Opinion ID: 1723051
Heading Depth: 2
Heading Rank: 3

Heading: The transition period

Text: The property-poor districts also raise several complaints involving the transition toward full implementation of Senate Bill 7. First, they note that the calculation of state aid will now be subject to a biennium lag. Senate Bill 7 limits a district's state aid to the amount to which the district would be entitled at the district's tax rate for the final year of the preceding biennium. TEX.EDUC.CODE § 16.254(e). Thus, when a district raises its tax rate, the additional tax effort is not recognized by the State for one or two years. This lag time has an uneven impact: property-poor districts must wait one or two years for additional state equalization money, but property-rich districts have immediate access to the greater revenues generated from their own tax bases. While the biennium lag does impact efficiency in the short term, there are considerations to be weighed against those concerns. If biennial funding decisions are based on assumptions regarding future tax rates, mid-year proration becomes necessary to adjust for any shortfall in appropriations caused by local tax decisions. The State argues that such proration is poor public policy, and its evidence at trial indicated that proration may actually be disequalizing. On this basis, we agree with the State that the Legislature's avoidance of proration is a legitimate exercise of legislative policy-making that does not compel the conclusion that the finance system is thereby rendered inefficient. The property-poor districts also dispute changes made by Senate Bill 7 regarding tax rollback elections. Formerly, the voters of a school district could petition for a rollback election whenever the district raised its tax rate by $0.08 or more. A successful rollback election operated to limit the rate the district could adopt for the following year. Senate Bill 7 changed these rules in several respects. See TEX.TAX CODE § 26.08. First, calculation of the district's rollback tax rate begins with its rate to stay even, rather than the actual tax rate for the prior year. In a district receiving a new infusion of money, the rate required to stay even may be substantially lower than the actual rate for the prior year. Second, the trigger is now set at an increase of only $0.06, rather than $0.08. Third, the rollback election is now automatic; no voter petition is necessary. Finally, if the election proposition passes, the tax rate is rolled back for the current year, rather than the following year, raising the possibility that mid-year budget cuts may become necessary. These changes, taken together, will tend to make significant tax increases more difficult. There is no evidence, however, that the changes will significantly affect the implementation of Senate Bill 7. The record reflects that in 1992-93, the average tax rate statewide was already $1.28, and this rate had been rising over the past four years at an average of over $0.10 per year. Moreover, the new provisions allowed a district to adopt a 1993-94 tax ratewithout fear of a rollback electionat whatever level was necessary to generate the revenue it received in 1992-93. Another complaint regarding the transition period is that Senate Bill 7 allows the wealthiest districts to keep some portion of their excess wealth, i.e., their property wealth in excess of $280,000 per student, for three years, while no corresponding phase-in is provided for the poorer districts. See TEX.EDUC.CODE § 36.002(b), (c). The property-poor districts' own evidence, however, indicates that 87 percent of Senate Bill 7's wealth reduction was accomplished in 1993-94; over $35 billion of property wealth was brought into the system, and only $4.7 billion was retained under the phase-in provisions. Less than that will be retained in 1994-95 and 1995-96, and none will be retained thereafter. Additionally, the transition period for poorer school districts has been eased to some extent by the Commissioner of Education's redistribution of excess CED funds. [17] We hold, therefore, that Senate Bill 7's phase-in provisions do not have such an unfavorable effect on poorer school districts as to make the finance system inefficient.