Tuesday, July 05, 2005

School Financing Fought on 2 fronts

Though a long piece, the Dallas Morning News actually provides a rather concise overview on school finance in Texas. This is a worthwhile read. -Angela

State's high court to hear case as special session struggles along

Tuesday, July 5, 2005
By TERRENCE STUTZ / The Dallas Morning News

AUSTIN – Turned off by the Legislature's repeated attempts to redo education funding in Texas, hundreds of school districts are pinning their hopes on the state Supreme Court instead.

Lt. Gov. David Dewhurst speaks on June 21 as Senate Education Committee chairwoman Sen. Florence Shapiro, R-Plano, looks on.

The high court will hear arguments on the volatile issue Wednesday, taking up the state's appeal of a lower court decision that ordered lawmakers to overhaul the $33 billion-a-year school finance system and shell out billions more.

It's the sixth time in the last decade-and-a-half that the court will weigh in on the issue. And this hearing comes right in the middle of a special session where lawmakers are struggling to reach a deal on school funding and a tax overhaul that would trade property tax cuts for hikes in other levies – even while districts say any potential compromise would be woefully inadequate.

"Nearly everybody I know has given up on the Legislature and is ready to take our chances with the Supreme Court," said Clayton Downing, director of the Texas School Coalition and former superintendent of Lewisville schools. The coalition represents about a hundred property-wealthy school districts.

But state leaders such as Lt. Gov. David Dewhurst, who presides over the Senate, reject that line of reasoning, saying elected lawmakers should decide the fate of schools.
"Not surprisingly, many of them don't want the Legislature to pass any bill," Mr. Dewhurst said last week of superintendents who are weighing in with lawmakers. "They want to wait until the court rules, thinking that our schools would be better off.

"I happen to think just the opposite. This is the Legislature's duty, not the court's."

Also Online
Tell Us: Who should be responsible for fixing Texas schools - the courts or the Legislature? Why?

That viewpoint will be reflected in the arguments of state attorneys as they take on lawyers for more than 300 school districts that are challenging the school finance system. They won the first round last year before state District Judge John Dietz of Austin, who ruled for the plaintiffs on almost every major point in the case.

State Solicitor General Ted Cruz, who will present the state's appeal, will argue that Judge Dietz overstepped his authority. And he will urge the justices to bow and let the Legislature decide the proper level of funding for public schools.

"Courts in New York and New Jersey and other states have dived in and taken over their state education systems, and the result has been that education policy for those states is being made by judges rather than state legislators elected by the voters," he said. "Those supreme courts essentially function as state boards of education."

Plaintiff's position
Dallas lawyer George Bramblett, who represents a large group of the plaintiff districts – including Dallas – is prepared to rebut arguments that the court should defer to lawmakers.
"Before the first decision in this case [in 1989], there was a funding disparity of as much as 700 to 1 between poor and wealthy school districts," Mr. Bramblett said. "There was nothing to push the Legislature to eliminate those disparities until the courts intervened.
"The notion that the Legislature should be able to do whatever it wants to do is the same as saying: 'Tear up the constitution,' " he said. "When legislators fail to do their duty, they force the issue into the court system."

Arguments during Wednesday's hearing – which will last two hours – will center on three major findings by Judge Dietz:

•Texas schools are not adequately funded;
•The current maximum school property tax rate of $1.50 per $100 valuation is, in effect, an illegal state property tax; and
•The state system for financing school facilities shortchanges poor districts and violates constitutional requirements for equity.

School officials are most interested in the first point. Testimony in last summer's trial in Judge Dietz's court indicated that schools need $4 billion to $5 billion per year in new money to meet an array of state and federal requirements such as annual improvements in student test scores.

Bills the House and Senate are working on in the special session propose an increase of $1.5 billion a year – or an average 4.5 percent gain. Many districts would get less than that.
Wednesday's court hearing will touch only briefly on the issue of "Robin Hood" provisions requiring wealthy districts to share their property tax revenues. Judge Dietz did not order any changes affecting the share-the-wealth mandate, which was upheld by the Supreme Court in 1995.
The high court has ruled in favor of school districts and against the state five straight times on the long-running school finance issue. But Gov. Rick Perry has boldly predicted that the all-Republican court would change course this time.

Mr. Perry, who appointed some of the justices, said he had not had any conversations with them but was offering his opinion based on their conservative temperament.

Not worried

Dr. Downing, whose organization includes several districts that are plaintiffs, said those rooting for the court to uphold Judge Dietz are not worried by the governor's remarks.
"Our attorneys think the Supreme Court justices are people of integrity and they will rule based strictly on the evidence in this case," he said.

More than one supporter of the school districts noted that the current "Robin Hood" law was upheld in a decision written by a prominent Republican justice – John Cornyn, now a U.S. senator.

The justices will consider what they hear Wednesday with a deadline in mind – Judge Dietz gave the state until Oct. 1 to fix the system or cease funding schools. State attorneys will ask the justices to postpone the deadline, as a final decision from the high court is not expected until the fall.

Legislators have a deadline of their own. The special session must end July 20 – though Mr. Perry could call another. And the governor vetoed the entire education budget lawmakers had approved in their regular session, perhaps endangering the start of school in August.
With so much at stake, and the politically difficult choices the Legislature faces on schools and taxes, Dr. Downing predicts – and hopes – that lawmakers will wait for the court to force its hand.

"At least a Supreme Court ruling would give legislators cover and maybe cause them to go in a different direction," he said.



A look at the school finance case the Texas Supreme Court will consider Wednesday:

A group of poor school districts sued in 1984, alleging that the Texas school finance system – based mainly on local property taxes and state aid – was unconstitutional and unfairly deprived them of the same funding per student as wealthier school districts. They won, and the state Supreme Court affirmed a lower court's order that the state must equalize funding between wealthy and poor districts.

The first four state Supreme Court orders from 1989 to 1995 on the issue concerned funding equity for all districts and the last affirmed the current "Robin Hood" mandate that requires higher-wealth districts to share their property tax revenues with lower-wealth districts.
The focus of the issue switched to adequate funding for schools and the state property tax limit in 2003, when the high court cleared a group of school districts to make their case on those issues in state court. Last year, state District Judge John Dietz ordered the Legislature to put billions of more dollars into the system, concluding that districts were being severely shortchanged based on the state and federal requirements they must meet. Judge Dietz gave the Legislature until Oct. 1 to fix the problems or he will cut off all funding for schools. The state appealed directly to the state Supreme Court.

Are Texas public schools adequately funded?

More than 300 plaintiff school districts say they don't receive enough funding to comply with state and federal requirements such as minimum average passing rates on student tests. The state says districts receive ample funding and point to improved student test scores in recent years as evidence.

Does Texas have a state property tax that the state constitution prohibits?

Districts argue that the current maximum property tax rate of $1.50 per $100 valuation is the same as a state property tax, now prohibited under the state constitution. They point out most districts are at or near the cap and have no way to raise more revenue. The state says that many districts haven't reached the limit and that districts still have discretion in setting rates and could cut extraneous expenses to reduce taxes. Judge Dietz ruled for the school districts.
Does Texas' method of paying for school facilities violate equity requirements that are supposed to protect low-wealth school districts?

One group of districts argues that the state is neglecting the needs of lower-wealth districts while wealthy districts can build and expand schools all they want. The state maintains it has provided financial assistance for facilities in lower-wealth districts and is in compliance with equity standards set by the courts. Judge Dietz ruled for the districts, but he also found no equity problems in funding for school districts' operating expenses.

Chief Justice Wallace B. Jefferson
Scott A. Brister
Paul W. Green
Nathan L. Hecht
Phillip Johnson
David Medina
Harriet O'Neill
Dale Wainwright

All are Republicans, and five were appointed by Gov. Rick Perry. There is one vacancy.

Terrence Stutz

House members come back Tuesday, and Senate members on Wednesday, to begin the second half of a special legislative session dedicated to school finance. They do so in much the same posture they've been in for weeks – close to a deal on education funding and initiatives, far apart on cutting property taxes and raising other revenue to pay for it. Here's a primer on the next two weeks:

Where they agree

Spending: Adding $2.9 billion to state school funding over two years. Guaranteeing each school district a boost of at least 3 percent.

Start date: Requiring districts to start classes the day after Labor Day, starting in the fall of 2006.

Merit pay: Giving teachers bonuses based on student test scores.
Charter schools: Rewriting regulations to weed out low-performing campuses and beef up academic standards. Charters could lose their license after a year.
"Reconstitution": Allowing teachers and principals to be replaced at campuses deemed "low-performing" two years in a row.

Where they differ
"Robin Hood": The House wants to limit how much a property-wealthy district must share with poorer areas to 35 percent of its tax revenues. The Senate wants no cap.
Teacher raises: The House wants an average raise of $1,500. The Senate would give all teachers $2,500 more over two years.
End-of-course tests: The House wants to abandon the Texas Assessment of Knowledge and Skills for high-schoolers, switching to end-of-course knowledge tests. The Senate wants to leave the TAKS alone.

The chambers agree on broad goals – cutting property taxes and replacing the revenue with a higher sales tax and a revamped business tax. But they differ on most details:
School property tax rate: The House wants the maximum rate to fall from $1.50 to $1.15 this fall. The Senate would drop it to $1.30. But both agree that they want it to drop further, to $1.10, in 2006.

Sales taxes: The House would boost the state rate a penny, to 7.25 percent. The Senate has been holding firm at a half-cent increase. The House would expand the tax to bottled water and car repairs, which the Senate opposes.
Cigarettes: The House would boost taxes on them by $1.01 per pack. During the regular session, the Senate wanted a 75-cent increase.
Business taxes: The House voted to close a few loopholes in the current franchise tax, which most Texas businesses currently avoid. The Senate wants a much broader business tax that hits most companies at a low rate.

Both chambers have passed school finance bills, so negotiations between the two could start this week.

House leaders hope to vote Wednesday on a tax bill. Because of constitutional restrictions, the Senate cannot take up the bill until the House passes it.

Both chambers must approve the full education budget for the next two years. Gov. Rick Perry vetoed the $33 billion in spending when he called a special session, hoping to force lawmakers to act.

Lawmakers have until July 20 to approve final legislation.

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