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Texas sales tax posts biggest single-month jump in two years

Comptroller Susan Combs, explaining her biennial revenue estimate in January 2013 (AP Photo/Eric Gay)

Texas has logged the biggest single-month percentage increase in sales tax receipts in nearly two years — 12.9 percent.

Last month’s sales tax revenue was $2.41 billion, up from $2.14 billion in October 2013, Comptroller Susan Combs announced Wednesday.

The last time monthly growth pressed into double-digit territory was November 2012, when collections grew by 13.1 percent.

“Strong growth in sales tax receipts was apparent across all major economic sectors,” said Combs, who leaves office in January.

She said “notable increases from retail trade and the oil and natural gas-related sectors led the growth,” signaling “increased spending by both consumers and businesses.”

For the fiscal year that began Sept. 1, Combs has forecast just 3.3 percent growth in revenue from Texas’ 6-1/4-cent sales tax. (Click here, see Table A-13.) September’s receipts were 7.9 percent higher than a year earlier. So as has frequently happened, her projection is looking very conservative.

The news probably will do little to cool the ardor for tax cuts among incoming GOP lawmakers and leaders such as Lt. Gov.-elect Dan Patrick and Gov.-elect Greg Abbott.

In election day interviews, Patrick pledged “serious property tax relief.” Abbott said more vaguely in his Tuesday night victory speech that he would keep Texas No. 1 in job creation by, among other things, “lowering the tax burden.”

But a host of considerations will complicate their effort, including a low-balling of entitlements such as Medicaid by about $1 billion in the current two-year budget cycle; lawmakers’ continued reliance on budget-balancing tricks, such as hoarding $4.2 billion in fees levied for specific purposes; road needs; and the looming threat of a court decision ordering a costly overhaul of school finance.

The great two-thirds rule debate has begun

Sen. John Whitmire, the dean of the Texas Senate (2008 AP Photo/Harry Cabluck)

Update at 4:00 p.m.: Checked tape, made minor changes to Whitmire’s and Nelson’s quotes.

Original item at 11:29 a.m.: The Texas Senate has begun its expected debate over whether to abandon a rule that for many decades has protected partisan, geographic and racial-ethnic minorities.

At a briefing on taxes for new Senate budget writers Wednesday, the chamber’s longest-serving member, Houston Democrat John Whitmire, launched a wry if somewhat backhanded defense of the “two-thirds rule.”

It can protect from attack things highly valued by rural senators, such as an exemption of agricultural equipment from the sales tax, Whitmire said at a hearing of the Senate Finance Committee.

The rule requires two-thirds of senators to agree before a bill can be taken up on the Senate floor.

Earlier this year, GOP lieutenant governor candidate Dan Patrick promised to reduce the influence of Democratic senators by weakening the rule and reducing the number of committees they chair. Patrick is a Houston senator.

On Wednesday, Whitmire interrupted a presentation by the comptroller’s office to discuss the sales-tax agricultural exemption.

He called it the “largest, broadest exemption we have.” Whitmire said urban tradesmen could view it as unfair, given they pay tax when they buy vehicles and equipment needed in their work. But the ag exemption has worked well, he said.

Then came the caveat.

“To preserve it, we need to make sure our rural members have a place at the table,” Whitmire said.

Senate Finance Committee Chairwoman Jane Nelson (2009 AP Photo/Harry Cabluck)

Sen. Robert Nichols, R-Jacksonville, said the Legislature tightened administration of the ag exemption in recent years. Beneficiaries have to attest they are engaged in food and fiber production, he said.

Whitmire, though, said that in the next revenue crunch, it and all other exemptions could be reviewed. The state may again face “challenges to find sufficient revenue,” putting the ag exemption at risk, he warned.

“The rural members should be mindful that the Senate rules currently allow them to block any consideration of repealing that,” he said.

Sen. Royce West, D-Dallas, interjected, “You talking about the two-thirds rule?”

Whitmire replied, “That would probably be the No. 1 thing that would come to my mind.”

A few minutes later, members of the panel began raising questions about the regressive effects of higher sales tax. Democrats mentioned Patrick’s proposal to decrease local school property taxes, perhaps by adding a penny or two to the state’s 6-1/4-cent sales tax.

Finance Committee Chairwoman Jane Nelson, R-Flower Mound, quickly cut them off, though.

She noted that higher sales tax is just one way to pay for property tax relief.

“Many of us would like to reduce property taxes,” Nelson said. “We’re going to look at a lot of different possibilities.”

Audit: Perry’s business fund gave millions to firms, universities that never sent an application

Governor Rick Perry at the Americans for Prosperity conference at the Omni Hotel in Dallas earlier this summer. (Vernon Bryant/The Dallas Morning News)

AUSTIN – The first independent audit of the Texas Enterprise Fund shows that the governor’s job-creating fund awarded $222 million — almost half the money granted — to entities that never submitted applications or specific promises to create jobs.

The 98-page report by the state auditor, released to lawmakers Thursday, paints a picture of a $500 million fund that, at least in its early years, gave away taxpayer money without a set evaluation process or a consistent criteria.

Early grants were awarded to companies or universities without their submitting formal applications, and some large projects were never required to create a single job — although that is the legislative mandate by which the fund was started.

Numerous contracts showed inconsistent requirements, weak compliance monitoring and led the auditor to state that it cannot verify many of the jobs or investments that were credited to the program.

Critics have complained that the Texas Enterprise Fund was a loosely controlled treasure trove for Perry to dole out state money to favored projects. The audit did little to dispel that.

In answer to auditors, Perry’s office acknowledged that weak controls were in place when the fund first began in 2003. But the fund has now implemented recommendations made by the auditors, aides said.

The “process and policies of the TEF have evolved” and it has now adopted “a more standard operating procedure,” Perry aides told the auditor.

The fund was created in 2003 and placed under the auspices of the governor to entice businesses to relocate or expand in Texas. Lawmakers specified the awards were to target companies that could promise job expansion and capital investment and that were also being pursued by other states.

In the past decade, the fund has given grants of $505 million to 115 entities, and is credited with creating 48,317 jobs.

But the government role in picking “winners and losers” has come under fire. The audit was ordered under legislation authored by Sen. Wendy Davis, now the Democratic nominee for governor. The Republican candidate, Attorney General Greg Abbott, has also said the incentive programs need to be re-evaluated.

In addition, lawmakers in advance of next year’s session are studying whether to keep incentive programs and, if so, how to structure them.

A Perry spokesman defended the fund as an important factor in Texas’ economic growth.

“The Legislature has continued to recognize its value by reauthorizing it every session since it was created,” said spokesman Felix Browne. “This audit confirms that funds awarded through the program have been allocated in accordance with state law. Administrative processes and procedures are regularly reviewed and updated as necessary to ensure effective, efficient and responsible distribution and oversight of all TEF awards.”

The audit pointed to a process that initially lacked written standards for assessing which business proposals should merit funding. Many of the entities that received large and early grants didn’t even fill out a formal application to receive the funds.

In addition, auditors could not “verify applicants’ assertions” that there were competitors for the projects outside of Texas.

The audit listed Sematech ($40 million) and the University of Texas at Dallas ($50 million in a deal requested by Dallas-based Texas Instruments) as having received large grants without filling out an application or promising new jobs.

In the UTD deal, Texas Instruments asked that the enterprise fund money be directed to the university to strengthen its engineering department. The company agreed at the time to invest $300 million to create a microchip plant in Richardson but did not pledge a specific number of jobs there.

Cabela’s ($400,000), Triumph Aerostructures ($35 million) and UT Health Science Center and M.D. Anderson Cancer Center ($25 million) also never submitted a formal application.

Once contracts were signed, most recipients were required to create jobs or invest capital, but many of companies were allowed to self-report on their compliance without submitting documents to verify their assertions, the audit said.

In half of the contracts reviewed — 40 of 81 projects — auditors couldn’t verify how many jobs had been created. In some cases, recipients provided only a summary of new jobs without being asked to show pay records.

The enterprise fund accepted the summaries, despite its own policies that require a detailed accounting, including job titles, hire dates and compensation.

The audit states that because of the weak documentation and monitoring, “it was not always possible to determine whether award decisions were supported, or to determine the number of jobs that recipients of the awards from the Texas Enterprise Fund created.”

The fund has recouped $14 million in “clawbacks” from companies that failed to meet their contract obligations, and another 23 recipients had their contracts terminated by the state.

But other companies could be in noncompliance with their contracts, said auditor, pointing to the lack of verification made it difficult to identify other shortcomings or failure to meet goals.

Among other points:

When contracts were amended — such as during the economic downturn to reduce the hiring goals — the fund was required by law to inform the lieutenant governor and House speaker, but it sometimes lacked documents to show those offices had been notified.

While the state terminated 23 contracts, resulting in $19 million being paid back, auditors found the state should have collected another $3.8 million.

The Legislature required a written report on the fund every two years to monitor its success. But the auditor found those reports often omitted information and appeared to have skewed some numbers to place it in a more favorable light.

For instance, the 2013 report showed that the fund had 66,000 jobs in contracts, instead of saying that companies actually had reported creating 48,000 jobs. It omitted the amount of capital investment, median wages of jobs created and whether those jobs carried health benefits.

In response, the governor’s office said that it used professional judgment in assessing the required level of monitoring, which was thorough enough to hit noncompliant companies with 103 “clawback” penalties.

It said early awards were determined though informal procedures that were “not fully documented,” but that also were refined as the incentive program matured. The procedures allowed flexibility in dealing with a wide range of different types of investments, the governor’s office said.

State Auditor's Report on Texas Enterprise Fund

Patrick pitches tax swap; Van de Putte wants revenue surplus for schools

Republican lieutenant governor nominee Dan Patrick said Saturday it’s time for the state to consider a tax swap – reduced property taxes in exchange for a higher sales tax – to fund schools, while Democrat Leticia Van de Putte called for using the state’s projected multi-billion-dollar revenue surplus to restore past cuts in education funding.

Patrick said property taxes have become excessive for too many Texans and he believes the public would support a tax swap that spreads out the burden of paying for schools and state programs.Texas schools are primarily funded with local property taxes and state revenue – including sales taxes.

“What I have always believed is we need to transition from depending (so much) on property taxes to more of a sales tax base that requires more people paying,” Patrick said at a political forum in Austin.

“This is something we need to have a serious discussion about. I am talking about bringing senators and hopefully House members together and being honest about tax policy,” he said, pointing out that many Texans cannot afford to keep paying higher and higher property taxes. School property taxes make up about 60 percent of the average property tax bill.

Texas Tribune Editor in Chief Evan Smith, who separately questioned both Sens. Patrick, R-Houston, and Van de Putte, D-San Antonio, asked Patrick about complaints that a higher sales tax would be regressive and increase the tax burden of lower income families.

“If you take an extra penny or two, would a person stop buying something because it costs $1.10 instead of $1.08?” he asked, referring to the current sales tax of 8.25 percent in most areas of the state. The tax swap should be set up so that people below the poverty level are exempted from sales taxes. “It would not be a tax on the poor. If you want to do something about a tax on the poor, let’s get rid of the lottery,” he said.

Van de Putte, whose views contrast sharply with Patrick on most key issues, said one of her biggest priorities will be to restore the funding levels for public schools that were slashed back in 2011 and only partially offset last year. She pointed out that the cuts, which eliminated 11,000 teaching jobs and increased class sizes across the state, were pushed through by the GOP majority in the Legislature, including Patrick.

The funding can be restored, she said, by using the state’s expected revenue surplus of $5 billion next year and the rainy day fund, projected to have as much as $8.5 billion by the next budget cycle.

“I would put that money back into public education,” she told audience members at the forum. “We need to put those programs that were showing success back on track.” She cited the $200 million for pre-kindergarten that was “ripped out” of the state budget along with other programs that were helping disadvantaged students – who now make up about 60 percent of all students.

As she travels around the state in her campaign, Van de Putte said, it is clear that many Texans value the importance of their public schools and want to see them funded properly.

Asked whether she would support a tax increase for schools, she replied, “I am willing to have the Legislature look at the budget and decide our priorities, and get a budget out that meets our priorities. I don’t think in the current economic climate, it will be necessary to look at an income tax or how to bring in new revenue.” Van de Putte said she wants to look at indexing the state gasoline tax to raise more revenue for highway construction and repairs.

In separate 30-minute interview session, the two candidates also laid out education proposals they favor. Patrick wants to see school choice expanded, allowing students in failing schools to attend private or religious schools. That would be accomplished by setting up state tax credits for businesses that contribute to private or religious schools. The money would be used to pay for scholarships for students who enroll at those schools.

Van de Putte, who has been an ardent opponent of private school tax credits and vouchers, wants to expand pre-kindergarten to a full-day program for all eligible disadvantaged children. She also wants to offer two years of free tuition at all community colleges for lower income students. The San Antonio senator also has called for a rollback of high-stakes testing in public schools.

Groups ramp up push to get disabled Texans to vote

Disability advocates, from left, Mark Cundall, Bob Kafka and Bryson Smith speak about mobilizing disabled Texans to vote at a Capitol news conference Wednesday. (Robert T. Garrett photo)

More than 50 disability rights advocacy groups and Texas nonprofits have banded together to try to mobilize the state’s more than 3 million disabled residents to vote on Nov. 4.

The groups have created a website promoting a Texas Disability Issues Forum, which will be held in Austin next week.

So far, only Democratic hopefuls seeking the top three statewide offices on the fall ballot have agreed to appear at the Sept. 24 event.

GOP nominees for governor, lieutenant governor and attorney general — Attorney General Greg Abbott and state Sens. Dan Patrick and Ken Paxton, respectively — have declining the invitation, citing scheduling conflicts, said event organizer Bob Kafka of ADAPT of Texas.

“We can’t force them to come,” he said at a Capitol news conference.

Organizers, though, have offered to let the let candidates citing schedule conflicts to participate using videoconferencing technology, Kafka said. Organizers also told the GOP candidates’ campaigns that they would let the absentee candidates tape an appearance at an earlier date, he said. Forum moderator Ben Philpott, a political reporter with Austin’s public radio station KUT-FM, would interview them “under the same type of setting,” Kafka said.

“We’re disappointed,” he said, noting the forum is a nonpartisan effort.

Abbott, who has been confined to a wheelchair since a tree fell on him about 30 years ago, did join Democrats Wendy Davis, Leticia Van de Putte and Sam Houston in filling out an 18-question issues survey. The four candidates’ responses are posted online here.

Abbott has vigorously defended the state against lawsuits brought by disabled Texans under the federal Americans with Disabilities Act. He also has supported the state’s voter ID law, which Kafka said poses problems for disabled people, who he said tend to have lower incomes and be less well educated.

Last week, Abbott unveiled a health platform last week that included support for 5 percent pay raises for personal attendants who help the disabled stay in their homes. State health and human services agencies run so-called “Medicaid waiver” programs that help the disabled remain in the community. They agencies have asked lawmakers next session to approve the additional $105 million in state spending that it would take to grant 5 percent raises. The attendants typically earn $7.50 an hour, or just a quarter more than the federal minimum wage.

Newspaper truth test calls Patrick’s claim on school funding false

Republican lieutenant governor nominee Dan Patrick has been cited for falsely claiming that he led efforts to increase funding for public schools last year. Patrick, a state senator from Houston, said earlier this month that he “led the charge” to restore education funds that had been lost in a round of budget cuts in 2011. But the Austin American-Statesman’s Politifact analyzed Patrick’s claim and pointed out that he was one of four Republicans in the Senate who voted against the 2013 state budget that increased state funding for schools by $3.4 million.

“It’s not clear to us how someone can lead in putting money back by voting against it,” Politifact said Monday in its analysis, rating Patrick’s claim “Pants on Fire!” The GOP senator also voted for the 2011 budget that cut funding for schools by $5.4 billion, according to the study. A campaign spokesman for the senator claimed that Patrick supported partial restoration of the funding reductions in two earlier votes in 2013, one in a senate committee and the other on the Senate floor. That funding increase was for $1.5 billion, a figure that was increased late in the 2013 session.

Patrick made his claim about leading the charge to restore education funding after a state judge recently overturned Texas’ school finance system, citing among other things the reduced funding levels since 2011. Democrat Leticia Van de Putte, Patrick’s opponent in the lieutenant governor’s race, has roundly criticized the Republican’s claim as false, noting that she opposed the funding cuts of 2011 and supported restoration of much of the state aid last year. Van de Putte, a state senator from San Antonio, is expected to continue her criticism during a televised debate between the two candidates on Sept. 29.

August sales tax receipts tie a bow on good state fiscal year

Comptroller Susan Combs (2011 AP photo)

Texas finished the fiscal year with a higher-than-expected yield of sales tax.

In August, the state took in $2.57 billion, up 7.5 percent from a year earlier, Comptroller Susan Combs said Wednesday.

As recently as December, Combs predicted sales tax receipts for the year would increase by a mere 3.5 percent. (Click here and go to page 34.)

By Aug. 31, when the budget year ended, sales tax generated not just the nearly $26.8 billion she had forecast but an additional $515 million.

“Fiscal year 2014 ended with total collections at $27.27 billion, up 5.5 percent over the previous year,” she said.

Combs credited gains “in both business and consumer spending.”

Explaining last month’s uptick, she pointed to producers of oil and natural gas and merchants – both retail and wholesale.

Combs and her aides have warned that an oilfield boom boosted by hydraulic “fracking” techniques may not continue its rapid growth in West Texas and South Texas.

Increased drilling activity spins off lots of purchases. On each, the state collects its 6-¼ percent tax.

Eva DeLuna Castro, who closely tracks state revenues for the Center for Public Policy Priorities, which advocates for increased spending on education and health care, said Combs issued “very conservative forecasts” in the past few years.

That was partly because the retiring Republican comptroller expected the Great Recession to curb consumers’ spending habits, creating a more austere “new normal,” DeLuna Castro recalled.

As it turned out, that proved wrong, the analyst said.

“Americans had all kinds of bills to pay and then they went out and bought new cars,” DeLuna Castro said. “So that reduced the savings rate.”

Van de Putte rips Patrick on school cuts in first TV ad in lieutenant governor’s race

 

Democrat Leticia Van de Putte attacks her GOP opponent in the lieutenant governor’s race, Dan Patrick, in her first television ad running in several major markets this weekend. The 30-second commercial reminds viewers that Patrick, as a state senator, voted in 2011 to cut school funding in Texas by $5 billion. Van de Putte, a state senator from San Antonio, opposed the reduction.

The funding cuts to schools, supported by most Republicans in the Legislature, resulted in the loss of 11,000 teaching jobs. Last year, Patrick voted against restoring much of that money, while most Republicans and all Democrats in the Senate supported the increased funding. “For a second time, Dan Patrick voted against our kids,” Van de Putte said in the TV spot, titled “Twice.” Patrick has defended his votes, saying the state had no choice but to cut spending on education.

How’s that new health care contract for state workers, retirees working out? Some lawmakers raise red flags

Rep. Byron Cook, R-Corsicana (2009 courtesy photo)

Lawmakers are sniping at UnitedHealth Group, two years after its main subsidiary took over a state health care contract affecting nearly a half million Texans.

The Minnetonka, Minn.-based company hired super-lobbyists connected to Gov. Rick Perry, such as former Perry chief of staff Mike Toomey and former Perry campaign manager Luis Saenz, when it snagged the four-year, $204 million Employees Retirement System deal in 2012.

United wrested the work as third party administrator for 445,000 active and retired state workers and their dependents from long-time vendor Blue Cross Blue Shield of Texas, a unit of Chicago-based Health Care Service Corp.

The dispute has to do with some House lawmakers’ concern that some state employees may be paying much higher medical bills because caregivers they see are “out of network” – and even when they go to an in-network hospital, they can be slammed because anesthesiologists, radiologists and other hospital-based providers don’t have contracts with United.

On Thursday, House State Affairs Committee Chairman Byron Cook, R-Corsicana, suggested an inadequate network is especially a problem in rural areas of the state.

Robert Kukla, director of benefits contracts at the retirement system, said it knew when it chose United that about 9,000 plan members would have to change primary care doctors. But access to care under United versus under Blue Cross “was comparable,” he said, and the retirement system went with United because of cost considerations.

Cook, a member of Speaker Joe Straus’ inner circle, said the system immediately should hire an outside auditor to check into disturbing signs he’s seeing that “balance billing” after hospital visits is growing and plan participants are shelling out increasing sums for out of network care.

Tom Quirk, United’s chief operating officer for Texas and Oklahoma, shot back, “Claims administrators don’t balance-bill. Physicians or care providers balance-bill.”

He and retirement system executive director Ann S. Bishop, a former Perry chief of staff, said United is hitting a goal of holding this year’s plan costs to 7.5 percent growth over last year. They also said United works hard when state employees complain to patch holes in its provider network, especially with the hospital-based doctors who resist signing contracts with insurers and are responsible for much of the balance billing.

Cook and a couple of his committee’s members, though, said they weren’t totally satisfied by the assertions of smooth sailing.

“I didn’t care which group has it,” Cook said of the contract. “I still don’t. But I care a lot that it be run for the benefit of the state and the participants. … I’m very happy if it all proves up. But we need to make sure the state does a good job at monitoring big contracts.”

Rep. Rene Oliveira, D-Brownsville (204 photo by Erich Schlegel/Staff photographer)

Rep. Rene Oliveira, D-Brownsville, said “the numbers are somewhat alarming” on mushrooming out of network spending and balance billing.

Rep. John Frullo, R-Lubbock, said he’d like to know why United doesn’t seem to be able to leverage bigger discounts from hospitals and doctors as it gets a better handle on the contract.

The system’s health benefits cost taxpayers $1.7 billion in the current two-year cycle. Bishop has asked lawmakers next year to provide an additional $291 million to cover medical inflation and increased utilization.

“If we do not get the full appropriation, we certainly will look at plan design changes,” or cuts to workers’ and retirees’ current benefits, she said.

Blue Cross hired Hillco Partners, a top lobbying firm, and lobbyist Mignon McGarry during the 2012 fight with United. Recently, Blue Cross lost another claims administration contract it had held for a long time, at the Teacher Retirement System. This time, Aetna won the business. United didn’t compete.

The contract at the non-educator Employees Retirement System is held by UnitedHealthcare, a subsidiary of UnitedHealth Group, a $130 billion juggernaut. UnitedHealthcare provides 92 percent of its corporate parent’s revenue, according to this company fact book.

Judge overturns Texas school finance system; discounts fixes by Legislature

Kindergartners Giselle Juarez, left, and John Diaz, right, raise their thumbs in the air while chanting positive slogans during a student rally for the district's positive behavior plan on the first day of school, Monday, Aug. 25, 2014 at Townsell Elementary in Irving. (Ben Torres/Special Contributor)

A state judge overturned Texas’ school finance system for the second time in 18 months on Thursday, ruling that a funding boost by the Legislature last year failed to fix a system that is both unfair and inadequate for the state’s five million public school students.

State District Judge John Dietz decided in favor of the more than 600 school districts who sued the state. They argued the Legislature has consistently underfunded schools while imposing new and expensive academic requirements for students.

In his ruling, the judge also pointed to inequities in the system that leave lower-wealth school districts with far less money to spend on their pupils than their wealthier counterparts across the state.

“The court finds that the Legislature has failed to meet its constitutional duty to suitably provide for Texas public schools because the school finance system is structured, operated and funded so that it cannot provide a constitutionally adequate education for all Texas schoolchildren,” Dietz wrote in his 21-page final judgment in the case.

“The court enjoins further funding under the system until the constitutional infirmities are corrected.”

Dietz also said lawmakers erred by sharply limiting the taxing ability of school districts, which amounts to an illegal statewide property tax.

Schools will not be immediately affected, as Dietz put the ruling on hold until July 1. The decision is expected to be appealed directly to the Texas Supreme Court, which last ruled on school finance in the fall of 2005. That order forced the state to revamp its method of funding education so that it was less reliant on local property taxes.

If the high court affirms Dietz’ new ruling, it would force the Legislature back to the drawing board. That would probably not occur until after the upcoming legislative session in January.

The judge originally found the funding system unconstitutional in February of 2013 after a 12-week trial pitting the state against school districts – including dozens from North Texas. But he withheld his final decision in the case after legislative leaders indicated they would address the issues raised by Dietz during their 2013 session.

Lawmakers did increase school funding by $3.4 billion in the current biennium. However, that did not make up for the $5.4 billion that was cut in 2011 to offset a severe shortfall in state revenue. Lawmakers also dropped 10 of the 15 high school tests that were slated to be required for graduation.

Additional hearings were held by Dietz earlier this year to decide whether the actions of the Legislature would temper his earlier decision.

They didn’t.

In his original ruling, the judge suggested it could take an extra $2,000 per child to meet all state standards – a total price tag of $10 billion to $11 billion a year.

“Education costs money, but ignorance costs more money,” he summed up. “It is the people of Texas who must set the standards, make sacrifices and give direction to their leaders about what kind of education system they want. The longer we wait, the worse it gets.”

Plaintiff school districts praised the judge’s ruling, while legislative leaders cautioned that Dietz won’t have the final word on whether the funding system is constitutional. That rests with the Supreme Court.

The lawsuit was triggered by the massive funding reductions of 2011, which forced elimination of 11,000 teaching jobs and increased class sizes at thousands of campuses across Texas. Many school districts, including Dallas, still received less funding per student this year than they did before the 2011 cuts.

In addition, a study by the National Education Association earlier this year showed that Texas ranks 46th among the 50 states and District of Columbia in spending per pupil. Last year, Texas ranked 49th.

Update at 3:10 p.m.: Sen. Wendy Davis, the Democratic nominee for governor, hails the ruling in a written statement as “a victory for our schools, for the future of our state and for the promise of opportunity that’s at the core of who we are as Texans.”

Davis, as she has before, blasted Republican opponent Greg Abbott, the current attorney general, for defending the school finance system in court. “The reality is clear and indefensible: insiders like Greg Abbott haven’t been working for our schools; they’ve been actively working against them,” she said. “Abbott has been in court for years, defending overcrowded classrooms, teacher layoffs and public-school closings, and today, Judge John Dietz ruled against him. This ruling underscores the crucial need to invest in education and reminds us of just how much our schools, teachers and students have had to sacrifice over the past three years just to get by.”

Abbott has not yet weighed in on the ruling, but he’s widely expected to appeal it.

Update at 4:25 p.m.: Greg Abbott, the Republican nominee for governor, has issued a statement pointing to his education plans, saying he hopes to “improve education for our children rather than just doubling down on an outdated education system constructed decades ago.”

Abbott, who as attorney general will have to decide whether to appeal Thursday’s ruling, did not address the court case directly. Instead, he noted that as a candidate for governor, “I have proposed substantial improvements for our schools that will do a better job of educating Texans while spending tax dollars wisely. My plan will make Texas top-ranked in the nation for education by returning genuine local control to school districts, ensuring all children are reading and doing math at grade level by third grade, and graduating more students from high school than ever before.”

School Finance Final Judgment by rjrusak

School Finance Findings Conclusions by rjrusak