Texas Court Orders New School-Finance Plan by April

By Lonnie Harp — January 30, 1991 5 min read

The Texas Supreme Court last week upheld a lower-court ruling sending legislators back to the drawing board to create a new finance plan for the nation’s second-largest state school system.

In their unanimous ruling, the justices gave lawmakers only until April to pass an acceptable plan, and until September to put it into effect. Otherwise, the court made clear, it would intervene to rewrite the school-funding system on its own.

The Supreme Court not only upheld the decision by District Judge Scott McCown--who last September had strongly criticized a $528-million reform plan devised by the legislature last year--but even argued that Judge McCown had been too lenient with state officials.3

Judge McCown would have given the legislature until this September to devise and enact a new system. But the Supreme Court last week said Judge McCown had allowed too much time.

Underscoring a statement from their 1989 decision that found the state’s school-funding system unconstitutional, the justices said a solution is “long overdue.”

The April deadline was set by “balancing the need for immediate action against the realities of the legislative process, and desiring to avoid or minimize disruption of the educational process,” the justices explained.

The justices left little doubt about their willingness for court intervention if the legislature’s second attempt at finance reform is also found to be inadequate.

“If the educational process is to be disrupted,” wrote Chief Justice Thomas R. Phillips, “it will be because the demands of the Constitution cannot be further postponed.”

Richards Readies Campaign

After the Supreme Court issued its 1989 ruling, lawmakers had to struggle through four special sessions before finally producing a plan acceptable to Gov. William P. Clements Jr. Lawmakers’ clashes with Governor Clements--who strongly objected to new taxes to finance reform--delayed enactment of the bill, known as Senate Bill 1, until June 1990.

But Mr. Clements, a Republican, left office at the end of the year, and his Democratic successor, Ann W. Richards, has promised to lead the finance-equity campaign. Ms. Rich ards was scheduled to hold a statewide meeting on the issue late last week as a prelude to her own legislative proposal.

Ms. Richards praised the ruling, saying it “reflects what many in public education have felt all along: Half measures, Band-Aids, and pre tense will not educate the children of Texas equally.”

“It will be a difficult and painful process, and we are going to do the job,” the Governor said.

But even with the best intentions, observers argued, the cost of an equitable plan in light of Texas’ fis cal troubles may make it impossible for lawmakers to produce a bill ac ceptable to the court.

“With the new leadership, the chances are a lot better than before, but there still are a difficult set of decisions that have to be made,” said Craig Foster, executive director of the Equity Center, a group repre senting poor school districts.

Analysts estimate that it would take $3 billion in new revenue each year to close the funding gap beL tween rich and poor districts and bring Texas to the national per-pu pil spending average.

Of its $528-million total, SB 1 only contributed about $300 million to erasing inequities, Mr. Foster con tended.

In its 13-page opinion, the SuL preme Court urged lawmakers to be more creative with their next plan.

“The fundamental flaw with Sen ate Bill 1 lies not in any particular provisions but in its overall failure to restructure the system,” Justice Phillips wrote. “Even if the approach of Senate Bill 1 produces a more equitable utilization of state educational dollars, it does not rem edy the major causes of the wide op portunity gaps between rich and poor districts.”

While the opinion does not direct ly suggest what steps lawmakers might take, it offers some hints.

The ruling discusses such options as consolidating some of the state’s 1,052 school districts, consolidating tax bases, and reducing schools’ deH pendence on locally generated prop erty-tax revenue.

The opinion emphasizes the fact that high property values allow wealthy residents to pay lower tax rates and still generate greater rev enue for their schools. Residents in poor areas, on the other hand, pay at generally higher tax rates but pro vide little money for their schools. “To be efficient, a funding system that is so dependent on local ad vaH lorem property taxes must draw rev enue from all property at a substan tially similar rate,” the court found.

By applying the same rates to Lealthy districts that are paid by poor ones, “the system could have hunL dreds of millions of additional dollars at its disposal,” the court said.

“Whether this additional revenue were used to increase the attainable equalized funding level, ease the state’s burden, or lower the tax rate each district must impose, the sys tem would be made more efficient simply by utilizing the resources in the wealthy districts to the same ex tent that the remainder of the state’s resources are utilized,” the ruling Lstates.3’Robin Hood Approach’ (

The court’s decision, which came as no surprise to most observers, drew expressions of regret from the state schools chief and other officials who endured last year’s battle to draft a politically acceptable finance bill. “It is my concern that it will be dif ficult to again reach a commitment on such a sizable amount of public- school funding increases,” said Com missioner of Education William N. Kirby. “With the fiscal conditions facing the state and the nation, that task would appear formidable.”

Mr. Kirby warned that, in light of revenue shortfalls, the court’s deci sion could leave redistribution of ex isting funds as the only realistic al ternative.

“Policymakers will be forced to consider some sort of Robin Hood ap proach which would involve trans ferring funds from property-rich school districts to property-poor dis tricts,” he said. “In my opinion, the financing provisions in Senate Bill 1 would have greatly improved the eq uity of our school-finance system, given appropriate time.”

A version of this article appeared in the January 30, 1991 edition of Education Week as Texas Court Orders New School-Finance Plan by April