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Texas School Funding Saga Continues

by Ken Parsons, Senior Vice President, Dallas, December 2012


Property taxes are the main funding source for Texas public schools. The battle over how school finance should be structured has been going on for decades and there's no end in sight.


Numerous lawsuits were filed this year by school districts across the state. The cases coalesced into one trial presided over by state District Judge John Dietz in Austin, which began Oct. 22.


System is Broken


Attorneys for the school districts told Judge Dietz that the state's funding system is "hopelessly broken" and repairing it could end up costing billions of dollars.


Schools in both property-rich and property-poor districts are calling for reform. They point out that their funding has been cut even as the state requires schools to prepare students for standardized tests that are getting more difficult.


Long Running Conflict


The Texas Supreme Court ruled in 1989 that the school finance system is unconstitutional. After subsequent overhauls by the Legislature, the high court again found the system unconstitutional in 1991, 1992 and 2005.


The Legislature cut local school property taxes by one-third in 2006 and tried to replace them with a business margin tax. However, the margin tax fell far short of expectations.


In 2011, lawmakers cut $4 billion in spending for schools and $1.4 billion in grant programs to help balance the budget. This caused per-student funding to drastically drop at the same time that enrollment increased by 80,000 students a year.


Back to the Drawing Board


Whatever Judge Dietz decides, it's likely to be appealed to the Texas Supreme Court once again. If the court rules against the state, it will again be up to the Legislature to try and fix the system.


The current lawsuit could take several more months. That would mean that the ruling may not come in time for lawmakers to tackle the issue during the 2013 legislative session. As it now stands, the saga continues.