Texas"Robin Hood' Law Hits Poor Districts with Tax Hikes, Too
SOMERSET, TEX.--In the modest school-administration building here, which used to house a drive-in restaurant called the Burger Barn, Superintendent Ann Dixon shuffles papers and punches a calculator as she ponders the state's new school-finance law.
The Somerset Independent School District, among the poorest in Texas, was predicted to be a prime beneficiary of the law aimed at closing the gap between wealthy and poor districts. But, as Ms. Dixon's figures show, progress has its price for the town's farm workers and laborers.
As one of the law's winners, the district should receive $1.1 million in new state funds--a 20 percent jump. At the same time, however, residents will see property-tax rates rise by 26 percent.
Across San Antonio in the wealthy community of Alamo Heights, meanwhile, school officials this fall are dropping home-economics and typing courses and arranging to rent out a high-school swimming pool to the Y.M.C.A.
The cutbacks in places like Alamo Heights were widely foreseen when the legislature, under court order, this year adopted a finance reform bill that forced wealthy school districts to surrender a portion of their local tax revenue to their poorer neighbors. About $300 million will change hands under the system, which is frequently referred to as the "Robin Hood" plan.
What was less commonly anticipated, however, was that along with well-off districts, places like Somerset would be forced to order local tax hikes to comply with the state's four-year plan. Some analysts are warning that the increased taxes will create a public outcry that could lead to widespread tax rollbacks and strengthen efforts to overturn the reform law.
But while they await the reaction to higher taxes, which will hit property owners within a few months, educators throughout the state at least are finding comfort in a new sense of common interests among rich and poor districts. No longer able to rely on their own resources, observers say, wealthy systems may now be willing to unite with other districts in urging state lawmakers to begin shouldering a bigger part of the school-funding burden.
Many of the residents of Somerset live on gravel roads and without telephones. But even before this year's property-tax increase, from $1.37 per $100 of assessed value to $1.73, they were paying some of the highest school taxes in the state.
Their money, supplemented heavily by state funds, has bought a patchwork of portable classrooms at the local elementary school, where the gymnasium and library share the same floor. The high-school and middle-school campuses adjoin to accommodate a shared cafeteria.
Walking across the parched elementary-school campus, Ms. Dixon lamented the bare landscape. "When it rains, half my playground runs down the road," she noted.
For raising about $300,000 in new local taxes, the 2,000-student district will receive about $13,000 in extra funding from the county education district created by the new law to collect and redistribute property-tax funds.
Combined with basic aid supplied by the state, though, the district's budget has not budged past last year's spending. It is only because of "enrichment" funds promised by the state that the district will be able to show an increase.
"I was supposed to get relief," Ms. Dixon said. "It's just a monumental frustration, wanting to do so much more for these people who have done so much for themselves."
'A Torture System'
The district needs a new elementary-school building, funds to enhance art and music programs, and money for competitive salaries, she said.
"You can do the best and live the longest, and you're not going to make more than $30,000 here," she complained. "It's like a torture system. These people whom you would think couldn't support it have sucked it up and said we'll do it for the schools." Ms. Dixon recalled that she and other poor-school administrators had hoped the state's school-finance remedy would bring more revenue and lower taxes.
"I see a lot of this as just a shell game with the money," she said. "All they did was shift it from the state to the local taxpayers. In all fairness, they keep saying you've got to give it a few years to work, but I live by what my checkbook says. Watching my community suffer like this doesn't give me any hope."
In the low-wealth Hutto Independent School District, situated in a small farming community north of Austin, the finance law also seems like a mixed blessing.
The tax rate in Hutto rose from $1.42 to $1.48 this year. Superintendent Ernie W. Laurence said the finance law will add about $150,000 to his $3-million budget.
"We are definitely helped by the lawsuit," he said. "This has given us some added relief, but there are still major problems in terms of equity. Somewhere down the line the state is going to have to bite the bullet."
A Visible Toll
While many poor districts claim that the redistribution has spread money too thin to make a difference, wealthy districts say that it has already taken a visible toll.
Across Bexar County from Somerset, the Alamo Heights High School and district-administration building mark a neighborhood of attractive homes on streets shaded by tall live oaks.
Throughout the school-finance case--which was initiated by another Bexar County district, Edgewood--the Alamo Heights schools have been cast as the very definition of wealth. Students in the 4th grade are introduced to the violin as part of the music program, and the high school teaches Latin and houses a swimming pool.
Under the new finance plan, property taxes in Alamo Heights this year rose 36 percent, from $1.05 to $1.42. The district paid more than $12.1 million to the county taxing district and will receive $8.2 million back. The redistribution plan forced a $l-million cut in the district's overall budget.
While many see the wealth of Alamo Heights as an easy target, Superintendent Charles L. Slater said the state is penalizing his system just for trying to keep pace with national averages.
"When all is said and done, we're still spending about $5,000 per pupil, but at the same time, the national average has gone up," Mr. Slater said. "So you have taken an exemplary school district that was at the national average, and now we're below that."
'It's Pretty Bloody'
Besides holding student spending constant, the district also has had to freeze teacher salaries at about their $30,000 average.
Mr. Slater said that even though the legislature's drawn-out action on the school-finance plan gave the district time to plan its reductions, the process has been wrenching.
The district has eliminated business and home-economics courses at its middle school and dropped accounting and typing at the high school, as well as terminating some coaching positions.
"They say cut the fat, but it isn't that easy," the superintendent said. "In fact, it's pretty bloody. We went through a difficult time of saying what are our priorities going to be."
As for the district's swimming pool, officials said they were nearing an agreement with the local Y.M.C.A. to lease the facility, which the district had closed.
Similar cuts have taken place in the small Lake Travis Independent School District north of Austin. The district, home to expensive developments and resorts perched in highlands overlooking the Colorado River, raised property-tax rates from $1.49 to $1.66. Taxpayers will surrender $1.2 million to poorer districts in Travis County.
The savings implemented by Lake Travis included a 20 percent reduction in administrative spending, a 19 percent cut in guidance and counseling services, a $301,000 payroll cut, major changes in transportation services, and limited maintenance.
Superintendent Walter R. Howard said that, while the district has escaped this year without cutting into what it considers its exemplary classroom programs, the long-term outlook is not so positive.
"We are faced not only with continued ways to economize, but even with that we have the prospect of higher taxes," he said. "How much more can you ask people to give? I think the funding source for those poor schools should be the state legislature, not the Lake Travis I.S.D."
'Not Theirs To Keep'
Despite grousing from all sides of the finance equation, however, the lawyers who fought the equity case continue to express optimism over the plan's long-term prospects.
"School people do not like change very much, and there are some changes in this, so people are scared," said Al Kauffman, lead lawyer for the poor districts in the school-finance case. "As far as equity is concerned, this is going to produce equity. It is the most equitable system I've ever seen proposed in the state of Texas by far."
National school-finance experts who have watched the Texas case said that, while wealthy school districts are certain to lose some ground, the wide disparities between rich and poor schools made any other solution prohibitively expensive.
Moreover, noted Kern Alexander, a professor at the Virginia Polytechnic and State University, finance cases like the one in Texas could mark a major shift by persuading school administrators and politicians to drop for good the notion that property taxes belong to the areas from which they are raised.
"I know they are going through some stress," Mr. Alexander contended, "but it is certainly going to benefit the system." "It is a state system of education.
It is not a case of some rich people having to divvy things up with the poor," he continued. "The state decided to fund education with the property tax, so the state created those disparities. But it wasn't the rich people's money to keep."
New Unity Seen
While local officials are unsure if the law will close spending gaps, they agree that the reforms have had a side-effect just as significant.
"I would not go out singing the praises of the bill except for one thing," Mr. Laurence of Hutto said. "It has put everybody in Texas in the same boat. Now we're all fighting with the short stick."
Administrators and observers alike noted that previous finance systems had pitted the interests of wealthy districts against those of poor systems.
"We might get along, and they might be my colleagues, but the state had put our interests as being opposed," Mr. Slater of Alamo Heights said. "There was a question of who are our friends, and how should we operate."
"I think it's time for us to say the next chapter is student achievement,' he said. "When superintendents get together, you say, "What's your tax rate, and how's your football team?'"
"Maybe we'll be able to ask next year, 'How are your students learning?'" Mr. Slater continued. "You would probably get some knee-jerk response, but I would hope that, after that, you would be able to say, 'Well, we're trying some things.'"
State leaders said putting school officials on the same financial ground was a major aim of the finance debate.
"That's probably the greatest benefit of this whole exercise," said Senator Carl A. Parker, chairman of the Senate Education Committee and the leading force behind the finance law. "That, and it has laid to rest all but the hard core of those who said money doesn't make a difference. This was the first time I had ever seen a delegation of some of the wealthy districts come to Austin and involve themselves."
But many lawmakers and educators are afraid to look too far ahead, given the past history of school-finance troubles and the controversy that still surrounds the new law.
The next step in the long-running battle will come Nov. 19, when the state supreme court is scheduled to hear arguments on a challenge to the new taxing system by several wealthy districts. The districts argue that the system in effect creates a statewide property tax, which is prohibited by the state constitution.
Beyond the present legal challenge of the taxing system, the plan's next obstacle will come over the next few months, as residents and businesses receive their increased property-tax bills. Although homestead exemptions will ease the burden for homeowners, businesses will bear much of the brunt for the taxes and are not likely to pay them without resistance, observers predict.
One reason for the unexpectedly high levies is that state and local officials used different numbers to set rates for the portion of property taxes that goes for school operations and maintenance. The state used a $O.72-per-$100 rate based on 1990 state property-value estimates to set what each district owed.
Local districts, however, used this year's local appraisals to determine tax obligations. Because of the different indexes, as well as differences in collection rates and changes in land values over the past year, the $0.72 rate has generated local base-tax rates ranging from $0.51 to $1.00.
Rates paid by property owners also include an additional amount for debt service and operating costs.
'A Tremendous Outcry'
"1 think you are going to see increasing sails for rollback elections on the property-tax increases because of just general voter anger," said Brad Gahm, vice president for governmental 8flairs for the Texas Association of Business. "That's coming from the citizens even though business shoulders a lot of that."
"When property-tax bills get delivered over the next month," he added, "we are going to hear a tremendous outcry across the state because we've all seen the tax rates going up while education is continuing to founder."
Mr. Hudson of Lake Travis agreed that a backlash from taxpayers is likely.
"It's finally going to seep in with some folks that we've been left with a pretty high bill," he said. "I think we are in for continued uncertainty and continued upheaval locally and at the state level."
Observers also worry that, if the courts uphold the legislature's remedy, lawmakers will turn a deaf ear toward pleas for more state revenue. "One of the things we're very concerned about is what happened in California when they got everybody in the same boat," said Craig Foster, executive director of the Equity Center in Austin. "School districts individually and collectively went to the legislature and said, 'We need help, we're in bad shape.' The legislature said, 'You're all in the same beat and the court said there are no inequities.' So it can turn on you."
The battle over school finance is far from over, Mr. Laurence of Hutto suggested.
"You haven't heard the end of it," he said, "and I don't know if you will for 10 years."
Vol. 11, Issue 08, Pages 1, 23-24Published in Print: October 23, 1991, as Texas"Robin Hood' Law Hits Poor Districts with Tax Hikes, Too