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Published in Print: December 8, 2004, as Judge’s Ruling Cites Flaws in Texas’ School Finance System

Judge’s Ruling Cites Flaws in Texas’ School Finance System

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A state judge told Texas last week that it has until next fall to fix its school funding system—a change that would likely force the legislature to add billions of dollars to the education budget.

Travis County Chief Judge John K. Dietz had declared in September that Texas’ school aid system was unconstitutional. ("Texas Judge Rules Funds Not Enough," Sept. 22, 2004.)

Last week, he released his much-anticipated final ruling, in which he wrote that the state’s way of paying for its schools “is financially inefficient, inadequate, and unsuitable … because the school finance system fails to recognize or cover the costs of meeting the constitutional mandate of adequacy, or the legislature’s statutory definition of a comprehensive adequate education.”

But the ruling stopped short of setting a specific level of funding to reach adequacy.

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The Nov. 30 court order gives the legislature until Oct. 1 of next year to find a new system to fix persistent inequities in the education funding formula.

The state is appealing the decision. Because of the short time frame given to overhaul the system, lawyers for the state are seeking to bypass the appellate system and go directly to the state supreme court early next year.

Texas now uses a “Robin Hood” formula that requires property-wealthy districts to share a portion of their tax revenues with poor districts. But the system also caps the amount school districts can collect at $1.50 of every $100 in assessed property value.

That cap has become “a floor and a ceiling, denying districts meaningful discretion in setting their tax rates,” the judge wrote.

The ruling echoes arguments made by leaders of Texas’ largest districts when they testified before Judge Dietz in August that they were barely able to afford an adequate education for their students, and were seeing increasing burdens and costs from federal and state accountability laws.

Three separate groups of districts, many with predominantly Latino enrollments, brought the case. They argued that their lack of property wealth did not allow them to raise enough money, and that the state’s formula did not give them enough relief.

David Hinojosa, a lawyer for the Mexican American Legal Defense and Educational Fund who helped argue the case for some of the plaintiffs, said that the judge’s decision reaffirmed that the districts were doing as well as they could with the money they had, but that more money was needed.

“Overall, it is a victory for our children; certainly we still have lingering problem with access to revenue,” Mr. Hinojosa said.

‘No Easy Solutions’

The state is hoping for a speedy appeal to resolve the case, said Debbie Graves Ratcliffe, a spokeswoman for the Texas Education Agency. It’s impossible to tell which way the state high court would rule, she added.

“We’re optimistic we can get a quick appeal to the supreme court,” she said.

The state had argued that the districts had discretionary funds that they used for activities such as athletics that could be redirected toward providing basic education services.

But Judge Dietz rejected that claim. He said the state’s accountability requirements, and its constitutional mandate of adequacy in education, set the funding bar at a higher level than the current $30 billion K-12 education budget could provide—particularly considering the added challenges of educating students who are poor or still learning English.

Last week’s ruling will not affect districts’ ability to issue bonds or take on public debt before the October 2005 deadline.

Regardless of which court takes up an appeal—and when it is heard—the topic of school finance is expected to be a dominant theme when the Texas legislature reconvenes for its 140-day session beginning in January.

But whether lawmakers can find an acceptable solution is unclear. The legislature met in a 30-day special session last spring on school finance, but was unable to agree on a new formula. ("‘Robin Hood’ Still Alive After Texas Special Session," May 26, 2004.) Though various legislative remedies have been debated, and several school finance bills have been filed before the opening session, nobody has found a “magic bullet” that will solve the state’s finance problems, Ms. Ratcliffe said.

“There are no easy solutions left on the table,” she said.

Mr. Hinojosa, the MALDEF lawyer, said he worries that many legislators are more interested in tax cuts for their constituents than in finding more money for schools. “They just want to replace the money received with one tax with another [tax cut],” he said. “Hopefully, they’ll put partisan politics aside and talk about children’s education, which is a priority.”

Vol. 24, Issue 15, Page 21

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