Tex. House Acts on Its Own To Adopt Finance Plan

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Adopting yet a new tack as the state races toward a court-ordered school-finance deadline, the Texas House last week passed a bill giving wealthy school districts a list of options for how to reduce their property-tax base.

But approval of the plan, which passed on a 98-to-44 vote, only moved into a conference committee the continuing struggle over devising a politically acceptable method of reducing funding differences between districts.

The Senate earlier approved a separate measure calling for the shift of about $40 billion in commercial property from rich to poor districts.

State leaders are under tremendous pressure to complete action by next Tuesday, when a judge has threatened to cut off state funding to districts if a plan implementing the state supreme court's finance-equity mandate has not been enacted.

The plan adopted by the House last week would let the state's wealthiest 109 districts choose from five options or face consolidation with a poorer nearby district.

The choices are to merge tax bases--a localized version of the current system, which has been rejected by both the courts and state voters; send money to poor districts by buying "attendance credits''; contract to educate students in other districts; voluntarily consolidate with one or more districts; or shift taxable property to the books of another district.

The first three options would require local voter approval. The final option is a broadened version of the property-transfer plan approved by the Senate.

House aides said they arrived at the local-option plan after a final hearing at which the overwhelming sentiment was that local officials needed to have some flexibility in how to reduce their levels of property wealth.

"We just put everything out there and told them to decide over the summer,'' a House aide said.

The bill was also meant to give the state more protection in court, with language stating that if one or more options are deemed unconstitutional, the other choices would remain.

Senate leaders, however, have continued to stand by their more narrowly focused solution. Defending the plan against critics who question its constitutionality, they also have expressed frustration with the House's reluctance to select a single solution.

Observers last week said they did not expect gridlock in conference, but added that tensions between the House and Senate appeared to be rising.

States Eye Tax Sharing

School-finance experts both within and outside of Texas last week offered differing opinions of the legislature's efforts to improve equity among districts by chopping wealth from the state's richest districts.

"It leads to more equity, no question about it,'' said John L. Myers, a school-finance consultant based in Denver. "But it is just a different kind of what they called 'Robin Hood' there before.''

Because Texas has experienced so many pitfalls in dealing with the school-finance issue, analysts said that other states are most likely to consider more orthodox finance solutions first. Observers noted, however, that any plan approved in Texas will gain national attention.

"Texas news travels fast,'' said Mary Fulton, a policy analyst with the Education Commission of the States. "If Texas passes any plan that uses some type of tax-base sharing, I think a lot of other states will take a harder look at it.''

"A lot of states are in a desperate situation financially, and people are looking at current revenue and how that can be used in alternative ways,'' Ms. Fulton said. "This is an option that's been considered by a number of states, but they haven't been under the pressure to have to actively pursue it.''

A handful of other states have mulled the so-called "Robin Hood'' plans, which call for shifting locally derived property-tax revenues from well-off to low-wealth areas. The more traditional approach to finance equalization involves shifting state revenues to aid districts with inadequate local resources.

Michigan in 1991 approved a limited tax-base-sharing plan that forced wealthy districts to share half of their property-tax growth from industrial and commercial property with poorer schools. Officials in Ohio have also considered limiting the amount districts can benefit from having high-value property, such as a nuclear-power plant, in their boundaries.

While such plans even the playing field among districts by neutralizing extreme wealth, however, their public acceptance and ability to solve larger finance-equity issues are less certain.

Oklahoma voters in 1990, for example, turned back a constitutional amendment that would have pooled taxes from some commercial property worth more than $500,000 for redistribution to poorer districts.

Little Help for Poor Districts

Moreover, while the legislature's solution brings down the top of the school-spending extremes, it does not greatly help poor districts that rely heavily on state funding.

"We've still got to decide how to distribute the state's share of the system,'' said Craig Foster, the executive director of the Equity Center, a group representing mostly low-wealth Texas districts.

The new plans might answer a key point of a 1991 ruling by the supreme court, which emphasized the need to reduce extremes in per-pupil spending, Mr. Foster said.

But they fail to answer all of the concerns of the court's 1989 ruling, which focused on providing a fair system of education for all of the state's children. To do that, observers say, will take significant new state funding.

One senior school-finance researcher from outside the state offered a bluntly critical assessment of what Texas lawmakers are doing.

"The problem in Texas is that the legislature refuses to cough up enough money to do what they should do,'' said Kern Alexander, a professor at Virginia Polytechnic Institute and State University.

"The Texas legislature is trying to play every angle it can to keep from biting the bullet, reforming the tax system, and bringing the system up from the bottom,'' Mr. Alexander charged.

Vol. 12, Issue 35

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