2014 Veritas Issue 4

8/9/2019 2014 Veritas Issue 4

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January 2015

Battles FoughtVictories WonP st, P ese t, nd F ture


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VERITAS | January 2015

Battles Fought and Victories Won:Past, Present, and Future To continue Texas’ journey away from povertyand toward prosperity, Texans will have tospeak loud and clear that they want less—notmore—government in their lives. To do this,they’ll also have to be willing to ght their own

human nature. It is easier to keep our headsdown, focus on our own lives, and not getbeat up by advocates who insist that only biggovernment can solve our problems—and, bythe way, enrich the advocates in the process.

25th Anniversary GalaOn November 14, 2014, the staff andsupporters of the Texas Public PolicyFoundation came together at The Alamo in SanAntonio, to reect on the Foundation’s 25 yearsof keeping up the good ght—for a more free,more prosperous future.

School Choice or All: Te ime IsNow In the ongoing school nance litigation, oneplaintiff has raised the argument that publicschools will be inefficient until competition is

established. This effectively brings before thecourt the argument they invited in 2005. Afavorable ruling from the Texas Supreme Courtin 2015 will be the strongest catalyst for schoolchoice reform.

4FEATURES

8

B O A R D O F D I R E C TO R S

Wendy Lee Gramm, Ph.D., ChairmanHelotes, X

Brooke L. Rollins, President & CEOFort Worth, X

im Dunn, Vice ChairmanMidland, X

Tomas Lyles, Secretary San Antonio, X

Ernest Angelo Jr., reasurerMidland, X

James R. Leininger, M.D., Chairman EmeritusSan Antonio, X

Phil D. AdamsBryan, X

Rick FletcherMidland, X

Windi GrimesHouston, X

Victor LealAmarillo, X

Linda McCaulAustin, X

Kendall MillerHouston, X

L.C. “Chaz” Neely San Antonio, X

Brenda PejovichDallas, X

Jeff Sande erAustin, X

Kyle StallingsMidland, X

George W. Strake Jr.Houston, X

Veritas is a publication o the exas Public Policy Foundation, a 501(c)3nonprot, nonpartisan research institute. Te Foundation’s mission is to

promote and de end liberty, personal responsibility, and ree enterprisein exas and the nation by educating and affecting policymakers andthe exas public policy debate with academically sound research and outreach. Our goal is to lead the nation inpublic policy issues by using exas as a model or re orm.

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Dear riends o liberty,

In this rst month o 2015, we come to an end—and a beginning. It was not withoutreason that the Romans named the rst month o the year afer the pagan god Janus,who had two aces: one acing orward, and one acing back. Te year’s end givesus an opportunity to reect on what we’ve accomplished—and on the tasks that lieahead.

Te past year, 2014, was a year o tremendous achievement or the exas PublicPolicy Foundation. We set the agenda, early and decisively, or the budget debatein the orthcoming 2015 exas legislative session. Already, the public conversationabout how best to spend exas tax dollars—and more importantly, how to get thosetax dollars back to exans—is underway on the terms that we and our allies have set. In September, we brokenew ground with our Crossroads Summit in Houston, which brought together some o the most eminentthinkers, scientists, and policymakers on energy and the environment. In challenging the status quo on thistopic, we did more than simply hold an event: we threw down a gauntlet, and moreover one that cannot beignored by the other side. In all o our policy areas, it was the same: moving orward, challenging the status quo,and building a new, more ree, and more prosperous exas or the generation ahead.

Indeed, this past year was an appropriate year or a conversation on what comes next in the Lone Star State.For the rst time in over a decade, nearly our entire statewide political leadership has changed hands. We maylook with pride to what was accomplished in the years o Governor Rick Perry and Lieutenant Governor DavidDewhurst—and we are ready or what must be done in the years to come under the leadership o GovernorGreg Abbott and Lieutenant Governor Dan Patrick.

Reection on the past and resolution on the uture were major themes o our extraordinary 25th AnniversaryGala in San Antonio, exas, on November 14th. It is hard to believe that when this Foundation was establisheda quarter-century ago, there was nothing really like it anywhere in the country. A ew intrepid men gatheredtogether and pledged, in a ashion, their “lives, ortunes, and sacred honor” to the cause o exas. wenty-veyears on, their achievement speaks or itsel . In a generation’s time, the exas Public Policy Foundation hasdone more than its share to keep exas ree and strong—and just as important, a beacon or the AmericanDream. Tat, perhaps, is the most grand and enduring achievement o the Foundation’s ounders: that in seek-ing to save exas, they may have ended up saving America.

In this issue o Veritas , you’ll get to experience and re-live some o the greatest moments o our Anniversary

Gala. You will also read about one o our prime objectives or the next legislative session: advancing true educa-tional reedom in exas. And you will read about our efforts to make sure that exas state budgeting adheres tothe principles o responsibility and conservatism that exans expect.

Tat is what we do at this Foundation every day. Te proo o our success is not ound in any particularpolicy, or law, or legislation, or research. It is ound in the lives and homes o exans who are ree to dream bigdreams—because we have kept the Lone Star shining bright.

Tat is a thing worth ghting or: last year, in the new year, and in every year to come.

Brooke RollinsPresident and CEO

PRESIDEN ’S MESSAGE


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In May 2005, the 79th exas Legislature was ac-ing the potential shuttering o public schoolsbecause o yet another exas Supreme Courtruling that the system o public education was un-constitutional. Policymakers had settled on a com-plex scheme that would lower property taxes byincreasing state unding or education to try andsatis y the court.

O course, more state unding meant a need ormore state revenue, i.e., higher taxes. o accomplishthis, policymakers decided to expand the state’sbusiness tax to provide the revenue to make the taxswap possible. Te debate during the closing dayso the legislative session was what the expanded taxwould look like.

Tis being exas, an income tax was out o thepicture. So with property and income unavailable—and the state already having one o the highest salestaxes in the nation, the apparatchiks in Austin werelef scrambling with what they could tax to come upwith the billions o dollars a year they needed.

Somewhere along the way, the idea o a payroll,or wage, tax was oated, and it quickly oundacceptance. Rather than taxing the income o abusinesses, a wage tax would tax its payroll expenses.Companies would simply pay a tax based on the sizeo their payrolls. Te idea picked up steam quickly.

Te desire to get out rom under the Court’s rulingand to placate constituents by cutting property taxescreated a momentum or the wage tax that was hardto stop.

Te problem was that a wage tax is a very bad idea.Te amount o wages a company pays is directlycorrelated to how many people it employs. Temore employees, the higher its wage payments. Inother words, the wage tax is a tax on jobs. And weall know that i you tax something, you get less o it.

Even worse, a wage tax unctions as a stealth personalincome tax. Te only difference is that because thecompany—rather than the employee—pays the tax,it keeps the money and pays it to the governmentinstead o its employees.

Te bottom line with a wage tax is that it results inewer jobs, and the people who get to keep their jobs

have lower wages.

Despite the Foundation’s effort to get this messageacross to policymakers in 2005, the wage tax keptmoving orward. But we didn’t give up, workingwith groups and the media here in exas and acrossthe nation.

Our efforts paid off with a May 10, 2005 Te WallStreet Journal editorial, “Deep in the Heart o axes.”

by Bill Peacock

Battles Fought andVictories Won:

Past, Present, and Future


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In it, Te Wall Street Journal pointed out the obvious:

A wage tax is of course a fancy disguise for a personal income tax, and imposing one is a sureway to put a state on the path to slower growth.Since 1990 the nine states without income taxeshave enjoyed twice the rate of job growth and 2.5times the population growth of the highest incometax states. Capital, jobs and economic developmentin America are migrating from high-tax states tolow, and from blue states to red. Why would fast- growing exas want to imitate New York and Massachusetts?

Te Wall Street Journal highlighted the Foundation’ssolution to the problem:

Tere is a better way out of this scal mess.Brooke Rollins, director of the exas PublicPolicy Foundation, has suggested a tax plan thatwould: cut residential and commercial school property taxes by 20 percent; eliminate the hatedbusiness franchise tax, which hammers high-capital investment companies; avoid any payroll/ income tax scheme; and make up for lost revenuesby broadening the base of the sales tax to manyconsumer services while raising the sales tax rate by

0.5 percent. Hold state spending growth to merelythe rate of ination, and the current 8.25 percentsales tax rate wouldn’t have to be raised at all.

As soon as Foundation staff saw the editorial theyimmediately began trying to gure out how tobest publicize it around the capitol. Tey quicklydiscovered, though, that the work was being done for them. Every lobbyist in Austin whose client wasopposed to the wage tax was distributing copies othe editorial around the capitol. It wasn’t long be orethe wage tax as we knew it was dead.

More recently, the Foundation undertook an effortto expose a signicant increase in appropriations asthe budget was advancing in 2013. Te differencewas that money was tight in 2011, but in 2013growth in the exas economy had provided morethan $40 billion in new revenue to spend. And spendit they did, with appropriations growing 26 percent

rom one session to the next. Te Foundation-leddebate over this issue—which included anothereditorial rom the Te Wall Street Journal —changedthe nature o the usually consensus-based budgetprocess and led to a record number o members inthe majority party in both the House and the Senate voting against the budget.

Lest it appear that I am guilty o lapsing off intodreamy reminiscence o victories past during thecelebration o the Foundation’s 25th anniversary, itis important to note that high taxes and excessivespending are still problems in exas—the wagetax morphed into today’s almost $5 billion a yearmargin tax and the overgrown budget last session,despite the disapproval o some conservatives, wasapproved by a wide margin.

Yes, we have led the nation in job creation or morethan a decade. And yes, the growing exas economy

has helped keep the United States aoat duringa time o national economic malaise. Yet exas’success in recent years has provided policymakerswith enough revenue in their coffers to spend thestate back into poverty i taxpayers are not vigilant.

Heading into the 84th session o the exasLegislature, it is important that the Foundation—and all reedom-loving exans—continue to speakout on these issues as many policymakers seemedpoised to move us in this direction. Tough stateofficials ound more capacity available under theconstitutional spending cap on non-dedicated

continued >>

“A wage tax is of course a fancy disguise for a personal income tax, andimposing one is a sure way to put a state on the path to slower growth.Since 1990 the nine states without income taxes have enjoyed twice therate of job growth and 2.5 times the population growth of the highestincome tax states.” Te Wall Street Journal


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BATTLES FOUGHT AND VICTORIES WON: PAST, PRESENT, AND FUTURE

general revenue in the current biennium, they wereclose to busting the cap to ully und Medicaid. SinceMedicaid is an entitlement program, the state has topay whatever it costs. Tis is nothing new, however,

so legislators usually set some money aside to coverthese additional costs.

In this case, however, legislators initially had lefonly a ew hundred million dollars o spendingbelow the budget cap to cover what now looks tobe about a $1 billion expense. So be ore they evenstart to contemplate spending or 2016-17, theymay have to push the current budget cap to its limitto cover Medicaid.

It doesn’t seem, though, that this spending will putmuch o a dent in the ability o legislators to spendmoney in 2016-17. exas is expected to have a $7.5billion budget surplus or the current biennium;add in economic growth over the next two years,and legislators should have at least $15 billion innew revenue to spend above current expenditures.

Te growth o tax revenue and the Legislature’spropensity to spend it are the reasons theFoundation ormed the Conservative exas BudgetCoalition last year. Composed o 14 likemindedstate and national organizations, the Coalition’spurpose is to help educate legislators and all exanswhy exas has reached the economic heights it hasand also how to keep us there.

Te reason or exas’ success is simple: by reducing

government intervention in the lives o peoplethrough taxation, spending, and regulation, exashas allowed the God-given creativity we eachpossess to ourish in the economy, resulting inincreased economic opportunity or all exans.Additionally, it provides room or exans’ charitablenature to step in and help those who or whateverreason struggle with sharing in the bounty o agrowing economy.

Te Coalition’s proposals or increasing prosperity inthe uture are also simple. We should limit spendinggrowth, reduce taxes, and change the budget process

to disrupt the propensity o policymakers to spend.

Te Coalition has called or a limit on all stategovernment spending o population growth

plus ination. Tis would result in an increase inspending o about 6.5 percent, or $13 billion, nextbiennium. Limiting spending growth to this levelwould mean there is still plenty o revenue availableto cover increased spending i the Coalition’s nextproposal—to eliminate the margin tax—is passed.Phasing out the tax over three years would reduceavailable revenue this biennium by only about $4.5billion.

Combined, these two proposals could allow or in-creased spending on Medicaid and transportation,two areas that continue to demand more taxpayer

unds—though adopting Foundation re orm pro-posals in both areas would reduce or even eliminatethis demand. Additionally, increased economicgrowth makes it likely that property tax revenueincreases will cover any growth in public schoolenrollment, eliminating another area that usuallydemands more state unds; again, the Foundation’sproposals or implementing school choice couldreduce these costs as well by making educationspending more efficient and the economy moreprosperous.

O course, none o these ways o reducing spendingsit well with the Austin establishment. TeFoundation’s simple approach to dealing with ever-increasing government is also seen as simplistic and

inadequate to deal with the complexities o the realworld; it is said our approach would leave peoplewithout the help they need. Te truth, though, isthat the Foundation’s approach is the best way odealing with li e’s complexities because it’s based onthe most common tenet o human nature—peoplealways act in their own best interest, or at least inwhat they perceive their best interest to be.

When people come to Austin to get involved ingovernment—either within the government oras lobbyists or special interests, they generallylike it and want to stay. Te easiest way to make


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sure o a long stay in Austin is to become part othe establishment that supports the doling outo taxpayer money to special interests. Similarly,many people—both rich and poor—like living offthis taxpayer money and, once they get it, tend tobecome dependent on it. It is not long be ore thedesire and willingness to prosper through theircreativity and ability to work diminish.

Te Coalition’s proposals are designed to breakthis cycle o government spending that grows thebureaucratic state, supports corporate wel are,and keeps many people in permanent povertyand dependence on government. Another o theCoalition’s proposals along these lines, which strikesat the heart o the appropriations process, is the Sales

ax Relie (S aR) Fund. Te S aR Fund is a meanswhereby legislators during the appropriationsprocess could dedicate money to sales tax reliethat would otherwise be spent. Members couldoffer an amendment to the appropriations bill thatwould take money rom an area o spending and

use it instead to reduce the sales tax. In addition todecreasing spending and reducing taxes, the up-or-down vote on the oor o the exas House or Senatewould increase transparency to help exans know

exactly where members o the Legislaturestand on these issues.

o continue exas’ journey away rom poverty

and toward prosperity, exans will have tospeak loud and clear that they want less—notmore—government in their lives. o do this,they’ll also have to be willing to ght their ownhuman nature. It is easier to keep our headsdown, ocus on our own lives, and not getbeat up by advocates who insist that only big

government can solve our problems—and, by theway, enrich the advocates in the process.

However, enough exans have proven theircommitment to reedom over the years that thoseo us at the Foundation are condent we are on thewinning side o this battle. As Davy Crockett put itin a letter to his children shortly be ore heading toTe Alamo:

I must say, as to what I have seen of exas, it isthe garden spot of the world. Te best land andthe best prospect for health I ever saw is here, andI do believe it is a fortune to any man to comehere. … I am rejoiced at my fate. I had ratherbe in my present situation than to be elected to aseat in Congress for life. I am in hopes of makinga fortune for myself and family.

As we know, Crockett’s ortune didn’t come in theorm o long li e and economic prosperity. But the

legacy o reedom he and others established is the

greatest inheritance he could have possibly lefbehind. Our efforts to seek reedom and prosperitytoday will likewise benet exans or generations tocome.

BATTLES FOUGHT AND VICTORIES WON: PAST, PRESENT, AND FUTUR

SPENDING LIMITS FOR 2016-17 BUDGET

$142.2B I L L I O N stat fnd

$217.1B I L L I O Nal fnd

6.5%increas

ABOVE 2014-15 SP ENDING

(pop. + infl.)

Bill Peacock is the vice president of research and the director of the Center for Economic Freedomat the Texas Public Policy Foundation. He has been with the Foundation since February 2005. Billdirects the research of the Foundation to ensure its accuracy, integrity, and application of free-market principles to the issues facing Texas and the nation. His own research focuses on economicfreedom and growth, property rights, civil justice, and regulatory issues. Bill has extensive experi-

ence in Texas government and policy on a variety of issues, including economic and regulatorypolicy, natural resources, public nance, and public education. His work has focused on identifyingand reducing the harmful effects of regulations on the economy, businesses, and consumers.


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W E N Y F I F HA N N I V E R S A R Y G A L A

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I there are some years that stand out: years when men and womenstood up, deed power, and risked everything to reclaim and defend the rights conferred by“Nature and Nature’s God.” Te modern roster is both short and glorious: 1776 ... 1789 ...1836 ... 1848 ... and of course, 1989.

Te year 1989, just 25 short years ago. It was the year of revolution.

In China, students and citizens rose up to demand law-ordered liberty. Tey bled for it. But theChinese Communists who massacred them still live in fear of their memory, and their example. “Atyrant dies, and his rule ends,” wrote Kierkegaard, “A martyr dies, and his rule begins.” Te rule ofthe free Chinese spirit has only begun—and it was born in 1989.

In Romania, a long-suffering people revolted against Europe’s most brutal tyranny—and won.oday’s peaceful NA O ally took up arms to shake off the rule of the Ceaușescus, and the climax

was a vivid example of the ancient warning, “Sic Semper yrannis.” It happened in 1989.

In Poland, the Communist military regime cautiously allowed a limited election for a mere 100seats in the national legislature. Tey lost every single one of them. Te moral collapse of PolishCommunism, born years before in the shipyards of Gdansk, fatally accelerated. It came to itsfruition in 1989. continued >>

T te P o le o T xa & A l A e ic ns n te F o ci ize s & co a rio s—I m sieged mo e o te M xic ns n e S n A n —I co inua B b rdme & an o a e fo 2 lo an. e e emy ha eman ed rre o e w se te garri re o b u te s ake —I av nsw red te emand w a fl g i v s pro dly fro te w s. I a re e . e , I a o n te n me o L & ev ry ing e r te A e ic n charac r w di a ch— e e emy i eceiv ng w o o b nc e se o tree o fo r to I ti a s eglec d, I m e rmined a po b e & die like a die o nev o o o & ta o i co n y—V c y W iam B rre T av sL . C . co d

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OPPOSITE FROM LEFT TO RIGHT: Historic downtown San Antonio—site of TPPF’s 25th Anniversary Gala. | TheSan Antonio Riverwalk—one of the city’s most prominent attractions. | TPPF supports gather near The Alamo inSan Antonio prior to the evening’s festivities. | TPPF President and CEO Brooke Rollins addresses distinguishedguests at TPPF’s 25th Anniversary Gala. | Texas Governor-elect Greg Abbott delivers remarks, highlighting thevital role TPPF plays in advancing liberty. | TPPF supporter Billi Jean Cowgill joins fellow patriots from across thestate. | Fritz Steiger, TPPF’s co-founder and rst president, enjoys the scene at the gala. | Lt. Governor-elect DanPatrick delivers a spirited rendition of the Travis Letter at The Alamo.

In Germany, a crowd gathered before the Berlin Wall checkpoints and demanded to be let through.Te feared and brutal East German border guards, the Grenztruppen, were overwhelmed. Shouldthey shoot? Tey urgently requested instructions and received none. Despite so much Germanblood on their hands from four decades of repression, the Grenztruppen were paralyzed without

will from above. Te crowd surged, the soldiers gave way, and the Berlin Wall collapsed in a night.It fell in 1989.

Tis was 1989. Tis was the year when freedom rang loud and clear from continent to continent.Tis was the culmination of America’s generational commitment to confront Communism—andRonald Reagan’s bold gambit to win the contest. It was 1989. And liberty’s triumph did not sparethe Lone Star State.

In the year when conspirators for freedom and prosperity gathered in Prague, Berlin, Warsaw, andBeijing, they also gathered in a most unlikely spot: San Antonio, exas. Tere, at Five Corners, anidea was brought into action. An institute was made real. An endeavor for liberty was created.

A exas Public Policy Foundation was born.

Te roll call of Foundation founders and leadership in 1989 is a list of some of the most visionaryand brave exans of our age:

• Dr. James R. Leininger, Chairman of the Board.

• Fritz S. Steiger, President and Board Member.• Skipper Dippel, an eminent banker from Brenham.

• Jim Windham, a distinguished businessman from Houston.• Scott Bennett, a talented columnist with the Dallas Morning News .

• Tex Lezar, a respected lawyer from Dallas with a record of service in Reagan’s Department of Justice.

• General Robert McDermott, USAF, an American hero in war and a public servant in peace,and distinguished Chairman of USAA.

• Chaz Neely, the generous visionary who wrote the rst check, behind Dr. Leininger, and servedas an originating board member.

• Phil Adams, a pioneer on the Foundation’s rst steering committee and board who openeddoors and minds to our mission. continued >>

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A state-based, free-market think tank was an entirely new concept, in the Lone Star State and inevery other state, in 1989.

Te past 25 years have been a breathtaking ride in bringing conservative, free-market principles topublic policy in exas. Te vision of the Foundation’s founders is carried on each and every day inthe hearts and minds of its staff and supporters. Tese exans, as much as the men who laid downthat cornerstone for liberty in 1989, understand that we must never lose sight of the importance ofkeeping up the good ght—for a more free, more prosperous future.

Te year 1989 was a year of revolution for liberty. We celebrate its achievements. And weremember that one vital act of that revolution took place, right here, in San Antonio, a quarter-century ago.

We may say many things about it. We may say it was pathbreaking. We may say it was bold. Wemay say it was daring. We may say it was visionary. We may say it was a success.

All those things are true. But we must also say one big thing about it, as we mark the 25th year:It is just the beginning.

ABOVE CLOCKWISE FROM TOP LEFT: The Alamo—site of the VIP reception prior to TPPF’s 25th AnniversaryGala. | Texas Governor-elect Greg Abbott celebrates with TPPF founder Dr. James Leininger and his wife,Cecelia. | Attorney General-elect Ken Paxton speaks to the crowd of TPPF supporters gathered at The Alamo.| Texas Governor Rick Perry shares stories of TPPF’s success with supporters at the event.


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____I would like to advance freedom in Texas by contributing to the Texas Public Policy Foundation (TPPF).I would also like a free subscription to: Veritas Texas Public Policy News (TPPN) electronic newsletter.☐ $_____________.

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Address:

City: State: Zip:

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Contribute to the Texas Public Policy Foundation today!

Your generous donation is tax-deductible under Section 501(c)3 of the Internal Revenue Code and helps ensure ourcontinued work. Donate online at www.TexasPolicy.com or mail to Texas Public Policy Foundation, 900 Congress Ave.,Ste. 400, Austin, TX 78701.

ABOVE CLOCKWISE FROM TOP LEFT: Texas pride and patriotism was on display throughout the evening.|Texas legislators and policymakers, including Representative Scott Turner, were on hand to recognize TPPF’simportance to Texas. | The next generation of patriots will carry the torch of liberty in Texas for decades tocome. | Some of Texas’ most distinguished patriots celebrate TPPF’s many accomplishments and look forwardto the continued defense of liberty in Texas.


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“H ow many o you think yourbusiness would be more efficientor more productive i it wererun by government?” Tis question wasrecently posed to business leaders at anAustin con erence. Not surprisingly, no oneanswered in the affirmative. exans know

well that bureaucracies do not allocateresources effectively. As SMU’s Pro essorMichael Cox said in a recent report,“imagine or a moment that governmenthad a telecommunications monopoly in theearly 1980s. Had the bureaucrats in chargeconceived o the cell phone, they would haveseen no gain in introducing a product thateven consumers didn’t know they wanted….Te bureaucrats’ priority would have beenprotecting jobs associated with land lines andpay phones.” Government operates by ruleand regulation rather than common sense

and innovation. Governments are driven bypolitics and special interests, which results inmisallocation o resources.

Nothing is more important to our societythan the education o our youth. Yet, todaywe delegate this unction almost entirely to

government.

Success in any enterprise is dependent uponintelligent decision-making and the wise al-location o resources. In exas, on average,we spend well over a quarter o million dol-lars or a classroom o 25 students. ($10,549per student) Yet the average teacher salary isless than $50,000. Something is very wrongwith this equation considering that all re-search indicates that the teacher is, by ar, themost important component to educationalsuccess. Over the past 20 years, the growth

by The Honorable Kent Grusendorf

School Choice for ALLThe Time Is NOW


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o non-teaching staff in our school system hasincreased twice as ast as student enrollment.

Since the publication o A Nation at Risk 30years ago, Americans and exans have imple-

mented countless re orms, almost all o whichhave required higher unding. We tried no-pass-no play, governance re orm, curriculumre orm, management re orm, and account-ability re orm. We enacted S AAR testing, andrepealed most o them be ore they were imple-mented, and have now even reversed course onaccountability re orms thinking that the otherdirection will be better. None o these re ormshave solved the problem.

Tere is a strong action that demands in-creased education spending—this is one issueat the heart o the ongoing school nance trial.Yet the recent ruling rom the ravis County judge is a 400 page indictment o our educa-tion system. Judge Dietz ound that the systemis a “dismal” ailure to “hundreds o thou-sands” o exas students. Among the ailures,the District Court ound:

1. A “disastrous” 25 percent o exas studentsail to complete high school.

2. One in three English Language Learners ailto progress even one grade level in learning

English afer a year o school.

3. Only 17 percent o all exans graduatingrom high school achieved college-readi-

ness on the SA or AC .

In the end, the Court concluded that everyper ormance measure considered at trial dem-onstrated that exas public schools are not ed-ucating students. Yet the Court concluded thatthe solution was to pump more money intothe system, though spending has increasedby more than 140 percent since 1972. As onetrial observer tweeted early in the trial: “Lookhow bad we are doing, look how bad we aredoing, give us more money.” Un ortunately,that weet accurately denes the testimony o

exas school superintendents. continued >>

Texas Education Trends: Spending & Achievement

P e r c e n t

C h a n g e

R e l a t i v e t o

1 9 7 2

160%

140%

120%

100%

80%

60%

40%

20%

0%

-20%

Dollars per Pupil (Adjusted for Ination)

Enrollment

SAT Score (Adjusted for Participation & Demographics)

1972 1982 1992 2002 2012

Source: Andrew Coulson, State Education Trends: Performance and Spending Over the Past 40 Years . Enrollmentdata from 1972-2002 is from NCES’ Historical Tables and Reports. Enrollment data from 2004-2012 is fromNCES’2013 Digest of Education Statistics , Table 203.20.


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SCHOOL CHOICE FOR ALL: THE TIME IS NOW

Structural Change RequiredIn 2015, one o the major debates during thelegislative session will be how much moneyto spend on education. History indicates that

more money will only lead to more o thesame. In act, as the exas Supreme Court hasindicated or almost three decades “structuralchange” is required. In its most recent rul-ing, the exas Supreme Court stated: “pour-ing more money into the system may ore-stall [constitutional] challenges, but only or atime. Tey will repeat until the system is over-hauled.”

Te challenges will be perpetual because thestatus quo system ails to allocate resources e -ciently. No matter how much money we pourinto it, we ail to meet the educational needso exas students. For the sake o exas’ very

uture we must address the structure o oursystem.

Command economies are inherently ineffi-cient. Government monopolies are inherentlyinefficient. Markets allocate resources in muchmore efficient and effective manners than dopolitically driven systems, which are ofen di-rected by special interest actions. We must al-low every child in exas the best educationalopportunity, regardless o where they live ortheir amily’s income. We must allow everyparent in exas to meet the educational needso their child. Universal school choice is the

only way to achieve that objective.

Why School ChoiceTe advantages o school choice are li e-changing. Empowering parents to choose be-tween schools would be benecial to the stu-dents who are not currently well served by thecurrent monopolistic system.

• In New York, or example, A rican Ameri-can participants in a private school choiceprogram were 24 percent more likely to en-roll in college as a result o having school

choice. Participants also enrolled in selec-tive colleges at twice the rate o non-par-ticipants.

• In Washington D.C., students who usedthe D.C. Opportunity Scholarship schoolchoice program graduated at a rate o 91percent, more than 20 percentage pointshigher than students who applied to theprogram, but were not accepted.

Why Teachers Win

The averagesalary of Texasteachers is$48,821.

$215K+That meansTexas spends$215-$325,000per classroom.

Choice woulddrive up wages asschools divertmore funds toclassrooms - where they havethe greatest effecton students.

But Total Spend-ing per student was $12,106 in

2012-13.

“Introducinggreater competi-tion into themarket forteachers will raiseteacher salaries.”

Report of Dr. Jacob Vigdor


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continued >>


• In North Carolina, criminal activity de-clined by 50 percent among high-risk stu-dents who won a lottery or a school choiceprogram, compared to students who ap-

plied but were not accepted.

Greater consumer choice provides greaterreedom. In addition, empirical evidence is

overwhelming that school choice would im-prove existing public schools. extbook eco-nomic theory teaches us that teachers wouldearn higher salaries and be provided betterworking conditions when more schools arecompeting or their services. eachers ofencomplain about not being treated as pro es-sionals. Te only way teachers will ever gainthat status is with greater competition ortheir services, just as with other pro essionals.

School choice or all would be benecialto students, parents, teachers, and existingschools. Tat is great news or the educationalenvironment, but school choice will do evenmore.

A recent SMU study, Rebuilding America’s Middle Class, concludes: “Rebuilding Ameri-ca’s middle class will require capitalism in theclassroom.” Te result o such a system wouldbe “innovative, world-class schools,” whichare “within our means, but we won’t get themwith current assumptions and institutions.”

School choice will not only be good or themiddle class, it would be very good or the en-tire exas economy.

Imagine the thousands o young amilies whowould move to exas i they had completechoice over their child’s education. Imaginethe effect o high-risk students who stay inschool and graduate, rather than droppingout and engaging in criminal activity. Imag-ine that more than the current 17 percent o

exas students achieve college readiness—and there ore don’t need remediation.

School choice would add trillions to the exaseconomy over time, which would reect theincreasing quality o li e exans expect.

Historical PerspectiveMost people think the rst exas charterschools came afer the re orm bill in 1995,but charter schools were common in exaslong be ore what we now call “public” schoolseven came into existence. oday, exans haveno private school options, but exans didhave such options be ore and afer the cur-rent exas Constitution was adopted. Publiceducation, as we know it today, evolved overdecades.

Te current exas Constitution o 1876 wasthe result o great debate and contention. In

act, there was more debate over the educa-tion issue than any other item be ore the con- vention. Negative reaction to the highly cen-tralized “radical school system,” establishedby the carpetbaggers during reconstructionwas the driving orce or re orm.

Te constitution as we know it today requiresthat the exas Legislature “establish and makesuitable provision or the support and main-tenance o an efficient system o public reeschools.” Tis method o organization was assimple and as loose as it could possibly be. Itgave parents the greatest latitude in determin-ing or themselves the kind o education they

desired or their children and the character oteacher they wished to employ. Te parentscould use state unding without geographicrestrictions—children were not assigned to aschool based on their address.

Te exas Supreme Court has stated bluntlythat private school choice is still allowed bythe exas Constitution. In 1995, the courtruled: “Te Constitution does not require,however, that the State Board o Education orany state agency [provide public education.]As long as the Legislature establishes a suit-


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SOFT TYRANNYSCHOOL CHOICE FOR ALL: THE TIME IS NOW

able regime that provides or a general di -usion o knowledge, the Legislature may

decide whether the regime should be ad-ministered by a state agency, by the districts

themselves, or by any other means.” ( Edge-wood IV , ootnote 8)

Opposition to School Choice:Almost all o the opposition to school choicecomes rom stakeholder sel -interest. Unionsoppose choice because it would diminishtheir power to direct the current system.With choice, good teachers will be in greatdemand. Markets will compete or goodteachers, just as they do or other pro es-sionals. Pay and working conditions will im-prove. In contrast, union power is enhancedwhen everyone, good and bad, is treated thesame. Tese unions struggle to hold powerbecause they need a government-grantedmonopoly to exist.

Public school administrators are usually op-posed to school choice. In many exas areas,superintendents are the highest paid individu-als and receive a prominent position in theircommunity. Competition would orce schooldistricts to spend unds more efficiently, whichwould mean directing more money to class-rooms and less to administrative overhead.

Lastly we have vendors who have a vestedstake in the status quo. Many vendors have

a stake in the current system, which pur-chases ood services, books, computers,buses, architects, and attorneys (who sue thestate or more money). In addition, there arehundreds o organizations and associationswhich are almost totally unded by dues

rom school districts.

Amazingly, the opponents to school choiceofen express their opposition to school“proteers,” though they themselves rake inhuge prots rom the established system.

Not a Partisan IssueSchool choice is not a partisan issue.

Although ofen viewed as a Republican is-

sue, many Democrats across the nation sup-port school choice. One outspoken leaderin the national school choice effort is KevinChavous, who was ormerly the Chairman othe Education Committee o the WashingtonD.C. City Council. He is now a leader in theAmerican Federation or Children and theAlliance or School Choice, where he pro-motes school choice throughout the nation.

Chavous avors school choice, saying, “Youknow what, I’m or the three to ve yearre orm plan de jure. I’m or a new publicschool superintendent saying ‘give me veyears to x the system.’ But you know, we gotto y that plane while we x it. And we needto have scholarships or low-income kidswho come rom challenged backgrounds.We need charter schools. We need home-schools. We need virtual schools. We needmagnet schools. By any means necessary weneed to educate all o our children.”

By the start o the 2014-15 school year, Dem-ocrats and Republicans had come togetherin states rom New Hampshire to Arizona toestablish 39 school choice programs, whichhave created an eligibility pool o more than2.7 million scholarship opportunities or

children across the country.

Why 2015?In 2015, there will be a larger opportunity

or school choice re orm in exas than therehas been in decades. Legislative leadershipseems readier than ever to support schoolchoice.

In addition, the exas Supreme Court willsoon address school nance. As mentionedabove, the court’s consistent position has


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The Honorable Kent Grusendorf is a senior fellow and director of the Foundation’s Center forEducation Freedom. He spent most of his professional life in Arlington as a businessman andsuccessful entrepreneur. He represented Arlington for 20 years in the Texas Legislature wherehis primary interest and focus was education. In his freshman term, due to his prior serviceon the State Board of Education, he was viewed as a leader on education issues. Through hisappointments, by three governors and three House Speakers, to the House Public EducationCommittee and various Select Committees, he played a signicant role in crafting legislative

responses to the Edgewood I, Edgewood II, Edgewood III, Edgewood IV , and West Orange Cove school nance court

decisions.


been that the Legislature needs to considerundamental changes, beyond pouring more

money into the system. For example, in its2005 West Orange Cove II ruling the Courtstated: “Perhaps … public education couldbenet rom more competition, but the partieshave not raised this argument, and there ore

we do not address it.” In the ongoing school

nance litigation, one plaintiff has raised theargument that the public schools will be ine -cient until competition is established. Tis e -

ectively brings be ore the court the argumentthey invited in 2005. A avorable ruling romthe exas Supreme Court in 2015 will be thestrongest catalyst or school choice re orm.

Enrollment in private school choice programs nationwide is increasing. In Texas, demand for choice in theform of public charter schools has resulted in waiting lists over 100,000 students long. An estimated 0.5% -6% of public school students would enroll in the TSG within the rst two years of the program’s creation,

allowing another 25,000-300,000 students to enroll in the school of their choice.Enrollment Growth data source: American Federation for Children

308,560

245,854

210,524190,811

182,608171,478

158,725

126,519108,705

96,52890,61381,524

55,373

29,003

Enrollment Growth inPrivate School Choice Programs

2000-01 2005-06 2010-11 2013-14


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Hap N YTe staff o the exas Public Policy Foundation wish you health,prosperity, and reedom in 2015. Tank you or your continued

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Documents

2014 Veritas Issue 4