State seeking review of school finance ruling

school bell tileA district court ruling that the state’s school finance system is unconstitutional could be reviewed by the Texas Supreme Court under a direct appeal request from the Texas Office of the Attorney General. Other parties, including a business group and charter school association, also have asked the Supreme Court to accept their direct appeals of the trial court ruling.

Government Code, sec. 22.001(c) allows an appeal directly to the Supreme Court from an order of a trial court granting or denying an injunction based on the constitutionality of a state statute.

State District Judge John Dietz, in an August 28 ruling, found the state’s system for funding public schools violates the state constitution and has given the Legislature until July 1, 2015, to address the issues in his ruling.

Constitutional issues. The ruling said the state was in violation of two provisions of the state constitution — a provision that prohibits a state property tax and a provision referred to in the opinion as the “education clause,” which charges the Legislature with establishing and supporting an efficient, free public school system.

State property tax. Judge Dietz found a property tax imposed by the funding system to be in violation of Tex. Const., Art. 8, sec. 1-e, which bans state property taxes, because school districts lack meaningful discretion to set local property tax rates. He said current maintenance and operations (M&O) tax rates function as both a floor and a ceiling for school districts because they cannot lower taxes without compromising their ability to meet state standards and are either legally or practically unable to raise rates further. The court said that even if the plaintiff districts raised M&O tax rates to the maximum allowed with voter approval, the additional funds — which are designed for local enrichment — would be needed for basic programs due to inflation, higher performance standards, and state budget cuts.

Adequacy, suitability, and equity. Judge Dietz said the school funding system was in violation of Tex. Const., Art. 7, sec. 1, which calls for a “general diffusion of knowledge” and charges the Legislature with establishing and providing suitable support for and maintenance of an efficient, free public school system. The opinion said the Legislature had failed to:

  • ensure that school districts and charter schools reasonably can provide all students with a meaningful opportunity to learn the essential knowledge and skills reflected in the state curriculum to be prepared for college or a career upon graduation;
  • structure, operate, and fund a system that can accomplish a general diffusion of knowledge for all students; and
  • design a system that gives all districts substantially equal access to necessary education funds at similar tax efforts.

Judge Dietz cited the convergence of three major trends since 2005 that he said have brought the school finance system back under judicial scrutiny: a rapidly growing student population that also is growing poorer and more diverse, the substantial raising of academic expectations and transition to more rigorous testing, and a significant decline in financial support for public education. He said that when adjusted for inflation, funding is $312 per student lower than in 2004 and that of 1,020 districts, only the 259 with the greatest property wealth are able to cover the cost of an adequate education.

The district court ruling came in a case consolidated from lawsuits filed in 2011 by four groups representing more than 600 districts of varying degrees of property wealth.

Other claims. The plaintiffs also included several individual taxpayers, who claimed that the finance system violated the requirement in Tex. Const., Art. 8, Sec. 1(a), that all taxation be “equal and uniform.” Judge Dietz denied the claim, saying that taxpayers in the same school district are taxed at the same rate and that the constitution does not require equal and uniform benefit from taxing.

Judge Dietz upheld the claim of a charter school association that raised adequacy claims similar to those of the school districts but denied a separate equal protection claim based on the lack of facilities funding for charter schools. The court said that because charter schools and districts are subject to different requirements, the Legislature has a rational basis for funding them differently.

A coalition of business interests and school choice advocates also intervened in the case, arguing that greater “qualitative efficiency” could be achieved with reforms such as eliminating the statutory cap on charter schools, allowing more school choice, and reforming provisions that govern teacher compensation, hiring, firing, and certification. Judge Dietz denied the intervenors’ claims, saying there was no precedent for judicial interference in specific questions of education policy.

Both the charter school association and the business and school choice coalition have filed notices of appeal to the Texas Supreme Court. A group of property-wealthy school districts also has asked the Supreme Court to hear its appeal of the portion of Judge Dietz’s ruling related to funding equity.

The state’s case. The state has not yet filed briefs outlining its arguments on appeal. During the trial, the state presented evidence from experts who questioned the relationship between funding and student achievement. The state also argued that districts have control over their own budgets and may be spending on personnel, technology, extracurricular activities, and facilities beyond what is required to provide a constitutionally adequate education.

Read the school finance final judgment here and the findings of fact and conclusions of law here.

by Janet Elliott

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