Texas District Court Rules School Finance System Is Unconstitutional

On August 28, Judge John Dietz1 of the 250th District Court ruled that the method the state of Texas currently uses to finance public schools is unconstitutional in several respects.2 The decision discussed state constitutional deficiencies in the equity of the distribution of educational funding, the adequacy of the amount of funding, and effectively constituting a prohibited state property tax. However, the court found that the school finance system does not violate taxpayer equity under the state constitution. The court has given the Texas legislature the opportunity to correct the constitutional deficiencies by July 1, 2015 before the state is enjoined from distributing educational funds under the current school finance system. The state is expected to appeal the decision to a higher court.

Background

The Texas public grade schools and high schools are funded by a combination of local school district property taxes and state funding. Under the current system, some property tax revenues from the wealthier districts (as considered by total property tax revenues) are shared with the poorer districts. This "share-the-wealth" or "Robin Hood" system has resulted in numerous controversies between the state of Texas and its school districts with respect to the constitutionality of the school finance system. The following summary of litigation and legislation represents only the more noteworthy developments.

Beginning in 1984 when the Edgewood Independent School District (ISD) filed a lawsuit claiming the system was inequitable through the current court challenges, there have been several successful legal challenges by both property-value-poor districts and property-value-wealthy districts. Financial transfers from wealthier to poorer school districts began in 19933 when the Texas legislature finally responded to the Texas Supreme Court's 1989 ruling that concluded there were glaring and unconstitutional funding disparities between poor and wealthy districts.4 The Texas Supreme Court upheld the Robin Hood system and the overall new school funding system in 1995.5

In 2003, property-value-wealthy districts legally challenged the Robin Hood system as inefficient and effectively constituting an unconstitutional state property tax that pushed many districts to raise tax rates to the maximum legal rate. By being forced to impose the maximum tax rate, the districts argued that they had effectively lost the discretion to set their own tax rates. Numerous other districts joined the case arguing that the system was inequitable and insufficiently funded public education. In a trial involving over 300...