Friday, August 19, 2005

Legislature Adjourns Special Session

Justices to decide if overhaul needed after bills fail in Legislature

11:56 PM CDT on Friday, August 19, 2005

By ROBERT T. GARRETT and TERRENCE STUTZ / The Dallas Morning News

AUSTIN – Once again, the future of Texas' nearly 8,000 public schools rests squarely with the state's highest court.

Another special legislative session on school finance ended Friday with a fresh round of finger-pointing among state leaders. But now, Texas Supreme Court justices, not lawmakers, have the next shot at decisions that could yield billions for schools and force higher taxes on consumers and businesses.

Only the seven men and one woman on the high court – one seat is vacant – have a good idea of what they'll do.

But former justices, legal scholars, lawyers and school finance veterans say it's likely the court will again find the education funding system unconstitutional and order an overhaul.
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Legislature adjourns special session

School finance failure produces lots of blame

Each of its five major rulings since 1989 ratcheted up the pressure on the Legislature to put more money into public schools and reduce funding disparities among school districts.

But lawmakers have not always fully complied.

"You will see language in every one of these opinions that says the system needs more than a Band-Aid, it needs to be totally revamped," said former Supreme Court Justice Deborah Hankinson of Dallas.

"The Legislatures, from the very beginning, have done nothing but put Band-Aids on it."

Past school finance battles have been bitter – a decade ago, the court upheld by a single vote the Legislature's "Robin Hood" plan that requires property-rich school districts to share their property tax revenue. The latest round also has exposed raw nerves.

Betting the bank

"School districts are banking everything on the court ruling," said House Speaker Tom Craddick, who has criticized districts for trying to get "megabucks" from the state with no strings attached. "If they win, that's fine. But if they don't win," Mr. Craddick warned, they won't get much sympathy from lawmakers in the next round of funding.

Last year, Gov. Rick Perry predicted the state would win – meaning lawmakers wouldn't have to do anything – because he had appointed most of the justices and "they don't legislate from the bench." All are Republicans.

Few expect the court to design a detailed system or order lawmakers to pour in a specific amount of money. Still, two of three former Republican justices who were interviewed – Ms. Hankinson, who has filed a brief for school boards in the case, and former Justice Craig Enoch of Austin – expect the court to order the Legislature to make at least some changes, particularly on the issue of taxes that local districts can levy. Former Chief Justice Tom Phillips said he has no idea what the court will do.

More than 300 school districts, including Dallas and Houston, are plaintiffs in the current lawsuit. They won the first round last year when state District Judge John Dietz of Austin ruled that the state was not providing enough money to educate all of its 4.4 million students and that the state had imposed an unconstitutional state property tax – a $1.50 limit per $100 valuation on local property tax rates.

The judge also found that facilities in property-poor school districts were underfunded.

Attorney General Greg Abbott took the case directly to the Texas Supreme Court, bypassing the intermediate appellate court, and a hearing was held by the court on July 6. A ruling is expected this fall.

Despite the confident predictions by Mr. Perry and others, the swift recent turnover on the court – only four are left from the last major judgment on this case in May 2003 – makes it difficult to gauge how sweeping or how minimal their decision will be.

Former Lt. Gov. Bill Ratliff, a Republican who wrote the "Robin Hood" school finance law, finds it hard to believe that the state will emerge completely victorious.

"I will be the most shocked person in Texas if the Supreme Court overturns Judge Dietz on all three points," Mr. Ratliff said.

Texas schools are primarily funded through local property taxes and state aid. Mr. Ratliff noted that the state share in the $33 billion-a-year system has slipped dramatically in recent years and now makes up only 37 percent of the total. Conversely, local property taxes have soared and pushed most districts up toward the maximum $1.50 tax rate for operating expenses.

Nearly two-thirds of districts are at or near that limit, so that issue is considered the most likely victory for school districts. But, Mr. Ratliff said, the issue of adequate funding is the most anticipated part of the decision.

"The state constitution says the Legislature must provide for a general diffusion of knowledge," he said, noting that translates into proper funding for education. "If that means something, the court should not be able to duck interpreting what it does mean."

Avoiding 'briar patch'

Former Justice Enoch, though, predicted "the court will just run from any question of adequacy," because justices would have to decide curriculum matters and "get off in the briar patch."

Testimony in a six-week trial last year indicated it would take an additional $1,100 a student per year to comply with state and federal requirements, such as minimum passing rates on standardized tests. That adds up to more than $4.8 billion a year, four times what the Legislature most recently proposed in its failed special sessions on school finance.

It also could require a sizable increase in state taxes, which the House and Senate refused to consider this year – except for proposals to raise some taxes to offset a reduction in school property taxes.

"We're not asking for megabucks. This is the amount that studies have shown is needed," said Clayton Downing, a former superintendent of Lewisville schools whose Texas School Coalition represents high-wealth districts.

The last school finance decision gave mixed signals on how justices may rule on the subject of adequate funding.

Writing for the majority, Justice Nathan Hecht said: "The courts cannot ... attempt to define in detail an adequate education. But once policy choices have been made by the Legislature, it is the judiciary's responsibility in a proper case to determine whether those choices as a whole meet the standard set by the people" in the constitution.

Justice Hecht, the only justice to take part in all the school finance decisions going back to 1989, is expected to play a major role in shaping its next one.

"He has a memory like a steel trap, and he's been there throughout, so obviously he's going to be important," said former Justice Phillips.

In 2003, Justice Hecht emphatically rejected suggestions by then-Justice Steven Smith that the judiciary had overreached and should reconsider its 1995 ruling that upheld "Robin Hood."

"To announce now that we have simply changed our minds on matters that have been crucial to the development of the public education system would not only threaten havoc to the system, but would, far more importantly, undermine the rule of law to which the court is firmly pledged," Justice Hecht wrote.

That could foreshadow the court's response to a chief argument by state attorneys – that the court should butt out and leave school finance to the Legislature.

A court finding against the state would put the ball back in the hands of lawmakers, who have tended to put off dealing with problems in schools, prisons and mental health facilities until state or federal judges forced them to act.

"It's the classic political response to problems they don't want to deal with," said Maurice Dyson, a school finance expert and assistant law professor at Southern Methodist University. "There is no better political cover than to have a court rule that something must be done, which allows politicians to say their hands are tied."



Are Texas public schools adequately funded? 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, which is prohibited under the state constitution. They point out that 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 expenses to reduce taxes.

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 complies with equity standards set by the courts.

Terrence Stutz
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