TEXAS PUBLIC SCHOOLS: WHO RUNS THEM? WHO PAYS FOR THEM? DOES IT MATTER?

These three questions frame an issue that is older than the Republic of Texas and as current as the most recent court decision or the last speech in the governor’s race. The questions of who controls and who pays for public education are linked in a surprising way; the issue of whether the answers to the first two questions really matter is also surprisingly complex. At the base of the problem is a Texas tradition of confusing good intentions with good policy.

Who Runs Them? A History of Governance

When Texicans revolted against Mexico in 1836, they cited their grievances in their Declaration of Independence. One of the complaints was that Mexico had failed to establish a system of public education. But when the Texicans won their independence, they proved to be no better educators than the Mexicans. To be sure, the Texas Constitution of 1836 declared that “It shall be the duty of Congress, as soon as circumstances permit (emphasis added), to provide, by law, a general system of education.” Despite this formal declaration of the importance of education, it was not until many years later that Texas began to develop a system of public schools.

In fact, there exists no clear evidence that the Republic of Texas ever wanted a state-supported and state-controlled system of schools; the congress merely provided an endowment to each county and then left to parents the maintenance and support of schools. In keeping with practice in the United States, the Constitution of 1836 did not prohibit private or denominational schools from receiving public aid, and several private academies received assistance through land grants. In other words, to the extent that the Republic did anything at all about education, it provided a voucher system and not a very generous one, since the allotment per student in 1854 was 62 cents per year.

After Texas became a state in 1845, the First Texas Legislature adopted a policy that would result in a state system of public schools six decades later. The policy allowed incorporated cities to establish and support public schools at local option. Voters in Corpus Christi refused to vote the tax upon themselves, and Galveston abandoned its education tax in 1848, even though voters had approved it. Thus, almost a century and a half ago, Texans first showed that they were willing to do almost anything for public education except pay for it.

In 1856, the legislature declared all schools to be “public schools” for per capita distribution purposes. Since parents could send their children to a private school and draw the per capita apportionment, the voucher system was still in operation. Between 1856 and 1870, the most important institutions for learning in Texas existed outside of the public school system, which was virtually nonexistent outside of incorporated cities.

The Constitution of 1869 provided the framework for the most highly centralized public school system ever imposed in Texas. Among other things, the constitution included a strong state superintendent’s office, mandatory districting of counties, compulsory attendance, and an obligatory local property tax not to exceed $1.00 per $100.

The first state board of education was created in 1871. It consisted of the state superintendent, the governor, and the attorney general. It had absolute control over education, and state supervisors–not locally elected boards–appointed teachers.

In 1928, the legislature replaced the board defined by the constitution with a nine-member State Board of Education appointed by the governor. Twenty-one years later, the legislature decided that the board should consist of one member elected from each congressional district. By 1984, the board had once again become appointed, this time with fifteen members. In 1989, the legislature again changed its mind and decreed that each of the fifteen board members should be elected from a separate district. In 1990, the board’s power to appoint a commissioner of education was transferred to the governor. And so it is today.

In short, in the last century and a half, public education in Texas has been governed in just about any way imaginable. The state governing body has sometimes been constitutional, sometimes statutory. It has varied in size from three to twenty-four members. It has been appointed. It has been elected from districts of various sizes. In this period, public education in Texas has sometimes been governed by rigid systems of state control and at other times by rather decentralized systems.

Ironically, the current trend toward decentralization has led to a concentration of power in an individual to a degree unknown even in the days of the Republic. In 1991, the legislature granted the power to the commissioner of education to waive state law as well as State Board of Education rules and policies. The current commissioner has done so about 2,200 times. Concern about the role of the Texas Education Agency prompted the 73rd Legislature to create the Joint Select Committee to Review the Central Education Agency. That committee was charged with reviewing the structure of the agency and the regulations it has promulgated. In August 1994, the committee endorsed a “charter school” program, which would allow school districts, with voter approval, to design and run their own education programs within board performance standards.

Controversies about school governance are by no means confined to the roles of the state and the school districts. As we all know, there is now controversy over the roles of the school boards and the individual campuses. In the last ten years, the trend has been toward decentralized management. In 1984, House Bill 72 declared that the principal should be the academic leader of the campus. In 1991, the legislature decided that each campus should be run by a committee of parents and teachers, and that each school board should develop a plan for this site-based management. Both concepts are now set forth in state law, although statutory language sometimes appears to have little to do with what goes on in the classroom.

These shifts in governance have been aimed at improving the quality of public education. About once a generation, it appears, the public becomes sufficiently concerned about the quality of the public education to make major changes. In the late 1950’s, at the height of the Cold War, the Russians launched the first satellite. Sputnik made education a national security issue in the United States and resulted in increased federal funding for mathematics, science, and technology.

In the early 1980’s several national reports deplored the quality of public education. “A Nation at Risk” compared the American education system unfavorably to those of other major industrial democracies: Great Britain, France, Germany, and Japan. That report questioned the ability of the United States to compete economically with those countries. It concluded that public education in this country was so poor that, if imposed on the United States by a foreign power, it would be an act of war. The call to action was heeded in Texas, Tennessee, Florida, and a few other states. House Bill 72 was Texas government’s response. The public response to the education reforms in that legislation was mixed. Despite widespread support for higher performance standards for both students and teachers, specific measures such as the “no pass no play” rule and statewide tests generated much resistance. The “no pass no play” rule took a heavy toll on hometown football teams. It was criticized as unduly harsh, discriminatory, and counterproductive.

Similarly, support for standardized testing breaks down when individual students or groups of students are adversely affected. The requirement that all students pass the Texas Assessment of Academic Skills (TAAS) test in order to graduate from high school is generally accepted as a reasonable measure for ensuring that every student attain a minimum level of literacy before being awarded a diploma. But every spring, when the time comes for students to walk across the stage, we hear protests from some who failed to pass the test but who feel they deserve to take part in the ceremony, or from groups who insist that the test penalizes students from a given ethnic group or geographical location. It is beyond the scope of this article to analyze these arguments, but they illustrate the concern that the public’s commitment to quality education exists more in theory than in practice.

Who Pays?

Frontier Texans were willing to share the cost of the schoolteacher’s salary, often contributing land or goods. Taxes have been more problematical, as the experience in Corpus Christi and Galveston demonstrated. Now, in a far more complex society, we must consider not only who pays for public schools, but who pays for human services.

The two issues are related in a surprising way. When Congress raises Medicaid costs, it raises school property taxes. The process, which I call the siphon effect, works like this: In human services, the federal government (Congress and federal agencies) sets the rules, allowing limited state discretion, and pays about half the costs. In public education, the state government (the legislature and the Texas Education Agency) sets the rules, allowing limited local discretion, and pays about half the cost. When Congress expands eligibility for a human service program, the increased state share comes off the top. The states then have just that much less to spend on education, prisons, or anything else. That action by Congress did not decrease the demand for education, for prisons or other services, so states have two choices. Legislatures must either raise state taxes or cut expenses in areas not affected by federal requirements and shift more expenses to the school districts. In the current anti-tax climate, legislatures by default choose the latter course.

In effect, then, when Congress expands eligibility for a Medicaid program providing health care to poor children, it raises local school property taxes. And it raises property taxes the most in states like Texas that rely most heavily on property taxes to pay for public schools. In Texas, the impact of rising Medicaid and prison costs has been a shrinking state share of public school costs. In 1985, the state provided 52.2 percent of the revenue. In fiscal 1995, it is 44.7 percent. The percentage other states contribute to the education budget varies. National Education Association reports show that Michigan, on the low end, contributed 37.8 percent while local governments contribute 62.2 percent. In North Carolina, the state pays about 71.8 percent of the cost of public education, compared to 28.2 percent from local governments.

A problem of longer duration is inequity in financing schools. The poorest 26 school districts, 2.5 percent of the 1,048 districts, have average taxable value per pupil of $38,624. The richest 143 districts, 13.6 percent, have average taxable value per pupil of $553,866. The contrast is even more pronounced when you compare the taxable value of the poorest school district, Edgewood, at $33,522 per pupil, with that of the wealthiest, Laureles, at $17,878,539 per pupil, a 533 percent difference.

How does this great difference come about? The richest districts have great wealth and few students. That great wealth is usually oil and gas reserves or refineries, petrochemical plants, or nuclear power plants. Some such districts have fewer than a dozen students. Hence the high ratios. Many of these high-wealth districts were created to protect property from high taxation. Poor districts typically have little valuable property, often only residential, and many students.

As long as there are such artificially large differences in per student wealth, there will be artificially large differences (87:1) in the amount of money poor and rich districts can raise for each penny of property tax. For as long as Texas pays most of its school costs with property taxes, there will be big differences in per pupil expenditures between rich and poor districts.

This is the problem that the Texas Legislature and the Supreme Courts of the United States and Texas have wrestled with for the last twenty-five years. The U.S. Supreme Court did not wrestle long. In its 1973 ruling in Rodriguez v. San Antonio ISD, it said that, although the Texas system of paying for public schools was inequitable, the Court was not going to intervene. The U.S. Constitution does not mention education. Many state constitutions make education a fundamental right. Since then, lawsuits challenging school finance systems have been filed in state courts in about half the states.

In 1989, the Texas Supreme Court ruled on a second lawsuit originating in San Antonio, Edgewood ISD v. Kirby. Contrary to the general impression, the court has never ordered that the same amount of money be spent on each public school student in Texas. What the Court has required in the Edgewood decision is “substantially equal access to similar revenue per student at similar levels of tax effort.”

In other words, school districts may continue to set their tax rates, and within limits, their tax revenue, and decide how much money they will spend on each student. The court required that, system wide, districts taxing at similar rates must be able to spend substantially the same amount per pupil.

Aye, there’s the rub.

In other words, districts taxing at relatively low rates have great incentive to raise tax rates, thereby earning more state aid. We have seen earlier how this system of “power equalizing” has raised taxes without, in fact, equalizing school district spending per pupil.

All over the country, property taxes have come under increasing attack. In many states, as in Texas, they have increased sharply. Because they are based on fixed assets and not income, they do not necessarily represent ability to pay. In the late 1970s, California voters passed Proposition 13, which placed a cap on the property tax rate and set in motion a series of similar tax revolts throughout the country. In 1982 Texans, by constitutional amendment, prohibited state property taxes.

In July 1993, the Michigan Legislature repealed all local school property taxes. Michigan, like Texas, had relied on such taxes for more than half the cost of public schools. School property taxes in Michigan raised $6.l8 billion a year. In December 1993, the Michigan Legislature put two alternatives before the voters: raising the state income tax or raising the sales tax. In March 1994 voters overwhelming chose to increase the sales tax. The new plan reinstates a much smaller school property tax but shifts about 80 percent of the burden to state sales and business taxes.

Why should Texas not do the same? Were Texas to eliminate school property taxes and replace the revenue with state aid, Texas would have to raise the sales tax ten cents or impose an income tax of 6 to 7 percent of federal adjusted gross income. Hardly an appealing political prospect!

Does It Matter?

As I hope this brief account has demonstrated, the only certainty in public education is that the law will change again soon. It is not so much that we do not learn from history as that we continue to care about the quality of public education, and no particular system has proven to be inherently better than another. Every change in governance, every shift in tax burden that I have described, has been advocated by people who want to “reform” the system.

When someone wants to “reform” a system, put your hand firmly on your wallet. What that someone wants is to transfer money and power from one group to another. The affected groups may be teachers, parents, school administrators, football coaches, plaintiffs, defendants, water users, farmers, city dwellers, bay shrimpers, Gulf shrimpers, commercial fishermen, sports fishermen, sales taxpayers, income taxpayers, property taxpayers, oil and gas producers, medical doctors, nurses, optometrists, age groups, felons, males, females, black, Hispanics, gay, or whatever.

There is nothing wrong with that. It is a factor of democracy and diversity of interests. Legislatures, congresses, parliaments, commissioners’ courts, city councils, and school boards meet periodically to make the transfers of power and money dictated by the politics of the times. That process in known as “responsive government,”

Unfortunately, responsiveness and meaningful reform do not necessarily go hand in hand. The path from good intentions to good education is paved with difficult choices and hard cash. Historically, Texans have meant well but have been unable to move as far down the path as they intended. Most would agree that it does matter who pays for our schools and who runs them; the question that remains is, when will we choose to move forward?

[1] Earnest Wallace, ed., Documents of Texas History (Austin: Steck Company, 1963), p. 98.
[2] T. R. Fehrenbach, Lone Star (New York: Collier Books, 1968), p.303.
[3] Central Education Agency is the name given by the constitution to the state’s education system; the administrative agency is known as the Texas Education Agency.
[4]National Commission on Excellence in Education, A Nation at Risk: The Imperative for Educational Reform: A Report to the Nation and the Secretary of Education, Washington, D.C., 1983.
[5] Fehrenbach, Lone Star, p. 303.
[6] Texas Legislative Budget Board, Fiscal Size Up: 1994-1995 Biennium, Texas State Services (Austin, 1994), p. 4-9.

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