January 2015

Battles Fought
Victories Won

Past, Present, and Future

8
14
2

F E AT U R E S

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

Battles Fought and Victories Won:

Past, Present, and Future

Wendy Lee Gramm, Ph.D., Chairman

To continue Texas journey away from poverty

and toward prosperity, Texans will have to
speak loud and clear that they want lessnot
moregovernment in their lives. To do this,
theyll also have to be willing to fight their own
human nature. It is easier to keep our heads
down, focus on our own lives, and not get
beat up by advocates who insist that only big
government can solve our problemsand, by
the way, enrich the advocates in the process.

Helotes, TX

Brooke L. Rollins, President & CEO

Fort Worth, TX

Tim Dunn, Vice Chairman

Midland, TX

Thomas Lyles, Secretary

San Antonio, TX

Ernest Angelo Jr., Treasurer

Midland, TX

James R. Leininger, M.D., Chairman Emeritus

San Antonio, TX

Phil D. Adams
Bryan, TX

25th Anniversary Gala

Rick Fletcher

On November 14, 2014, the staff and

supporters of the Texas Public Policy
Foundation came together at The Alamo in San
Antonio, to reflect on the Foundations 25 years
of keeping up the good fightfor a more free,
more prosperous future.

School Choice for All: The Time Is

Now

In the ongoing school finance litigation, one

plaintiff has raised the argument that public
schools will be inefficient until competition is
established. This effectively brings before the
court the argument they invited in 2005. A
favorable ruling from the Texas Supreme Court
in 2015 will be the strongest catalyst for school
choice reform.

Midland, TX

Windi Grimes
Houston, TX

Victor Leal

Amarillo, TX

Linda McCaul
Austin, TX

Kendall Miller
Houston, TX

L.C. Chaz Neely

San Antonio, TX

Brenda Pejovich
Dallas, TX

Jeff Sandefer
Austin, TX

Kyle Stallings
Midland, TX

George W. Strake Jr.

Houston, TX

Veritas is a publication of the Texas Public Policy Foundation, a 501(c)3

nonprofit, nonpartisan research institute. The Foundations mission is to
promote and defend liberty, personal responsibility, and free enterprise
in Texas and the nation by educating and affecting policymakers and
the Texas public policy debate with academically sound research and outreach. Our goal is to lead the nation in
public policy issues by using Texas as a model for reform.

VERITAS | January 2015

PRESIDENT S MESSAGE
Dear friends of liberty,
In this first month of 2015, we come to an endand a beginning. It was not without
reason that the Romans named the first month of the year after the pagan god Janus,
who had two faces: one facing forward, and one facing back. The years end gives
us an opportunity to reflect on what weve accomplishedand on the tasks that lie
ahead.
The past year, 2014, was a year of tremendous achievement for the Texas Public
Policy Foundation. We set the agenda, early and decisively, for the budget debate
in the forthcoming 2015 Texas legislative session. Already, the public conversation
about how best to spend Texas tax dollarsand more importantly, how to get those
tax dollars back to Texansis underway on the terms that we and our allies have set. In September, we broke
new ground with our Crossroads Summit in Houston, which brought together some of the most eminent
thinkers, scientists, and policymakers on energy and the environment. In challenging the status quo on this
topic, we did more than simply hold an event: we threw down a gauntlet, and moreover one that cannot be
ignored by the other side. In all of our policy areas, it was the same: moving forward, challenging the status quo,
and building a new, more free, and more prosperous Texas for the generation ahead.
Indeed, this past year was an appropriate year for a conversation on what comes next in the Lone Star State.
For the first time in over a decade, nearly our entire statewide political leadership has changed hands. We may
look with pride to what was accomplished in the years of Governor Rick Perry and Lieutenant Governor David
Dewhurstand we are ready for what must be done in the years to come under the leadership of Governor
Greg Abbott and Lieutenant Governor Dan Patrick.
Reflection on the past and resolution on the future were major themes of our extraordinary 25th Anniversary
Gala in San Antonio, Texas, on November 14th. It is hard to believe that when this Foundation was established
a quarter-century ago, there was nothing really like it anywhere in the country. A few intrepid men gathered
together and pledged, in a fashion, their lives, fortunes, and sacred honor to the cause of Texas. Twenty-five
years on, their achievement speaks for itself. In a generations time, the Texas Public Policy Foundation has
done more than its share to keep Texas free and strongand just as important, a beacon for the American
Dream. That, perhaps, is the most grand and enduring achievement of the Foundations founders: that in seeking to save Texas, they may have ended up saving America.
In this issue of Veritas, youll get to experience and re-live some of the greatest moments of our Anniversary
Gala. You will also read about one of our prime objectives for the next legislative session: advancing true educational freedom in Texas. And you will read about our efforts to make sure that Texas state budgeting adheres to
the principles of responsibility and conservatism that Texans expect.
That is what we do at this Foundation every day. The proof of our success is not found in any particular
policy, or law, or legislation, or research. It is found in the lives and homes of Texans who are free to dream big
dreamsbecause we have kept the Lone Star shining bright.
That is a thing worth fighting for: last year, in the new year, and in every year to come.

Brooke Rollins
President and CEO

www.TexasPolicy.com

Battles Fought and

Victories Won:

Past, Present, and Future

by Bill Peacock

n May 2005, the 79th Texas Legislature was facing the potential shuttering of public schools
because of yet another Texas Supreme Court
ruling that the system of public education was unconstitutional. Policymakers had settled on a complex scheme that would lower property taxes by
increasing state funding for education to try and
satisfy the court.
Of course, more state funding meant a need for
more state revenue, i.e., higher taxes. To accomplish
this, policymakers decided to expand the states
business tax to provide the revenue to make the tax
swap possible. The debate during the closing days
of the legislative session was what the expanded tax
would look like.

This being Texas, an income tax was out of the

picture. So with property and income unavailable
and the state already having one of the highest sales
taxes in the nation, the apparatchiks in Austin were
left scrambling with what they could tax to come up
with the billions of dollars a year they needed.
Somewhere along the way, the idea of a payroll,
or wage, tax was floated, and it quickly found
acceptance. Rather than taxing the income of a
businesses, a wage tax would tax its payroll expenses.
Companies would simply pay a tax based on the size
of their payrolls. The idea picked up steam quickly.

The desire to get out from under the Courts ruling

and to placate constituents by cutting property taxes
created a momentum for the wage tax that was hard
to stop.
The problem was that a wage tax is a very bad idea.
The amount of wages a company pays is directly
correlated to how many people it employs. The
more employees, the higher its wage payments. In
other words, the wage tax is a tax on jobs. And we
all know that if you tax something, you get less of it.
Even worse, a wage tax functions as a stealth personal
income tax. The only difference is that because the
companyrather than the employeepays the tax,
it keeps the money and pays it to the government
instead of its employees.
The bottom line with a wage tax is that it results in
fewer jobs, and the people who get to keep their jobs
have lower wages.
Despite the Foundations effort to get this message
across to policymakers in 2005, the wage tax kept
moving forward. But we didnt give up, working
with groups and the media here in Texas and across
the nation.
Our efforts paid off with a May 10, 2005 The Wall
Street Journal editorial, Deep in the Heart of Taxes.

VERITAS | January 2015

A wage tax is of course a fancy disguise for a personal income tax, and
imposing 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 the
rate of job growth and 2.5 times the population growth of the highest
income tax states. The Wall Street Journal
In it, The 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 sure
way to put a state on the path to slower growth.
Since 1990 the nine states without income taxes
have enjoyed twice the rate of job growth and 2.5
times the population growth of the highest income
tax states. Capital, jobs and economic development
in America are migrating from high-tax states to
low, and from blue states to red. Why would fastgrowing Texas want to imitate New York and
Massachusetts?
The Wall Street Journal highlighted the Foundations
solution to the problem:
There is a better way out of this fiscal mess.
Brooke Rollins, director of the Texas Public
Policy Foundation, has suggested a tax plan that
would: cut residential and commercial school
property taxes by 20 percent; eliminate the hated
business franchise tax, which hammers highcapital investment companies; avoid any payroll/
income tax scheme; and make up for lost revenues
by broadening the base of the sales tax to many
consumer services while raising the sales tax rate by
0.5 percent. Hold state spending growth to merely
the rate of inflation, and the current 8.25 percent
sales tax rate wouldnt have to be raised at all.
As soon as Foundation staff saw the editorial they
immediately began trying to figure out how to
best publicize it around the capitol. They quickly
discovered, though, that the work was being done
for them. Every lobbyist in Austin whose client was
opposed to the wage tax was distributing copies of
the editorial around the capitol. It wasnt long before
the wage tax as we knew it was dead.

More recently, the Foundation undertook an effort

to expose a significant increase in appropriations as
the budget was advancing in 2013. The difference
was that money was tight in 2011, but in 2013
growth in the Texas economy had provided more
than $40 billion in new revenue to spend. And spend
it they did, with appropriations growing 26 percent
from one session to the next. The Foundation-led
debate over this issuewhich included another
editorial from the The Wall Street Journalchanged
the nature of the usually consensus-based budget
process and led to a record number of members in
the majority party in both the House and the Senate
voting against the budget.
Lest it appear that I am guilty of lapsing off into
dreamy reminiscence of victories past during the
celebration of the Foundations 25th anniversary, it
is important to note that high taxes and excessive
spending are still problems in Texasthe wage
tax morphed into todays almost $5 billion a year
margin tax and the overgrown budget last session,
despite the disapproval of some conservatives, was
approved by a wide margin.
Yes, we have led the nation in job creation for more
than a decade. And yes, the growing Texas economy
has helped keep the United States afloat during
a time of national economic malaise. Yet Texas
success in recent years has provided policymakers
with enough revenue in their coffers to spend the
state back into poverty if taxpayers are not vigilant.
Heading into the 84th session of the Texas
Legislature, it is important that the Foundation
and all freedom-loving Texanscontinue to speak
out on these issues as many policymakers seemed
poised to move us in this direction. Though state
officials found more capacity available under the
constitutional spending cap on non-dedicated
continued >>

www.TexasPolicy.com

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

general revenue in the current biennium, they were

close to busting the cap to fully fund Medicaid. Since
Medicaid is an entitlement program, the state has to
pay whatever it costs. This is nothing new, however,
so legislators usually set some money aside to cover
these additional costs.
In this case, however, legislators initially had left
only a few hundred million dollars of spending
below the budget cap to cover what now looks to
be about a $1 billion expense. So before they even
start to contemplate spending for 2016-17, they
may have to push the current budget cap to its limit
to cover Medicaid.
It doesnt seem, though, that this spending will put
much of a dent in the ability of legislators to spend
money in 2016-17. Texas is expected to have a $7.5
billion budget surplus for the current biennium;
add in economic growth over the next two years,
and legislators should have at least $15 billion in
new revenue to spend above current expenditures.
The growth of tax revenue and the Legislatures
propensity to spend it are the reasons the
Foundation formed the Conservative Texas Budget
Coalition last year. Composed of 14 likeminded
state and national organizations, the Coalitions
purpose is to help educate legislators and all Texans
why Texas has reached the economic heights it has
and also how to keep us there.

The reason for Texas success is simple: by reducing

government intervention in the lives of people
through taxation, spending, and regulation, Texas
has allowed the God-given creativity we each
possess to flourish in the economy, resulting in
increased economic opportunity for all Texans.
Additionally, it provides room for Texans charitable
nature to step in and help those who for whatever
reason struggle with sharing in the bounty of a
growing economy.
The Coalitions proposals for increasing prosperity in
the future are also simple. We should limit spending
growth, reduce taxes, and change the budget process

to disrupt the propensity of policymakers to spend.

The Coalition has called for a limit on all state
government spending of population growth
plus inflation. This would result in an increase in
spending of about 6.5 percent, or $13 billion, next
biennium. Limiting spending growth to this level
would mean there is still plenty of revenue available
to cover increased spending if the Coalitions next
proposalto eliminate the margin taxis passed.
Phasing out the tax over three years would reduce
available revenue this biennium by only about $4.5
billion.
Combined, these two proposals could allow for increased spending on Medicaid and transportation,
two areas that continue to demand more taxpayer
fundsthough adopting Foundation reform proposals in both areas would reduce or even eliminate
this demand. Additionally, increased economic
growth makes it likely that property tax revenue
increases will cover any growth in public school
enrollment, eliminating another area that usually
demands more state funds; again, the Foundations
proposals for implementing school choice could
reduce these costs as well by making education
spending more efficient and the economy more
prosperous.
Of course, none of these ways of reducing spending
sit well with the Austin establishment. The
Foundations simple approach to dealing with everincreasing government is also seen as simplistic and
inadequate to deal with the complexities of the real
world; it is said our approach would leave people
without the help they need. The truth, though, is
that the Foundations approach is the best way of
dealing with lifes complexities because its based on
the most common tenet of human naturepeople
always act in their own best interest, or at least in
what they perceive their best interest to be.
When people come to Austin to get involved in
governmenteither within the government or
as lobbyists for special interests, they generally
like it and want to stay. The easiest way to make

VERITAS | January 2015

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

SPENDING LIMITS FOR 2016-17 BUDGET

$142.2

BILLION
state funds

$217.1

BILLION
all funds

6.5%

increase

(pop. + infl.)

ABOVE 2014-15 SPENDING

sure of a long stay in Austin is to become part of
the establishment that supports the doling out
of taxpayer money to special interests. Similarly,
many peopleboth rich and poorlike living off
this taxpayer money and, once they get it, tend to
become dependent on it. It is not long before the
desire and willingness to prosper through their
creativity and ability to work diminish.
The Coalitions proposals are designed to break
this cycle of government spending that grows the
bureaucratic state, supports corporate welfare,
and keeps many people in permanent poverty
and dependence on government. Another of the
Coalitions proposals along these lines, which strikes
at the heart of the appropriations process, is the Sales
Tax Relief (STaR) Fund. The STaR Fund is a means
whereby legislators during the appropriations
process could dedicate money to sales tax relief
that would otherwise be spent. Members could
offer an amendment to the appropriations bill that
would take money from an area of spending and
use it instead to reduce the sales tax. In addition to
decreasing spending and reducing taxes, the up-ordown vote on the floor of the Texas House or Senate
would increase transparency to help Texans know

exactly where members of the Legislature

stand on these issues.

To continue Texas journey away from poverty

and toward prosperity, Texans will have to
speak loud and clear that they want lessnot
moregovernment in their lives. To do this,
theyll also have to be willing to fight their own
human nature. It is easier to keep our heads
down, focus on our own lives, and not get
beat up by advocates who insist that only big
government can solve our problemsand, by the
way, enrich the advocates in the process.
However, enough Texans have proven their
commitment to freedom over the years that those
of us at the Foundation are confident we are on the
winning side of this battle. As Davy Crockett put it
in a letter to his children shortly before heading to
The Alamo:
I must say, as to what I have seen of Texas, it is
the garden spot of the world. The best land and
the best prospect for health I ever saw is here, and
I do believe it is a fortune to any man to come
here. I am rejoiced at my fate. I had rather
be in my present situation than to be elected to a
seat in Congress for life. I am in hopes of making
a fortune for myself and family.
As we know, Crocketts fortune didnt come in the
form of long life and economic prosperity. But the
legacy of freedom he and others established is the
greatest inheritance he could have possibly left
behind. Our efforts to seek freedom and prosperity
today will likewise benefit Texans for generations to
come.

Bill Peacock is the vice president of research and the director of the Center for Economic Freedom
at the Texas Public Policy Foundation. He has been with the Foundation since February 2005. Bill
directs the research of the Foundation to ensure its accuracy, integrity, and application of freemarket principles to the issues facing Texas and the nation. His own research focuses on economic
freedom and growth, property rights, civil justice, and regulatory issues. Bill has extensive experience in Texas government and policy on a variety of issues, including economic and regulatory
policy, natural resources, public finance, and public education. His work has focused on identifying
and reducing the harmful effects of regulations on the economy, businesses, and consumers.

www.TexasPolicy.com

TWENTY FIFTH
ANNIVERSARY GALA

VERITAS | January 2015

To the People of Texas & All Americans in the World:

Fellow citizens & compatriotsI am besieged, by a thousand or

more of the Mexicans under Santa AnnaI have sustained a
continual Bombardment & cannonade for 24 hours & have not
lost a man. The enemy has demanded a surrender at discretion,
otherwise, the garrison are to be put to the sword, if the fort is
takenI have answered the demand with a cannon shot, & our
flag still waves proudly from the walls. I shall never surrender or
retreat. Then, I call on you in the name of Liberty, of patriotism
& everything dear to the American character, to come to our aid,
with all dispatchThe enemy is receiving reinforcements daily &
will no doubt increase to three or four thousand in four or five days.
If this call is neglected, I am determined to sustain myself as long
as possible & die like a soldier who never forgets what is due to his
own honor & that of his countryVictory or Death.
William Barret Travis
Lt. Col. comdt

n the history of liberty there are some years that stand out: years when men and women
stood up, defied power, and risked everything to reclaim and defend the rights conferred by
Nature and Natures God. The modern roster is both short and glorious: 1776 ... 1789 ...
1836 ... 1848 ... and of course, 1989.
The 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. They bled for it. But the
Chinese Communists who massacred them still live in fear of their memory, and their example. A
tyrant dies, and his rule ends, wrote Kierkegaard, A martyr dies, and his rule begins. The rule of
the free Chinese spirit has only begunand it was born in 1989.
In Romania, a long-suffering people revolted against Europes most brutal tyrannyand won.
Todays peaceful NATO ally took up arms to shake off the rule of the Ceauescus, and the climax
was a vivid example of the ancient warning, Sic Semper Tyrannis. It happened in 1989.
In Poland, the Communist military regime cautiously allowed a limited election for a mere 100
seats in the national legislature. They lost every single one of them. The moral collapse of Polish
Communism, born years before in the shipyards of Gdansk, fatally accelerated. It came to its
continued >>
fruition in 1989.
www.TexasPolicy.com

In Germany, a crowd gathered before the Berlin Wall checkpoints and demanded to be let through.
The feared and brutal East German border guards, the Grenztruppen, were overwhelmed. Should
they shoot? They urgently requested instructions and received none. Despite so much German
blood on their hands from four decades of repression, the Grenztruppen were paralyzed without
will from above. The crowd surged, the soldiers gave way, and the Berlin Wall collapsed in a night.
It fell in 1989.
This was 1989. This was the year when freedom rang loud and clear from continent to continent.
This was the culmination of Americas generational commitment to confront Communismand
Ronald Reagans bold gambit to win the contest. It was 1989. And libertys triumph did not spare
the Lone Star State.
In the year when conspirators for freedom and prosperity gathered in Prague, Berlin, Warsaw, and
Beijing, they also gathered in a most unlikely spot: San Antonio, Texas. There, at Five Corners, an
idea was brought into action. An institute was made real. An endeavor for liberty was created.
A Texas Public Policy Foundation was born.
The roll call of Foundation founders and leadership in 1989 is a list of some of the most visionary
and brave Texans 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 Reagans Department of
Justice.
General Robert McDermott, USAF, an American hero in war and a public servant in peace,
and distinguished Chairman of USAA.

10

Chaz Neely, the generous visionary who wrote the first check, behind Dr. Leininger, and served
as an originating board member.
Phil Adams, a pioneer on the Foundations first steering committee and board who opened
continued >>
doors and minds to our mission.
OPPOSITE FROM LEFT TO RIGHT: Historic downtown San Antoniosite of TPPFs 25th Anniversary Gala. | The
San Antonio Riverwalkone of the citys most prominent attractions. | TPPF supports gather near The Alamo in
San Antonio prior to the evenings festivities. | TPPF President and CEO Brooke Rollins addresses distinguished
guests at TPPFs 25th Anniversary Gala. | Texas Governor-elect Greg Abbott delivers remarks, highlighting the
vital role TPPF plays in advancing liberty. | TPPF supporter Billi Jean Cowgill joins fellow patriots from across the
state. | Fritz Steiger, TPPFs co-founder and first president, enjoys the scene at the gala. | Lt. Governor-elect Dan
Patrick delivers a spirited rendition of the Travis Letter at The Alamo.

VERITAS | January 2015

11

ABOVE CLOCKWISE FROM TOP LEFT: The Alamosite of the VIP reception prior to TPPFs 25th Anniversary
Gala. | 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 TPPFs success with supporters at the event.

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

12

The past 25 years have been a breathtaking ride in bringing conservative, free-market principles to
public policy in Texas. The vision of the Foundations founders is carried on each and every day in
the hearts and minds of its staff and supporters. These Texans, as much as the men who laid down
that cornerstone for liberty in 1989, understand that we must never lose sight of the importance of
keeping up the good fightfor a more free, more prosperous future.
The year 1989 was a year of revolution for liberty. We celebrate its achievements. And we
remember that one vital act of that revolution took place, right here, in San Antonio, a quartercentury ago.
We may say many things about it. We may say it was pathbreaking. We may say it was bold. We
may 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.

VERITAS | January 2015

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 TPPFs
importance to Texas. | The next generation of patriots will carry the torch of liberty in Texas for decades to
come. | Some of Texas most distinguished patriots celebrate TPPFs many accomplishments and look forward
to the continued defense of liberty in Texas.

Contribute to the Texas Public Policy Foundation today!

____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.
$_____________.

13

Name
Address:
City:

State: Zip:

Phone:

E-mail:

Please accept my check: personal business

Please bill: MC Visa Amex

Amount:

Card#:

Exp.:

Security Code:

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

School Choice for ALL

The Time Is NOW

by The Honorable Kent Grusendorf

H
14

ow many of you think your

business would be more efficient
or more productive if it were
run by government? This question was
recently posed to business leaders at an
Austin conference. Not surprisingly, no one
answered in the affirmative. Texans know
well that bureaucracies do not allocate
resources effectively. As SMUs Professor
Michael Cox said in a recent report,
imagine for a moment that government
had a telecommunications monopoly in the
early 1980s. Had the bureaucrats in charge
conceived of the cell phone, they would have
seen no gain in introducing a product that
even consumers didnt know they wanted.
The bureaucrats priority would have been
protecting jobs associated with land lines and
pay phones. Government operates by rule
and regulation rather than common sense

and innovation. Governments are driven by

politics and special interests, which results in
misallocation of resources.
Nothing is more important to our society
than the education of our youth. Yet, today
we delegate this function almost entirely to
government.
Success in any enterprise is dependent upon
intelligent decision-making and the wise allocation of resources. In Texas, on average,
we spend well over a quarter of million dollars for a classroom of 25 students. ($10,549
per student) Yet the average teacher salary is
less than $50,000. Something is very wrong
with this equation considering that all research indicates that the teacher is, by far, the
most important component to educational
success. Over the past 20 years, the growth

VERITAS | January 2015

of non-teaching staff in our school system has

increased twice as fast as student enrollment.

1. A disastrous 25 percent of Texas students

fail to complete high school.

Since the publication of A Nation at Risk 30

years ago, Americans and Texans have implemented countless reforms, almost all of which
have required higher funding. We tried nopass-no play, governance reform, curriculum
reform, management reform, and accountability reform. We enacted STAAR testing, and
repealed most of them before they were implemented, and have now even reversed course on
accountability reforms thinking that the other
direction will be better. None of these reforms
have solved the problem.

2. One in three English Language Learners fail

to progress even one grade level in learning
English after a year of school.

There is a strong faction that demands increased education spendingthis is one issue
at the heart of the ongoing school finance trial.
Yet the recent ruling from the Travis County
judge is a 400 page indictment of our education system. Judge Dietz found that the system
is a dismal failure to hundreds of thousands of Texas students. Among the failures,
the District Court found:

3. Only 17 percent of all Texans graduating

from high school achieved college-readiness on the SAT or ACT.
In the end, the Court concluded that every
performance measure considered at trial demonstrated that Texas public schools are not educating students. Yet the Court concluded that
the solution was to pump more money into
the system, though spending has increased
by more than 140 percent since 1972. As one
trial observer tweeted early in the trial: Look
how bad we are doing, look how bad we are
doing, give us more money. Unfortunately,
that Tweet accurately defines the testimony of
Texas school superintendents.
continued >>

Texas Education Trends: Spending & Achievement

Percent Change Relative to 1972

160%
140%
120%

Dollars per Pupil (Adjusted for Inflation)

Enrollment
SAT Score (Adjusted for Participation & Demographics)

100%
80%

15

60%
40%
20%
0%
-20%

1972 1982

1992 2002 2012

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

www.TexasPolicy.com

SCHOOL CHOICE FOR ALL: THE TIME IS NOW

Structural Change Required

In 2015, one of the major debates during the

legislative session will be how much money
to spend on education. History indicates that
more money will only lead to more of the
same. In fact, as the Texas Supreme Court has
indicated for almost three decades structural
change is required. In its most recent ruling, the Texas Supreme Court stated: pouring more money into the system may forestall [constitutional] challenges, but only for a
time. They will repeat until the system is overhauled.
The challenges will be perpetual because the
status quo system fails to allocate resources efficiently. No matter how much money we pour
into it, we fail to meet the educational needs
of Texas students. For the sake of Texas very
future we must address the structure of our
system.
Command economies are inherently inefficient. Government monopolies are inherently
inefficient. Markets allocate resources in much
more efficient and effective manners than do
politically driven systems, which are often directed by special interest factions. We must allow every child in Texas the best educational
opportunity, regardless of where they live or
their familys income. We must allow every
parent in Texas to meet the educational needs
of their child. Universal school choice is the
only way to achieve that objective.

16

Why School Choice

The advantages of school choice are lifechanging. Empowering parents to choose between schools would be beneficial to the students who are not currently well served by the
current monopolistic system.
In New York, for example, African American participants in a private school choice
program were 24 percent more likely to enroll in college as a result of having school

Why Teachers Win

The average
salary of Texas
teachers is
$48,821.

But Total Spending per student

was $12,106 in
2012-13.

That means
Texas spends
$215-$325,000
per classroom.

Choice would
drive up wages as
schools divert
more funds to
classrooms where they have
the greatest effect
on students.

$215K+

Report of
Dr. Jacob Vigdor
Introducing
greater competition into the
market for
teachers will raise
teacher salaries.

choice.
Participants
also enrolled
in selec-what
As a result,
teachers
could choose
tive colleges at twice the rate of non-parkind of school to teach at
ticipants.

without sacrificing their financial health.

In Washington D.C., students who used

the D.C. Opportunity Scholarship school
choice program graduated at a rate of 91
percent, more than 20 percentage points
higher than students who applied to the
program, but were not accepted.

VERITAS | January 2015

SCHOOL CHOICE FOR ALL: THE TIME IS NOW

In North Carolina, criminal activity declined by 50 percent among high-risk students who won a lottery for a school choice
program, compared to students who applied but were not accepted.
Greater consumer choice provides greater
freedom. In addition, empirical evidence is
overwhelming that school choice would improve existing public schools. Textbook economic theory teaches us that teachers would
earn higher salaries and be provided better
working conditions when more schools are
competing for their services. Teachers often
complain about not being treated as professionals. The only way teachers will ever gain
that status is with greater competition for
their services, just as with other professionals.
School choice for all would be beneficial
to students, parents, teachers, and existing
schools. That is great news for the educational
environment, but school choice will do even
more.
A recent SMU study, Rebuilding Americas
Middle Class, concludes: Rebuilding Americas middle class will require capitalism in the
classroom. The result of such a system would
be innovative, world-class schools, which
are within our means, but we wont get them
with current assumptions and institutions.
School choice will not only be good for the
middle class, it would be very good for the entire Texas economy.
Imagine the thousands of young families who
would move to Texas if they had complete
choice over their childs education. Imagine
the effect of high-risk students who stay in
school and graduate, rather than dropping
out and engaging in criminal activity. Imagine that more than the current 17 percent of
Texas students achieve college readiness
and therefore dont need remediation.

School choice would add trillions to the Texas

economy over time, which would reflect the
increasing quality of life Texans expect.

Historical Perspective

Most people think the first Texas charter

schools came after the reform bill in 1995,
but charter schools were common in Texas
long before what we now call public schools
even came into existence. Today, Texans have
no private school options, but Texans did
have such options before and after the current Texas Constitution was adopted. Public
education, as we know it today, evolved over
decades.
The current Texas Constitution of 1876 was
the result of great debate and contention. In
fact, there was more debate over the education issue than any other item before the convention. Negative reaction to the highly centralized radical school system, established
by the carpetbaggers during reconstruction
was the driving force for reform.
The constitution as we know it today requires
that the Texas Legislature establish and make
suitable provision for the support and maintenance of an efficient system of public free
schools. This method of organization was as
simple and as loose as it could possibly be. It
gave parents the greatest latitude in determining for themselves the kind of education they
desired for their children and the character of
teacher they wished to employ. The parents
could use state funding without geographic
restrictionschildren were not assigned to a
school based on their address.
The Texas Supreme Court has stated bluntly
that private school choice is still allowed by
the Texas Constitution. In 1995, the court
ruled: The Constitution does not require,
however, that the State Board of Education or
any state agency [provide public education.]
As long as the Legislature establishes a suitcontinued >>

www.TexasPolicy.com

17

SCHOOL
SOFT TYRANNY
CHOICE FOR ALL: THE TIME IS NOW

able regime that provides for a general diffusion of knowledge, the Legislature may
decide whether the regime should be administered by a state agency, by the districts
themselves, or by any other means. (Edgewood IV, footnote 8)

Opposition to School Choice:

Almost all of the opposition to school choice

comes from stakeholder self-interest. Unions
oppose choice because it would diminish
their power to direct the current system.
With choice, good teachers will be in great
demand. Markets will compete for good
teachers, just as they do for other professionals. Pay and working conditions will improve. In contrast, union power is enhanced
when everyone, good and bad, is treated the
same. These unions struggle to hold power
because they need a government-granted
monopoly to exist.
Public school administrators are usually opposed to school choice. In many Texas areas,
superintendents are the highest paid individuals and receive a prominent position in their
community. Competition would force school
districts to spend funds more efficiently, which
would mean directing more money to classrooms and less to administrative overhead.

18

Lastly we have vendors who have a vested

stake in the status quo. Many vendors have
a stake in the current system, which purchases food services, books, computers,
buses, architects, and attorneys (who sue the
state for more money). In addition, there are
hundreds of organizations and associations
which are almost totally funded by dues
from school districts.
Amazingly, the opponents to school choice
often express their opposition to school
profiteers, though they themselves rake in
huge profits from the established system.

Not a Partisan Issue

School choice is not a partisan issue.

Although often viewed as a Republican issue, many Democrats across the nation support school choice. One outspoken leader
in the national school choice effort is Kevin
Chavous, who was formerly the Chairman of
the Education Committee of the Washington
D.C. City Council. He is now a leader in the
American Federation for Children and the
Alliance for School Choice, where he promotes school choice throughout the nation.
Chavous favors school choice, saying, You
know what, Im for the three to five year
reform plan de jure. Im for a new public
school superintendent saying give me five
years to fix the system. But you know, we got
to fly that plane while we fix it. And we need
to have scholarships for low-income kids
who come from challenged backgrounds.
We need charter schools. We need homeschools. We need virtual schools. We need
magnet schools. By any means necessary we
need to educate all of our children.
By the start of the 2014-15 school year, Democrats and Republicans had come together
in states from New Hampshire to Arizona to
establish 39 school choice programs, which
have created an eligibility pool of more than
2.7 million scholarship opportunities for
children across the country.

Why 2015?

In 2015, there will be a larger opportunity

for school choice reform in Texas than there
has been in decades. Legislative leadership
seems readier than ever to support school
choice.
In addition, the Texas Supreme Court will
soon address school finance. As mentioned
above, the courts consistent position has

VERITAS | January 2015

SCHOOL CHOICE FOR ALL: THE TIME IS NOW

Enrollment Growth in
Private School Choice Programs

308,560

245,854

158,725

81,524

90,613 96,528

108,705

182,608
171,478

210,524
190,811

126,519

55,373
29,003
2000-01

2005-06

2010-11

2013-14

Enrollment in private school choice programs nationwide is increasing. In Texas, demand for choice in the
form 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 first two years of the programs creation,
allowing another 25,000-300,000 students to enroll in the school of their choice.
Enrollment Growth data source: American Federation for Children

been that the Legislature needs to consider

fundamental changes, beyond pouring more
money into the system. For example, in its
2005 West Orange Cove II ruling the Court
stated: Perhaps public education could
benefit from more competition, but the parties
have not raised this argument, and therefore
we do not address it. In the ongoing school

finance litigation, one plaintiff has raised the

argument that the public schools will be inefficient until competition is established. This effectively brings before the court the argument
they invited in 2005. A favorable ruling from
the Texas Supreme Court in 2015 will be the
strongest catalyst for school choice reform.

19
The Honorable Kent Grusendorf is a senior fellow and director of the Foundations Center for
Education Freedom. He spent most of his professional life in Arlington as a businessman and
successful entrepreneur. He represented Arlington for 20 years in the Texas Legislature where
his primary interest and focus was education. In his freshman term, due to his prior service
on the State Board of Education, he was viewed as a leader on education issues. Through his
appointments, by three governors and three House Speakers, to the House Public Education
Committee and various Select Committees, he played a significant role in crafting legislative
responses to the Edgewood I, Edgewood II, Edgewood III, Edgewood IV, and West Orange Cove school finance court
decisions.

www.TexasPolicy.com

NON-PROFIT ORG.
U.S. POSTAGE PAID
PAID
PERMIT NO. 403
AUSTIN, TX

P.O. Box 1449

Austin, TX 78767-1449
www.texaspolicy.com

Happy New Year!

The staff of the Texas Public Policy Foundation wish you health,
prosperity, and freedom in 2015. Thank you for your continued
support of our mission to keep the Lone Star shining bright!