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Tex. Finance Bill Signed Into Law, Challenges Anticipated

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Gov. Ann W. Richards of Texas last week signed a new school-finance bill that seeks to reduce funding disparities by effectively transferring property wealth from rich school districts to poor ones.

In a June 1 hearing, a state district judge said he would presume the measure was constitutional, giving officials in the nation's second-largest state school system a reprieve from a threatened cutoff of state funds.

The legislature passed the school-finance plan as one of its final acts before recessing. The measure passed the Senate on a 25-to-6 vote and was cleared by the House 103 to 41. By winning two-thirds majorities in both chambers, the law takes effect immediately, forcing wealthy districts to quickly confront the new system.

Under the law, the state's 109 wealthiest districts will have five options for reducing their property-tax base below $280,000 per pupil by the fall. The choices are consolidating with a poorer district, transferring commercial property to another district, consolidating tax bases with another district, contracting to educate students from another district, or paying the state the excess local funds.

The final three options would require local voter approval. If no choice is made, the state will move to transfer property from the wealthy districts. (See Education Week, June 2, 1993.)

Many Questions Unanswered

While the last-minute plan provided political leaders a chance to relax, others across the state were beginning to feel the frenzy of managing under the new system.

Busiest, perhaps, were officials at the Texas Education Agency, where officials were working to prepare a videotape and handbook explaining the new system at the same time they were seeking clarification on the new provisions themselves.

Representatives of the wealthy districts were called to the state capital for a meeting to discuss the details of the new law, but T.E.A. officials said they may still be unable to answer all questions by this week.

"Even though the plan got passed, we're still feeling down to the wire,'' said Gary Reese, a spokesman for the education department. "We are trying to get enough clarity that we can tell districts what their options are and how to proceed.''

The questions left hanging by the new law are many, observers said.

Commissioner of Education Lionel R. Meno met last week with the state's county property appraisers to discuss how to handle situations in which districts choose to shift some of their commercial property to a poorer one. State officials were also trying to learn exactly how the revenue taken from wealthy districts will be redistributed to the state's poorest schools.

In many cases, education officials and associations were answering questions last week from a conference-committee draft of the bill, not the final law.

'Down Some Deep, Dark Hole'

Officials said the list of options provides some hard choices for local administrators.

In the Alamo Heights Independent School District in San Antonio, for example, the tax base provides about $330,000 per student. As a result, the district will have to reduce its overall budget by about $3.5 million to meet the new law's provisions.

Superintendent Charles L. Slater said local officials had strongly endorsed the Senate-passed version of the legislation, which had provided only for transferring commercial-property wealth to other districts. But the longer list of options in the final bill has muddied the local decision, he said..

Transferring property, Mr. Slater noted, would be a permanent decision--unlike paying the state excess funds each year or contracting to teach more students. The 3,900-student district would have to add 700 more pupils under its current tax base to meet the law.

"We are exploring the possibilities and looking for creative options,'' Mr. Slater said.

Some district officials, he said, are concerned that sending a check to the state--perhaps the easiest option--would be "like watching our local taxes go down some deep, dark hole.''

The community might prefer expanding its education program to more students so it can see its money at work, the superintendent suggested.

"Now is the time to put more energy into creative solutions,'' he said.

That time, however, is short. Many Texas districts complete their school-year budget by August, and local elections to approve some of the law's options would need to be held next month.

Meanwhile, the original plaintiffs who brought the lawsuit that started the state's long-running struggle over school-finance equity have vowed to challenge the new law in court.

Officials said last week that other poor districts and possibly a coalition of wealthy districts are also expected to consider legal challenges.

At the court hearing last week, District Court Judge F. Scott McCown set a July 15 deadline to file suit against the new law.

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