School panel gives 'menu of options'
Finance committee offers 5 plans; few seem likely to fly in Austin
By TERRENCE STUTZ / The Dallas Morning News
AUSTIN - A special House-Senate committee charged with finding fixes for the state's troubled school-finance system has completed a yearlong review without settling on specific recommendations for the Legislature.
Instead, the Joint Select Committee on Public School Finance will send lawmakers five alternatives for funding education, according to a draft report obtained by The Dallas Morning News on Tuesday. Experts said most of the options would find little support in the Legislature.
The report also lists several possible revenue sources to ease the burden on local property taxpayers.
Possible sources of funds for public education
. A voluntary or mandatory state income tax
. Expansion of the business franchise tax
. Closing of loopholes in the business franchise tax
. Elimination of sales tax exemptions
. An increase in professional license fees
. Raising the current $1.50 cap on local property taxes for schools
. Penalties for businesses that fail to declare taxable personal property
. Mandatory disclosure of property sales prices, which could boost tax valuations and, as a result, collections
SOURCE: Joint Select Committee on Public School Finance
Most of the funding proposals would diminish or end the sharing of property taxes by high-wealth districts - the most criticized aspect of today's $26 billion-a-year finance system. But the cost of doing so now would be prohibitive, according to key lawmakers, who say that the state would have to substantially boost school aid at a time when finances are tight.
The report comes after an election year in which candidates from both parties called for changes to the state's school-funding law, dubbed "Robin Hood" by critics.
A leader for the 118 high-wealth school districts that must share their property tax revenues said the group was disappointed that no changes appeared imminent.
"The committee's report is troublesome, but not surprising," said John Connolly, executive director of the Texas School Coalition and former superintendent of Highland Park schools. "We'll still be looking for some kind of holding action by the Legislature to keep people alive."
Among the committee's proposals were creation of a statewide property tax for schools, suggested by acting Lt. Gov. Bill Ratliff. Sen. Florence Shapiro, R-Plano, proposed overhauling the system so that funding is based on an independent study of what it actually costs to educate a child.
Another plan would shift business and other nonresidential property from tax rolls of high-wealth districts to those of low-wealth districts, equalizing their sources of property tax revenue. Two other plans would increase funding for most districts - one dramatically - while reducing the amount of property tax revenue-sharing.
"It is a menu of options rather than a directive," said Sen. Teel Bivins, R-Amarillo, chairman of the select committee. "We wanted to do the spade work on as many options as we could and give our best guess as to the costs."
The senator acknowledged that when the 18-member committee began its work last year, he had hoped that some proposals might win a consensus.
"But the reality is that it is very difficult to get a consensus when it comes to education funding," said Mr. Bivins, who is also chairman of the Senate Education Committee. He also said lawmakers on the panel were reluctant to "lay out any bold plans" when it was unclear who would become governor, lieutenant governor and House speaker prior to the Nov. 5 election.
Rep. Kent Grusendorf, R-Arlington, a member of the select committee, said that given the uncertainty of the legislative leadership and the projected $5 billion revenue shortfall in the next two-year state budget, it was "appropriate" that the panel not give specific recommendations.
"We have been through this fight [on school finance] several times before, and it's very difficult to come up with a plan in the first place. With the revenue shortfall, it becomes even more difficult," said Mr. Grusendorf, who many lawmakers believe will be appointed chairman of the House Public Education Committee next year.
Besides the five funding options, the select committee report also laid out several possible sources of revenue to boost funding for schools.
Among those were a voluntary or mandatory state income tax, expansion of the business franchise tax and closing of loopholes in the tax, raising the current $1.50 cap on local property tax rates for schools, elimination of sales tax exemptions and an increase in professional license fees.
Many of those proposals have been pitched to the Legislature in the past without success.
Some committee members also suggested ways to increase local property wealth, such as mandatory disclosure of property sales prices and penalties for businesses that fail to declare all personal property subject to taxation.
The report cited estimates indicating that as much as $36 billion in taxable property is not reported or is under-reported by businesses in Texas.
Experts said most of the revenue-raising suggestions would find little favor in the Legislature, especially the new Republican-dominated House, where all tax bills must originate.
GOP leaders have ruled out any tax bills for the 2003 legislative session.
When the select committee was originally appointed after the end of the 2001 legislative session, several members said they were interested in finding a way to eliminate the so-called Robin Hood provisions of the funding law.
But they have acknowledged in recent months that probably can't happen because of the state's tight budget situation over the next two years.
They note that high-wealth districts will be sharing as much as $2.5 billion of their property tax revenues with other districts over the next two years - funds that would have to be replaced by the state to end revenue sharing.
"I would love to get close to the edge of Sherwood Forest, but I don't know when we'll be able to get all the way out," Mr. Bivins said.
One of the proposals that several Republicans have voiced interest in is an adequacy study to determine the actual cost of meeting educational standards set by the state.
Ms. Shapiro has championed the idea, saying that it only makes sense that the state set academic standards and then determine how much it will cost to help students meet those standards.
"Once we know what the cost per student will be to reach those standards, we can start looking at where we'll get the money," said Ms. Shapiro, who would like to have an independent consultant perform the study before the 2005 Legislature convenes.
In the meantime, she said, lawmakers should provide some relief to school districts in the next session to help ease the tremendous finance pressure that many are experiencing. Mr. Bivins also has endorsed that approach, suggesting that lawmakers could find up to $1 billion in new funds to help public education over the next two years.
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