School finance lawsuit
The search continues for an equitable finance system

When the 82nd Legislature cut $5.4 billion in public education funding, talk about a new round of school funding litigation began. The talk became a reality Oct. 11 when the Texas Taxpayer and Student Fairness Coalition—a group of 150 Texas school districts organized by the Equity Center—filed a lawsuit challenging the constitutionality of the state’s school finance system.

The basis for the new suit is similar to a West Orange Cove school finance case from 2004. In that case, the school finance system was called into question for not—as required by the Texas Constitution—adequately and equitably funding public education. In that case, presiding Judge John Dietz ruled in favor of the plaintiffs and found that the cap on the amount of taxes school districts can raise through local property taxes removed districts’ meaningful discretion to fund their schools. Dietz also ruled that the system did not generate enough funding to provide the adequate education called for in the Texas Constitution.

Dietz’ ruling was partially overturned in 2005 by the Texas Supreme Court. The court maintained that the system was unconstitutional because it created a statewide property tax, but the court also overruled Dietz’ judgment on adequacy issues. To address this ruling, the Legislature opted in 2006 to lower property taxes to restore meaningful discretion and adopted the target revenue system, a hold-harmless scheme meant to ensure that schools did not receive less funding due to the lowered property tax rates.

The current lawsuit cites the target revenue system and the recent cuts in education funding as the main culprits in creating an inequitable funding system.

The suit also revives the adequacy issues overturned in the West Orange Cove case, but it takes a new spin on the argument by citing civil rights violations and brings the issue of fairness to taxpayers into the fray. This unique angle has not been brought up in prior cases.

Whether these arguments are compelling enough for the courts remains to be seen. Although not official yet, it is expected that this most recent case will also land in Dietz’ court. Regardless of who presides over this case, however, it will likely end up in a challenge before the Texas Supreme Court.

Proceedings on this matter are not expected to begin until summer 2012, with a goal of reaching a decision before the start of the next legislative session in 2013.

Questions? Contact ATPE Governmental Relations.

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Essentials contains legislative advertising contracted for by Doug Rogers, Executive Director, Association of Texas Professional Educators, 305 E. Huntland Dr., Suite 300, Austin, TX 78752-3792, representing ATPE.

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