Foundation: Taxpayers fared well in 2009 legislative session

Key wins are adoption of conservative budget and defeat of higher taxes

Taxpayers fared well this legislative session, according to the post-session assessment of the Texas Public Policy Foundation.

“The Legislature adopted a relatively conservative budget, needed eminent domain reform, and improved public school accountability, while cutting taxes for small businesses,” said Justin Keener, the Foundation’s vice president of policy and communications. “To taxpayers’ relief, they defeated the expansion of government-run health insurance and several tax increases. Texas remains poised for a bounce back from the global recession thanks to lawmakers’ actions to maintain our state’s competitive edge of low taxes and a reasonable regulatory environment.”

Keener praised the Legislature’s action to reduce the bite of the gross margins tax on small businesses. “While we would have preferred a rate reduction for all businesses, increasing the exemption to $1 million for the next two years and to $600,000 permanently will be a great benefit to the small and startup enterprises that are the backbone of the modern Texas economy,” he said.

While there was not much forward movement on taxpayer protections such as improving the state’s expenditure limit and building upon Texas’ position as a leader in financial transparency, taxpayers dodged several bullets in the forms of billions of dollars in proposed new taxes and fees. The Foundation cited the failure of local-option transportation taxes and the unemployment stimulus legislation as the two biggest bullets that taxpayers dodged.

“During difficult times, Texas families expect their governments to scrutinize their budgets and set priorities in the same way that they have to,” Keener said. “This is not the time to ask citizens to raise taxes and fees, especially when other alternatives are available. The House showed true statesmanship in vetting the tax plans and rejecting them.”

The Foundation also cited the defeat of legislation that would have expanded unemployment eligibility, thereby accepting federal stimulus dollars in return for a likely permanent business tax increase.

“Our research has shown that one-time federal unemployment funds often come with conditions that permanently increase employer taxes,” said Talmadge Heflin, Director of the Foundation’s Center for Fiscal Policy. “Gov. Perry was right to reject these funds, and thankfully the Legislature ran out of time before it could overrule him.”

Heflin praised the Legislature for adopting a budget that stayed within population growth plus inflation, and for not tapping the Economic Stabilization Fund. “The state should have almost $9 billion set aside next session to pay for any emergency situations or tax relief initiatives,” he said.

According to the Foundation’s Bill Peacock, director of the Center for Economic Freedom, eminent domain reform moved forward for the first time since 2005 with passage of HJR 14.

“If adopted by Texas voters, this constitutional amendment will stop local governments from using blight designations to condemn blocks of perfectly good homes and businesses for economic development projects,” Peacock said. “While work still remains to fully address the ramifications from the Kelo Supreme Court decision, private property owners came out ahead this session.”

Texas public school students and taxpayers saw improvements. “The Legislature made considerable strides in education by preserving and expanding Texas’ teacher merit pay program, as well as providing for a meaningful accountability program to better prepare children for work or college,” according to Foundation education policy analyst Brooke Terry.

Despite these advances, Terry said many public school children will suffer due to the Legislature’s inability to lift the arbitrary cap on charter schools.

“More than 17,000 Texas children are on a waiting list to enter a charter school and we are very disappointed that the Legislature failed to lift the cap,” Terry said. “Texas charter schools have demonstrated amazing results by inventing new models to educate students and prepare them for success in college and the workplace.”

Charter schools are public schools supported by legislators in both parties. However, legislation to raise the arbitrary cap on charter schools and to help effective open-enrollment charter schools expand was vehemently opposed by the teacher unions.

"Major bills fail every session leaving work unfinished, yet industrious Texans still go about their business. This session will be no different," Keener said of the sunset legislation for the Texas Department of Insurance and the Texas Department of Transportation. "The governor and the Legislature have several options before them and we encourage them to take a measured approach when evaluating them."

Justin Keener is Vice President of Policy and Communications for the Texas Public Policy Foundation.

The Honorable Talmadge Heflin is Director of the Center for Fiscal Policy at the Texas Public Policy Foundation. Heflin served 11 terms in the Texas House of Representatives and chaired the House Appropriations Committee in 2003, leading the Texas Legislature’s successful efforts to close a $10 billion budget deficit without a tax increase.

Bill Peacock is Director of the Center for Economic Freedom at the Texas Public Policy Foundation.

Brooke Terry is an education policy analyst at the Texas Public Policy Foundation.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation’s website, www.TexasPolicy.com.

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Statement on Governor Rick Perry’s State of the State Address

Statement by Justin Keener, Vice President of Policy and Communications

“We applaud Gov. Rick Perry’s focus on fiscal responsibility in his remarks today. This is the time for state government to restrain spending, not to increase taxes or expand programs. Texas must continue to lead by example, rather than to follow other large states like California down the path to bankruptcy.

“We join Gov. Perry in urging the Texas Legislature to take the next step toward full government financial transparency. Especially during difficult economic times, we need to engage all interested Texans in the battle to root out government waste and inefficiency at both the state and local levels.

“The legislature should also heed Gov. Perry’s call to finish the job of protecting Texans’ property rights from eminent domain abuse. The Legislature took a good first step shortly after the U.S. Supreme Court’s Kelo decision, but it now needs to finish the job of protecting Texas property owners.

“Gov. Perry’s support for increasing the amount of funding for incentive pay and removing the legislative cap on open-enrollment charter schools shows that he understands the importance of promoting competition within Texas public schools.”

Justin Keener is Vice President of Policy and Communications for the Texas Public Policy Foundation.

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin. More information can be found on the Foundation’s website, www.TexasPolicy.com.

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Texas PolicyCast: Capped out of charter schools

In August, the Texas Public Policy Foundation published a report that found that tens of thousands of school children were on waiting lists to attend Texas charter schools. Last month, the State Board of Education granted the final charters it is allowed under current law. What does the future hold for charter schools and these children? For that, we talk with Brooke Terry, education policy analyst at the Texas Public Policy Foundation.

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Legislature should eliminate cap on charter schools

State Board of Education awards final charters allowed under current law

AUSTIN – Today’s issuance of the last school charters allowed under current law makes it essential that the Texas Legislature repeal its cap on charter schools.

“Restrictions imposed by the Texas Legislature now deny tens of thousands of students the opportunity to enroll in their preferred public school,” said Brooke Dollens Terry, education policy analyst at the Texas Public Policy Foundation. “The Legislature should get rid of its arbitrary cap on charter schools and provide parents with more public school options for their children.”

The Texas Legislature has capped the number of open-enrollment charters at 215, of which 209 entities had active charters. After two charter operators voluntarily consolidated under another charter to free up two additional slots, the State Board of Education issued the final eight charters at its meeting today. Yesterday, Sen. Dan Patrick filed legislation (SB 308) that would repeal the charter school cap.

In August, the Foundation released a report, “Calculating the Demand for Charter Schools,” which compiled the first-ever, Texas-specific waiting list for charter school enrollment. The report concluded that while 89,156 students attended 355 open-enrollment charter school campuses during the 2007-08 academic year, at least 16,810 children were on waiting lists to attend a charter school – including 7,415 in the Houston area; 5,896 in the Dallas/Fort Worth Metroplex; and 2,110 in the Rio Grande Valley.

“If we value free markets and competition, we should allow as many public schools to open as students will attend,” Terry said. “And by the tens of thousands, Texas public school students and their parents want an alternative to their government-assigned campus.”

Terry emphasized that charter schools are public schools that predominantly serve students who are behind academically upon entering the charter school. Sixty percent of charter school students come from low-income families, and 81 percent are ethnic minorities.

“Many of these parents understand that traditional public schools have failed their children,” she said. “Rather than writing these students off, we need to encourage new options that meet these students where they are so that they can receive the education they’ll need to be productive citizens.”

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin.

Brooke Dollens Terry is an education policy analyst at the Texas Public Policy Foundation.

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Foundation: Don’t lock children out of charter schools

AUSTIN – Tens of thousands of Texas school children will be locked out of the school that can best meet their needs once the State Board of Education hits the Texas Legislature’s cap on charter schools later this week.

“The State Board of Education has done what it can to promote competition and innovation in Texas public schools,” said Brooke Dollens Terry, education policy analyst at the Texas Public Policy Foundation. “But restrictions imposed by the Texas Legislature will deny tens of thousands of students the opportunity to enroll in their preferred public school.”

The Texas Legislature has capped the number of open-enrollment charters at 215, of which the State Board of Education has issued 209. The State Board of Education’s Committee on School Initiatives is expected to recommend the final six charters at its 1 p.m. meeting today, with the full board expected to approve those charters at its 9 a.m. meeting tomorrow. Both meetings will take place at the Texas Education Agency headquarters, located at 1701 N. Congress Avenue in Austin.

In August, the Foundation released a report, “Calculating the Demand for Charter Schools,” which compiled the first-ever, Texas-specific waiting list for charter school enrollment. The report concluded that while 89,156 students attended 355 open-enrollment charter school campuses during the 2007-08 academic year, at least 16,810 children were on waiting lists to attend a charter school – including 7,415 in the Houston area; 5,896 in the Dallas/Fort Worth Metroplex; and 2,110 in the Rio Grande Valley.

“If this cap is not lifted, the waiting list will grow, preventing even more students from attending a public charter school,” Terry said.

Terry noted that charter schools are public schools that predominantly serve low-income and minority students who are behind academically upon entering the charter school.

“Many charter schools focus on students who have fallen through the cracks of the public school system,” she said. “Rather than writing these students off, we should increase the range of educational settings and options available to them so that they can receive the education they’ll need to be productive citizens.”

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin.

Brooke Dollens Terry is an education policy analyst at the Texas Public Policy Foundation.

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TPPF COMMENTARY: Waiting for Rescue

By Brooke Dollens Terry

If public charter schools are really so bad, then why are tens of thousands of Texas students standing in line for admission?

The State of Texas, which prides itself on everything being bigger and better, does not have enough room for every student who wants to attend the public school of their choice. Last year, at least 16,810 Texas students were on a waiting list to attend a public charter school. Imagine the entire Pearland school district on a waiting list.

This large waiting list demonstrates a tremendous parental and student demand for educational options besides their government-assigned public school.

Houston’s regional waiting list was the largest, with 7,415 students waiting to get into a charter school last year. The Dallas/Fort Worth region had 5,896 students on a waiting list, while the Rio Grande Valley had 2,110 students on a waiting list.

Most Americans are unfamiliar with charter schools. In fact, only 20 percent of Americans can correctly identify a charter school as a public school, according to a Center for Education Reform national poll.

Charter schools, while subject to less government regulation, are public schools funded with public funds. Charter schools cannot charge tuition, teach religion, discriminate, or cherry pick students.

Charter schools serve more students who are academically behind their peers than traditional schools, with many focusing on hard-to-serve students and students at risk of dropping out. As a result, charter schools serve a higher percentage of minority and low-income students than traditional schools. In Texas, 81 percent of students in charter schools are minorities, compared to 60 percent in traditional public schools.

When a charter school has more applicants than room for new students, the school holds a lottery to determine which students may attend. Imagine parents, whose child is trapped in a low-performing public school, crying for joy that their child is randomly selected to attend a school with a track record of serving at-risk students with innovative strategies.

With tens of thousands of students dropping out of Texas public schools each year, it is ridiculous that state policy prevents students from obtaining an education in a setting that best meets their needs.

Some education associations, policymakers, and reporters fixate on a few poorly run and mismanaged charter schools as a reason to cap enrollment or limit student choice. Abuse of public funds is unacceptable – whether by a public charter school or a public school district – and the Texas Education Agency should always investigate and pursue such misconduct wherever it occurs.

But depriving thousands of students more educational opportunities because of a few bad actors makes no sense. It is like saying an exemplary school district should have its enrollment capped or be prevented from expanding because a different school district mismanages its finances and fails to teach its students.

Overall, charter schools are meeting the individual needs of many students in innovative ways with less government funding. Unfortunately, state lawmakers have capped the number of public (open-enrollment) charters to only 215. With 210 active charters, the cap may be reached this fall leading to more students waiting to attend a charter school.

Texas charter school enrollment is a drop in the bucket compared to traditional public school enrollment with only two percent of the more than 4.6 million students in Texas public schools attending a charter school last year. The last thing that Texas needs to do is stifle competition in the area of public education. Each and every child’s education is too important not to allow them the opportunity to attend a public charter school if they choose.

The Texas Legislature should eliminate the cap preventing new public charters from opening and allow charters to operate in a free market.

Ultimately, parents, not government, should decide where their child attends school. Until that day arrives, Texas has at least 16,810 students waiting for rescue.

Brooke Dollens Terry is an education policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

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Foundation publishes Texas charter school waiting list

Foundation publishes Texas charter school waiting list

Nearly 17,000 Texas students waiting to enroll in charter schools

AUSTIN – School will open on Monday, but nearly 17,000 Texas children will find the doors to their preferred charter schools locked, according to a report released today by the Texas Public Policy Foundation.

“Last year, at least 16,810 Texas students were on a waiting list to attend a public charter school,” said Foundation education policy analyst Brooke Terry. “Imagine the entire Pearland school district on a waiting list.”

The Foundation’s new report, “Calculating the Demand for Charter Schools,” is the first attempt to compile a Texas-specific waiting list for charter school enrollment. The report provides a statewide total (16,810) as well as regional breakdowns.

Terry said the reason so many students are unable to get into charter schools is because the Texas Legislature has capped the number of open-enrollment charters at 215. There are currently 210 active charters, and the State Board of Education is expected next month to grant the last five allowed under current law.

“If this cap is unchanged, the waiting list could get larger with more students being prevented from attending a charter school,” Terry said. “In 2009, the Texas Legislature should eliminate the cap so that new charters can meet the overwhelming parental demand.”

Terry noted that charter schools are public schools, and that many serve groups of students who are behind academically upon entering the charter school – such as high school dropouts or students at risk of dropping out because they are teenage parents, drug offenders, in foster care, or homeless.

“Many charter schools focus on students who have fallen through the cracks of the public school system,” she said. “Rather than writing these students off, we should increase the range of educational settings and options available to them so that they can receive the education they’ll need to be productive citizens.”

About the Texas Public Policy Foundation: TPPF is a non-profit, free-market research institute based in Austin, Texas.

About Brooke Terry: Ms. Terry is an education policy analyst at the Texas Public Policy Foundation.

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Houston students benefit from district’s embrace of competition

Despite its overwhelming track record of success, competition is becoming a dirty word in America -- especially in the field of education. Grade inflation, the dilution of extracurricular activities, and the over-the-top attacks against supporters of school choice all reflect a hostility to the notion that competition is healthy.

However, Jamie Story shows in this week's commentary how the state's largest school district has embraced the challenge of competition and how their students are better off for it.

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Houston students benefit from district’s embrace of competition

By Jamie Story

While the public school lobby has traditionally opposed any introduction of competition into the education system, the state’s largest school district seems to have embraced it.

\In Houston, 80 state-authorized charter schools enroll approximately 20,000 students. That’s one charter student for every 10 students in the Houston Independent School District (HISD). Few school districts in the country face this degree of competition—and even fewer have risen to the challenge like HISD.

At a recent forum hosted by the Texas Public Policy Foundation, HISD Chief Academic Officer Dr. Karen Soehnge emphasized that “we fundamentally, as an organization, embrace choice.” That’s not something you typically hear from a public school administrator. But HISD has responded to competition by maximizing choice within the public school system.

In HISD, students can choose to attend any school where space is available. Campus funding is based on enrollment – if a school doesn’t compete to keep students, it loses the dollars that go with them. And students have a wide variety of learning environments from which to choose, since HISD has created specialized magnet schools and virtual courses that maximize student flexibility.

HISD has also responded by establishing a network of district-authorized charter schools. Today, 29 district charters enroll approximately 11,000 students. By comparison, the state as a whole only contains 54 district charters, meaning more than half of the state’s district charters are in HISD.

What are the results of this movement toward choice? In 2005, HISD had 31 campuses rated unacceptable, and only six rated exemplary. In 2007, the district had 15 of each. For its size, Houston has half as many unacceptable schools as either Fort Worth or Dallas, and fewer even than Austin, a property-rich district.

A study by the Texas Public Policy Foundation found that traditional public schools facing competition from charters outperform those public schools that do not face competition. HISD provides concrete proof to support this unsurprising finding.

It is no coincidence that HISD, with its significant charter competition, is one of the most innovative urban districts in the country. If charter schools were allowed to expand more freely throughout the state, other Texas districts might be motivated to undertake similar reforms in response to competition from charters. Unfortunately, a legislative limit on the number of state-authorized charters has hampered the effects of competition.

But despite this limitation, school districts are still within their power to increase student choice. Charters authorized by school districts and universities do not fall under the state mandated cap, so district charters can proliferate elsewhere like they have in Houston.

Even more importantly, parents have the power to demand choice within their children’s districts. According to a little-known portion of the education code, the majority of parents and teachers of an existing public school may petition their school board to grant a charter to the campus. While the school board is not required to honor the petition, they are not allowed to arbitrarily deny the request either. To date, this authorization option has not been utilized by parents and teachers, but it holds great promise for increasing parental choice within the public school system.

“We are not threatened at all by competition,” Dr. Soehnge said at the TPPF forum. When more Texas school districts adopt that same attitude and embrace choice, parent satisfaction and student performance will soar.

Jamie Story is an education policy analyst at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

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