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Wealthy Districts Seek To Replace Lost Local Funds

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Feeling the brunt of court-ordered state school-finance reforms designed to reduce the gap between rich and poor schools, wealthy school districts in some states are looking to the creation of local education foundations as a way of restoring programs and keeping local funds out of reach of state policymakers.

In Texas, for example, the most recent school-funding overhaul was financed largely by forcing wealthy districts to raise their property-tax rates and then distributing the proceeds among their poorer neighbors. Although subsequently struck down by the state supreme court, the law prompted the creation of several school foundations in well-to-do areas and has given a new zeal to already existing private funds.

Meanwhile, leaders of local education foundations in California-- where the funds became popular after school-finance changes and a property-tax-limitation measure in the 1970's--report inquiries from across the country as wealthy school districts seek to protect their resources from lawmakers strapped for cash to fund finance and classroom reforms.

"The school district is the core of this community,'' said Cora Amerman Blackbird, the founder of the Eanes Education Foundation, which aids a school district located outside of Austin, Tex. "We had to do something. People have worked too hard to build this fine school district to watch it cut those programs.''

Others worry, however, that the funds thwart state efforts to level the playing field among wealthy and poor school districts.

The Edgewood school district, which spearheaded the lawsuit that forced Texas's new finance laws, for example, has little prospect of raising much private money from its mostly low-income residents, noted Craig Foster, the executive director of the Equity Center, a coalition of poor school districts in the state.

"You can do this in Eanes,'' Mr. Foster observed. "But for poor school districts, they really don't have a way to make it go--so Edgewood loses again.''

The Eanes foundation, which launched its first fund-raising campaign last fall, expects to collect $80,000 for the district in its first year. That represents a significant step toward offsetting the $300,000 that Texas officials estimate the district lost this year under the state's new finance plan.

'Talking About the Basics'

In Highland Park outside Dallas, one of the state's most affluent districts, the seven-year-old school foundation is looking beyond its previous efforts to create an endowment to distribute $1,000 awards to top students and teachers.

After seeing about $2.6 million in local property-tax revenues go to poorer districts, officials now view the foundation in a new light.

"We're beginning to see that it has greater potential for funding than we ever thought we would need,'' said Judy Gibbs, the vice president of the school board and the district's tax-exempt foundation.

The foundation board has recently doubled in size and vowed to quadruple its endowment in two years.

A similar deployment has begun in the Alamo Heights school district outside San Antonio.

In the past year, the Alamo Heights foundation has raised $170,000 to help fund the district's technology efforts and supplement library and equipment resources.

"Where we used to be talking about keeping Alamo Heights at the cutting edge, we're talking about the basics now,'' said Charles L. Slater, the superintendent of the district, which lost about $3.5 million to the state's recapture program. "This has definitely changed both our mission and our tactics, and there's a lot more motivation.''

More Efficient Than Taxes

"Ideally, the foundation would become a permanent source of funding because it's so much more efficient than [property] taxes. It could help us keep taxes down,'' noted Ms. Gibbs. "If we could have people contribute through the foundation rather than by paying taxes, it would be much more efficient.''

Observers said that for many of the state's wealthiest districts, such a scenario makes sense. In Highland Park, for example, raising $2 million in foundation funds would bring the district as much revenue as collecting $4.6 million in property taxes.

Officials in Texas, as in other states, expect any major school-funding reforms to force the state's wealthiest districts to surrender some local funds. Additional efforts to impose spending caps on wealthy districts, moreover, will probably increase the pressure to seek private funds.

Still, Mr. Foster expressed surprise at how fast the better-off districts are moving to replace lost funds.

"The crisis hasn't really hit yet in the sense that they haven't cut to the point where it really hurts,'' he said. "When it really gets cooking is when one or two of the wealthy districts that lead the way get hit with the spending caps. That's when another 100 or 200 districts are going to be doing the same thing.''

Growth in California

California educators have seen local foundations mushroom from a handful in the early 1970's to several hundred today. The growth has been sparked by the state's school-finance overhaul and Proposition 13, the landmark 1978 property-tax limitation, both of which have severely limited local funding.

The Hillsborough Schools Foundation, for instance, now provides more than 7 percent of the budget for the affluent district in San Mateo County. Supporters say it has made the difference between a struggling school district and one that can offer innovative programs.

"It's making a huge difference,'' said Julie Switky, the fund's executive director. In 11 years, it has contributed $3 million to the district and built a $1-million endowment.

But other foundation officials in the state point out that even with large endowments and sizable annual gifts, they have not erased cuts.

Leaders of the Beverly Hills Education Foundation say they are content to cushion continuing financial blows.

"It's not for the frills anymore, it's for the basics,'' said Evy Rappaport, the fund's executive director. "Everyone is trying to hold on by their fingertips.''

Ms. Rappaport's foundation has access to impressive financial resources. A recent dinner-dance raised $160,000, and other events are expected to bring in about $350,000.

Nevertheless, the district has suffered discouraging basic-program cuts. Class sizes have risen from 15 students to 40, Ms. Rappaport said, and the district's language department has been scaled back to French, Spanish, and Latin.

Ms. Rappaport and others said foundations are increasingly being viewed as a last-ditch vehicle for expanded academic programs in top school districts. She cites telephone inquiries from across the country seeking advice on how to launch and sustain such funds.

"More and more people are realizing that it's become a necessity,'' she observed.

A Costly Short-Term Fix?

But even some foundation officials wonder whether the rush by wealthy districts to solicit more school funding is wise.

In Massachusetts, where the economic recession has done some of its worst damage, districts are creating foundations to squeeze more money from sources across the state.

Charles H. Gibbons, the executive director of the Boston Plan for Excellence in Public Schools, questioned whether the solicitation frenzy will be a costly short-term fix.

"Clearly most of these are thinly veiled fund raisers to replace services that municipalities previously provided,'' Mr. Gibbons said, warning that given the dissatisfaction with school achievement and tough economic times, seeking funds to maintain existing programs may do more harm than good.

"I can see the private sector stepping back until the dust settles--until legislatures have wrestled with school-finance systems and interest income goes up once the economy stabilizes,'' he added.

Many observers also question whether the foundations unfairly perpetuate inequities.

"It's a sticky issue a lot of these funds are going to have to look at,'' said Amanda Broun, the national public-policy director for the Public Education Fund Network. "Whether you look at private sources in state allocations is an open question.''

But others suggest the private funds are not relevant to state finance policies. "I don't think equity is an issue when we're not talking about public funds,'' argued Mr. Slater of Alamo Heights. "I would hate to say at some point that education is limited to whatever the state can provide.''

Moreover, warned Ms. Blackbird of the Eanes district, parents who are discouraged or blocked from conducting their own efforts to improve the schools may abandon the public-education system altogether.

"It's not the best of all worlds,'' said Ms. Switky of the Hillsborough, Calif., foundation. "But a lot of communities feel like we've got to do what we can for our own.''

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