Fixing Texas school finance may mean big price tag

Last Updated: Tue, Feb 05, 2013 23:45 hrs

Before declaring Texas' public school finance system unconstitutional, state District Judge John Dietz offered a hypothetical.

He said a vast majority of Texans want the state's students to have an education system challenging enough to prepare them for the high-tech jobs of tomorrow. But, he said, if those same Texans were told doing so would cost an additional $2,000 per student — or between $10 and $11 billion extra in every two-year budget — that support would quickly evaporate.

"Now what I begin to hear from my vast majority is, 'you can't solve the problems of education by throwing money at it,'" Dietz said.

He ruled in favor of more than 600 school districts statewide that sued in response to $5.4 billion in cuts to public education the state Legislature approved in 2011. The figure Dietz offered could mean Texas will have to find additional funding to cover more than double the cost of the cuts — and that was simply a hypothetical. The actual number may be even larger.

The case before Dietz was the sixth of its kind in Texas since 1984 and in the past, courts have sometimes ordered the state to spend a specific amount per pupil to meet its constitutional obligations. Dietz offered no such figure. Instead, he simply ruled that the way Texas funds its schools violates the state constitution because the Legislature has raised academic standards while simultaneously cutting education funding, and hasn't ensured that that funding is equally distributed to school districts in wealthy and poorer parts of the state.

Still, If his decision holds, Texas may have to find many billions of extra dollars for its schools.

"We would have to modernize our tax system," said Scott McCown, executive director of the progressive think tank the Center for Public Policy Priorities. He said finding even the additional revenue Dietz suggested would mean applying the state sales tax to services and collecting more business taxes.

Indeed, $10 billion is more than the state has recently collected annually from its entire business tax. But former Democratic state Rep. Scott Hochberg, a school finance expert, said such a tally still might now require drastic overhauls: "the Legislature's used to big numbers."

The Texas Constitution forbids a state income tax, meaning the school finance system is built on what schools districts can raise in local property taxes — with state dollars used to fill in the funding gaps between districts.

Catherine Clark, associate executive director for Governmental Relations at the Texas Association of School Boards, conceded that any steep funding increase would be a tough sell for a Republican-dominated Legislature.

"Many other states collect much more revenue per capita than ours," Clark said. "We might not want to be like some of those other states, but we might decide we want to make an important investment in the future."

The Texas Public Policy Foundation, an influential conservative think tank, countered that more state funds for schools isn't the answer.

"This ruling doubles down on that status quo: school spending in Texas has grown rapidly over the last decade, with few academic gains to show for it," said James Golsan, the group's Center for Education policy analyst.

But Dietz based his ruling on a chart from the nonpartisan Legislative Budget Board showing that while state spending on schools has increased and is now approaching $48 billion, when adjusted for inflation spending has actually held steady at around $30 billion between 2002 and 2011. And that's amid a population boom that has seen enrollment growth in public schools increase by an average of more than 70,000 students per year, and academic standards have gotten far tougher over the same period.

Fueling that increase are children who come from low-income families or who need extra instruction to learn English — two cohorts that are especially costly for school districts to educate.

David Hinojosa, an attorney who represented a group of school districts in poor parts of Texas in the case before Dietz, said the Legislature could first focus on improving funding to the neediest areas to avoid the sticker shock of immediate, across-the-board funding increases to schools.

"It can concentrate its resources on the high-need children such as the English Language learner and low-income students and raising the floor up, and then work from there to see what more-capacity school districts need," Hinojosa said.

Dietz's ruling means nothing changes immediately in school finance. The Texas attorney general's office has the option of appealing the decision straight to the state Supreme Court, which, if it upholds Dietz's ruling, would order the Legislature to overhaul the way the state pays for its schools.

Since the legislative session ends in May, though, such a ruling will almost certainly mean convening a special session on school finance in 2014. But allowing the case to make its way through lower appeals courts before it reaches the Supreme Court could be a better political option.

Republicans in the Legislature might not want to vote in favor of increasing school funding until after the March 2014 primary to avoid tea party challenges. The longer the case takes to get to the high court, the longer a potential special session is delayed.

"Moving forward, we don't expect the Legislature to do much," Hinojosa said. "It's likely to be decided in about a year or so from the Supreme Court."

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