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Tex. Court Overturns State School-Finance System for 3rd Time

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The Texas Supreme Court late last week struck down the state's school-finance system for the third time in 28 months, forcing lawmakers once again to develop a new funding plan.

While the court's 7-to-2 decision to invalidate the system was widely expected across Texas in recent weeks, the justices surprised observers by voting 5 to 4 to allow the legislature to wait until next year's regular session to come up with another solution to the problem of funding disparities between rich and poor school districts.

Although the extension will give lawmakers more time to prepare a plan, it is unlikely to change the alternatives, according to legislative aides. Most observers believe that the only options available to the state are either a massive district-consolidation program or constitutional amendments establishing a statewide property or income tax.

The court's ruling decisively struck down the county education districts that lawmakers created last year to combine tax bases and distribute funds among the state's nearly 1,050 school districts. Lawyers for several wealthy districts that lost significant property-tax revenue under the system successfully argued that the county districts, which imposed a mandated property tax rate, essentially created a statewide property tax in violation of the state constitution.

"The state has moved from encouraging school districts to contribute local tax revenue, to conditioning state funds on such contribution, to mandating a specified contribution,'' wrote Justice Paul A. Gonzalez for the majority. He added that while the change has reduced disparities, it has done so without obtaining voter approval for a new tax.

"The very purpose of the C.E.D.'s is to levy a uniform tax statewide," Justice Gonzalez wrote. "C.E.D.'s are mere puppets; the state is pulling all the strings."

Justice Lloyd Doggert, however, criticized the majority's action in his dissenting opinion.

"For the school children, there is delay--perhaps indefinite delay-in achieving equal educational opportunity; for the taxpayers, most probably an income tax," he wrote. "This is the unspoken but very real message announced here."

Justice Doggert criticized the 65 page majority opinion as "a morass of contradictions and excuses."

Taking the Pressure Off

While the stern ruling was widely anticipated, the participants in the debate expressed both surprise and relief that the court gave the legislature until June 1, 1993, to create another system.

"They wanted to avoid a highly charged special session that nobody wanted," said Schuyler Marshall, a Dallas lawyer for three plaintiff districts. "This takes the pressure off everybody and gets us through the November election."

The break was also appreciated by Gov. Ann W. Richards, who did not take exception to the court's findings.

"We are grateful that the court has allowed us almost two years to come up with a new plan because we need to examine very carefully where we go from here," she said.

A more spirited reply, however, came from Senator Carl A. Parker, chairman of the Senate Education committee and chief author of the system that was struck down. Mr. Parker had argued prior to the ruling that the legislature had reached the best plan politically achievable.

"The tragedy of court involvement has once again been ably demonstrated by the supreme court," Mr. Parker said last week. "The courts' involvement already has robbed Texas children of some quality in education and continued court involvement will only make it worse."

Officials last week emphasized the tough task that awaits lawmakers after the supreme court once again endorsed the same strict standard for spending equality that had been put forth in its original Edgewood v. Kirby ruling in October 1989.

Senator Parker said any improvement to the law will only come as the result of cooperation between wealthy and poor districts--a combination that has been hard to come by in the state capital.

"I will wait and see if the education community can come together with a consensus plan or if they will continue to divide themselves into ever smaller interest groups," he noted.

Tax Bills Still Due

Although lawmakers found little cause for optimism after the decision, school officials applauded the court's decision to require property owners to pay the county-education-district taxes for both 1991 and 1992.

Many educators had envisioned a nightmare scenario under which the court overturned the system and imposed a short deadline, inciting political rebellion and leading taxpayers to seek refunds from school districts.

"Texas districts are breathing a sigh of relief," said a statement from the Texas Association of School Boards. "This decision means that taxes will be collected on schedule and school doors will remain open."

In the days before the ruling, a flood of lawsuits were filed contesting the property taxes due Jan. 31 in the event the school-finance system was struck down. Thousands of businesses were thought to have joined the lawsuits, but observers said the challenges appear to have been rendered moot by the court's ruling.

"If they sue and appeal, they are going to end up before the very same court," said Dan Casey, government relations director for the T.A.S.B. "1 think people will get the message that they should go ahead and pay."

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