Texas Supreme Court hears arguments on 1993 Robin Hood school funding law.

AUSTIN - Attorneys representing hundreds of rich and poor Texas school districts that educate millions of children brought their constitutional challenges of the latest share-the-wealth school finance law to the Texas Supreme Court yesterday.

This is the fourth time since 1989 that the Texas Supreme Court has been asked to rule on the constitutionality of state school finance laws, affecting about 1,050 districts. The hearing drew about 200 people to the court room, where people had to reserve seats to wait for the few remaining chairs.

Two primary issues were on appeal at the hearing and will be considered by the nine justices when they make a ruling, expected to be handed down later this year or early next year.

The first was a December ruling by state Justice Scott McCown that upheld the "Robin Hood" school finance law approved by the legislature last year and that would redistribute about $600 million annually in the ad valorem taxes from almost 100 property-rich districts to property-poor districts. Under the law, rich districts have more than $280,000 assessed property value per student.

The second issue was McCown's opinion that while the school finance law was constitutional for operations and maintenance funding, the state legislature needed to come up with a more equitable system for school construction and facilities programs.

He said if a better facility system is not found, all school bond issuance would be halted as of Sept. 1, 1995.

For the most part, the hearing focused on arguments from both rich and poor districts that the Texas Supreme Court should overturn the first part of McCown's decision, the upholding of the 1993 school finance law.

The state is appealing the school construction part of McCown's order, which could cost billions of dollars to implement. Poor districts support the order, and the rich districts have not taken a position. "We don't think it was proper for a district court judge to separate facilities funding," said Toni Hunter, assistant attorney general who argued the state's case. "[The new school finance law] already equalized the funding."

Hunter argued that the state's 1993 law already is a substantial improvement over earlier legislation that was tossed out on appeal to the Texas Supreme Court. She said there is no gap in funding for 85% of the 4.6 million students in the state's secondary and primary schools. Only in three more extreme cases does a $600 per student funding gap emerge, she said.

"The district court found that to be an acceptable standard," she said. "There is substantially equal access."

However, attorneys for the poor districts argued that facilities funding as well as property tax revenues available for school maintenance and operations are not equal, although some progress has been made.

The 1993 law "didn't take care of financing for facilities," said Albert Kauffman, who represents 120 low-wealth districts and filed the original lawsuit for Edwood Independent School District that started the case about a decade ago.

Kauffman said estimates have been made that $3 billion in state funding would be needed to bring school building up to adequate levels and that equalizing facilities funding on an ongoing basis in the future could cost the state an extra $1 billion to $2 billion a year.

"There is some political pressure to raise taxes," he said. Kauffman also said school districts, under the 1993 law, can exceed a state tax cap of $1.50 per $100 assessed property value by 50 cents with a voter referendum.

As a result, property tax revenues raised would not be equal and that inequality violates the state constitution. However, the wealthier districts said the 1993 school finance law was unconstitutional for different reasons. Attorneys argued that the shifting of $600 million in local property taxes to the state for redistribution to poor districts was equivalent to a statewide ad valorem tax, which, they maintain, was prohibited under state law.

Robert Luna, a Dallas attorney who represents 15 wealthy districts, called the tax distribution "surrogate state aid." The districts, he said, "have been forced to transfer substantial portion of tax revenue."

In a lighter argument, Hunter disagreed. "There is nothing in the constitution that prohibits a reliance on property taxes," she said.

That and other constitutional questions will be weighed by the nine justices of the Texas Supreme Court. Speculation on when a decision will come ranges from a few weeks, to until after the November election, to before the state legislature convenes next year.

Three times previously the Texas Supreme Court overturned the lower court's decision.

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