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Texas Judge Orders State To Plan for Funding Crisis

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The Texas Education Agency has been ordered to begin making contingency plans for paralyzing the nation's second-largest state school system if lawmakers have not approved a new school-finance plan by June.

On the eve of the new legislative session, District Judge F. Scott McCown sent lawmakers a not-so-subtle reminder of the task awaiting them by calling in officials from the state education department and the comptroller's office to say it was time to begin planning for what many observers believe is a likely option.

The legislature faces its third attempt to draft a new school-finance plan that then must meet court approval. So far, the lengthy process has been marked by delays, defeats, and frustration.

Lawmakers have begun again to search for an answer, with the Senate starting work on a constitutional amendment last week. At the same time, other state officials will begin charting out the dark side of the scenario.

Judge McCown repeated last week that if the legislature does not meet the June 1 deadline, he will freeze all state funds as well as some local taxes that are redistributed by the state's county education districts.

Although the order would allow districts to continue spending locally generated funds, observers expect that most public school operations would be severely crippled after the deadline.

Beyond the legislature's dilemma, the situation has forced some tough new considerations for state and local school officials as well.

Shutdown Logistics

The judge's order requires Commissioner of Education Lionel R. Meno to begin contacting other states that have been confronted with school-finance lawsuits to discover their experience with threatened court-ordered school closings.

In addition, state officials are required to notify each Texas school district of its obligations under the court order, and to examine federal requirements for continuing programs funded by Congress.

The state's outside findings and its plans for shutting down funding to the state's 1,050 districts are due May 1.

Officials in the state education department said last week that they have only begun to think through the issues involved.

Observers said obligations to pay teacher contracts, which must be signed by April, and funding for year-round schools may be the chief concerns of state policymakers.

"We're still looking at the logistics, trying to identify the issues and questions involved,'' said Joey Lozano, a spokesman for the T.E.A.

The state agency has some background in the issue, having advised districts for an April 1991 deadline that lawmakers did not meet.

The legislature was able to pass a plan, however, by the time the first round of state-aid checks would have been frozen.

This time, however, the state supreme court has ordered Judge McCown to act swiftly and strongly in cutting off school funds and he, in turn, has asked officials for a more complete shutdown plan.

In his Jan. 11 ruling, Judge McCown said a well-conceived plan is necessary because of the strong possibility it will be used. "The court is advised that the legislature may not meet this deadline,'' he wrote.

Districts on Notice

Officials in the state comptroller's office said last week that they will devise a system for impounding any state and county-education-district funds that are frozen by the judge.

In offering initial guidance on what would happen to school funds, the judge set strict standards for tapping any state money once the deadline is passed.

"School districts and others have been on notice since June 1, 1987, when this court's original order was issued, that state funds would ultimately be cut off if a constitutional system were not enacted.''

Districts, he added, "have continued to [sign contracts] at their own peril.''

While making districts responsible for their own debts, the judge said that, if a district defaults on its payments, state money would be doled out on a case-by-case basis. Creditors would have to file claims in the Austin district court.

Further, Judge McCown ruled that any program in which federal funds are obtained through matching state funds would be discontinued. Districts unable to pay bond debts would be relieved by the court "only to the extent required to avoid any bond default,'' he said.

"The judge wanted to impress on the legislature that he is serious,'' said Andy Welch, a spokesman for the comptroller's office. "If it comes to the point of funds being terminated on June 1, we will have a plan.''

'What Are We Going To Do?'

Local school districts, meanwhile, are making decisions with the legislature, the court, and any forthcoming state edicts all in mind.

Several districts have rearranged school calendars to end the year by the deadline, but have found that such decisions are rarely simple.

The 70,000-student Austin district, for example, canceled its Good Friday holiday and rescheduled two staff-training days for weekends or after-school hours in order to complete the year on May 28 rather than June 2.

Officials said the decision was made in order to escape the possibility of canceled graduations. Many administrators discouraged the change, however, arguing that lawmakers will not act unless they know such nightmares might occur.

"We are a high-visibility district, and it would put more pressure on the legislature,'' said Jeff Prescott, the district's director of communications. "But we wanted to remove all doubt.'

Since Judge McCown's order would allow districts to continue operations with local funds, Austin officials expect to be able to finish the school year and pay for many summer programs.

Mr. Prescott noted, though, that the judge's relative leniency on funding will now force districts to grapple with a whole new set of questions about how to use any remaining local funds.

"You won't see a lot of school districts coming to a grinding halt, but some will whimper a bit and if it goes on all summer, so will we,'' he said.

Paying for the full complement of the Austin district's summer programs, including summer school, meal programs, extended services for special-education students, one year-round school, and band and cheerleader camps, would leave the district about $5 million short by the fall, officials estimated.

"Most people think this is going to happen,'' Mr. Prescott said. "There was a plan yesterday, and there will be another plan tomorrow, but my gut tells me it's a 50-50 chance that they will do something.''

"The questions we have to answer are: 'Do we not do some things? Do we do it all and hope it gets fixed? Do we borrow money to pay for it?' and 'What do we cut?' '' he added.

"The longer we go without answering, the harder the decision is,'' Mr. Prescott said. "I'm sure every district in the state is asking the same thing: 'What are we going to do?' ''

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