Law & Courts

School Finance on Table in Final Days of Texas Session

By David J. Hoff — May 24, 2005 3 min read

Texas lawmakers are working on bills that would dramatically alter the way the state’s schools are financed and operated.

Facing a May 30 deadline, House and Senate members are crafting compromises on bills that would change how communities raise money for schools, assess students, and even set their school calendars.

The bills, which would increase funding by $3 billion over the next two years, are designed to head off a Texas Supreme Court ruling against the state in a long-running school finance case. At the same time, they also aim to respond to homeowners’ complaints about rising property-tax bills.

To meet both goals, the measures would replace revenue lost from property taxes with a variety of business, cigarette, and alcohol taxes. Both chambers would raise the state sales tax. The House would increase it by 1 percentage point, while the Senate would raise it by half that much. The current sales tax is 6.25 percent.

In the end, the most important decision facing a House-Senate conference committee will be how much money to spend and how to distribute it throughout the state, one legislative leader said last week.

“Once we make up our minds on a final number on how much new money’s going into public education, I think we’ll reach an agreement on the form of how to implement that,” said Lt. Gov. David Dewhurst, the Senate president, in an informal May 17 news conference broadcast on the Internet.

Critics, however, say that neither the House nor the Senate plan would provide enough money to settle the finance lawsuit. Last year, a state district judge ruled that the state doesn’t provide enough money to ensure that schools offer “an adequate suitable education,” as guaranteed by the Texas Constitution. (“Texas Judge Rules Funds Not Enough,” Sept.22, 2004.)

The state will spend about $30 billion on K-12 schools in the current two-year budget, meaning the bills would add about 5 percent a year to school budgets.

On July 6, the supreme court is scheduled to hear arguments on the state’s appeal of the judge’s 2004 ruling.

“I believe we’ll have enough funding in the program to satisfy the supreme court,” Mr. Dewhurst, a Republican, told reporters.

The most important pieces of the Texas bills would change the way schools are financed.

The House version of a tax bill would cap property taxes at $1 for every $100 of assessed value. It would give school boards the option of adding 10 cents to that rate in so-called enrichment funding, subject to voter approval. The Senate version would set a maximum tax rate of $1.10, with up to 15 cents allowed to be added for enrichment.

Host of Issues

Both plans would substantially increase state financing of districts, but not enough to completely eliminate the state’s “Robin Hood” measures that redirect local property-tax revenues from wealthy areas to poor ones. The bills would cut the amount of such revenue that now changes hands by about half, according to an analysis by the Equity Center, a coalition of school districts favoring equitable funding across the state.

In addition to overhauling the finance system, both the House and the Senate would make substantial changes in the way that schools operate. For example:

• Both chambers passed amendments that would require the school year to start after Labor Day. Most Texas districts now open in August.

• The House and the Senate have similar plans that would give the state education commissioner authority to install new management in struggling schools. The managers could be private companies or a group of teachers or parents.

• The House bill would create 11th grade end-of-course exams that students would have to pass to earn a diploma. The Senate bill would make the 11th grade version of the existing Texas Assessment of Knowledge and Skills the high school exit exam.

A separate bill that the House was considering would launch a pilot tuition-voucher program in eight districts in the state’s largest cities. The vouchers would be available for a variety of students deemed at risk. Secular and religious private schools would be eligible to redeem the vouchers.

As of late last week, the House planned to debate the bill early in the week of May 23.

The legislature is scheduled to adjourn May 30, as mandated by the state constitution

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