Law & Courts

State Finance Lawsuits Roil K-12 Funding Landscape

By Andrew Ujifusa — January 22, 2013 7 min read
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As state budgets slowly recover from several years of economic contraction and stagnation, significant court battles continue to play a related yet distinct role in K-12 policy, even in states where the highest courts have already delivered rulings on the subject.

This year, meanwhile, marks the 40th anniversary of a U.S. Supreme Court decision that was a turning point for the role of property taxes in financing school districts and that continues to complicate fiscal decisions for state policymakers. The 5-4 ruling, in San Antonio Independent School District v. Rodriguez, held that the state did not have to justify the higher quality of education for wealthier districts that might result from their local property taxes.

In a 2008 article for the Virginia Law Review, Judge Jeffrey Sutton of the U.S. Court of Appeals for the 6th Circuit, based in Cincinnati, wrote: “For better, for worse, or for more of the same, the majority in Rodriguez tolerated the continuation of a funding system that allowed serious disparities in the quality of the education a child received based solely on the wealth of the community in which his parents happened to live or could afford to live.”

The 1973 decision has fragmented the fight over the intertwined issues of funding adequacy and equity, said Wade Henderson, the president and chief executive officer of the Leadership Conference on Civil and Human Rights, based in Washington.

“We are left to battle in the state courts primarily over whether the funding formulas used by schools and by the states are constitutional in providing that kind of meaningful access,” he said.

Since the 1970s, lawsuits filed in 45 states have challenged the constitutionality of school finance systems, according to the National Education Access Network, a research group that tracks lawsuits related to education finance and equity based at Teachers College, Columbia University.

Texas’ current dispute is among the latest—and largest. Following the legislature’s decision in 2011 to cut K-12 aid by $5.4 billion, roughly two-thirds of the state’s school districts filed suit. The case is now before state District Court Judge John Dietz, although it is ultimately expected to reach the state supreme court.

The Texas Supreme Court also ruled on school funding in 1989 and 2005. In both of those cases, the court directed the legislature to change parts of the K-12 funding formula.

Gaps in local resources continue to play a part in the current trial. Judge Dietz told lawyers for the state earlier this month to redo a wealth-gap study that underestimated the funding differences between low- and high-wealth districts.

DOCKET UPDATE

School funding lawsuits continue to bedevil several states still recovering from the economic downturn that began in 2007. The suits are at various stages, and concerns about the courts’ role in education finance have emerged.

Arizona
On Jan. 15, the Arizona Court of Appeals said that lawmakers were wrong to deny school funding increases to account for inflation. The court ruled that legislators did not follow a ballot measure approved by voters in 2000 that mandated K-12 funding increases for inflation.

Texas
A District Court judge is presiding over what began as four separate cases brought by hundreds of districts against the state after the legislature cut $5.4 billion from K-12 aid during its 2011 session. Districts allege that the structure of the current system creates inequalities between school systems based on wealth, and that the state has not provided the “efficient system” of public education as mandated by the state constitution.

Kansas
State Republican lawmakers indicated that they are considering changes to the state’s constitution in order to strengthen the state legislature’s power over K-12 finance and limit the state supreme court’s oversight. The move could be a significant counterpoint to a U.S. District Court ruling Jan. 11 that the state’s funding system is unconstitutional.

Colorado
Lawmakers and others are waiting for the state supreme court to rule in the Lobato v. State of Colorado case that could mandate an increase in K-12 spending by the state by anywhere between $2 billion to $4 billion annually.

Washington
Less than a year after the state supreme court ruled in McCleary v. State of Washington that the state’s K-12 funding system was constitutionally inadequate and needed to be fixed, the state’s chief justice claimed lawmakers had not done nearly enough to remedy the problem. The impact of satisfying McCleary on the court’s terms could cost the state an additional $1.4 billion in the 2013-15 budget cycle.

SOURCE: Education Week

Texas Budget Issues

The legislature is unlikely to overhaul the K-12 finance system until after the state supreme court rules on the case, which is a combination of four previous suits. School funding advocates say even if the court rules for the districts in the case, it won’t necessarily solve the long-term problem.

“Texas needs a more equitable school finance system, or adequate school finance system, that grows with the population. And for that, you need a revenue base that grows with the population,” said Clay Robison, a spokesman for the Texas State Teachers Association, a 68,000-member affiliate of the National Education Association.

Since the 2011 cuts, which amounted to roughly $500 per student, Mr. Robison said, Texas schools have lost 25,000 employees, including 11,000 teachers.

Gov. Rick Perry, a Republican, has defended Texas’ school funding during his tenure. On Jan. 9, Mr. Perry told the Fort Worth Star-Telegram that despite the 2011 cut in state aid, state funding for schools increased 70 percent overall from 2002 to 2012, while enrollment grew only 23 percent.

“So I think under any scenario over the last decade,” he told the Star-Telegram this month, funding for public schools “has been pretty phenomenal.”

Experts testifying for the state in the finance case have said that higher school funding doesn’t necessarily translate into higher test scores. University of Missouri economist Michael Podgursky told the court last month that there is greater variation in test scores within Texas districts than between them.

The state supreme court may try to address inequities between districts, while not infringing on the legislature’s prerogative when it comes to total funding levels, said Sandy Kress, an Austin, Texas, lawyer and former education aide to President George W. Bush who helped write the federal No Child Left Behind Act.

“A lot of other people were left hat in hand in the last legislative session, too,” he said, referring to advocates on issues other than education.

Constitutional Change?

In Kansas, a district court ruled Jan. 11, in Gannon v. State of Kansas, that the K-12 finance system violates the state constitution, and the court prohibited the state from making further cuts to its per-pupil funding level.

As in Texas, Kansas’ most recent major supreme court ruling on school funding took place in 2005. In Montoy v. State of Kansas, the state high court required legislators in two separate rulings to increase spending to a specified level. The Gannon case stems from allegations that lawmakers have not ultimately made the funding increases prescribed by the court in the Montoy ruling.

The state plans an appeal of this month’s decision and cites the economic downturn as necessitating budget cuts. And Kansas Senate President Susan Wagle, a Republican, told the Kansas City Kansan that lawmakers will consider amending the constitution to give the legislature tighter power over K-12 funding.

“We believe they should not be appropriators and that that role should be clearly left in the hands of elected officials,” Ms. Wagle said of the three-judge district court panel.

Abiding by the panel’s ruling would mean a $440 million increase in basic state K-12 funding, from roughly $3,800 per student to $4,500.

The talk of changing the state constitution illustrates how the ramifications of school funding suits in Kansas go beyond just technical issues of finance, said Mark Tallman, the assistant executive director for advocacy for the Kansas Association of School Boards, which did not join the plaintiffs in the case but supports the district court’s recent decision.

“It’s an even more negative reaction,” Mr. Tallman said of the Gannon decision, compared with the Montoy rulings eight years ago.

The supreme court in Washington state, which unlike Texas’ highest court has already ruled in its most recent school funding case, had a message last month for legislators: Get moving.

The K-12 finance system in the Evergreen State has been up in the air following a landmark ruling by the supreme court in January of last year, when the judges found, in McCleary v. State of Washington, that the state’s methods of school funding were inadequate as defined by the state constitution. The court gave lawmakers until 2018 to fix the problem.

The state filed an update with its supreme court in September that detailed the state’s response so far. But in a Dec. 20 court order, Chief Justice Barbara Madsen responded that the state had not done enough to begin fixing the funding inadequacy.

She said that just as students must meet periodic academic benchmarks in school, “the state should expect no less of itself than of its students.” The court required the state to file a detailed five-year plan with the court at the end of the 2013 legislative session.

Washington State Muddle

Meanwhile, in November, Washington state voters approved a ballot initiative that will require a state tax increase to win either a two-thirds vote in the legislature or voter approval. Then, Democrats’ hopes of unified control of the state government crumbled in December, when two senators joined with Republicans to form a majority coalition in their chamber, resulting in a divided government. (Voters had kept the state House of Representatives Democratic and elected Jay Inslee, a Democrat, as their new governor.)

In the face of potential political gridlock, Sen. Rodney Tom, one of the two Democrats in the new Senate coalition, has suggested the state eliminate its Guaranteed Education Tuition program, which is similar to so-called 529 plans that lock in present-day higher education costs, to free up cash for K-12.

The legislature’s lead budget writer, Rep. Ross Hunter, a Democrat, previously had proposed an increase in state property taxes for redistribution to districts as part of a revenue-neutral “levy swap” with districts to boost school funding. Mr. Hunter estimated that the additional cost of the McCleary ruling to the state for the 2013-15 biennial budget alone would be $1.4 billion.

Legislators in Washington state may have to consider parceling out several noneducation state duties to city and county governments in the future, said another Democrat, Rep. Reuven Carlyle.

“We can’t have it all, in terms of the state providing the depth of equitable funding across every category, and have public education be the paramount duty … without something giving,” he said.

A version of this article appeared in the January 23, 2013 edition of Education Week as State Finance Lawsuits Still Roiling Landscape


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