David Anthony is the superintendent of Cypress-Fairbanks Independent School District, the third-largest ISD in Texas.
Bill Hammond is a former state representative and the president of the Texas Association of Business.
Louis Malfaro is the secretary-treasurer of the Texas chapter of the American Federation of Teachers, the country’s second-largest education union.
Scott McCown is a former district judge and the executive director of the Center for Public Policy Priorities.
Robert Scott is the commissioner of the Texas Education Agency.
Arlene Wohlgemuth is a former state representative and the executive director of the Texas Public Policy Foundation.
jake silverstein, editor, texas monthly: We all know that Texas is facing a severe budget shortfall, and we know that some of the plans put forward this session include drastic cuts to education, anywhere from $4 billion to $10 billion. But I want to start by talking about how we got here. Judge McCown, you heard every school finance case from 1990 to 2002. Let’s hear your perspective on this.
scott mccown: Texas has always been a low-tax state, and yet it’s always been a state that believes in education, and I think that struggle has intensified because of the Great Recession, which is responsible for a portion of our shortfall. But it comes on top of the 2006 creation of a structural deficit, 1 so it was a double whammy.
1In 2006, facing an order from the Supreme Court, the Legislature cut property taxes, one of the main sources of money for public schools. To cover the difference, it raised cigarette taxes and adopted a “margins tax,” which is a modified business income tax (this is also known as the “tax swap”). The margins tax, however, did not produce as much as initially estimated, leading to what many have referred to as a “structural deficit,” an ongoing gap between revenue and spending.
silverstein: Is that how other folks at the table see it?
david anthony: Well, one of the analysts for Standard & Poor’s in Dallas has indicated that the biggest problem in Texas right now is the property tax buy-down in 2006. Not the recession, even though the down economy certainly has an impact.
robert scott: But the scope of the problem is far beyond even those two items. It’s not just that the tax swap of 2006 failed to deliver. It’s not just that the Legislature didn’t appropriate enough. It’s that you also have growth of 70,000 to 80,000 students per year.
bill hammond: The shortfall established by the tax not producing as much money as the comptroller estimated it would is 20 percent of the problem. Everybody keeps talking about the structural deficit based on the franchise tax, but like the commissioner just said, that’s a relatively small part of the problem. You’re creating a new Fort Worth ISD every year.
mccown: I don’t think it’s 20 percent. I think it’s a full third. We’ve got a structural deficit that’s $10 billion; we’ve got a shortfall that’s $30 billion.
louis malfaro: It’s a $5 billion annual shortfall.
mccown: That’s the cost of maintaining current services.
arlene wohlgemuth: Well, that’s the cost of the LAR,2 but the Legislature has never funded all of that.
2Before a legislative session, every state agency and institution prepares a Legislative Appropriation Request, which outlines funding requirements and needs for the upcoming biennium.
mccown: No. It’s not the cost of the LAR, it’s the cost of what the LARs say they need to maintain current services. It’s not the wish list beyond that.
wohlgemuth: But even that has never been fully funded. Even in good years.
malfaro: I think Scott raised an interesting issue, this tension in Texas between wanting to be a low-tax state and wanting to be a leader in education reform. Look at the Quality Counts report that Education Week3 comes out with every year. In “Standards” they give us an A because we have built an academic system with high expectations. On “Implementation” we get a C because we’re not reaching those standards. On “Funding” we get an F, benchmarked against other states around the country. So clearly the funding is where we are falling down. A lot of us feel like for the money that’s being spent, Texas is actually doing fairly well. The problem is, we’re a laggard when it comes to real investment in education.
3Education Week is a national newspaper run by the nonprofit Editorial Projects in Education. It publishes an annual report card, known as Quality Counts, on the quality of education in all fifty states.
hammond: I don’t agree with that for a minute. In the first place, I don’t think there is any relationship between funding and academic performance. I don’t think anybody has ever shown that.
wohlgemuth: Not only that, but personnel has