According to this recent article, five years ago HISD started charging out-of-district students a tuition for enrolling in HISD schools. Did the decline in enrollment really surprise them? Due to the decline in enrollment, HISD started losing money, and they're now considering getting rid of the tuition to HISD's schools.
First of all, thank goodness they're lowering barriers to education. I highly suspect that when this policy was passed five years ago, long term economics benefits were not considered--that is, making education more affordable for children now will allow them to contribute more to the economy in the future. There are high pay-offs to lowering barriers to education, but they take a pretty long time to come. Still, as a general policy, charging such tuitions at the primary and secondary education levels is probably a bad idea.
The first issue that comes to mind, however, is that there may be free riders from other districts. That is, other districts may severely lessen funding to their educational programs, and lessen their taxes, if they know their students are going to HISD for their schooling. The possible effect? Cost of living in surrounding areas goes further down, those surrounding areas reap the benefits of higher population growth (and the longer term benefits of an education populace), and depending on the elasticity they may still come out ahead financially.
Then again, transportation is a big issue, unless the surrounding areas use their educational funding to transport their children across district lines.
Side notes: The article refers to HISD schools as "elite." Pardon my skepticism. And, when evaluating the unknowns of what will happen with the policy (the article mentions a board member worried that neighboring districts will send their problem children to HISD), why not just look at the numbers from recent history (five years prior)? Look at the number or percentage of problem children (however the board member my define that term; whatever she's worried about) before and after the previous policy change. There may be none, but if there is, find out how much those extra problem children cost the district, and do a basic cost-benefit analysis. I just hope they consider longer term factors as well.