Handicapping the High Court on School Finance

State District Judge John Dietz declared the Texas school finance system unconstitutional last week. But the 260 hours the litigants spent in his courtroom only mark the beginning of the lawsuit's journey through the legal system.

Dietz's oral ruling, delivered from the bench immediately after the state finished its closing arguments, will be followed by a detailed written decision in four to six weeks. At that point the state plans to appeal — most likely to the Texas Supreme Court, though it could also choose a slower trek through Austin’s 3rd Court of Appeals first. Opting for the more circuitous route could be advantageous depending on timing.

Parties involved in the litigation estimate that with a direct appeal, it would take the high court about a year to reach its final decision, sometime in spring 2014 — either right before or right after the primaries. There are three justices up for re-election then: Chief Wallace Jefferson, Jeffrey Boyd and Phil Johnson. A special session would likely take place that fall. If the legal process were more drawn out, the final decision could land just before 2015, leaving lawmakers to consider it during the 84th regular session.

Dietz was also the judge at the trial level when the courts last considered school finance system in 2005. He issued a ruling then that found the system unconstitutional because it was inadequately funded and it created a statewide property tax — two conclusions he came to once again this time around. Back then, in a 7-to-1 decision, the all-Republican Supreme Court agreed with Dietz on the property tax finding, but did not on the adequacy claim.

While no constitutional violation existed at the time, the justices wrote, “there is substantial evidence, which again the district court credited, that the public education system has reached the point where continued improvement will not be possible absent significant change, whether that change take the form of increased funding, improved efficiencies, or better methods of education.”

The opinion went on to say that “it remains to be seen whether the system’s predicted drift toward constitutional inadequacy will be avoided by legislative reaction to widespread calls for changes.”

The two-thirds of schools districts suing the state believe that reaction has not taken place, and that what the court originally saw as an impending constitutional violation has turned into a real one.

But there has been high turnover among the justices who considered that case. Four who participated in the decision remain on the bench: Nathan Hecht, who wrote the opinion, Jefferson, Johnson and Paul Green, who were all in the majority. Don Willett was on the court but recused himself.

Since then, four new justices have joined the court: Debra Lehrmann, a former Fort Worth family court judge; Eva Guzman, a former Houston appellate judge; Boyd, Gov. Rick Perry’s former general counsel; and John Devine, a social conservative activist and former Houston trial court judge. Perry first appointed all of them except Devine, who won a primary against incumbent David Medina.

Political Consultant Works for Both Perry, Abbott

From left to right: Gov. Rick Perry, Republican consultant Eric Bearse, Attorney General Greg Abbott
From left to right: Gov. Rick Perry, Republican consultant Eric Bearse, Attorney General Greg Abbott

Eric Bearse hates that his name is in this sentence.

But the political consultant, who’d much rather operate in the background, may be the best evidence yet that there’s real and true harmony between Attorney General Greg Abbott — rumored to have designs on the Governor’s Mansion — and Gov. Rick Perry — the man who hasn’t announced whether he wants to keep occupying it.

He’s on both of their political campaign payrolls, and has been consistently for the last 10 months.

“I expect they’ll be friends and allies for years to come,” Bearse said from his Austin office, visibly uncomfortable that he — not one of his bosses — was the subject of a reporter’s attention.

It’s no secret that Abbott would like to succeed Perry. And Perry has said he won’t announce his re-election plans until the summer. But whether there is some spoken or unspoken agreement between them was unknown until late last month, when Perry told WFAA-TV in Dallas that Abbott had agreed not to run against him in the GOP primary if he decided to seek another term.  

When reporters sought comment from Abbott, they got a vague statement from his campaign spokesman — Bearse — acknowledging only that “Gov. Perry and Gen. Abbott are close friends, and talk frequently.” The most telling detail of the entire exchange, the one that seemed to assure that Abbott and Perry won’t run against each other in 2014, was that Bearse was serving as Abbott’s spokesman.

Bearse has long been a Perry guy. He started with Perry during his 1998 bid for lieutenant governor, and worked for him on campaigns and on his government staff as a speechwriter until 2007, when Bearse started his own political consulting firm. He helped write Perry’s 2008 Boy Scout book, On My Honor.

Bearse, who temporarily suspended his own firm’s business in 2011 to work on Perry’s presidential campaign, has been on the gubernatorial campaign payroll since Perry bowed out in South Carolina, at a rate of $4,000 a month, according to Texas Ethics Commission filings. These days, his work for the governor is largely political writing; over the years, he’s written close to 2,000 speeches for Perry.

At the same time, Bearse is also on Abbott’s payroll, and has been on a per-project basis for several years. After Perry’s failed bid for the presidency, Bearse signed on with Abbott in a formal campaign communications role, which has paid him $5,000 a month since March. 

Bearse doesn’t just work for Perry and Abbott; his laundry list of Republican clients also includes Comptroller Susan Combs ($3,000 a month) and House Speaker Joe Straus ($5,000 a month), in addition to some other lawmakers. In Texas, the fact that Republicans hold all statewide offices is “mostly a blessing, and at times a curse,” Bearse joked; it can be a hard for a consultant to gauge who might run against whom down the road.

“You can twist your mind around a lot of hypotheticals,” he added.

Bearse has navigated such complicated political waters in the past. When he left the governor’s office in 2007, he took on Straus, then a second-term member, as an occasional client. Shortly after, he gained a regular client, then-House Speaker Tom Craddick, R-Midland. Bearse wasn’t working on any projects for Straus in early 2009, when the San Antonio Republican unseated Craddick to take over the speakership. But shortly afterward, Bearse found himself off of Craddick’s payroll, and landed back on Straus’s.

Bearse puts his concurrent work for Perry and Abbott in a different category: uncomplicated. “Because they’re great friends and allies, there is no conflict,” he said. “It works out very well.”

His strategy in business, he said, is to be helpful to Republican candidates in their current capacities, and to stay on his toes in the event that circumstances and party dynamics change.

“While they may have different shades of conservativism, of Republicanism,” he said of his clients, “they’re all working to advance our state.” 

Straus on Priorities; More Campaign Woes for Dewhurst

Joe Straus can sound so mild when he’s making news. Without any visible ruffling of feathers on stage or in a packed room at a TribLive talk this week, the speaker of the Texas House threw cold water on school vouchers, on the possibility of tax cuts, and on transportation funding as a serious competitor to funding for water infrastructure.

Vouchers have blown up in previous sessions and he said he doesn’t want a repeat of that. Without flat killing the idea, he said he’s willing to wait and see what comes over.

The school finance ruling puts a potentially expensive item on the state’s list of things to do, and that and other needs make major tax relief less likely. Gov. Rick Perry proposed $1.8 billion; again, Straus is doing the wait and see thing.

And he stuck to his guns on water, calling it the state’s most important problem of the moment and saying he’s concerned about spending the state’s Rainy Day money on roads as a two-year stopgap instead of as part of a bigger plan.

One more: Straus said “there may be something where there’s enough flexibility” to make Medicaid expansion work in Texas under the federal health care law.

* * * * *

A former aide to Lt. Gov. David Dewhurst is now under federal investigation after the Dewhurst campaign disclosed that Kenneth “Buddy” Barfield had apparently misappropriated at least $1 million from Dewhurst’s federal political account.

Barfield, a longtime advisor to Dewhurst, served as campaign manager of his campaign for U.S. Senate and has worked on his political campaigns for several years.

Dewhurst’s accountants and lawyers have not made public the total amount they believe is missing from the politician’s various state and federal campaign accounts.

The federal investigation and amendments to the federal filings were first reported in The Dallas Morning News. In a cover letter to the Federal Election Commission, the campaign said the new reports “remove certain transactions that were disclosed in the original report, but which did not actually occur.” The letter, from Curt Beck, assistant treasurer to the Dewhurst for Texas account, also said the corrections disclose a debt from the federal campaign to Dewhurst’s state campaign, which “represents payments made by the David Dewhurst Committee [the state committee] for various consulting services provided to the Dewhurst Campaign [the federal committee], including media consulting, communications consulting, and other types of consulting services.”

Dewhurst had earlier disclosed campaign finance reporting problems that he attributed to Barfield, correcting Texas Ethics Commission reports on his political contributions and expenditures dating back to 2008. The campaign brought the matter to the attention of Travis County prosecutors at the time, and proceeded on to an accounting audit of its federal campaign reports.

That work resulted in amended federal reports for the third and fourth quarters of last year, which in turn prompted federal inquiries into Dewhurst’s accounting for his U.S. Senate campaign.

“After learning in early December of Mr. Barfield's embezzlement from the state committee account for his own personal gain, we began an internal investigation into the federal campaign account,” said Rob Johnson, a spokesman for Dewhurst. “Unfortunately, during this on-going investigation, it has become clear that Mr. Barfield also stole funds for his own personal gain from the federal campaign account. This is a serious and unfortunate situation and our attorneys have turned this matter over to the U.S. Department of Justice and the Federal Election Commission. The federal campaign is fully cooperating with both agencies in their investigation of this matter and we look forward to the resolution of this matter.”

Separately, Dewhurst’s federal campaign is refunding about $780,000 to campaign contributors who gave money for his general election campaign last year. Since he lost the primary runoff, he wasn’t in the general election and can’t keep the money raised for it.

Newsreel: School Finance and California

In this edition of the Texas Weekly Newsreel: The state's school finance system is ruled unconstitutional, committee hearings kick off at the Capitol and California Gov. Jerry Brown dukes it out with Rick Perry.

Inside Intelligence: About School Finance...

Judge John Dietz’s ruling in the latest school finance trial — that the state’s method of funding public education is inequitable, inadequate and requires an illegal statewide property tax — prompted us to ask the insiders about their first impressions. The judge’s written ruling won’t be published for weeks, he said, and the appellate courts will have plenty of time to work after that.

We started there, asking whether the state’s highest civil court is likely to uphold the trial judge’s ruling: 60 percent said they will, though a number said in their comments — found abridged below and in full in the attachment — that the court will uphold some but not all of the ruling.

A majority of the insiders think the ruling will force a tax increase at the state level. Slightly less than half think it will result in higher local school property taxes.

Finally, we asked who — if anyone — is likely to be blamed by voters for the consequences of the ruling. One in eight insiders said nobody will; 44 percent said it will fall on Republicans and 16 percent said blame will fall on incumbents.


Will the Texas Supreme Court uphold a district judge’s school finance ruling?

• "Really need the text of that ruling before this question can be answered with any degree of certainty...and even then, is anything certain with this court?"

• "The Supreme Court would have to overturn its previous ruling to reject Dietz's finding on inequity."

• "The Leg blames the Supremes again, politically useful in that it provides political cover for any action on the tax front …sound familiar, same song, next verse."

• "There may be parts they de-empathize to provide the state with a softer decision, but the system too warped to say it meets constitutional standards in all respects."

• "Ridiculous, irresponsible, unfounded opinion by a biased liberal judge. It will almost entirely be overturned."

• "The Supremes will uphold the ruling - late this year or sometime next year. So why are school districts celebrating now? It's like winning the Publisher's Clearinghouse, but being told it may be up to two years before you get your money."

• "The one aspect that the state will have a particularly hard time defending is that of inequity.  The rather unjustifiable differences in the amounts that school districts receive in the system are likely to bring this thing down.  There's no explaining it away."

• "Our activist SC writes more laws than the legislature.  They will write this one, but will punt the final funding and solution to the legislature and call it conservative."

• "The judge dusted off his prior ruling, changed the dates and dollars, and reordered it as expected. The high court struck down much of his previous ruling so we will see."

• "Liberal Democrat trial judge + conservative Appeals Court/conservative Supreme Court = changing standard of what constitutes a equitable and efficient public education."

• "I am afraid the court has become too much of a creature of the Executive branch."

• "Some of it?  Yes.  All of it? No."


If upheld, would the school finance ruling force a tax increase of some kind?

• "We don't need no stinkin' taxes! We don't need no education! We don't need no thought control!"

• "It might in certain school districts, but it could actually lower local school taxes if districts get to keep all the money they raise."

• "If not a tax, some other method to raise revenue will definitely be on the table. Who knows, even gambling might be on the table."

• "The money the state cut from the budget in 2011, if returned, plus savings by eliminating the Target Revenue and other Hold-Harmlesses provides enough money for a strong first step.  Phasing in other required improvements will run concurrent with the improving economy."

• "If the court finds against the state solely on inequity, the solution can be to take the rich down to where everyone else is.  That doesn't cost the state anything, financially speaking."

• "If it means shutting down public schools, this Legislature will not raise taxes."

• "It would force the state to utilize the resources it has to FULLY FUND public education in this state!  It would require districts to use money for the purpose which it was intended - the EDUCATE students!  Reduce the size of the 'district office' staffs and put teachers in classrooms."

• "At the minimum, this undermines posturing for a tax cut"

• "If it's $10 billion underfunding, absolutely.  But it won't be.  Look for gaming to come back into the picture."

• "In moral terms, of course.  In political terms, keep dreaming."


If upheld, would the school finance ruling force an increase in local property taxes?

• "Probably not, assuming that the leadership protects the property tax relief fund."

• "Maybe not 'force,' but possibly result in one."

• "Wasn't this (hasn't this) been the basis for the flawed funding to begin with?"

• "Always does (eventually). And when too many districts are forced to go that route, that's the cue to file the next lawsuit against the state."

• "The 3 most likely sources for new state revenue seem to be 1) raising sales tax rate, 2) raising franchise tax rate, or 3) raising property tax rate.  Good luck choosing the one that can pass."

• "Why would taxpayers approve a local tax increase only to have the revenue diverted to another school district?"

• "It should force a more statewide approach.  Local tax disparities got us here."

• "Local property taxes will not be FORCED to go up, but local school will go up on them anyway and then blame the legislature.  Its tradition for them to do so."

• "Since a quarter of the districts are already maxed out on their tax rate, it's hard to avoid a ruling that this is (once again) a state property tax.  Since the state still hasn't been able to make up for the revenue lost to the 2006 forced school property tax cut, the only option will be to let the districts (with voter approval) raise their local rates even higher.  Or give up on getting kids to pass tests."


Who, if anyone, will voters most blame for the consequences of the ruling?

• "Everyone will point fingers at each other."

• "You did not list my preferred answer. To quote the great Jo Carol Pierce, I blame God."

• "I actually think people could end up happy about this in the long run and will blame no one!"

• "The way things are set up, all sides can point somewhere else to assess blame."

• "Democrat voters will blame republican officials.  Republican voters will blame judges."

• "You should have as a choice: 'Everybody named above, plus everyone not named, but not me.'"

Our thanks to this week's participants: Gene Acuna, Cathie Adams, Brandon Aghamalian, Jenny Aghamalian, Victor Alcorta, Clyde Alexander, George Allen, David Anthony, Jay Arnold, Louis Bacarisse, Charles Bailey, Walt Baum, Dave Beckwith, Rebecca Bernhardt, Andrew Biar, Allen Blakemore, Tom Blanton, Hugh Brady, Chris Britton, Lydia Camarillo, Kerry Cammack, Thure Cannon, Snapper Carr, Janis Carter, William Chapman, Elizabeth Christian, Rick Cofer, John Colyandro, Harold Cook, Beth Cubriel, Randy Cubriel, Curtis Culwell, Denise Davis, Hector De Leon, June Deadrick, Nora Del Bosque, Tom Duffy, Jeff Eller, Jack Erskine, Jon Fisher, Neftali Garcia, Norman Garza, Dominic Giarratani, Bruce Gibson, Eric Glenn, Kinnan Golemon, Daniel Gonzalez, John Greytok, Clint Hackney, Wayne Hamilton, Bill Hammond, Adam Haynes, Ken Hodges, Steve Holzheauser, Shanna Igo, Deborah Ingersoll, Richie Jackson, Cal Jillson, Jason Johnson, Bill Jones, Mark Jones, Robert Jones, Lisa Kaufman, Richard Khouri, Tom Kleinworth, Ramey Ko, Sandy Kress, Pete Laney, Dick Lavine, James LeBas, Donald Lee, Luke Legate, Leslie Lemon, Richard Levy, Ruben Longoria, Homero Lucero, Vilma Luna, Matt Mackowiak, Bryan Mayes, Dan McClung, Scott McCown, Mike McKinney, Debra Medina, Robert Miller, Mike Moses, Steve Murdock, Craig Murphy, Keats Norfleet, Pat Nugent, Keith Oakley, Gardner Pate, Jerry Philips, Wayne Pierce, Richard Pineda, Allen Place, Royce Poinsett, Kraege Polan, Gary Polland, Jay Propes, Bill Ratliff, Patrick Reinhart, Jason Sabo, Andy Sansom, Jim Sartwelle, Stan Schlueter, Bruce Scott, Robert Scott, Ben Sebree, Christopher Shields, Julie Shields, Ed Small, Todd Smith, Larry Soward, Dennis Speight, Jason Stanford, Keith Strama, Bob Strauser, Colin Strother, Michael Quinn Sullivan, Sherry Sylvester, Jay Thompson, Russ Tidwell, Gerard Torres, Trey Trainor, Vicki Truitt, Ware Wendell, Ken Whalen, Darren Whitehurst, Seth Winick, Peck Young, Angelo Zottarelli.

The Calendar

Monday, Feb. 11

  • House Appropriations Committee hearing (7:30 a.m.)
  • House Land and Resource Management Committee hearing (2 p.m.)
  • House Pensions Committee hearing (2 p.m.)
  • House Technology Committee hearing (2 p.m.)
  • Senate Finance Committee hearing (10 a.m.)
  • Senate Nominations Committee hearing (10:30 a.m.)
  • Senate Agriculture, Rural Affairs and Homeland Security Committee hearing (3 p.m.)

Tuesday, Feb. 12

  • House Appropriations subcommittees meeting at 7 and 7:30 a.m.
  • House Transportation Committee hearing (8 a.m.)
  • House Human Services Committee hearing (10:30 a.m.)
  • House Natural Resources Committee hearing (2 p.m.)
  • House Public Education Committee hearing (2 p.m.)
  • Senate Education Committee hearing (9 a.m.)
  • Senate Finance Committee hearing (9 a.m.)
  • Senate Health and Human Services Committee hearing (9 a.m.)

Wednesday, Feb. 13

  • House Energy Resources Committee hearing (2 p.m.)
  • House Natural Resources Committee hearing (2 p.m.)
  • Senate Transportation Committee hearing (8 a.m.)
  • Senate Finance Committee hearing (9 a.m.)

Thursday, Feb. 14

  • House County Affairs Committee hearing (10:30 a.m.)

The Week in the Rearview Mirror

A court of inquiry in Williamson County is hearing testimony that could lead to charges against former prosecutor Ken Anderson. Anderson was in charge of the case against Michael Morton, who was wrongfully convicted of killing his wife and spent 25 years in prison before being freed. The court will decide whether there was evidence of criminal wrongdoing in the form of evidence being withheld. 

The House Appropriations Committee  heard testimony about grant money awarded by the state’s embattled cancer-fighting agency. The largest recipient of money from the Cancer Prevention and Research Institute of Texas— to the tune of $25 million — was alleged to have spent over $1 million on bonuses, moving expenses and payments to board members. The company, Statewide Clinical Trials Network of Texas, known as CTNeT, closed last week after the state cut off funding. Meanwhile, two former top officials with CPRIT who were scheduled to testify were told not to come as scheduled. Investigators pursuing civil and criminal charges in the case were concerned that the officials' testimony might provide them with legal immunity.

Standardized testing requirements for public schools are under fire in the Legislature; the newly installed chairman of the House Public Education Committee, Rep. Jimmie Don Aycock, R-Killeen, introduced a bill that would reduce the number of required tests from 15 to five. The Legislature originally required the tests in a 2009 bill to bulk up the college readiness of Texas graduates. But the State of Texas Assessments of Academic Readiness, or STAAR, has been widely panned by parents, teachers and state officials alike. Every member of the education committee signed on to Aycock’s bill. 

A state district judge ruled the state is not required to tell the public how much it pays in pensions to former members of the Texas Legislature. Texans for Public Justice sued to get the information; that group wanted the state to produce the total cost of retirements for 103 former lawmakers who now lobby the Legislature. TPJ is mulling an appeal.

CNN's Piers Morgan came to Texas as part of his anti-gun crusade. At a gun store and shooting range in Katy, Morgan tested several of the weapons on site, then went on to interview local business owners and state officials. Attorney General Greg Abbott and Sen. Dan Patrick, R-Houston, made appearances on the show objecting to any new gun controls and stressing the need for Texans to be able to defend themselves. Morgan bantered with them, but let rocker Ted Nugent lecture the audience about the need for law-abiding citizens to have unlimited access to guns.

Against a background of debate over immigration reform, El Paso was ranked the safest city of its size in the country by Congressional Quarterly. Austin ranked fourth and San Antonio came in 10th.  Rankings are tabulated using FBI crime reports.

Political People and their Moves

Carol Alvarado picked up endorsements from Rudy Reyes and R.W. Bray, former competitors in the race for SD-6. Here’s a mirror: Sylvia Garcia got an endorsement from Joaquin Martinez, another of the vanquished. Alvarado and Garcia are in a runoff to replace the late Mario Gallegos, D-Houston; the election date isn’t yet set.

Former U.S. Sen. Kay Bailey Hutchison joins the Bracewell & Giuiliani firm (which also employs her husband, bond attorney Ray Hutchison) as senior counsel. She'll advise the firm's clients, but won't be lobbying.

Austin-based Stanford Research and 3rd Coast Research are merging, bringing Jason Stanford and Will Caskey into the same firm doing political and corporate opposition research.

Chuck DeVore is now the vice president for policy at the Texas Public Policy Foundation and Jesse Treviño is now the veep of communications there. 

Rick Bluntzer left NRG Energy to run communications and public affairs at EZCorp, which operates pawn shops and payday lending services under the rubric of “instant cash solutions for consumers.” 

Tis the season of gubernatorial reappointments. Gov. Rick Perry reappointed:

• Austin attorney J. Winston Krause to the Texas Lottery Commission.

Deeia Beck of Austin to the Office of Public Insurance Counsel for a two-year term. She has held that post since September 2008.

Ron Ederer of Corpus Christi and John Steen III of Houston (son of the Texas Secretary of State) at the Texas Racing Commission. Ederer is an attorney and an adjunct professor at Texas A&M Corpus Christi; Steen is vice president of business development for Sage Midstream.

Barbara Cargill to chair the State Board of Education.

Debbie Unruh as independent ombudsman at the Texas Juvenile Justice Department; she was first appointed in November 2010.

• Dr. Kyle Janek, a former legislator, as executive commissioner of the state’s Health and Human Services Commission.

• Major General John Nichols of Spring Branch as adjutant general of Texas commanding the Texas Military Forces. 

Deaths: M.A. Taylor Jr., a former state legislator and Republican Party activist and local chairman from Waco. He was 85.

Former Rep. Frank Cahoon of Midland, at one time the only Republican in the Texas House. He was 78.

Quotes of the Week

There is no free lunch. We either want increased standards and are willing to pay the price, or we don't.

District Judge John Dietz, finding the state's financing system for schools unconstitutional

They run a little radio ad and all you lapdogs run to report it. ... It's not a burp. It's barely a fart.

California Gov. Jerry Brown, quoted in the Sacramento Bee on a come-to-Texas ad campaign aimed at companies in California 

I don’t want revenge. I don’t want anything ill for Judge Anderson. I don’t. But I also realize that there are consequences for our actions and that there needs to be accountability because without that, every single thing falls apart.

Michael Morton, freed after 25 years in prison for a wrongful conviction, testifying in a court of inquiry on Ken Anderson, who was his prosecutor

They deserve under the Second Amendment to meet force with force.

Attorney General Greg Abbott to CNN's Piers Morgan on allowing ranchers along the border access to firearms

To have popular culture impact 100 years of their standards is inappropriate.

Gov. Rick Perry on the Boy Scouts of America reconsidering its ban on gay members and leaders

In just three weeks, The New York Times has devoted a lead editorial to blasting me. Bill Maher has attacked me, Rachel Maddow, Chris Matthews. Morning Joe seems to devote their morning sections to attacking me. And I’ll tell you what, I view all of that as a sign that maybe we’re doing something right.

U.S. Sen. Ted Cruz during an appearance on Glenn Beck's radio show