School Financing Proposal Unveiled

AUSTIN – Texas property owners would pay a statewide property tax of $1.40 per $100 assessed value to finance the $24 billion public school system under a plan unveiled Wednesday by acting Lt. Gov. Bill Ratliff.

The proposal, which would require passage by the Legislature in 2003 and a statewide vote to amend the Texas Constitution, would abolish the authority of the state’s 1,040 local districts to assess some – but not all – property taxes.

Under the proposal, for example, local districts could no longer levy taxes for maintenance and operations, but could levy property taxes for debt service and for extra educational enrichment activities. The state would guarantee a certain minimum level of revenue for poorer districts that levy taxes for debt and educational enrichment.

Ratliff, author of the state’s current “Robin Hood” funding system, which roughly equalizes revenues between poor and wealthy districts, said his replacement system would not increase the overall property tax burden for the average Texan.

He said it would maintain the state’s present $15,000 homestead exemption, but prohibits optional exemptions now provided by local districts.

“I designed it specifically to be revenue-neutral,” Ratliff, R-Mount Pleasant, told a special committee of state lawmakers considering a retooling of the current system. “I think the primary advantage is that we get away from the fact that some school districts have to raise money to get sent somewhere else.”

State Rep. Paul Sadler, the Henderson Democrat who leads the House Public Education Committee, complained that the proposal could put lawmakers in the unenviable position of grappling with new tax legislation during each of their biennial sessions.

And state Sen. Teel Bivins, R-Amarillo, leader of the Senate Public Education Committee, questioned whether Ratliff’s plan is the “mother of all Robin Hood systems.”

“This plan proposes to take away local revenue controls,” Bivins said.

But state Rep. Todd Smith, R-Euless, said Ratliff’s plan would end up providing some districts with additional revenue for the same tax effort. “I will not discard this out of hand,” he said.

Under the $1.40 tax proposed by Ratliff, the owner of a $100,000 house would pay the state $1,190 in annual property taxes.

But under caps currently written into the state constitution, local districts could then levy an additional 60 cents in property taxes per $100 valuation. That equates to an additional $510 in property taxes for the owner of a $100,000 home.

Ratliff’s plan also provides additional state funding for property poor districts that assess between 1 cent and 10 cents in property tax for educational enrichment. It would also provide additional funding for property-poor districts that assess from 1 cent to 30 cents for debt service.

Ratliff said his proposed system would bring more than 98 percent of Texas schoolchildren into an equalized funding system, increase funding for poor districts, and make it easier for future legislatures to increase teacher pay, finance health insurance packages for school employees and other public education needs.

He said the state provides slightly more than 40 percent of the funding for public schools under the Robin Hood system, with local property taxes and federal dollars paying for the rest. Under the new system, the state would finance more than 90 percent of local education needs.

It would also end a component of the current system in which property-wealthy districts levy certain minimum property taxes and then cut a check to the state to redistribute some of the local property tax revenues to poorer districts.

However, it would also leave more than 80 of the state’s wealthier districts with less available revenue than would be available under the current system, said Ratliff.

Arlington school district Superintendent Mac Bernd said the plan’s basic allotment would bring Arlington about $500,000 more than the current finance plan does.

“The big benefit to us would be the provision which pays for teacher health insurance,” Bernd said. Arlington will spend close to $10 million on health insurance this year, he said.

“I think his plan shows promise,” Bernd said of Ratliff’s proposal. “Educational finance in Texas has reached a critical stage – obviously something has to be done. It could really go a long way to address the structural problems.”

Peggy Venable, state director of the conservative Texas Citizens for a Sound Economy, said the measure would also lead to less local control. “The devil is in the details, and this plan is full of troubling details,” she said. “Instead of instituting a new tax, we need to look at what constitutes a basic or adequate education … This plan simply funnels more tax dollars into education without asking any questions regarding outcome.”

Bill Allaway, president of the Texas Taxpayers and Research Association, questioned whether the state’s patchwork of 253 local tax appraisal districts could fairly administer the plan. “There is no silver bullet,” he said.

The current push to redo the state’s school finance system comes after unsuccessful lawsuits by several of the state’s wealthier districts. They claimed that the current system limits their ability to provide a quality education.

Advocates for poor districts also say too large a funding gap remains within the current system.

Complicating matters is the continued increase in enrollment – which has caused expenses to increase – as well as a shortage of facilities and teachers. But a statewide property tax may be a tough sell, especially in an election year.