Education

California School-Finance Lawsuit Returns to Court

By Robert Rudy — February 09, 1983 7 min read
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In 1967, John Serrano Sr. was told by his son’s school principal that the boy, then 6 years old, was considered nearly gifted, but could receive a decent education only if the family moved out of East Los Angeles to a wealthier school district.

Mr. Serrano moved his family to the suburb of Whittier, but remained upset enough about the incident to file, the following year, the landmark court challenge that spurred similar litigation seeking school-finance reform in two dozen other states.

Today, John Serrano Jr. is a working adult, but the lawsuit survives. The third and perhaps final chapter of Serrano v. Priest is proceeding almost unnoticed in a Los Angeles courtroom.

The original decision in Serrano, upheld by the California Supreme Court in 1974, declared that the state’s system of paying for public education, based primarily on property taxes, was unconstitutional. In 1976, the state supreme court affirmed its earlier decision and gave the legislature six years to equalize--within $100--the amount spent on each pupil, regardless of where in the state he or she lived.

The six-year period is up, and the plaintiffs are back in Superior Court for what is informally being described as a compliance hearing.

Related Suit

The plaintiffs’ lawyers are also pressing a second, related suit, Gonzalez v. Riles, which is being tried together with Serrano III.

Much has changed since 1976. Owing both to the Serrano decisions and to the enactment of Proposition 13 in 1978, the state’s share of support for schools has doubled.

By last year, the state was supplying about 82 percent of all the money, exclusive of federal aid, spent on California schools. And Proposition 13 virtually eliminated property taxes as a source of funds for education.

But the growth in state support tells only part of the story, the plaintiffs contend. They argue, in general, that many disadvantaged children are still denied equal educational opportunity because the state has not done enough to close the gap between what so-called “high-wealth” districts spend and what poorer districts can afford.

In addition, they claim that the legislature disbursed state “bail-out” funds after Proposition 13 without regard to districts’ needs--exacerbating the disparities between rich and poor school districts.

They are asking that the state be given one year to reach 100-percent compliance with the original court mandate. If, during the one-year period, legislators are unsuccessful in equalizing per-pupil spending, then the plaintiffs ask that a permanent injunction be issued to prevent the state from disbursing money to schools.

The defendants, a group of state officials, claim that the gap between rich and poor has been substantially reduced. They argue that any further equalizing of spending will actually cause more harm than good to many students in both rich and poor districts.

More than 93 percent of the districts in the state are now within the $100 “band” for per-pupil spending stipulated in the 1976 order, the state says. Furthermore, the state’s lawyers contend, the allowable variation should be changed from $100 to $200 to account for inflation. (The state’s per-pupil average is now about $2,500, although a few districts, primarily rural ones with unusually high expenses, spend up to $3,000 or more.)

The equalizing that has occurred in the past several years has been made possible by a process that has come to be called “leveling down.’'

Essentially, it means that in order to make per-pupil spending more equal, large sums of money have been taken from wealthy districts and given to poorer districts, thus reducing the average. (The original intent of the court order was to give more money to poorer districts to bring them up to spending levels already in place for wealthier districts--an objective that was made unreachable by Proposition 13 and the subsequent fiscal crisis it caused.)

Substantial Sums

Lawyers for the defendants, hired by the state department of education with special funds, argue that further leveling down to bring every district within that $100 band would require taking substantial sums from already hard-hit districts to give a few dollars more to slightly poorer districts.

Robin Johansen, of the San Francisco law firm defending the state, cited a study showing that for every wealthy district that relinquishes $500 to $800 per student, other less affluent districts would receive only about $61 per student.

“It would be disastrous for a number of schools,” she said."I don’t think there would be a corresponding benefit that would even come close to making it worthwhile.”

Furthermore, Ms. Johansen said, continued leveling down would hurt many poor and disadvantaged children in so-called “high-wealth” districts that already have experienced substantial cuts.

“It is clear by now ... that most high-revenue districts simply can-not get by with less than they have now,” a defense brief states. “It is no longer a matter of cutting ‘frills,’ but a question of shortening the class day and eliminating basic programs.”

Perhaps the defense’s best psychological weapon in the nonjury trial is its list of witnesses--several superintendents from districts that are considered high spenders but that argue they have been hurt by the leveling down.

In addition, two nationally recognized experts on school finance, Charles Benson and James Guthrie of the University of California at Berkeley, both of whom testified for the plaintiffs at the original trial, have testified that the further action requested by the Serrano plaintiffs will hurt more than help California’s four million public-school students.

“I believe the differences in expenditures among school districts in California are now insignificant,” Mr. Guthrie said in an interview last month. “Given declining enrollment, Proposition 13, and the state’s fiscal circumstances, I believe the state has made good progress. While I think that progress should continue, I do not think the system of school finance in the state of California can withstand another wrenching change.”

Mr. Guthrie acknowledged that there remain some districts that spend well above the state average, but contended that any remedy would be ''either so costly or so punitive as to damage the youngsters in them.’'

“You’d either have to take away from high-spending districts or take away from the state welfare budget,” he added. “The pain is greater than the advantage at this moment.”

Not everyone, however, agrees with the defendants that equalization has been achieved for the most part. “The state hasn’t done as much as you may have been led to believe,” said Richard Rothschild, a lawyer for the Los Angeles-based Western Center on Law and Poverty.

John McDermott, another lawyer for the plaintiffs and John Serrano’s lawyer during the first two trips through the courts, said high-wealth districts have not been hurt that much.

He said state legislators have helped “bail out” high-spending districts with a variety of special funds that he said have totaled nearly $1 billion over the years.

“If a fraction of that had been spent on equalizing, we would have had compliance by now,” he said. “I think the burden [on districts forced to level down to the average] has been imaginary. They’ve actually done better than low-spending districts.”

‘Special Funds’

It is those “special funds” that have become the focal point in the plaintiffs’ case. In a separate brief filed with the Gonzalez suit, the plaintiffs allege that the state has distributed revenues without taking into account district wealth to stabilize funding for districts that would otherwise lose money because of the Serrano decision.

Those funds, in many cases called “add-ons,” include funding to compensate for declining enrollment, certain summer-school programs, meals for needy pupils, development centers for handicapped children, and transportation and maintenance costs.

“By substituting state funds for lost property-tax revenues, the legislature re-enacted and recreated the same spending disparities that existed before Proposition 13,” states the plaintiff’s brief in the Gonzalez case.

Furthermore, argued Mr. Rothschild, the plaintiffs’ lawyer, those add-ons are geared toward past spending formulas more than present needs; he added that it “does not make a whole lot of sense to pay more to some districts because a long time ago they had more property value.”

Ms. Johansen, however, described the somewhat sudden inclusion of Gonzalez and its complex list of non-wealth-related revenues as “novel.’'

“Nothing in the plaintiff’s prior pleading, the Serrano judgment itself, or the decisions of the California Supreme Court implied in any way that non-wealth disparities are unconstitutional,” states the defendants’ brief.

Representatives on both sides agree that the Serrano/Gonzalez court case, which is expected to continue through mid-February at the superior-court level, in all probability will once again wind up in the state’s highest court.

A version of this article appeared in the February 09, 1983 edition of Education Week as California School-Finance Lawsuit Returns to Court

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