Prospects for New School-Finance Plan in Texas Dim

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A new effort by Texas leaders to produce a consensus school-finance plan splintered last week into a new round of questions that observers said may only begin to be answered during the current special session.

The latest plan proposed by Gov. Ann W. Richards, Lieut. Gov. Bob Bullock, and Speaker of the House Gibson Lewis had received widespread criticism by the time the special legislative session began last week.

Its prospects had been so diminished after a few days of circulation that the Governor in opening the monthlong session urged lawmakers to concentrate primarily on the wording of a proposed constitutional amendment meant to clear the way in the courts for a new system.

The leadership's plan, which marks the third attempt to revamp the state's school-finance system, would abolish the county education districts created by the last reform law but struck down by the state supreme court. Instead, the new proposal would reshuffle local funds from the richest to the poorest school districts through the state's teacher-retirement fund.

Retirement Plan Eyed

According to the plan, the state's wealthiest schools would pay about $400 million into the retirement fund. State officials would then take an equal amount out of the pension program and distribute it among the state's poorest districts.

The proposal also would require many districts to levy a higher property tax in order to receive guaranteed state aid.

In addition to its recapture provisions, the new plan would free $750 million in school-construction bonds and divide them based on district wealth. It would convert an existing $1 billion school fund into a reward program designed to provide financial incentives to poor schools that improve, and eliminate the potential for mid-year aid cuts by guaranteeing revenues based on local tax rates.

The plan also would require districts to spend 60 percent of their budgets on instruction, including teacher salaries and benefits.

Beyond the mandatory increases in local property taxes, officials said, the plan would provide about $650 million in new state funds in its first two years.

State leaders, who have pledged not to raise state taxes and informed districts that they must learn to live with less, acknowledged that the plan would not satisfy many educators.

"School finance is like dividing up you sweet old aunt's estate,'' said Governor Richards. "Someone is always going to get coffee mugs when they really wanted the roll-top desk.''

'Doesn't Help Anyone'

Observers last week were waiting for a signal from the Senate education committee, which had scheduled hearings on the leadership plan, on whether lawmakers would undertake a full-scale revision of the system or concentrate just on pushing the constitutional amendment.

While use of the teacher-retirement system has been criticized, concern has also been raised about the plan's reliance on local taxes rather than seeking new state funds.

But state officials argued that they have been backed into a corner.

"People tell us they are tired of raising property taxes, but they don't support an income tax, and you can't put this all on the sales tax,'' said Sonia Hernandez, the Governor's education-policy director.

Local school officials, meanwhile, said they expected legislators to search for new strategies.

"This is a Band-Aid approach again,'' argued John P. Connolly, the superintendent of the affluent Highland Park school district in Dallas. "The courts have said the state relies too heavily on property taxes, and all this does is add $2 billion more.''

The Highland Park district projects that it alone would lose $36 million a year in property taxes by decade's end. But the plan would also exact a stiff price from poor districts forced to raise their already high tax rates, Mr. Connolly contended.

"The funding plan doesn't help anyone,'' he said.

Michelle Willhelm, the superintendent of the Alief school district in Houston, a district just below the average for state wealth, criticized the plan's reliance on local funds. Moreover, she charged, state leaders seem to have abandoned the issue of adequate schools in their attempt to address equity concerns.

In that respect, Ms. Willhelm said, the plan is not an improvement over the current system, which includes a greater share of state funds.

Ms. Willhelm also criticized the plan's effort to increase instructional spending. Equipment costs, such as classroom computers and software, would not be counted in the total. That could discourage districts from expanding their technology programs, she said.

"There is still a ways to go,'' she observed. "I am sure we will see many changes and much debate.''

Pushing for an Amendment

While school lobbyists said last week that they were unsure how lawmakers would address the plan during the remainder of the session, they were optimistic about chances for passage of a constitutional amendment.

The admendment drafted by the leadership would authorize the "recapture,'' or transfer, of local funds, which previous court decisions have barred.

The proposal also seeks to add definition to the constitution's education article by requiring lawmakers to insure that funding levels are equalized for 95 percent of the state's schools. Because per-pupil spending is so high among the richest districts, school-finance officials usually define equity after excluding the wealthiest 5 percent.

Officials are pressing for passage of a constitutional amendment because the question must clear the legislature by February to be included on the May 1 state ballot. Lawmakers are under court order to create a new finance system by June 1, or risk the shutdown of all public schools.

Officials said last week that it was crucial to pass the amendment during the special session. Because Mr. Lewis is retiring at the end of the year, the House is expected to be preoccupied with leadership and committee changes early in the 1993 session, thus making it unlikely that an amendment could be passed by the February deadline.

Such upheaval is also likely to take a toll on the school-finance plan should it be held over until the regular session, observers said. Unless top lawmakers are able to steer the plan onto a fast track within the next few days, analysts added, the issue could overshadow the regular session.

Vol. 12, Issue 11

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