The history of San Felipe School District (Texas), 1894-1971, depicts a situation in which Mexican Americans had control of local schools. Established in the Mexican "barrio" of the racially divided border town of Del Rio, San Felipe resisted annexation to the Anglo school district and became an independent school district in 1929. Mexican Americans made up the vast majority of the faculty, staff, and administration. Spanish was used extensively in and around the schools, and Mexican holidays were sometimes occasions for early dismissal. However, the more frequent use of Spanish was at the expense of English language skills. Students and employers alike complained about the poor English proficiency demonstrated by San Felipe graduates. Poverty made it difficult for the district to meet its financial obligations and nearly impossible to expand facilities to meet demand. Restructuring of statewide taxation and funding formulas for Texas schools under the 1949 Gilmer-Aiken Law exacerbated financial problems faced by San Felipe schools. The opening of Laughlin Air Force Base (LAFB) in the district in 1952 could have been the district's economic salvation, since federal funds were allocated locally based on numbers of students at the base. However, the predominately Anglo LAFB students transferred to the Anglo Del Rio district, causing a federal judge to view the situation as segregation and order the two school districts consolidated. (Contains 25 references) (Author/TD)