Texas, Despite Surprise Surplus, Foresees Tighter Times

By Michelle Galley

At a time when most states are struggling to maintain their current levels of education spending, Texas public schools stand instead to receive an influx of cash.

Because property values last year rose nearly twice as much as the state legislature had projected, and because the state's school finance system relies heavily on property taxes, the Texas school budget is expected to wind up with a surplus of between $400 million and $900 million in the upcoming 2003 fiscal year. Current estimates indicate that the surplus will likely fall into the lower end of that range.

But the party may be over almost before it starts. That's because Texas budgets two years at a time and is facing an estimated $5 billion deficit for the two-year period beginning in September 2003. The bulk of the surplus money—roughly $300 million—will go to finance school items the state legislature agreed on in its last biennial session, during the spring of 2001. That list of potential expenditures, to move forward only if extra money turned up, includes grants to make debt payments on existing or newly issued...