Texas Districts Prevail in Ruling; Appeal Will Follow: Rural School & Community Trust

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Texas Districts Prevail in Ruling; Appeal Will Follow

Last Updated: May 30, 2013

This article appeared in the May 2013 Rural Policy Matters.

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Texas Districts Prevail in Ruling; Appeal Will Follow

A massive school funding case in Texas ended its first phase in early February when Texas District Judge John Dietz ruled, immediately following closing arguments, that the state’s school funding system is unconstitutional. School finance experts across the country have called it one of the most sweeping decisions ever.

The legal challenge was brought by a number of parties, some with competing interests. Those coalitions included groups of small and rural districts, wealthy districts, and property-poor school districts with large concentrations of low-income students and English-language learners. Texas has more than five million public schools students, and plaintiffs representing over 600 school districts are responsible for educating three-quarters of those students. (Editor’s note: See previous RSFN coverage with details about the parties here.)

Lawyers for state officials claimed in court that districts have plenty of money and that inefficiency, not funding levels, is the problem. “The system did not collapse... Perhaps it become more efficient,” claimed Assistant Attorney General Nichole Bunker-Henderson.

The state has already announced plans to take its arguments to the Texas Supreme Court. That will likely take at least a year, by which time there could be new appointees to the high court.

The claims in the case reflect the complexities of Texas’ school funding system. Judge Dietz noted: “I have to say, there are 26 million Texans, and I doubt there are 26 people in this state who understand this school finance system.” Texas has no state income tax and a constitutional prohibition on a state property tax.

Following the last school finance ruling in 2006, the state lowered the cap on local property taxes for schools, replaced revenues lost to those reductions with state funding, and froze district spending levels. At that time business taxes were projected to make up for the lost revenue. However, that did not occur as a result of the recession, and last year the legislature reduced state education funding by $5.4 billion.

Many poor districts have claimed the changes to the finance system essentially froze existing inequities among districts. Further, even when poorer districts tax themselves closer to the cap than wealthier districts, they lack the property wealth to generate sufficient revenues to pay for adequate schools.

A dramatic increase in standardized testing accompanied by drastic funding cuts was also referenced by Judge Dietz, who pointed out that schools are being asked to do more with less. The state’s new testing program has seen high failure rates, particularly among at-risk students. According to plaintiff lawyers in the case, 60% of Texas students come from low-income homes; among those students, 47% have failed at least one of the standardized exams. Plaintiffs hope the court ruling will force the restoration of the massive cuts, which would, in part, would help districts reinstate tutoring programs to prepare students for standardized tests.

Texas school finance litigation has been almost a constant element of the school policy landscape in recent years. In 2005, plaintiffs lost an adequacy case. At that time, the state high court found that overall funding was adequate but warned that the finance system needed reforming to remedy a “drift toward constitutional inadequacy.” Low-wealth districts promised then that they would revisit the adequacy question in court.

Legislative response

House Democrats filed a resolution to address school funding immediately following the February ruling.

Save Texas Schools, a statewide coalition supporting public education and revisions to the finance system, organized a rally soon after the House resolution. At the rally education advocates accused the Texas Legislature of waiting to be forced to act rather than affirmatively restoring cuts. Former Texas Education Commissioner Robert Scott was also a speaker at the rally; notably, Scott publicly stated that the state’s testing system had gone too far.

The Texas legislature has begun final work on the state 2014–15 budget which is due in late May. The budget process has demonstrated some renewed commitment to public education.

Texas students might also benefit from the economic recovery; revenues have increased across the board, creating a surplus of $8.8 billion and increasing the Economic Stabilization Fund (ECS) — the state’s rainy day fund — to a projected $12 billion. Much of the debate about restoring education funding has centered on the use of that fund, which is meant for one-time expenses. Using those funds for a recurring expense such as education requires a constitutional amendment. Texas voters will decide that question in November.

Both houses of the legislature have proposed restoring a large portion of the cuts as an initial step, but budget committee negotiators have yet to iron out the differences.

Restoring education funding has competed for attention this session with bills to create scholarship programs for poor students to attend private schools as well as expansion of the charter school system. Groups advocating for both charter and voucher interests were also represented in the school funding suit and were recognized plaintiff-intervenors. Their claims were denied by the court.

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