Texas Faces New School Finance Litigation

Last Updated: October 27, 2011

This article appeared in the October 2011 Rural Policy Matters.

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This month, a new school funding lawsuit was filed in Travis County Court, supported by over 250 districts in the state. Plaintiffs in the Texas Taxpayer and Student Fairness Coalition (TTSFC) include rural, suburban, and city districts. The lawsuit has been anticipated for some time. (See last year’s RSFN coverage here: www.ruraledu.org/articles.php?id=2586.)

Although the districts were poised to bring this action last year, they delayed to give the Texas Legislature another chance to overhaul the system, which did not happen. Some legislators have said that the legal action will likely prompt legislative action in the next session.

The plaintiffs contend that the current funding system, adopted in 2006 as a temporary remedy to the previous funding lawsuit, is inequitable. After the previous court decision was announced, Texas legislators reduced property taxes and implemented a new business tax. But the revenue from the new tax has never been enough to replace the property revenue for districts.

The temporary system, still in place, contains a ‘hold harmless’ clause that guarantees that student revenue does not drop below 2005-06 levels. Because property taxes bring higher returns in higher-wealth districts, the guarantee has kept their state revenue stream much higher than for plaintiff districts. In contrast, most low-wealth Texas districts have lower school funding now than at the time of the lawsuit, even if their tax rates are high. Currently there is a revenue gap among Texas districts of as much as $7,000 per student.

TTSFC lawyers are asking the court to declare the system unconstitutional and in violation of the state’s equal protection clause. The previous decision states that Texas school districts must have “substantially equal access to similar revenue per pupil at similar levels of effort."

The non-profit Equity Center has organized the coalition of districts wanting to join in the litigation. Their action will eventually be accompanied by a coordinating lawsuit that will be focused on adequacy issues. Equity Center has been involved in all of Texas’ school finance suits since its founding in 1982.

Read more:

Coverage on lawsuit:
Equity Center website:
Editorials on school finance reform in the state:

Read more from the October 2011 Rural Policy Matters.