Education Funding

Districts File Lawsuit Against Texas’ School Finance System

By Bess Keller — April 18, 2001 3 min read

Four Texas school districts that were forced by state law to share their tax revenue with poorer districts have challenged the education finance system in state court.

In a lawsuit filed April 9, the districts argue that the system violates the Texas Constitution by essentially forcing many districts to levy the maximum property tax allowed by the state in order to pay for school programs. That, in effect, creates a state property tax, which is prohibited by the state constitution, the lawsuit states.

“The inadequacy of state funding has caused more and more reliance and overreliance on local property tax, which means school districts will be driven to the maximum rate to support that system,” said John P. Connolly, the president of the Texas School Coalition, a group of 70 districts that are on the giving end of the state’s equalization formula.

The finance system, established in 1993, has been nicknamed the “Robin Hood” law because it shifts money from richer districts to poor ones. Under that law, 84 districts are currently required to turn over a portion of their property-tax revenue to balance funding between property-rich and property-poor districts.

Initially, the wealthy districts could raise more money by hiking their property-tax rates. But several have reached the state-imposed cap of $1.50 per $100 of assessed value, and others are close. Without more money, they may have to cut services to students, some district leaders predict.

“We’re looking at having to reduce, maybe even eliminate, elementary school Spanish and a literacy program, and elementary music and art are under scrutiny,” said Wilburn O. Echols Jr., the superintendent of the Coppell Independent School District.

The 9,400-student district in the Dallas suburbs is one of the four plaintiff districts. The other three are La Porte in the Houston area and Port Neches-Groves and West Orange-Cove in southeastern Texas.

Statewide, about 40 percent of the state’s more than 1,040 districts—including many property-poor ones—are within 6 cents of the cap.

Signed on to the suit as intervenors—meaning they are official supporters of the legal challenge—are 36 additional school districts.

Mr. Connolly, the superintendent of the 6,000-student Highland Park district, located in an enclave city surrounded by Dallas, said the suit aims to raise the level of funding for all Texas districts by getting the state to kick in more aid. The group is attempting to make that argument to property-poor districts, he added.

“The issue is as much one for property-poor districts as property-wealthy ones,” he argued. “If and when we are successful, most [state] dollars will go to poor school districts.” The suit was the second in a matter of days to challenge the school finance system. On April 5, four taxpayers filed a suit in state district court against the Dallas and Highland Park districts, where they live, seeking to prevent them from collecting property taxes.

Like the districts, the taxpayers argue that the state’s finance plan relies on what is in effect an unfair and unconstitutional property tax.

Mr. Connolly said the timing of the districts’ suit—before the legislature ends its biennial session this month—was meant to prompt not only an overhaul of the system for the long term, but also an infusion of money over the next two years.

Study Likely

Legislative leaders, who had been anticipating the districts’ lawsuit for months, have called for a committee to study school finance before the 2003 session, and have said no change to the plan is likely before then.

Members of the House of Representatives face the overhaul with some wariness. Four years ago, a House proposal that would have raised the state’s share of school spending to 80 percent, from the current 45 percent, failed in the Senate.

Texas has largely bucked a national trend that shifts more responsibility for school funding from the local to the state level. Even so, it has significantly reduced the spending gaps between districts, following a national move toward greater equity.

John H. Augenblick, a Denver-based consultant who advises state legislators on school finance matters, said the plaintiff districts may not have an easy time arguing that current funding is inadequate, given that some national studies and many Texans have proclaimed that the state has made considerable progress in raising student achievement.

“For somebody to argue that it’s an inadequate amount in the face of all the supposed evidence that kids [in Texas] are doing great is pretty tough,” he said.

A version of this article appeared in the April 18, 2001 edition of Education Week as Districts File Lawsuit Against Texas’ School Finance System

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