THE EDUCATION FRONT

Bill White said something interesting and different in Monday night's gubernatorial debate. Different for most Democrats, that is.

When asked about the state's school funding situation, he said that parents should be free to put what they want into their children's school after the state has met its funding obligations. At the same time, the state must make sure that kids from all backgrounds have access to quality schools.

To make sure I heard that correctly, I followed up with the White campaign. Here is their post-debate statement:

"In addressing the question posed by the Dallas schoolteacher, Bill was recognizing the basic tensions that school districts and the legislature face. In trying to create a funding system that is fair and meets everyone's needs, there are competing principles. First, that all students, regardless of their economic situation and where in the state they live, have equal access to a quality education. Second, that local communities are able to make decisions about how much money they put towards education."

This approach may sound like a no-brainer, but Democrats usually haven't been so forthcoming about letting parents put what they want into their child's school. They often focus on equalizing funding. What White is saying allows for the fact that some schools could end up with more money beyond what the state puts in through its funding formulas.

That was a clear --and politically smart -- nod to surbuban voters, who often are passionate about building up their children's schools. White, a Democrat, knows he needs some suburbanites to win in the fall.

More than the politics of his position, the state shouldn't shoo away parents who want to improve upon the state's investment, as long as they don't run afoul of school finance laws.

Make no mistake: White also is signaling that the state has a clear responsibility to adequately fund all schools. That's his way of saying to urban and rural Texans that the state can't shortchange them. (As a Dallas resident, I'm glad to hear that.)

These funding issues get quite technical, but basically the state has a legal responsibility to give all schools access to an equal amount of wealth. After that is where things can get tricky. Some don't like to think about schools being free to access other buckets after the state has done its job. But White is giving them some wiggle room.

This is both good policy and good politics.

Last week a national report gave Texas a D+ for its school funding system. Today, Texas lawmakers said they'll study ways to improve school finance.

Granted, it's just a coincidence. But it's another reminder that like most states, Texas' method of funding public education is far from perfect. (For another local, recent reminder, check out Diane Rado's story about Dallas ISD having to share property tax money with other districts.)

Debates over school finance usually focus on two core issues: Adequacy (How much money is spent overall, and is it enough to achieve our state's educational goals?) and Equity (no matter the size of the financial pie, is it split fairly among school districts?). Judging by the following comments, not to mention the current economy, I bet Texas lawmakers will concentrate more on the latter.

From Lt. Gov. David Dewhurst: "Few issues are more critical to the future of Texas than the quality of our public schools and the education they provide to our young people. I expect the members of this committee to engage the public and come up with the best ideas to ensure that Texas is using taxpayers funds responsibly to provide our students with a world-class education."

From House Speaker Joe Straus: "Every child in Texas public schools deserves a quality education. While we fund important priorities, we must also ensure that we use each taxpayer dollar wisely."

School finance eggheads can read the whole release by clicking below.

Welcome to a new year on The Education Front.

Over the next few months, I'm going to spend some time here exploring what it takes to spread success around a big urban district. We've talked about this topic in the past, and, among other things, I'm going to line up some people with experience in urban districts to share their ideas.

There will be no quick fix, but we have no choice to continue finding the right answers. Urban school districts are where you find large numbers of poor, minority students. If we don't do right by them and create more than pockets of excellence, they will fail us by dropping out or ending up in dead-end jobs. No one benefits from that scenario.

Along these lines, I plan on concentrating on the gap between Latino students and their Anglo peers. We've talked considerably about this challenge the last few months, but we can't let up. This gap too affects the larger society.

Finally, I will try to keep the issue of school finance alive in this blog this year. Texas is looking at a funding shortfall in next year's session. And I hope to continue exploring how the Texas Legislature can solve this problem. This won't require a major overhaul, like the Legislature tried to do in 2006. But it will require action, and perhaps The Education Front can help show the way.

I look forward to our discussions this year, a big part of which are the ideas you provide. As always, let's keep the exchanges civil and show that a blog can be both informative and interesting.

This is good news:

Texas House Speaker Joe Straus put in his interim charges for the House Ways and Means Committee that he wants the tax committee to both monitor the business tax that supplies money for schools and look at the tax exemptions that some businesses enjoy. That's code for his way of saying the 2011 Legislature is headed into trouble financially, and he wants some ways to deal with it before the next Legislature starts in January 2011.

We discussed here last month that the Legislature is looking at a serious hole, partly because the school finance solution that legislators put together in 2006 is not supplying sufficient dollars. The business school tax is part of the problem because it is not raising enough money to offset the local property tax cuts that were part of the school finance fix.

The Morning News' Bob Garrett touches upon other reasons for the coming shortfall in his good explanatory piece in this morning's paper. They include lower sales tax receipts and stimulus money that probably won't be around in 2011.

There are several ways to get out of our hole, which could reach $8 billion to $10 billion. One way is we luck out and the economy roars back. Another way is we control spending. I wouldn't count on either of those supplying enough cash but we certainly can hope for them.

More likely, legislators will need to tinker with the school business tax. That could mean a one-time hike in the tax, matched with spending cuts. It also could mean doing away with some business tax exemptions.

Education Front readers may recall that the Center for Public Policy Priorities' Dick Lavine suggested on this blog a couple of weeks ago that Austin should review all tax exemptions. He told Garrett in today's story that these exemptions may have been rooted in a legitimate reason long ago, but this is a different day.

Of course, touching exemptions will set off a firestorm, as Garrett explains.
That's why I admire Straus for putting them on the table. He's showing guts.

Now, the Ways and Means Committee should show its own courage and offer up some exemptions that the state could end. We're going to need all the help we can get to climb out of this hole.

We better get ready now. The 2011 Legislature is likely to be dominated by -- yes, once again -- school finance.

This subject never goes away, does it?

It's popping up again because legislators failed to put aside enough money to pay for the school finance fix they passed in a 2006 special session. They had some good fundamentals in their plan, such as a new business tax that they created to help the state pick up a larger share of school spending.

With the new business tax in play, locals were freed to drop their school property taxes by about a third. On the surface, the idea made sense: The state provides more money through the business tax and the locals get tax relief.

But there was a catch: The business tax, along with an increase in the cigarette tax, was not set at a rate to bring in enough money for the state to sufficiently ramp up its spending. It certainly wasn't set at a rate high enough for local property taxes to go down 30 percent and to maintain spending on the state's other priorities.

Some in Austin knew this from the beginning. They warned that the state eventually would have to figure out a way to pay for all of that property tax cut.

Well, that day is arriving. The state budget limps along, year to year, with a built-in annual deficit of about $3 billion to $5 billion. And it's getting bigger, not smaller, thanks to the slowdown in the economy. As a result, the longer we wait, the worse the problem will get.

The Rainy Day Fund could help out, but should we use all of it to pay for this deficit when other needs are equally compelling? We shouldn't rule out either some spending cuts in areas that are not essential or maybe some kind of hike in the business tax, even if it's only a one-time hike.

Whatever the answer, we should get ready. That includes asking all our gubernatorial candidates how they would deal with this problem. It's coming.

Poke many Texas taxpayers, ask them what they're willing to shell out their hard-earned cash for, and the words "schools" or "education" are likely to come in near the top of their lists. That makes it all the more maddening, then, when, session after session, our Legislature fails to adequately (let's set aside permanently) address the way we fund our schools here in the Lone Star State.

This week brings yet another flap over our property-tax driven school funding formula: Texas Education Commissioner Robert Scott's decision to bail out -- to the tune of $24 million dollars -- a handful of school districts that offer their homeowners optional homestead tax exemptions. The decision sits not at well with school officials in, among other places, Bexar County, for example, which doesn't offer the optional homestead exemptions.

I was talking to a lawyer friend yesterday who observed that more businesses are likely to start moving offshore with taxes and regulations expanding under President Obama. At the same time, he said, some companies in New York and California may think more seriously about moving to Texas.

While Texas would face the same tax/regulatory issues under Obama, the state has no income tax and it has a fairly friendly attitude towards business. Indeed, Richard Fisher of the Dallas Fed said Texas should use this moment to gather up more companies to come here.

Our good fortune, however, presents a conundrum. While Texas has no income tax, it also struggles with a way to pay for its schools. And, along with low taxes, businesses look to see whether a state has good schools.

The challenge to pay for schools, by the way, also is getting harder. Facing a court order, legislators a few years ago finally reformed the state's business tax. It, along with higher cigarette taxes, became the primary way the state pays for its share of school spending.

But a rear-guard action was launched against the business tax this year. Gov. Rick Perry helped lead the charge during the session. He wanted to go out and tell GOP primary voters that he lowered business taxes in a recession. Never mind that lower business taxes mean less of a revenue stream for schools. Austin went along and exempted businesses whose annual gross receipts total a million bucks or less.

The Legislature will make up the difference for the next two years, but what about after that? I don't know. We could be facing a constant hole in school funding.

One of the options, of course, is creating an income tax. I've been open to it in the past, and I guess I still am. But I am getting more and more reluctant to go that route, precisely for the reason my lawyer friend outlined. I don't want to see Texas become California and New York.

In fact, one of the exciting elements of living here is seeing if Texas can prepare for the future without turning into California. Can our low-tax, low-regulation model be amended enough that we can take care of growing needs, like funding schools adequately, without giving into California-creep?

This is a balancing act. We can't afford to not invest in our state. We have too many needs, whether that's for roads, water or schools. Yet we can't tax ourselves so heavily that we become a less attractive place to live.

True, no one's talking about an income tax these days, not with a governor's race coming. But it's one of those issues that will remain on the back burner as long as we struggle to finance the state's needs. That puts the pressure on those of us who aren't wild about a state income tax to come up with alternatives. And we may need some answers by the time the 2011 Legislature rolls around.

Anybody got any ideas?