Disaster!

New taxes to offset tax cuts for the rich and no new revenue for the schoolchildren of Texas? The Legislature must be back in session.

April 2005By Comments

IT’S A COMMON JEST around the Capitol that, as New York judge Gideon Tucker remarked back in 1866, “No man’s life, liberty, or property are safe while the Legislature is in session.” Only this time, it’s no joke. The school finance bill passed by the House—barely—in early March is a disaster. It sets the wrong priorities and it benefits the wrong school districts. If it becomes law, it will imperil the future of Texas.

The first priority of state government used to be education. Today it’s tax cuts—specifically, cuts in local property taxes that provide the bulk of the revenue to run the state’s school system. The school finance plan, sponsored by Kent Grusendorf, of Arlington, chairman of the House Public Education Committee, and backed by House Speaker Tom Craddick, calls for $11 billion in property tax reductions. All of the new tax revenue that will replace property taxes will be used solely to offset the cuts and end the Robin Hood school finance plan, which the Legislature adopted a dozen years ago. Not one cent of this new revenue will go to the public schools.

Make no mistake: Robin Hood deserves to die. That scheme, as surely everyone knows by now, came into being because the Texas Supreme Court had demanded equity in funding between property-rich and property-poor school districts. Under duress, the Legislature required the former to ship hundreds of millions of their local tax dollars to the latter. The solution was supposed to be temporary, until the Legislature got up the courage to find the money elsewhere. Guess what? Courage does not come naturally to the Texas Legislature. Over time, the hundreds of millions have become billions, so that Highland Park, the quintessential Robin Hood victim, today sends 70 percent of its locally raised property taxes to poor districts. Democrats were only too happy to let the rich districts bear the burden of equity, and Republicans failed to embrace a proposal backed by Governor George W. Bush in 1997 that would have provided some property tax relief. Now the tax cuts ensure that Robin Hood will be entombed, but all the money is going for the funeral and nothing is left over for the heirs.

The resistance to committing new tax dollars to education is getting to be a familiar story for the state’s GOP leadership. In 2003, faced with a $10 billion revenue shortfall, they cut education funding rather than raise taxes. Last spring, Governor Rick Perry called lawmakers to the Capitol for a special session to reduce local property taxes and replace the lost revenue with a state property tax, but he opposed using any of the new money for education. The House rejected Perry’s plan and passed a different Grusendorf proposal without discernible enthusiasm; it died, unmourned, in the Senate. Who knew that would be the high point, so far, for public education in the Republican era? The current proposal is far worse; it violates the principle of “First, do no harm.”

Of all the things you’d think that the Legislature would not do, foremost on the list would be to endanger funding for hard-to-educate students: those from families below the poverty line or who do not speak English. It has long been established that these students cost more to educate than those from middle-class families. They need more individual attention (especially in preparing for the standardized tests by which school performance is judged) and more special programs (bilingual education, for example). The Legislature previously acknowledged this with a system of “weights”—formulas that provide extra funding for students who need the most help. In the current funding system, students who qualify for compensatory education get 20 percent more funding than the basic per-pupil spending level of $6,861 per year. Students in bilingual education get 10 percent more. As the basic per-pupil grant has risen over the years, so has the funding for these weights.

No more. Grusendorf has done away with weights. The schools will get a fixed amount per pupil for compensatory and bilingual education—a little more than they receive now. But the amount will not grow unless the Legislature votes to increase it. What’s more, under the new bill, compensatory and bilingual money is no longer earmarked. School districts don’t even have to spend the money on those programs. They will be pressured by teachers’ groups to use the money for salary increases instead.

This is madness. Everybody—except, it seems, the Texas House of Representatives—understands the demographic future of Texas: Fail to educate these kids and you condemn the state to a low-wage economy and a bleak future. During the past ten years, public school enrollment has grown statewide by almost 800,000 students, more than 60 percent of whom qualify for compensatory or bilingual aid.

Perhaps there are rationales behind getting rid of weights, you may be thinking. Well, there are, sort of. One is Grusendorf’s belief that weights make the school finance formulas too arcane for average legislators to understand (which is another way of saying that they suspect that their school districts back home are getting shortchanged). The formulas may be complex, but they aren’t written in Greek, and they aren’t beyond the reach of any lawmaker willing to learn them. Another rationale is that when the Legislature cuts spending—and the elimination of weights amounts to a spending cut in future years—it sweetens the pill by allowing  more flexibility in how the money is spent. But the Legislature could have provided school districts the flexibility without restraining future spending. The reason they didn’t, one suspects, is that an unstated purpose of this bill is to restrain future spending on education.

That leads us to a third rationale: plain old politics. Weights benefit districts with hard-to-educate students. These tend to be urban districts with lots of apartment kids and poor rural districts. They tend not to be suburban districts, where a big majority of Republican voters live. Without weights, fewer dollars will flow to urban districts for compensatory and bilingual programs, leaving more dollars available to be sent to the suburbs. Take, for example, a new program in the House bill to provide school districts $500 for every kid in high school. This sounds politically neutral, but it isn’t. The winners are suburban districts with low dropout rates; the losers are urban and South Texas schools where high dropout rates are pandemic. The high school grant, like the new money for hard-to-educate students, can be used for anything districts want to spend it on.

Supporters of the House plan point out that it puts $3 billion more into public education and that every school district in the state will receive at least a 3 percent increase in funding. None of this new funding will come out of tax dollars, however. The plan is to raise revenue from casino gambling; if lawmakers reject gambling, the alternative is to cut the overall state budget by $3 billion—a huge amount of money that can be amassed only by dipping into the big pots of health care and higher education, with unavoidable consequences. (A recent study by economist Ray Perryman concluded that the 2003 cuts in health care cost the state $4.4 billion in gross product, $3 billion in personal income, and $1.5 billion in retail sales.) Even so, much of the promised $3 billion is a shell game, a case of the Legislature giving with one hand and snatching back with the other.

Here’s how it works. One of the big battles in educational policy is that Democrats tend to favor across-the-board pay raises for teachers, while Republicans tend to favor merit and incentive pay—no one more so than Grusendorf, who believes, correctly, that across-the-board pay raises reward the unworthy and keep them in the profession. His bill calls for districts to provide incentives to teachers for volunteering to mentor younger teachers, for choosing to teach in low-performing schools, for getting students to improve their performance on standardized tests. So far so good. But his bill doesn’t provide any money. Instead, 1 percent of every district’s budget must be used for incentive pay. Poof! There goes a chunk of the promised $3 billion. And that’s not the only claim on the “new” money. A $1,000 teacher health insurance payment, formerly provided by the state, must now be paid for by the districts. Gifted-and-talented programs, which used to be state-funded, are now a local district responsibility. The state has always provided textbooks to school districts, but starting with the 2006—2007 school year, districts must buy their textbooks, at a total cost statewide of $400 million. All of the above are claims on the $3 billion. This is a little like a parent telling a teenager, “I’m going to raise your allowance, but you have to buy your own clothes and pay for your own gasoline.” It’s phony money.

How did we get, in a decade, from education reform to education retrenchment? One answer is the personality of the governor. This kind of school finance bill would never have had a chance when Bush was in office—or Ann Richards, or Mark White. Perry has never made public education funding a priority, just tax cuts; indeed, the accompanying bill raising other taxes to pay for the property tax cuts includes a Perry-backed provision that 15 percent of future growth in state revenue must be spent on further property tax reductions. A second reason for the lack of support for public schools is a widespread belief among conservatives that billions have been poured into education with little effect. Not true: From 1997 to 2002, according to a Manhattan Institute study, the Hispanic high school graduation rate in Texas increased from 51 to 57 percent, while the national average remained flat at 52 percent. California gained one point, to 54 percent; Florida lost 4 points, to 50 percent. The gain among African Americans, from 55 to 66 percent, is even more dramatic.

But the blame doesn’t fall on Republicans alone. Democrats had their shot at fixing school finance in the early nineties and chose the divisive route of putting the burden on rich districts. The business community is too scared about getting taxed to worry about the future of the state. Finally, the school community deserves part of the blame for their plight; they approach the Legislature with a haughty and unrealistic sense of entitlement rather than saying, “Give us the money and here’s what we’ll do with it”—and it can’t just be incremental raises in salaries.

Two months remain in the legislative session. Lieutenant Governor David Dewhurst and the Senate have yet to be heard from, and the governor could step up, but in the meantime, none of us—especially the schoolchildren of Texas—are safe.

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