Check out Greg Moses' summary in theTexas Civil Rights Review, and also MALDEF's response (scroll down), as well as that of the Statesman's titled, 'Schools need more than tinkering'.
State Supreme Court wants a fix by June 1.
By Jason Embry
Wednesday, November 23, 2005
The Texas Supreme Court declared the state's school finance system unconstitutional Tuesday because school boards lack control over the tax rates they set, handing a partial victory to school districts and prompting what could be major changes to Texas' tax structure.
But the court also ruled that the system does allow enough overall spending on public education to meet the state and federal demands students and teachers face and that money is distributed fairly enough to satisfy the Texas Constitution. Although that decision on overall spending is an immediate setback for school officials who have pressed lawmakers for significantly more money, the high court did warn that the school system is drifting toward an underfunded state.
"The court recognized, as all Texans recognize, that we can and should do a better job of educating students in Texas," said Attorney General Greg Abbott, whose office defended the system in a lawsuit brought by more than 300 districts. "But just because we can do a better job does not mean that the job being done now is unconstitutional."
The court, in its 7-1 opinion, gave the Legislature a June 1 deadline to restructure the tax system, which now relies heavily on local property taxes to pay for public schools. The Legislature is likely to meet in a special session next spring.
In the meantime, the decision will have little immediate effect on the daily operations of the state's $33 billion-a-year school system and its 4.3 million students.
"For the past decade, the Legislature has been shifting the responsibility of funding Texas schools onto local districts and onto the local property tax, but the local property tax can no longer bear this heavy burden," said David Thompson, a lawyer for some of the school districts, including Austin, that sued the state. "The Supreme Court's decision makes clear that it is time for the Legislature to step up to the plate and pay for the high academic standards it has imposed on districts and students."
The court was acting on a ruling last year by state District Judge John Dietz of Austin that the system was unconstitutional for three reasons: because school boards had lost control over their tax rates, because the system lacked enough funding for schools to meet constitutional standards and because districts did not have equal access to money to build and renovate schools.
The Supreme Court did not specifically address the "Robin Hood" nature of the system, meaning the state can continue to require districts that have high property values relative to their student populations to share some of their local tax money with districts that have lower values per student.
But if lawmakers reduce schools' dependence on property taxes to pay for education — a likely outcome of Tuesday's decision — most, if not all, wealthy districts will keep a higher percentage of the dollars they collect, proposals made earlier this year showed.
Forbidden state tax
Under the current school finance system, districts may not set tax rates for the portion of the revenue they use to maintain and operate existing schools any higher than $1.50 per $100 in assessed property value. They may exceed that cap to pay for construction.
Because of a lack of state funding to balance out the local dollars, school districts argued, they have had little choice but to tax at or near the $1.50 cap, robbing them of the tax-setting discretion that prior court decisions have said they must have.
The Texas Constitution forbids a statewide property tax, but the court said Tuesday that that's effectively what the current cap has become. More than 80 percent of Texas students are in districts that tax within 5 cents of the $1.50 cap, including Austin, up from 6 percent of students in 1994.
The court pointed out that districts are spending more than 97 percent of the revenue that would be available if every district taxed at maximum rates, up from 83 percent in 1994.
"The current situation has become virtually indistinguishable from one in which the state simply set an ad valorem tax rate of $1.50 and redistributed the revenue to the districts," said the court's majority opinion, written by Justice Nathan Hecht.
The Legislature, anticipating that the court would order changes in the tax system, tried repeatedly this year to cut property taxes and replace those taxes, dollar-for-dollar, by increasing taxes on consumers and businesses, such as the sales tax and a proposed payroll tax. Most of the plans benefited higher-income Texans, according to legislative analyses.
They never approved a final plan because House and Senate leaders could not agree on whether businesses or consumers should bear the brunt of the increase. But the proposals floated during the regular legislative session and two special sessions generally gave voters the option of adding slightly to their school districts' tax rates — an option intended to make sure communities are able to raise more money if they want.
Some school officials argued that schools would need that extra money just to meet minimum standards on such things as the state tests that students must pass to graduate or be promoted. The court decision warned against that, which school lawyers interpreted as a call for larger funding increases than state leaders have pushed.
"The state cannot provide for local supplementation, pressure most of the districts by increasing accreditation standards in an environment of increasing costs to tax at maximum rates in order to afford any supplementation at all, and then argue that it is not controlling local tax rates," the court's opinion said.
Warning on adequacy
On the question of whether Texas students are receiving an adequate education, Dietz had ruled that there was not enough money in the system overall to provide the "general diffusion of knowledge" that the constitution requires.
But the Supreme Court said in its ruling Tuesday that Dietz did not find that such a diffusion is impossible in the current system, just that the state has not provided enough money to get there.
The court warned that "substantial evidence" suggests that continued improvement will not be possible without significant change, although it did not limit its definition of change to an increase in spending. School district lawyers said the court's warning was another call for more education spending.
Gov. Rick Perry downplayed talk of spending increases.
"The court also made note of an important point: While the $10 billion in increased funding Texas has provided for education since 1999 has had a positive and measurable impact on our schools, it is possible for the Legislature to implement new reforms that will improve student success without necessarily spending additional dollars," Perry said.
The governor did not say when he would call lawmakers back for a special legislative session. The fact that a Perry-appointed commission studying the state tax system held its first meeting Monday suggests such a session is several months away, perhaps after the March political primaries. Perry is among the incumbents running for re-election.
The Supreme Court rejected the state's argument that judges should stay out of this discussion and bow completely to the Legislature on questions of adequate funding for education.
"Had the state won that argument, adequacy would have been off the table forever," said Mark Trachtenberg, a lawyer for school districts. "When the Legislature meets again, it is going to meet knowing it has a constitutional duty to provide an adequate education that is enforceable in the courts."
Next: more litigation?
Dietz had also called the school finance system unconstitutional because some property-poor school districts don't have the same access as other districts to money to build facilities.
School construction is paid for primarily by passing bond initiatives, which rely on local taxes. The state does not attempt to equalize funding to build facilities the way it does for operating expenses such as teacher salaries and utilities.
The court ruled that property-poor districts did not prove that they must have more buildings to educate students in a way that complies with the constitution. That finding might have opened the door to more litigation, one observer said.
"With regard to equity in funding facilities, the court in essence invites further litigation by ruling only that necessary evidence was not presented," said Scott McCown, a former district judge who has ruled on school finance cases. McCown now heads the Center for Public Policy Priorities, which pushes for additional spending on education.
Justice Scott Brister, in the lone dissenting opinion, said the court should not find that school districts are forced to tax at the maximum rate just because some of them do. He also questioned whether school districts, instead of students or parents, should have brought the lawsuit, and he said the majority opinion did not demand the "efficient" system of school funding the constitution requires.
The lawsuit decided Tuesday began in 2001, when a small group of districts sued over the question of whether the property tax cap had become, in effect, a statewide tax. Other districts later joined as the questions of adequacy and fairness were added. The districts that were plaintiffs in the suit included some that had been on opposite sides of prior school finance battles in the courts.
November 22, 2005 CONTACT: David Hinojosa (210) 224-5382
(210) 473-1935 cellular
J.C. Flores (213) 629-2512, ext. 124
MALDEF Decries Latest Decision of Texas Supreme Court:
Ruling Abandons Low-wealth Districts and
Upholds Glaring Inequities in the System
(AUSTIN, TEXAS) More than 16 years after declaring the school finance system
unconstitutional in Edgewood I, the Supreme Court of Texas refused to remedy persistent
inequalities in the present school funding system. As a result, property-poor districts face
the prospect of even greater inequities in a new system that will not contain a property tax
MALDEF represented the Edgewood Districts∗, a group of 22 property-poor
school districts, many of which filed the original landmark school finance suit in 1984.
Despite a trial record consisting of 655 Findings of Fact and 24 Conclusions of
law based on over 7,000 exhibits and testimony from dozens of witnesses, the Supreme
Court refused to address the issues and, instead, deferred to the Legislature’s discretion.
Although the Supreme Court found that the State violated the Texas Constitution by
forcing district’s to tax at the maximum rate, the Court failed to address the gross
inequities in the system.
“MALDEF is very disappointed with the Supreme Court’s ruling,” said MALDEF
President and General Counsel Ann Marie Tallman. “This case is not about money but
rather about lost educational opportunities for the 2 million-plus students attending
schools in property-poor districts. Unfortunately, the Court has failed to act and protect
the interests of those children.”
David Hinojosa, MALDEF Staff Attorney and lead counsel in the case, added:
“Fifty years after Brown v. Board, our undisputed evidence at trial showed that the
quality of education for certain Texas children still suffers as a direct result of which side
of the tracks they live on. Despite the glaring disparities between the haves and have-
nots, the Court refused to confront the issues head on.
He continued: “The lone victory for our districts was that the Supreme Court did
not state that the recapture (wealth-sharing) system needed to be eliminated. With that in
mind, there is every reason for the Legislature to address the inequities in the system
when creating its new school finance plan.”
∗ The Edgewood District consist of the following Independent School Districts: Edgewood, Brownsville,
Edcouch-Elsa, Harlandale, Harlingen, Jim Hogg County, Kenedy, Laredo, La Feria, La Vega, Los Fresnos,
Monte Alto, Pharr-San Juan-Alamo, Raymondville, Roma, San Benito, San Elizario, Socorro, Sharyland,
South San Antonio, United, and Ysleta.
"The fact that the Supreme Court ruled that the system is constitutional does not
mean that we have a quality school system that can support the economic future of Texas.
MALDEF looks forward to working with the Legislature to provide a funding system that
is fair and equitable for all Texas children," commented Luis Figueroa, MALDEF
legislative staff attorney.
A national nonprofit organization found in 1968, MALDEF promotes and protects the
rights of Latinos through advocacy, community education and outreach, leadership
development, higher education scholarships and when necessary, through the legal