DALLAS – School districts in Texas won’t be able to pay their bills by summer without a special $1 billion appropriation from the state, a top school finance official said in court Monday.
The schools need the $1 billion to meet July payments, said Shirley Beaulieu, chief financial officer for the Texas Education Agency.
The request for a $1 billion supplemental appropriation is being developed by TEA and will be presented to lawmakers within weeks, she said.
Beaulieu’s revelation came during her testimony in an Austin state district court trial that combines several suits contending that the Texas system for financing public schools is inadequate, unfair, and unconstitutional.
The trial in Judge John Dietz’s 200th District Court began in October 2012 and is expected to last at least another month. Testimony resumed Monday after a three-week holiday recess.
More than two-thirds of the 1,024 local school districts in the state, along with the Texas Charter School Association and the Texas Association of Business, are parties to the suits against the state and the Texas Education Agency.
The 2011 Legislature cut state aid to education by more than $5 billion over fiscal 2012-2013. Local property taxes provide most district revenue, with state appropriations accounting for about a third of local school budgets.
The cuts included $4 billion from basic foundation aid and $1.3 billion from special school program grants. Lawmakers did not fund $2.2 billion that the districts should have received for the 80,000 new students entering Texas public schools each year, and shifted a $2.3 billion payment to school districts due in August into fiscal 2014-2015, which begins Sept. 1.
The need for an emergency $1 billion appropriation proves that the state school finance system is a “robbing Peter to Paul” plan, said Rick Gray, an attorney for the Equity Center, which represents more than 600 school districts.
“This just magnifies the need for the Legislature to seriously get in and solve the problem once and for all,” Gray said.
Texas is first in student enrollment growth of the 15 most populous states, Gray said, but 12th in per-student funding and 13th in teacher salaries.
Rob Coleman, assistant director of fiscal management at the Comptroller's Office, testified Tuesday that lawmakers had to slash the 2012-2013 state budget to resolve a looming $27 billion revenue shortfall.
Texas avoided cuts to education in the previous budget with $5.9 billion from the $12 billion it received in federal stimulus funds, Coleman said.
Lawmakers did not choose to soften the cuts by tapping the $8.8 billion Rainy Day Fund, Gray said.
"It was their discretion to take from that fund, or not," Coleman said.
Dietz’s ruling will be appealed to the Texas Supreme Court. A special legislative session may be required if significant changes are mandated to the school finance system.
Each of the plaintiff groups in the school finance suit has their own complaints about the current system but all want the Legislature to revise the way the state funds education.
The Texas Constitution requires the state to ensure the “general diffusion of knowledge” through “an efficient system of public free schools.”