Alabama Funding Discrimination Lawsuit Moves Forward

Last Updated: March 30, 2011

This article appeared in the March 2011 Rural Policy Matters.

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After multiple setbacks in the state courts through 2002, Alabama school funding plaintiffs have turned to federal court for relief with a new litigation strategy. The hearing in Lynch v. Alabama, first filed in 2008, began earlier this month in Huntsville. Plaintiffs from rural Lawrence and Sumter counties asked a federal court in the Northeastern Division for Alabama to suspend several provisions of the state’s constitution, claiming that those provisions place severe limits on property taxes, are rooted in historic efforts to deny educational opportunity to African Americans, and continue to severely restrict the capacity of rural and majority black counties to raise revenues necessary for schools.

The lawsuit charges that these provisions are purposefully discriminatory and violate Title VI of the Civil Rights Act and the U.S. Constitution. It alleges that Alabama’s property tax revenues fail to adequately fund K–12 public schools and that this shortfall unconstitutionally shortchanges black public school students. Plaintiffs are asking the court to allow the Governor and Legislature one year to reform the tax code before imposing a complete injunction on the challenged provisions. State attorneys deny any linkage between state property tax policies and discrimination, and say that the students named in the suit cannot show that they have been harmed by the low tax revenues.

The lawsuit raises holdings by the Alabama Supreme Court in a 2004 decision on a higher education desegregation case, Knight and Sims v. Alabama. That case claimed that the tax policies were adopted for segregative purposes and with discriminatory intent. Although the Alabama high court refused to grant the relief requested by the plaintiffs — striking down those constitutional provisions, the finding that the provisions were racially discriminatory still stands. Plaintiff Knight is Democratic State Representative John Knight of Montgomery; he is also involved in the Lynch case.

Alabama’s property taxes are by far the lowest in the nation, and rural instructional expenditures are also among the lowest in the nation. The state is characterized by significant corporate property holdings. The most powerful advocates for low property taxes in Alabama have traditionally been those entities and individuals that hold huge tracts of “unimproved” acreage, primarily large timber tracts.

Property tax restrictions are part of the 1901 state constitution and include constitutional amendments added in the 1970s that further restrict the capacity of localities to raise property taxes, especially in rural areas. Property tax millages are limited, assessment rates are kept artificially low, and local governments must go through a long and arduous series of steps to hold referenda on local property taxes. School boards have no taxing authority. As a result of these restrictions, local governments are forced to rely heavily on sales taxes to fund schools. However, rural counties generate low sales tax revenues, so they often lack the means of raising any significant revenues for schools.

New law sets education spending caps

In other school funding news, Alabama has a new funding law that sets spending caps for education. Supporters say will help reduce the likelihood of “proration” in the future. Proration occurs when revenues fall short of projections and school funding is cut after the state budget has been approved — usually in the middle of the school year.

The cap will be based on a 15-year average, and overages will be used to replenish the state rainy day fund and to create a reserve fund for lean economic years.

This month, Governor Robert Bentley announced a 3% across the board cut in the Education Trust Fund, which provide state funding for K–12 and higher education. Those cuts go into effect this school year. Bentley also released a budget for next year based on higher expected revenues. That budget would not require cuts to teachers, but it underfunds other school costs including non-teaching staffs, maintenance, and transportation. State Superintendent Joe Morton has warned that under the Bentley budget many local school systems will be pushed into deficit spending.

Read more:

Update on funding lawsuit:

Website housing all of the legal pleadings from both the Knight and Lynch cases along with various summaries and updates at:

School funding proration and new spending cap law:

Read more from the March 2011 Rural Policy Matters.