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Posted: Feb 4, 2013 4:09 PM

Updated: Feb 4, 2013 4:09 PM

AUSTIN, Texas (AP) The system Texas uses to fund public schools violates the state's constitution by not providing enough money to school districts and failing to distribute the money in a fair way, a judge ruled Monday in a landmark decision that could force the Legislature to overhaul the way it pays for education.

Shortly after listening to closing arguments, Judge John Dietz ruled the funding mechanism does not meet the constitutional requirement for a fair and efficient system that provides a general diffusion of knowledge.

The state is expected to appeal the ruling to the Texas Supreme Court. This was the sixth case of its kind since 1984. In 2005, Dietz found the previous funding system unconstitutional and directed the Legislature to devise a new one.

At issue in this case are $5.4 billion in cuts to schools and education grant programs the Legislature imposed in 2011, but the districts say simply restoring that funding won't be enough to fix a fundamentally flawed system.

They point out the cuts have come even as the state requires schools to prepare students for standardized tests that are getting more difficult and amid a statewide boom in the number of low-income students and those who need extra instruction to learn English, both of whom are more costly to educate.

"There is no free lunch. We either want increased standards and are willing to pay the price, or we don't," Dietz said. He has promised to issue a detailed, written decision soon.

The trial took more than 240 hours in court and 10,000 exhibits to get this far.

Sen. Rodney Ellis, D-Houston, said Dietz's decision confirms what his party has been saying all along.

"Hopefully this latest in a long line of decisions will force the legislature to truly and systemically address the inequities in our school finance system to ensure that every child in every school regardless of wealth has access to a top-notch education," Ellis said in a statement.

The attorney general's office declined to comment.

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PERRY'S TECH FUND SHOWS $6M IN POTENTIAL LOSSES

Gov. Rick Perry's pet fund that gives taxpayer dollars to high-tech Texas startups is leaving room for $6 million in potential losses due to troubled investments, according to a new state report.

The allowance for bad debts is a drain on the value of the Texas Emerging Technology Fund, which Perry calls an economic sparkplug but that critics have blasted because of its performance and politics. An annual report released last week shows that barring the state getting its money back from failed projects, the fund now stands at $2.4 million above what the state has put in down from $4.6 million a year ago.

Employment levels also fell at more than 130 companies in the fund, but a true employment picture is unclear because several startups didn't submit new figures.

It makes for a muddled snapshot of the tech fund that Perry launched in 2005. Lawmakers started budget talks in January with no new funding for the program that has absorbed criticism over accountability and transparency.

Perry spokeswoman Lucy Nashed said investments in startups take time to mature and that massive hiring is not the chief goal of the tech fund, which Perry has trumpeted as one of his signature economic development initiatives as governor.

"These early stage companies are focused on getting their technologies off the ground, and over time have the potential to become bigger job creation engines," Nashed said.

The report is not without bright spots. The tech fund made $3.2 million from selling assets in 2012, which is money that would otherwise boost the fund's value. Outside investment in tech fund companies also rose by 29 percent, and Perry's office points to that so-called "follow-on funding" as a barometer of whether the fund is making smart choices.

Perry calls the tech fund a "strategic priority" in the proposed 2014-15 state budget that he sent to lawmakers last week. He is asking for another $132 million to hand out to more companies, but budget-writers in both the House and Senate appear to be waiting for Perry's office to make a fresh case. Budget drafts in both chambers include no new tech fund money.

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PERRY AIRS RADIO ADS TO ATTRACT CALIFORNIA BUSINESSES

The Education Committee has referred to the full Texas Senate a measure allowing local school districts to decide how much they want STAAR exam results to count toward high school students' grades.

Texas law requires that scores on the State of Texas Assessment of Academic Readiness exam count 15 percent of high school students' grades in core courses.

But the rule has been widely criticized by parents and district superintendents. It has been suspended each of the first two years the STAAR test has been administered.

Education Committee Chairman Dan Patrick proposes allowing local school districts to decide if, and how much, they want STAAR results to factor into final grades from zero to 15 percent.

The committee voted unanimously Thursday to send the bill to the Senate.

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QUOTE OF THE DAY:

"Judge Dietz is right to recognize that those in control of the Capitol have turned their back on our most precious assets our children for years." Sen. Kirk Watson, D-Austin, on a Travis County district judge declaring Texas' school finance system unconstitutional.

Topics: Capitol Almanac

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