How Things Really Work

Once again, Texas Education Commissioner Skip Meno and the State Board of Education deserve a round of applause.

A few weeks ago, the Board adopted a much more rigorous set of high school course guidelines designed to better prepare students for college or jobs.

Mandates are out of fashion these days, so the State Board is only encouraging students to take the tougher courses. The curriculum is not a requirement but a guideline. It would increase credits from 21 to 24, include four years of English instead of three, algebra and geometry instead of some undefined mathematics courses, and a foreign language.

Still, it provides a template for parents who want their children to succeed and for students who aspire to something higher than unemployment compensation.

The guidelines were the result of a stunning discovery by education leaders. Texas children did poorly on national college entrance exams because many of them didn’t have the preparation other states provided in their public schools.

Texas and Arizona rank dead last in the number of student who opt for college preparatory course. Only 25 percent of Texas students took 20 or more college preparatory courses last year, compared to 42 percent nationally.

One of the reasons for that is that our minimum graduation requirements are pretty wimpy–two years of unspecified science, no foreign languages, three years of social studies. Many Texas students could fulfill the 21 minimum requirements in three years without breaking a sweat.

They don’t because the Texas school day is still designed to let kids out early to pick cotton, and to suit the schedules of school buses, teachers and coaches.

Texas students have fewer hours to learn than students get in many states–six periods instead of seven or eight. And large portions of the school day are typically captured by extracurricular activities like band and athletics.

Despite the progress made since 1985 in emphasizing academics over athletics, many Texas school administrators have not yet grasped the concept that extracurricular activities should be extra. They should be after school activities reserved to those with passing grades.

Not surprising then that Commissioner Meno’s plan to beef up the high school curriculum has its critics, many of whom make their living teaching non-substantive courses.

We’re told it’s too rigid and would deprive kids of meaningful electives like band, photography and journalism. We’re told that students would lose their exposure to fine arts.

And understandably, students object because they would rather take soft electives like photography than geometry. Who wouldn’t?

Fortunately, the business community took a strong stand for the new curriculum. Businesses have been struggling for years to find high school graduates with the skills necessary to fill basic craft jobs. There just aren’t anymore good salaries and lifetime careers for those with strong backs and no skills.

Business has been strong behind Texas’ continuing process of upgrading the public schools, from the 1985 school reform package to the State Board of Education’s more recent actions to stiffen basic skills tests and eliminate Mickey Mouse courses.

There has been progress. Dropout rates are down. SAT scores are up.

But there’s a long way to go. We hope school boards will embrace the graduation guidelines and encourage their students to take the tougher courses.

But while we have school boards like the one in the Round Rock Independent School District that is apparently more worried about whether the superintendent is a born-again Christian, maybe we shouldn’t be too optimistic.

Texas could be facing a showdown with the federal government over the $5 billion plus Medicaid program because of a little-noticed portion of President Clinton’s budget bill approved by Congress last summer.

The law requires states to seek recovery of the costs of nursing home and other long-term care services from the estates of those who receive these benefits through Medicaid. Medicaid is the state-federal program that provides medical care for the poor.

That means that the state could recover at least part of the money it spends on nursing home care for an elderly person by claiming assets, usually a house, left by that person after death. The state could not, however, claim that property as long as there is a surviving spouse, a minor child, or a blind or disabled survivor of any age.

One way for the state to recover the costs would be to enter a lien the property. The lien would be collected only when the property is sold, usually after the Medicaid patient dies.

There were good reasons for the decision. Medicaid is one of the fastest- growing costs of state and federal governments. Texas’ Medicaid budget, state and federal, grew from 11 percent of the state budget in 1981 to 16.6 percent in 1992.

The cost of long-term care for the elderly or disabled is a big reason for that growth. The number of elderly and disabled increased 11 percent since 1987 but accounted for 50 percent of the growth in provider payments, according to Comptroller John Sharp’s “Fiscal Notes”.

There is every reason for state and federal governments to look for ways of recovering some of those costs from the estates of those who incur them. Estate recovery is the law in about 25 states, and some of them have found it very effective.

A person who has more than $2000 in assets is not eligible for Medicaid. To get under that limit and qualify for Medicaid, many people have given their homes or other property to their heirs. Popular disapproval of that practice caused many states and the federal government to pass the estate recovery laws.

Under estate recovery, no elderly person loses their home. No elderly person is saddled with the ruinous costs of (usually terminal) nursing home care. Those costs are simply deducted from the estate (and the taxpayers’ bill) when the patient dies.

The hitch is that Texas tried this once with painful political results.

In 1987, as part of a bill reconstituting the Texas Department of Human Services, the Legislature required that liens be filed against estates of Medicaid clients.

No lien could be filed if there was a surviving spouse, dependent child or disabled heir. But 1988 was an election year, and a sharp-eyed consultant put together, and an opportunistic candidate for the Texas Senate paid for, a television spot that showed an elderly woman supposedly facing the loss of her family home because of the Medicaid lien law.

No such thing could have happened.

The target of the ad–one of a large majority of legislators who voted for the bill–lost the election. The opportunistic candidate, former state Senator Temple Dickson, won. Senator Grant Jones of Abilene, sitting Chairman of the Senate Finance Committee, was the loser.

Not surprising then that elected leaders are wary of the idea. The Legislature asked the department to delay implementation. The first bill filed in the 1989 session repealed that part of the law.

The Department of Human Services is exploring ways to implement the federal law, but Commissioner Burt Raiford expressed concern that the dollars recovered would not cover the expense necessary to collect them.

The dilemma also shows that it is easier to talk about cutting Medicaid costs than it is to do it. Containing Medicaid costs sounds great in the abstract. It’s the details that are unpleasant.

To whom should we deny the lifesaving operation? Is the infant whose family’s income is 186 percent of poverty (who is not eligible for any help) less deserving than the infant in a family whose income is 184 percent of poverty? Should we hold doctors’ fees constant and risk having fewer doctors who see Medicaid patients?

Should we put a dollar limit on the expenditures and make it first come, first served?

Should we ration health care by the severity of the health problem, as Oregon now does? Or should we continue to ration it, as Texas now does, by ability to pay?

All choices considered, recovering assets from a client’s estate may not be such a bad idea.

Notes from a Curmudgeon

People, or at least members of Congress, are concerned about violence on television. I have been, all of my adult life, a radio and television broadcaster. For about one-third of my adult life, I have been an elected public official.

Both occupations are subject to intense public scrutiny. Broadcasting is graded by rating systems that measure how many people watch the program. Advertisers buy their time accordingly. Public officials are graded at every election.

There has recently been much interest in term limitation. But people re-elect their legislators, federal and state, overwhelmingly. They watch the programs about which our would-be nannies complain. If the public officials were not popular, they would not be in office. If the TV programs in question are not popular, they would not be on the air. In other words, term limiters and would-be program censors want to tell OTHER PEOPLE whom they can vote for and what programs they can watch.

If you don’t like your public officials, vote against them. If you don’t like some TV programs, don’t watch them. The officials that OTHER PEOPLE elect and the programs OTHER PEOPLE watch is their own business, not anybody else’s.

That apparently isn’t what Democratic Senator Paul Simon of Illinois thinks. He wants television networks and stations to send a signal indicating that somebody thinks the next program is “objectionable.” Viewers would have a switch that would blank out the program. The “Big Brother” that George Orwell predicted would control our lives didn’t arrive by 1984, but he’s not far behind schedule.

Senator Simon grew up in the newspaper business. He should have a livelier sense of what the First Amendment to the U.S. Constitution is about. Apparently he does not.

How much harassment is enough?

Mr. John Demjanjuk has been acquitted of having been a prison guard at a German death camp during World War II. The trial at which he was convicted was a farce. The evidence against him was that of aged witnesses who “identified” him after 50 years. Russian documents later proved he was not the man the prosecutors claimed he was–or the man the witnesses “identified.”

The Israeli Supreme Court, in a belated but courageous act, reversed the conviction. After having wrongfully imprisoned Mr. Demjanjuk and threatened him with death for a decade, did the Israeli government then release him, apologize to him and compensate him?

No. The government held him while trying to decide whether to prosecute him for allegedly having been yet another guard at yet another camp. Did the prosecutors not try their best case first?

So much for Israel’s claim to be a land of law and due process.

How much harassment is enough?

For three years the Federal Trade Commission investigated one of America’s most successful companies, the Microsoft Corporation (in which I am a small stockholder) for alleged anti-trust violations. The investigation ended with no charges being filed.

The Justice Department has now decided to plow the same ground all over again, doubtless costing Microsoft another fortune in legal fees. Microsoft is the world’s dominant maker of computer software. Apparently the government’s policy is to penalize success by, in effect, levying fines in the millions of dollars that go to lawyers.

Republicans like to say that government should be run like a business. Last month Republican Governor John Engler signed a bill repealing all local school property taxes in Michigan, effective December 31, 1993. (The bill was sponsored be a Democratic legislator). That bill takes away two-thirds of the money necessary to operate public schools in Michigan. The legislature has not yet passed the taxes necessary to run the schools in 1994-95.

Is that any way to run a business?

In June, the United States House of Representatives voted overwhelmingly to stop building the Superconducting Supercollider (SSC). To call the vote irresponsible would be too kind.

The vote was part anti-Texan, part Luddite (anti-big science).

Last year the House voted to do the same thing–for similar reasons. The SSC vote was the first after the House defeated a balanced-budget amendment to the U.S. Constitution. The consequences of that amendment were (and are) completely unknown. Texas congressmen, notably Representative Charles Stenholm of Stamford, were among the amendment’s most vociferous advocates.

In 1987, Texans overwhelmingly passed two bond issues totaling $1 billion to help pay for the SSC. The project is now under construction. To abandon the project now would be to walk away from about $1.2 billion in state and federal dollars already invested. The benefits to the nation and world that can be expected to flow from the SSC are huge, if incalculable.

The project was saved by then-Senator Lloyd Bentsen, chairman of the Senate Budget committee. Bentsen persuaded the Senate of the worth of the project and prevailed in the ensuing conference committee.

That was last year. Bentsen, of course, is no longer in the Senate but is Secretary of the Treasury.

This is this year. What were our two Texas Senators doing even as the House was voting on the Supercollider? Clowning around on the Capitol steps with Ross Perot.

Want to see what the future of public education in Texas might be like? Take a look at what happened in Michigan last month.

The Michigan legislature repealed all local school property taxes as of December 31, 1993. Those taxes provide 60% of the cost of running Michigan public schools. In Texas, local taxes pay 54% of the cost.

Legislators will come back later this year to figure out how to solve the problem they have created. To replace all the lost revenue, they would have to pass a tax bill raising between $5.4 and $6.3 billion.

Michigan has constitutionally limited state income and sales taxes. It is the only state to have a “single business tax.” This tax is a “value-added” tax, another form of sales tax. Michigan is in a recession because the automobile industry is depressed. Detroit, Ypsilanti, and Ann Arbor make up about one-third of Michigan’s economy.

Increasing the income and sales taxes to their present constitutional limits would raise about $3.8 billion.

The parallels between Texas and Michigan are startling. Both states have:

• Prison and welfare costs rising faster than all other expenses. (Almost all states have the same problem.)

• High local school property taxes, and therefore

• Heavy reliance on those taxes to pay for a system that discriminates on the basis of real estate values

• A dominant industry in distress: automobiles in Michigan, oil and gas in Texas. (General Motors is shutting down its Willow Run plant near Detroit and transferring some production to its Arlington plant in Texas.)

• An unwillingness to overhaul the tax system to adjust for the decline of that industry

• Approaching gridlock that threatens the future of public education and other state services. (Michigan pays teachers more and spends more per student in public schools than does Texas.)

Texans, in the late 1960’s, constitutionally banned a state property tax. This November they will consider a constitutional amendment prohibiting an income tax without a popular vote. If adopted, that proposal virtually ensures that Texas will not have an income tax until some part of our system collapses dramatically.

In Michigan, Governor John Engler opposes an increase in the income tax. The legislature, having just repealed local school property taxes, is not likely to enact one statewide.

Since 1988, Texas has ranked ninth or tenth among the ten largest states in teacher salaries and expenditures per pupil. Per-pupil state aid to public schools will drop slightly ($29) next year, from $2,139 in 1993 to $2,110, according to figures compiled by Dan Casey of the Texas Association of School Boards. Total state and local revenue per pupil will drop by $112 this year and $110 next year. These figures assume local taxes stay at current levels.

Much of the drop in local revenue per student is caused by a declining property tax base and increasing enrollment. Texas public schools are expected to enroll 3,322,453 students this year. That number will grow about two percent (65-70,000 students) a year for the rest of the decade, according to Texas Education Agency and Legislative Budget Board figures.

The property tax base shrinks not only because of lower real estate values but because the legislature exempts more kinds of property almost every session. The last session passed five measures exempting various items (pollution control equipment, expanded homestead exemption, some low-income housing, cotton in transit, plant covers used by nurseries) from property taxes.

State law limits school taxes to $1.50 per $100 valuation for maintenance and operation funds. Many districts are approaching that limit. Each penny of the local tax produces about $19 per pupil.

Ten years ago, the state paid about half the cost of public education: 49% in 1982-83. That figure drops to 46% in 1994-95. Texas is closing in on Michigan’s 40%.

The drop in the state share is reflected in the general appropriations bill. In 1986-87, 42% of the state budget went to public schools. In 1994-95, the figure will be 37%, according to LBBing to LBB figures. The cost of health care and prisons has gone up faster than the cost of education.

As the Detroit News said after the Michigan property tax repeal, the legislature’s action “was nothing if not bold: Wipe out the existing system of school funding, (BOLD) then (UNBOLD) figure out how to replace it. [The repeal] represents the easy half of finance reform.”

In other words, the Michigan legislature has scaled heights of irresponsibility hitherto reached only by the Supreme Court of Texas. Just a few years ago, the Supremes shot themselves in their judicial feet when dealing with school finance.

They said unanimously that Texas’ system of paying for public schools is bad. So bad that they were would stop all state aid to public schools if the legislature did not perform some unspecified miracle in six months. The next time around, the Supremes declared some school taxes unconstitutional. But, they said, the bad old taxes had to be paid anyway so that state could keep on paying for schools in that same bad old way.

The federal courts said the same thing. Neither court said that the taxes are owed and may not have to be refunded. That issue is on appeal.

In Michigan, the legislators needed no help from the courts. They pulled the trigger themselves, and Governor Engler cheered them on.

With all the concern about the health care crisis, it has nearly escaped our attention that the patient shows signs of getting better.

As all of us wait for Hillary Rodham Clinton to unveil the administration’s health care plan, costs are beginning to level out. Galloping inflation is slowing to a canter. Providers and consumers are switching to more cost-effective systems, all without government action.

Market forces are beginning to work.

Big businesses are bringing down the cost of their health benefits. The clout of big corporations has touched off competition for their business, even though that means providing services a different way.

The United States spends more on health care than any other country. One dollar out of seven, 14 percent of gross national product. And even for that expense, we leave about 20 percent of our people without coverage.

Canada spends about one dollar out of 12, eight percent of gross national product, and covers all its citizens.

The U.S. medical inflation rate is coming down, from 11 percent in 1990 to 7.4 percent in 1992.

The major change in health care, and the one credited with getting runaway costs under control, is managed care. Managed care comes in a variety of packages -Health Maintenance Organizations (HMOs), and Preferred Provider Organizations (PPOs) are two.

The key concept is that of gatekeeper. A family physician or other health care professional must authorize specialized care or hospitalization. There are limits on the providers that a consumer can use and get total reimbursement.

A managed care network operates on fixed revenue, so it is essential to contain costs. The fee for service system lacks that discipline. The insurance company pays for whatever treatment was given. It is open ended.

There are tradeoffs. A favored physician may not be on the preferred provider list. A certain hospital may not be used by an HMO. Some of the organizations allow the insured person to use any provider desired, but the reimbursement level will be much lower for those not on the approved list.

There are now 41.4 million Americans enrolled in HMOs, more than four times the total at the beginning of the 1980’s. One of the incentives for business is that HMO premiums are rising more slowly than those for other types of coverage 8.8 percent in 1992 compared to 14.2 percent for traditional health coverage.

Some states, including Texas, are experimenting with managed care to reduce costs in the Medicaid program, which provides care to low income citizens.

More elderly citizens on Medicare are enrolling in managed care because of the incentives these programs offer.

We don’t have to look far for one of the success stories. Four years ago, the University of Texas System started a plan to manage health care costs for employees. Now, UT employees pay less for their health insurance than employees at other state universities or agencies.

Last September, the Texas Employee Retirement System, which purchases health benefits for all state employees, moved to a plan similar to UT’s. Texas A&M University put in a similar plan at the same time.

Even with the tradeoffs, most UT employees rated the system above average and 60 percent of them preferred the use of contracted providers to lower costs. Only 10 percent of those surveyed last year preferred the traditional fee for service plan.

Managed care providers use a number of techniques to hold costs down. One of the best long term cost savers is prevention.

Systems operating on a fixed income have a big incentive to keep people well.

That means more emphasis on immunizations, pre natal care and early detection of disease. Prudential’s HMO in Baltimore is paying low income pregnant women $10 for their pre natal checkups. The hope is that better care will prevent premature births, which cost $50,000 and up in care.

Another cost saving element is the use of other health care professionals, like physician’s assistants and nurse practitioners, to perform certain procedures.

Cost consciousness works. More brand name drugs are being discounted. Lower cost equipment is being developed.

Providers, major insurers and government researchers are examining medical practices to discover which are most cost effective.

Managed care requires changes in the way providers do business and consumers find care. One of the greatest controversies involves the use of new and very expensive techniques for prolonging lives.

Is prolonging life a good idea? What is the quality of prolonged life?

These tough questions are not resolved and may never be.

Another legislative session is over and with it comes another state budget held together with band-aids, baling wire and bookkeeping tricks.

It took all the ingenuity of our state leaders to come up with enough delayed payments, one-day transfers, cost containments and federal fund gimmicks to finance state government for another two years.

The sad fact is that Texas’ 1960’s tax system isn’t designed to support the nation’s third largest state in a time of growth and change.

The oil price bust of 1985 demonstrated just how rickety the state’s revenue structure is. Two blue ribbon task forces, the last one in 1991, reported on the cracks in the foundation:

* Heavy reliance on an oil-gas severance tax when those resources are being depleted.

* A business franchise tax that falls heavily on capital-intensive industry, the sector of the economy which traditionally has produced the best-paying jobs.

* Entire sectors of the economy–primarily the fast-growing service sector, as well as partnerships, joint ventures and other non-incorporated businesses–which are undertaxed.

* Rising property taxes also fall most heavily on industries that need a lot of invested money, because local governments are forced to pick up part of the state’s burden.

The 1994-95 budget bill is not a thing of beauty. The greatest growth is in the prison budget–35.6%. In some programs, like job training for welfare mothers, health screening for low-income children and services for abused children, we will fall below our already pathetically low level of services.

The increase for higher education was a 3.2%, not enough to keep us competitive.

With no reason to hope for better times ahead, state agencies are increasingly trying to lock in a source of funding that will leave them less at the mercy of political and economic whims.

Our founding fathers were farsighted enough to set aside public land for education, creating the Permanent School Fund and the Permanent University Fund. Later on, legislators created a constitutionally protected fund for highways.

The Texas Parks and Wildlife Department, which I serve as a Commissioner, succeeded this session in trading a declining revenue source for a growing one.

Two cents of the cigarette tax was dedicated to park funding in 1971 by then state Senator Don Kennard of Fort Worth. It was a considerable accomplishment at the time.

But cigarette sales are declining as more people heed the health warnings. The penny tax on a pack of cigarettes generated $18.4 million in 1983 but only $13.5 million in 1992.

Meanwhile, the need for recreation and open space in an increasingly urban state is growing. Park visitation grew 37 percent since 1980 and is likely to increase by 4 percent a year. And threats to wildlife habitat and biologically unique areas have increased the demand for state conservation.

The solution was to trade the cigarette tax for a portion of the sales tax on sporting goods. The legislation, sponsored by Rep. Rene Oliveira and Sen. John Montford, gives the department approximately $31 million for the next biennium, to be divided equally between state and local parts.

That is approximately the take from the two-cent cigarette tax, but during 1994-1995, the department would receive $10 million more, or about what the cigarette tax produced at its peak in 1987.

In the long run, the switch will protect the state’s ability to acquire, develop and operate parks, as everyone who buys sporting equipment adds to the Parks and Wildlife Trust Fund.

No one blames state agencies for trying to build some predictability into their funding. But dedicated funds prevent the Legislature from responding to changing needs.

With dedicated funds, federal mandates and lawsuit requirements, there is precious little discretion left to the House and the Senate. An outdated tax system only aggravates the problem.

A better solution would be to undertake the long overdue repair on our tax system.

You don’t hear much about workers’ compensation these days. That’s good news.

Several years ago, workers’ compensation was ranked as one of Texas’ bigger business problems.

Rates were skyrocketing, up 200 percent between 1985 and 1990. Insurance carriers threatened to stop doing business in Texas. Small businesses were forced to “go bare” because of the cost of coverage and others were pushed into the workers’ compensation equivalent of an assigned risk pool.

It hampered our ability to attract industry and add jobs. The new system helps bring jobs to the state.

A California telemarketing company, World Savings, has decided to locate a $47,000,000 facility in San Antonio. This operation will employ many people. World Savings will also donate a 100-acre site for a junior college.

Marian Sandler, co-CEO of World Savings, told Bexar County Judge Cyndi Krier that the company decided to locate in San Antonio because of the work ethic there and because of the changes Texas has made in its workers’ compensation system.

After years of bitter struggle, workers’ compensation reform was achieved by the Legislature in 1989, but the new law actually took effect in January 1, 1991.

The reason that we don’t hear much anymore is the law is working. It is lowering costs and getting higher weekly benefits to injured workers more quickly.

There are still plenty of complaints. Many workers will argue that they got more from the old system. Lawyers certainly did. And insurance rates haven’t come down as quickly as we hoped.

But look at these facts, based on the latest report from the Texas Workers’ Compensation Insurance Facility:

* Lost time claims were down 10.8 percent in 1991 and 22 percent in the first half of 1992.

* The average cost of a claim is 27.3 percent lower.

* Medical costs were down 9 percent–when medical costs in every other area are rising.

* The benefits to injured workers are higher. The average weekly benefit paid in the first eight months of 1992 was $362 to compared to $191 in 1990.

* Injured workers get their benefits faster–an average of 15.5 days as compared to 30 days in 1991.

* Attorneys, who were involved in 90 to 95 percent of cases, are now involved in 39 percent of the informal hearings and 53 percent of the formal hearings.

* The number of employers forced to purchase coverage from the Workers’ Compensation Insurance Facility (the assigned risk pool) is down by 63 percent.

There are other benefits.

Those who abuse the system are being prosecuted. Criminal fraud charges were brought against 32 persons, resulting in three convictions, five arrests and 12 indictments.

Guidelines on medical fees resulted in savings totaling $225.8 million. Just the requirement that injured workers get a second opinion before submitting to back surgery has resulted in savings of $12.9 million.

In addition, employers are taking advantage of the free safety consultations provided under the law. Some 3,300 have received advice and their injuries dropped 21.7 percent.

Some 900 employers with high injury rates have had to implement new safety programs because of the new law.

The bad news is that insurance companies seem to want to have it both ways. They want the lower losses achieved under the new law, and they want to raise their rates the way they did under the old one.

These companies can file their own rates, without approval from the Texas Department of Insurance. Too few have filed decreases while many signaled higher rates.

Maybe we need to reconsider rate regulation if rates don’t go down, as the former Speaker of the House, Gib Lewis, suggested.

Since the rates haven’t matched the recent experience, a large number of employers continue to “go bare,” instead providing workers’ comp-like plans permissible under the Employees Retirement Income and Security Act (ERISA).

ERISA does not specify what benefits must be provided and these plans are exempt from state regulation. In some cases employers use alternate plans or accident and health insurance policies that do not provide equivalent benefits.

But rates still have not gone down, and that is just one more reason why the public grows more and more frustrated with the whole system of private insurance. Companies lobby for reform, but when they get it they prefer to conduct business as usual. And, as in our current, critical health insurance crisis, rates only go one way–up.

The new law creates another option for Texas business–a competitive fund that can save employers from 15 to 20 percent the cost of coverage through traditional commercial carriers.

All of the evidence is that the reform is working. But the result we aimed for–lower insurance rates–is too slow in coming.

Another threat is on the horizon, one that can only be settled by the Texas Supreme Court.

Workers’ compensation reform was challenged in court by the Texas AFL-CIO who charged that workers were being deprived of fundamental rights. The Business Insurance Consumers Association of Texas weighed in on the side of the state, arguing that the Legislature is free to place some restrictions on benefits and evidence that can be presented to a jury.

We hope the Supreme Court upholds reform. We hope insurance companies don’t undermine it by putting their profits ahead of common sense.

Highly educated engineers and scientists can work just about wherever they want. So how to get them to work in a rural area just South of Dallas–even if the project is as important as the Superconducting Supercollider?

One way is to make sure there are good schools for their children to attend.

With that in mind, let me draw your attention to the Texas Advanced Placement Project, financed by the O’Donnell Foundation of Dallas. This project improves education in nine school districts near the Supercollider, which is near Waxahachie in Ellis County.

Advanced Placement is a program designed by The College Board to enable students to complete college-level studies in high school. Assuming they score well on the uniform examination at the end of an AP course, they may place out of the corresponding college course.

The Advanced Placement examination was the target for the barrio students in the movie “Stand and Deliver,” a true story about the superb California teacher Jaime Escalante.

Advanced Placement is on the verge of going statewide in Texas. While the O’Donnell project was underway, the Senate Education Committee was studying an Advanced Placement initiative for Texas.

Senator Carl Parker, chair of the Senate Economic Development Committee, Rep. Libby Linebarger, chair of the House Public Education Committee, and Comptroller John Sharp have announced a statewide initiative to give all students the opportunity to take these challenging courses.

College students who have taken Advanced Placement courses in high school make better grades than non-AP students. The AP students are more likely to attend college and do better when they get there.

The O’Donnell Foundation finances Advanced Placement courses in nine school districts near the SSC site: Duncanville, DeSoto, Cedar Hill, Red Oak, Midlothian, Lancaster, Ferris, Ellis and Waxahachie.

All of those schools offer advanced courses in calculus, biology, chemistry, physics and English.

The program relies on incentives for teachers and for students. Teachers get a $100 stipend and expenses paid to a two-day AP training conference and a $250 stipend and expenses paid to a summer institute. When they teach their first course they receive a $1000 bonus from the foundation.

During the two school years the program has been in effect, teachers have earned $35,000 in bonuses. Their training cost $20,000.

Students get their exam fees paid and a $100 mini-scholarship if they pass the test by earning a grade 3 out of a possible 5. Schools get a $3,500 equipment grant and a $100 bonus for each passing student. Students have earned $24,000 in scholarships, and schools got the same amount in bonuses.

Last year 269 AP exams were taken by 208 students in those districts, and a grade of 3 or better was earned on 188 of these exams. The Texas students did slightly better than the national average with 70 percent passing compared to 66 percent nationwide.

Obviously, only a small number of students take the courses–208 of 5,010 students in the SSC schools last year, but the number is steadily growing. Only 40 students took AP exams in 1982. And, at a time when Texas SAT scores trail the national average, the SSC students are bucking the trend. Over the past three years, the average SAT score in Texas increased from 874 – 876, and the average SAT score of the SSC schools increased from 876 – 911. While the average score in Texas is still below the national average of 899, the score of SSC schools is 12 points higher.

And the cost of this SSC initiative was small–$118,000 over two years.

The Parker-Linebarger bill will provide incentives for teachers and schools offering AP classes. Teachers will receive $250 for teaching a course the first time. Schools will receive $100 for each student who successfully completes an exam.

That may improve the Texas track record. When compared to the 10 largest states, Texas students took the fewest number of AP exams per 1000 11th and 12th grade students, and Texas has the lowest percent of schools offering AP’s.

In 1992, 32% of Texas schools offered AP exams (the national average is 46%) and only 6% of 11th and 12th grade students took AP’s (compared to the national average of 10%).

The SSC project has demonstrated that ordinary students in ordinary high schools can achieve excellence, given a special challenge and a small incentive. The result is good for the students, who will perform better in college and presumably in life.

It is good for the teachers who grow professionally, and it’s good for a state like Texas that spent $125 million this biennium financing remedial education at the college level.

Comptroller John Sharp estimates that more than one-third of students entering Texas colleges and universities each year cannot read, write or compute at post-secondary school standards. (So what are they doing in college anyway?) Sharp proposes charging the cost of the remedial education they require back to the schools from which they graduated.

I agree. I proposed the same idea in 1986 and was called a racist for making such a wrongheaded suggestion. It’s more in fashion now since the community college system has begun offering “guarantees” with its graduates in technical fields.

The Comptroller estimates that the Advanced Placement initiative will save taxpayers $13 million by 1998 by reducing the number of credit hours and the amount of remedial education now necessary in colleges and university. It’s important that this legislation pass.

If the schools in your city do not offer Advanced Placement tests, you may want to ask why. Aren’t your children as important as those whose parents are building the Supercollider?

Media stories about environmental disaster abound in the modern world–oil spills, destruction of rain forests, holes in the ozone layer–but now the school finance crisis in Texas must be counted among them. Countless trees are being destroyed to provide the paper for an endless and often poorly informed debate about Proposition 1, the proposed constitutional amendment on the May 1 ballot. The smart money on the outcome of the election might be to invest in East Texas timber land.

The gist of Proposition 1 is simple. By authorizing the Texas Legislature to create county-wide education districts (CEDs), the proposed amendment would enable the CEDs to levy a uniform property tax rate across all of the local school districts within the county and then to redistribute the revenue back to those districts. Most districts would receive back the same amount of money that they contribute per pupil.

Some districts have far more property wealth than others and raise much more money for each penny of property tax. In a few counties, poor local districts would get back more money than they had contributed. The very rich local districts would get back less. Redistribution would be limited to about $400 million in the near term. Thus Proposition 1 is a relatively modest effort to break the link between real property wealth and education expenditures (creating a “fiscally neutral” system) and to narrow the gap in the school districts’ ability to raise money for education. The lack of fiscal neutrality is the constitutional evil identified by the Texas Supreme Court in a series of landmark decisions. In other words, Proposition 1 tries to achieve fiscal neutrality.

Does Proposition 1 solve the school finance crisis? Surely not. Is it helpful? Absolutely. It gives the legislature one more tool with which to address the problem. Why is this added tool necessary? The answer is that we are running out of alternatives. The court has said that the present county education districts are unconstitutional because the minimum tax rate was set by the legislature, in violation of the constitutional ban on a state property tax, and the people in each county education district had not approved that rate. It also has said that the legislature cannot leave the richest districts out of any equalization plan, permitting them to raise gobs of money at relatively low tax rates. If you take off one of the constitutional shackles, it is easier to devise a better plan. And Texans are as enthusiastic about massive consolidation of school districts, abolition of the local property tax and state-wide funding of education, and new state taxes as Californians are about earthquakes.

In voting on Proposition 1 the voters need to be attuned to the realities of the situation. As Freud once said, theories are good, but they do not prevent things from being true. First, while the Texas Supreme Court often has been as unclear about exactly what is required, there is no way to address the constitutional issue without moving funds to poorer districts (or leveling downward by capping spending in affluent school districts). The only question is where to get the money. Virtually all state-wide taxes have a redistributive effect (some communities and people receive back more in services and other support than they contribute in taxes); otherwise, we would be speaking only of a user fee (like a fee to defray the cost of picking up the trash once a week). Indeed, the “no politics” proposal relies precisely on this redistributive effect in advocating the use of state revenues. Similarly, consolidation of school districts is a way of evening out resources over a larger geographic area. Just like some areas within a county may receive back more funding for roads or other services than those residents pay in taxes, the same type of result would occur if school districts were merged. Nonetheless, some opponents of Proposition 1 believe several impossible things. They promise to solve the problem of unequal access to education dollars without adding funds to the system, consolidating tax bases or school districts, or redistributing current funds. It cannot be done.

Second, much is often made of the fact that there is great public dissatisfaction with public education, that more money does not necessarily mean more learning, that the whole educational system is in need of radical surgery and not palliatives. We agree. But the defeat of Proposition 1 is not the way. We need to address school finance problems so that our educators and policymakers can begin to move on to other critical problems. The present crisis has created enormous instability and uncertainty, diverting the attention of parents, political leaders, and school administrators from other worthy endeavors. There is nothing in Proposition 1 that would preclude major changes in the education system, ranging from school choice plans to site-based management and school restructuring. And it is morally bankrupt to argue that education dollars are not important in poor school districts and that this is a compelling reason why wealthy districts should retain their financial advantage.

Third, school finance reform in Texas is not primarily about race and ethnicity. In Texas, urban school districts tend to be reasonably well off in terms of property wealth, and yet they educate large numbers of Mexican-American and African-American children. There are identifiably poor districts that are overwhelmingly Mexican American, but there are also such districts that are overwhelmingly Anglo. (Boles ISD is one of the poorest districts and is 88% Anglo.) The issue is one of common sense and not racial politics: In the light of limited resources, voter preferences, the rulings of the Supreme Court of Texas, and our shared educational goals, what is the best school finance policy for all of the children in this state?

Fourth, some have urged that it would be better to infuse $400 million in new state dollars into the poor districts rather than to approve Proposition 1. But where is the $400 million to come from? Presumably from new state taxes, taxes that would have to be distributed in a manner similar to that under Proposition 1. More importantly, there is not enough money in the treasury to achieve fiscal neutrality. A hybrid approach of tax base consolidation (CEDs), new state dollars, and other reforms is the only feasible solution.

Whether Proposition 1 is embraced or rejected by Texas voters, we can confidently predict that years of skirmishing and litigation remain ahead. Proposition 1 provides a mechanism for reform; it does not implement a particular vision of equity. If it is approved by the voters, the courts will still need to pass on whether the state has established an “efficient” system of education. If it is defeated, the legislature will try once more, and, once again, the courts will be the final arbiters. But voters should be painfully aware that the demise of Proposition 1 would leave the legislature with few alternatives. Confrontation, gridlock and, alas, more fallen trees would be our fate over the long summer.

(*Yudof is the dean of The University of Texas Law School. Hobby, a former lieutenant governor of Texas, has taught courses in school finance at The University of Texas at Austin and Rice University.)

Should the cops practice medicine? Should the legislature pass laws that make you hurt?

Senate Bill 370 does both of those things. It has worthy goals–saving money and minimizing fraud. But it would also make a lot of people suffer a lot of pain.

The bill says that if the doctor prescribes Valium for you, the doctor has to tell the cops. Do you think that is a good idea?

The bill adds some medicines–benzodiazepines–to the Schedule II list of controlled substances. It would require doctors who prescribe these drugs for their patients to make three copies of the prescriptions–one for their records, one for the patient and one for the Department of Public Safety.

If a doctor has to tell the cops when he or she prescribes a medicine, the doctor won’t prescribe it very often. The doctor rightfully fears that the loss of the license to practice medicine if the doctor prescribes the drug.

The drugs now on Schedules I and II of the controlled substance list are those with considerable potential for harm–heroin, morphine and pure codeine, among others. The benzodiazepines are a milder category which includes Valium, Halcion, Serax, Xanax and other medications used to treat anxiety, insomnia and muscle spasms.

“These are medications the people really depend on for survival,” said Jackie Shannon, executive director of the Texas Alliance for the Mentally Ill. “It’s going to make people who need these prescriptions feel like criminals…It’s just another way to stigmatize mental illness.”

Senate Bill 370 has already passed the Senate because it will supposedly save the state $5.1 million over the next two years. It is one of more than 100 cost-saving measures proposed by Comptroller John Sharp in the Texas Performance Review.

That report claims that the Medicaid Vendor Drug program is a “major source” of drugs illegally diverted for sale or personal use. Those who qualify for Medicaid–the poorest of our citizens–are entitled to three prescriptions per month paid for by the program, which is 64 percent federally funded and 36 percent state funded.

In 1989, New York added benzodiazepines to its triplicate prescription list, arguing that widespread abuse of these drugs had become a serious public health hazard and a costly abuse of the Medicaid system.

The result, according to Sharp’s report “Against the Grain,” was a $27 million savings over two years. Prescriptions for the medications decreased by 55 percent during that time.

In a time when money is short and the needs are great, any cost-cutting idea is welcome. The problem with this one is that no one considered the many Texans with a legitimate need for these medications.

“I think it’s inappropriate to get at those few who abuse by lumping everyone together,” Ms. Shannon said.

Dr. C. Stratton Hill Jr., who has dedicated most of his life to the relief of pain, predicts that the result of Senate Bill 370 will be more suicides, longer hospitalization and the use of primitive medications with severe side effects.

When the number of prescriptions drops rapidly, it doesn’t necessary mean the drug was over-prescribed, he said. It just means patients aren’t getting the medication.

Triplicate prescriptions are onerous, and they subject doctors to the threat of criminal prosecution or loss of license.

“There are abusers and there are bad practices, but don’t try to do police work by restricting access to legitimate, effective drugs,” Hill said. He is director of the Office of Pain and Symptom Management at the University of Texas M.D. Anderson Cancer Center in Houston.

A number of studies dispute the value of New York’s crackdown on Valium.

The Department of Health claims remarkable success in reducing abuse of that class of drugs, and a particularly large reduction in prescriptions from “Medicaid mills”–pharmacies suspected of diverting medication to illicit use.

But an April 1992, article in “Hospital and Community Psychiatry” suggests that less safe and effective drugs were substituted for the benzodiazepines–making it unlikely that doctors were over-prescribing or that patients were siphoning off prescriptions for illegal profit.

“While New York State’s triplicate prescription program for benzodiazepines may have succeeded in targeting illicit diversion of drugs from Medicaid mills, the program’s most dramatic consequence has been its profoundly negative impact on the legitimate practice of the medicine and the suffering caused patients as a result,” the article concluded.

A more recent article in the Journal of the American Medical Association said: “National surveys have consistently yielded the same conclusion: most prescribed use of sedative-hypnotic drugs is conservative, therapeutically appropriate and limited to short periods–three months.”

Fortunately, the popularity of Senate Bill 370 has waned somewhat since it left the Senate. It is stalled in the House Committee on Public Health with an impressive list of opponents that includes the Texas Medical Association, the Texas Alliance for the Mentally Ill, psychiatrists, osteopaths, pharmaceutical companies, family physicians and community health clinics.

One of the arguments that they make is that Senate Bill 370 could cost as much as it saves.

The Department of Public Safety once estimated that each triplicate prescription costs the state 99 cents to store and process. With about 4.8 million prescriptions for benzodiazepines per year in Texas, the cost could be $4.8 million, the net saving $300,000.

It’s not worth it.