget deficit that is estimated to reach $5 billion in the fiscal biennium that begins this August.

But Mr. Kirby, the Texas education commissioner, has issued a clear warning to policymakers not to undercut the state's legal position by scaling back the ambitious reforms approved in earlier, better times.

"Any budget cuts,'' he said in a statement, "would seriously affect our standing in the appeal of this suit and most likely would result in a retreat from the progress we've made in equity over the past several years.''

Like several other states in the region, Texas is suffering through its worst fiscal crisis since the Great Depression, due to the collapse in oil prices and the resulting decrease in state tax revenues.

Gib Lewis, the powerful Speaker of the state House of Representatives, told reporters last week that Judge Clark's ruling could prove even more costly than a recent federal court order demanding sweeping improvements in the state prison system. Governor Clements has said the state will need to spend an additional $500 million over the next two years to comply with that ruling.

Other observers contended, however, that the state does not necessarily need to resolve the problem out of its own treasury. The legislature, one lawyer argued, could ensure equality by aggressively redirecting local tax revenues from wealthy to poor districts.

But few expect the state's historical aversion to such redistribution policies to change. Even in other, relatively more liberal states, observers note, the general pattern has been for the state to pick up the added costs of complying with unfavorable equalization rulings.

In California, for example, the state's share of total education spending shot up from slightly less than 40 percent to nearly 70 percent in the wake of a 1974 school-finance ruling from the state's Supreme Court.

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