I just wrote a 23 page report on Texas school finance

From Politics to Progress,
What Alternatives Are Left?

Texas school finance has been a highly contentious issue since the days after World War II and its polemic nature shows no sign of dissipating soon. School finance in Texas works under several competing core values: adequacy, equity, efficiency, legitimacy and liberty. The different concepts cause lawmakers to balance local control issues with the idea that children in Texas need a sufficient level funding through a fair distribution of resources. Moreover, all of this must be realized in such a way to produce maximum effect with minimal effort and still it must appear reasonable to the constituents of the state. This is an extremely difficult and arduous task to undertake. The battle for education funding has been a long, hard road, and for the foreseeable future, it will continue...

There will also have to be a paradigm shift in thinking regarding taxation in the state. Its citizens must realize that even though there is no state income tax, the citizenry is simply being taxed in other ways that in effect are more regressive. As a consequence, the state has had to develop more and more complicated state tax structures that lead to higher degrees of inefficiencies. This causes more litigation on the part of individuals or organizations that feel wronged by the tax system. In reality, the children are the ones who lose. In the end, it will probably take continued court action and political persistence on the part of some brave and respected legislators to force the needed change in education finance.

Others offer much more specific tax related reform. Former Lieutenant Governor Bill Ratliff has developed a plan to completely redefine Texas school finance (Dyson, 2004). His plan would call for a constitutional amendment to abolish local school property taxes for maintenance and operations and then establish a statewide property tax to pay for education. His plan also permits local enrichment taxes that could be levied in Tier II. Finally, it would restructure the tier structure of school finance although it would remain three tiers. In Tier III, he wants the state to guarantee a yield of $35.00 per penny of tax rate per ADA for all debt service on educational facilities up to $0.30. (Dyson, 2004) His plan may have opposition, especially from those that want more local control even though these districts still could maintain some sort of local control in the form of the enrichment taxes in Tier II. Additionally, a state wide property tax is not seen as favorable.

Still others are calling for a state income tax to fund education. The Center for Public Policy Priorities (2005) has called for a state income tax because in its view all other options will not sufficiently cure the school finance situation in Texas. This institution sees the Legislature’s failure to fund education and the reliance on local property tax revenues as the primary reasons for the trouble Texas schools currently face. At present, Texas has the thirteenth highest property tax bill in the nation. Furthermore this group sees raising the sales tax a poor option. The members of this group see the tax as too regressive. They report that four-fifths of Texas families would be worse off; especially those whose incomes are less than 21,797 (The Center for Public Policy Priorities, 2005). This concurs with the concerns by Zodrow (2004). He claims that any sales tax expansion that would disproportionably affect the poor could be offset by introducing a targeted means-tested sales tax rebate through use of the Lone Star Card program. However, if four-fifths of the families would be worse off, only targeting the poor would still leave a large proportion of middle class families struggling with a larger tax burden. The Center for Public Policy Priorities (2005) sees the only solution for funding education as a personal income tax coupled with an expanded sales base to include certain services while at the same time closing loopholes in the business franchise tax. This sentiment is echoed by Zodrow (2004) as well who advocates significant changes to the tax system in Texas although he recognizes that such strong opposition to a state income tax would render this possibility moot.

Does the current system need a complete overhaul? Does it fail entirely to meet its original intentions? Fiscal neutrality has increased over time. This was the intention of the system (Imazeki & Reschovsky, 2003). The next question is if the current finance system is adequate. This is difficult to answer as equal dollars does not mean equal performance (p. 15). In fact, some districts may indeed require more money than others in order for their children to receive an adequate education because of special needs. The current system tries to account for this in weighted formulas it has for per-pupil spending. These are the weights termed Cost of Education Index or CEIs. However, politics enters the fray once again. Even though the adjustments are in place, they are probably not adequate and quite possibly are developed less on the real need of any given district but more as a result of political negotiations (p. 17). Using a cost index function, it has been determined that the current school finance system does not adequately support all the students in Texas especially those students who are poor and are considered English language learners, ELLs (p. 17). These CEIs are antiquated in the views of some analysts (Taylor, L., Alexander, C., Gronberg, T., Jansen, D. & Keller, H., 2000). The CEI increases the amount the state aid received by school districts and it also reduces the amount of local revenue that is distributed through recapture. In a separate, more recent study, the same conclusions were found. The CEI mechanism is sorely outdated and needs to be recalculated since it relies on data that is from 1989 (Taylor, L. 2004). A large part of the CEI calculation is a function of teacher
From Politics to Progress 12.
salary across neighboring districts (Texas Center for Educational Research & Texas Association of School Boards, 2001). Allan Odden (2003) has made it clear that any finance reform must address issues of teacher salary since it will take highly qualified individuals to teach today’s students in the era of accountability and standards. Quite possibly, the Legislature simply does not want to recalculate this mechanism for fear of having to increase state aid. It is a cynical point of view but given the Legislature’s hesitancy to realize real change in the system, that point of view may be appropriate. So, two factors are affecting adversely the adjustments, politics and an insufficient formula in place to determine the adjustments.
Clearly the Legislature needs to act with better solutions. State aid has been steadily falling mainly because the foundation formula, Tier I, and the guaranteed tax base formula, Tier II, are not automatically adjusted for the rising costs of education (Imazeki, J. & Reschovsky, A, 2003). What this means is that as property values rise, state aid decreases. However, many districts can not recoup the difference in loss of state aid as they are at or near the $1.50 property tax cap. At the same time, the state and federal government expect more rigorous standards of performance. This is creating another rise in the cost of education. Finally, districts in Texas with high populations of low-income families and ELLs are too struggling to meet the added costs of educating these children even with the adjustments in their allotments.

Lie of the Week
http://www.salon.com/politics/feature/2000/07/07/lie_week/
(snip)
But in healthcare policy circles, Bush has actually been rather notorious for trying to make sure the program covers as few kids as possible. Though the program allowed states to insure kids at up to double the poverty line -- or 200 percent -- Bush first tried to limit coverage to kids whose parents made up to 133 percent of the poverty line, later agreeing to bump it up to 150 percent. Bush fought tooth and nail with the state legislature to keep coverage to 150 percent, rather than the more generous 200 percent. In human terms, this meant denying coverage to roughly 200,000 Texas children. The legislature eventually won, and Bush signed the bill. But Bush fought it every step of the way.

So, signed it? Yes. But "embraced" it? Well, that sounds like a bit of a stretch. Doesn't it?
(/snip)