AUSTIN -- With pre-adjournment deadlines closing in, legislative leaders struggled Tuesday to break a school finance impasse that injected new uncertainty into the Legislature's final week and rekindled predictions of a special session.
A day after a major education measure was brought down on a point of order, lawmakers conducted rolling negotiations to try to devise a plan to channel $4 billion in education cuts to the more than 1,100 Texas school districts.
"Because school districts must set budgets well in advance of the beginning of the school year, I believe that passing a final school finance plan out of the Legislature still remains of the utmost importance," Senate Education Committee Chairwoman Florence Shapiro, R-Plano, said in a letter to fellow lawmakers.
The school finance issue was tied to the Legislature's emerging two-year state spending plan and lawmakers' efforts to push through a related nontax revenue measure that helps fund the budget.
Never miss a local story.
"It's essential to the budget," said Rep. Lon Burnam, D-Fort Worth. "If we can't get that done, it's likely we'll have a special session."
Gov. Rick Perry said he is confident that lawmakers will resolve the setback over school finance and adjourn by midnight Monday so he won't need to call them back to Austin.
"I'm pretty optimistic about getting the budget, and school finance is obviously part of that," Perry told reporters at a bill-signing ceremony.
"People are still talking and working toward a solution," he added, predicting "that when the 31st rolls around, we'll be finished with our business and go home."
Perry said he was on the phone with House Speaker Joe Straus and others in search of a solution.
Shapiro and other lawmakers, including House Public Education Committee Chairman Rob Eissler, R-The Woodlands, also held talks with members of Perry's staff and planned to meet into the evening to discuss a deal.
The drop-dead point for making a deal was unclear, but there's no question that critical deadlines for passing bills are approaching fast.
Shapiro told the Quorum Report about 9 a.m. Tuesday that "we've got 24 hours to make a decision," but some legislative officials said lawmakers could find a way to pass a school finance bill as late as this weekend.
Shapiro and Eissler are pushing competing school finance plans. Rep. Scott Hochberg, D-Houston, one of the House's leading experts on school finance, has also proposed one.
House and Senate budget negotiators plan to meet Thursday to give final approval to a delicately crafted budget agreement that would reduce state spending by $15 billion over the next two years.
The 2012-13 budget, which would require approval by the House and Senate, calls for $4 billion in reductions in state education.
The evolving school finance plan would implement the cuts by setting new funding formulas to distribute the reduced package of $38.6 billion in state education assistance to school districts, including those in North Texas.
If lawmakers can't reach agreement on a school finance plan, education funds would be distributed to districts under the current formulas at prorated levels to correspond with the funding cuts.
The money would likely be exhausted by April 2013, school finance experts say. The next session of the Legislature, which convenes in January 2013, would then have to approve a supplemental budget to continue funding.
Schools would have to make up the deficit locally, using taxes, fund balances or other means.
North Texas school officials say they are anxiously watching the debate as they try to make plans.
"Right now, we'd just like to know something," said Hank Johnson, chief financial officer for the Fort Worth school district.
Staff writers Aman Batheja and Eva-Marie Ayala contributed to this report.
Dave Montgomery is the Star-Telegram's Austin bureau chief. 512-476-4294