AUSTIN - The tug of war over how Texas pays for its schools flared anew Thursday.

A group of mostly poor, rural school districts went to court to reopen the suit, arguing that property-wealthy districts have been allowed to siphon millions of dollars from the state's school finance system.

Legislative leaders who fashioned the current funding law rejected the complaints and said they expect the state to prevail in the latest legal fight.

In a petition filed in state District Court, 126 districts assert that their students are being deprived because of unfair funding advantages for wealthier districts.

At issue is an estimated $486 million since the finance system was last revamped in 1993.

"The Legislature has handed out half a billion dollars to rich school districts, mostly over the last four years," said Austin lawyer Buck Wood, who represents the low-wealth districts.

"This money has been thrown at districts with less than 5 percent of the kids," he said, while many districts with less wealth have had to scramble to find enough money to educate their students.

The petition names the state, not any high-wealth districts, as the defendant. Attorneys for those districts could not be reached for comment.

The petition was filed with state District Judge Scott McCown of Austin, who has presided over the state's long-running school finance case.

Most of the 126 school districts are small and rural. Among those near Dallas-Fort Worth are Alvarado, Burleson, Italy, Kaufman, Terrell and Weatherford.

Three urban districts also are taking part: Corpus Christi, El Paso and San Antonio. No Dallas County districts are involved.

The last major decision in the school finance fight occurred in January 1995 when the Texas Supreme Court upheld a massive funding law approved by the Legislature. A key part of that required high- wealth districts to share their property taxes with the rest of the state.

This year, 86 high-wealth districts sent about $365 million to other school districts.

Judge McCown was asked to reopen the case by the low-wealth districts, which were intervenors in the original suit filed in 1984.

The petition says high-wealth districts have received preferential treatment, such as being allowed to keep more local property tax revenues than originally intended. The petition also cites the large number property tax exemptions that have been granted to businesses.

"The granting of school tax exemptions, through the back door, for everything from country clubs to mega-millionaire owners of professional sports franchises must stop," the districts said in a statement.

"These private wealthy concerns and individuals are enjoying an unconstitutional loophole and are not paying their school property taxes."

Reaction to the court petition from legislative leaders generally was critical.

Senate Finance Committee Chairman Bill Ratliff, R-Mount Pleasant, who wrote the 1993 school finance law, said studies have shown Texas now has one of the most equitable school funding systems in the nation.

"I don't think they recognize the realities of what the courts might do," he said, noting that the state Supreme Court narrowly approved the current "share-the-wealth" funding system.

"They might actually lose ground at the Supreme Court."

Mr. Ratliff said in addition to more equitable funding, the Legislature also approved $360 million for school facilities - with most of that going to low-wealth districts.

"They only look at the negative side of the ledger, not the positive side," he said.

House Public Education Committee Chairman Paul Sadler, D-Henderson, said the Legislature has to consider the financial needs of all districts, not just those saying they don't have adequate funds.

"We have to view the system as a whole, we can't ignore one group for the other," he said. "We have to look at needs, not only of low- wealth districts but also [of] mid-wealth districts, rapid-growth districts and wealthy districts."

Mr. Sadler said the only way to have absolute equity is to get away from a system that relies so heavily on local property taxes. Public schools in Texas are funded through a combination of property taxes and state aid.

Mr. Sadler wrote a bill in 1997 that would have replaced a substantial portion of school property taxes with a variety of other taxes on businesses and services. The measure passed the House but died in the Senate.

The current system is as fair as possible given its reliance on local property taxes, Mr. Sadler said.

"I think we will win this latest challenge, because we have done a good job of maintaining equity standards in our finance system," he said.

Lupe Gonzales, superintendent of the Mission school district - one of the plaintiffs - disputed that, saying flaws in the system have "progressively eroded" the equity standards set by the state Supreme Court.

In addition, he said, the state has "failed to keep pace with the costs of providing the minimum educational system required by the [court] session."

The state attorney general's office, which will defend the funding system in court, declined to comment, saying it had not seen the petition.

Mr. Wood said the districts will not seek immediate relief from the courts, and he pointed to possible negotiations with the Legislature before its next session beginning in January.

But Mr. Ratliff said he is not inclined to negotiate.

"They are trying to put a gun to our heads, and I don't respond very well to intimidation tactics," he said. "My inclination is to let them see if they can do better in the courts."

Public school funding this year totals about $21.5 billion. Nearly $11 billion is local property taxes, $9.7 billion comes from the state and $719 million is federal aid.

© 1998 The Dallas Morning News All Rights Reserved Terrence Stutz / Austin Bureau of The Dallas Morning News, 05-08-1998. ©1998 The Dallas Morning News