Texas schools may face a wilderness of funding

Just beyond the Houston ship channel, among the petrochemical stacks, sits one of Texas's poorest school districts. More than 80 percent of students are minorities. Many don't speak English as a first language. Their parents don't drive Lexuses.

Yet the Galena Park Independent School District is also the state's largest "exemplary" district - the highest rating given out for performance. The reason, say educators: Robin Hood.

That's the name of the state's current school-funding system, under which wealthy districts are forced to share property-tax revenues with poor ones. For Galena Park, one result is innovative programs for struggling students. But in wealthier districts, revolt has long been simmering. And as education budgets tighten across the state, suburban parents are saying, in effect, "We want our money to stay right here."

The clash over education funding is surfacing with greater intensity nationwide. In Vermont, where a similar law seeks to spread the wealth, one town seceded from the public-school system. Dozens more have raised millions for their own schools, through private funds that bypass the state. And in New Hampshire, the supreme court ruled in favor of a coalition of towns with scant property wealth, who claimed the state put unfair pressure on local communities to raise funds.

School funding, long one of the states' most perplexing issues, often gets legislative attention only under court order. Currently, 20 states are being challenged in court for failing to provide adequate funding to all schools.

The rich-school-poor-school gap has always been a sore point. But in an era of slashed budgets and new demands on school performance, districts are showing fresh desperation, and dismay.

Now, the Texas Supreme Court has agreed to hear a case aimed at dismantling the current funding system. Arguments are scheduled for March 27, and a quick decision may force the Texas legislature to deal with it this year.

Although many lawmakers agree that the system is broken, they've been reluctant to fix it - even in years when they haven't been preoccupied with a $10-billion budget shortfall.

"It has all the makings for a perfect storm," says Steve Smith, who studies education finance for the National Conference of State Legislatures in Denver, Colo. "In the middle of a difficult budget time nationwide, No Child Left Behind requires that all children perform at a proficient level by 2014." Since only one-third of US children currently perform at the mandated level, he says, "that's a 200 percent increase in productivity without a significant increase in funding."

Since the 1970s, some states have improved funding for poor school districts by shifting from reliance on local property taxes - which give richer districts a huge advantage - to greater reliance on state taxes for school revenue. Thirty years ago, local revenue sources paid for 52 percent of school funding nationwide, with states footing 40 percent of the bill. Today, local revenue sources pay for about 44 percent, with states picking up nearly half of the total cost.

The issue has been especially tough for states such as Texas and New Hampshire, which have no income tax. In Texas, the legislature has compounded the difficulty by limiting the amount it's willing to spend on education, sliding its percentage from 50 percent in the 1980s to about 40 percent today - leaving Texas districts with the highest local burdens in the country.

"The state needs to be putting a lot more money into the system," says Buck Wood, an Austin attorney who represents many of the poor school districts. "It is falling down on its job to properly fund schools and ... has shifted the burden to the local taxpayer."

There are several bills in the legislature right now, including one that does away with Robin Hood by 2005, and another that proposes a state income tax to help fund schools. Many believe it's time Texas implemented an income tax, as the simplest way to raise cash.

"There is no way to solve this problem without a huge new source of revenue," says F. Scott McCowen, executive director of the Center for Pubic Policy Priorities in Austin and a former judge who presided over years of Robin Hood challenges. "The only answer is the income tax. Texas is trying to fund an entire state government out of a sales tax on goods. And as a result, public education competes with everything else in the budget."

But legislators have been unable to agree on a solution, partly because a new plan would require an increase in spending and taxes - something Gov. Rick Perry has said he won't allow. "Many people got elected on the pledge to slay Robin Hood, so they can't go home without addressing it," says Michael Hinojosa, chairman of the Texas Association of School Administrators' legislative committee and a school superintendent. "The question is: Who is going to blink first?"

Back in Galena Park, school officials say they're confident that the legislature can find a workable system - though they're quite happy with the current one. Robin Hood funds have enabled them to provide individual instruction to struggling students. Galena Park's "pull-out program," for instance, shifts the five lowest performers in each classroom into a smaller class.

"Robin Hood has worked great for us," says Mike Seale, Galena Park's chief financial officer. "If the state throws out the Robin Hood plan and doesn't come up with a mechanism [to] generate what Robin Hood did, we will not be able to be as successful."