Law & Courts

Texas Judge Rules Funds Not Enough

By David J. Hoff — September 21, 2004 5 min read

A Texas judge declared the state’s beleaguered school funding system unconstitutional last week, largely because it fails to close the achievement gap between white and minority students.

In his comments before handing down the ruling Sept. 15, District Judge John Dietz said the state’s cap on property-tax rates prevents Texas from raising enough revenue to ensure all students reach state-established achievement levels.

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“If the educational gap were completely closed, then Texas would be wealthier and would spend less in real dollars on prisons and the needy than it does today,” the judge said. “The solution seems obvious. Texas needs to close the education gap. But the rub is that it costs money to close the educational achievement gap.”

The case has been closely watched nationally and is part of an upswing in school finance litigation. Currently, almost half the states face such lawsuits or are responding to court orders to fix their systems.

Ruling only minutes after hearing closing arguments in a five-week trial in Austin, Judge Dietz said Texas failed to raise enough money to provide “an adequate suitable education,” as promised in the state constitution.

He also found that the state’s cap on property-tax rates failed to meet a separate constitutional guarantee that districts have “meaningful discretion” in setting their tax rates.

The judge promised to issue a written injunction by the end of the month that would prohibit the state from relying on its school finance system after Oct. 1, 2005.

Enforcement of that order will likely be put on hold, however, while the Texas Supreme Court considers the state’s appeal of the case, which state officials promised to file almost immediately after the judge ruled.

“Because this is a critical matter of statewide importance, and because the students, parents, school districts, and taxpayers need closure on this matter, we will urge the Texas Supreme Court to hear the school finance case at the earliest possible date,” state Attorney General Greg Abbott said in a statement.

‘Major Victory’

Judge Dietz’s decision is the latest in a lengthy history of school finance litigation in the Lone Star State.

The state set up its current school finance system in 1993 after the state supreme court ruled that the previous system didn’t meet the Texas Constitution’s guarantee of an efficient education. The main problem with the system, as the court determined then, was its inequitable distribution of funds.

Under the current system, wealthy districts must share portions of their property-tax receipts with poor districts. The so-called Robin Hood system also limits local property-tax rates to $1.50 per $100 of assessed value.

In West Orange-Cove Consolidated School District v. Neeley, more than 330school districts joined civil rights activists in claiming that the system didn’t raise enough money and failed to distribute it equitably.

“It was a major victory,” Wayne R. Pierce, the executive director of the Austin-based Equity Center, a coalition of 652 Texas school districts, many of them plaintiffs in the case, said about last week’s ruling. “There’s no other way around it.”

According to a lawyer who worked for the plaintiffs, the judge’s remarks about providing enough funding to close the racial achievement gap are unique among those coming from the bench in the history of school finance litigation in the state. Previous cases, and rulings, focused on the amount of money available for each child and whether it was equitable for poor and minority students, said David Hinojosa, a staff attorney for the San Antonio-based Mexican American Legal Defense Fund, one of the plaintiffs.

“He really gets it,” said Pascal D. Forgione Jr., the superintendent of the 78,700-student Austin Independent School District, which is part of the coalition of districts suing the state. “If we don’t address the demographics and . the achievement gap, our economy is going to suffer.”

And those demographic changes are happening quickly, Mr. Forgione said. In the Austin district, the student poverty rate has risen from 48 percent to 58 percent in the past four years. Students from racial and ethnic minorities account for almost 70 percent of the district’s enrollment, he said.

Economic Argument

In his statement announcing the ruling, Judge Dietz relied heavily on a state demographics report that predicts the losses to the Texas economy if it doesn’t close the achievement gap.

“If we could close the gap in educational achievement just halfway by 2020,” he said, citing the report, “then Texans would be wealthier than [they are] today in real dollars, spend more money for our economy, [and] pay more taxes for our government.”

But if the gap persists until 2040, he said, the state’s average income would fall from $54,000 to $47,000 and the high school dropout rate would rise from 18 percent to 30 percent.

Judge Dietz appeared to be swayed, according to one lawyer, by evidence that the state’s early interventions are effective in closing the achievement gap among 3rd graders on state tests.

After that grade level, state aid for teacher training, curriculum specialists, and tutors is trimmed back, and the gap widens, Mr. Hinojosa said.

“When they have provided more resources [up to 3rd grade], you have a small gap,” Mr. Hinojosa said. “When they haven’t provided the resources [in upper grades], you see a big gap.”

Legislative Solution

State leaders responded to Judge Dietz’s decision with promises to come up with a solution before the state supreme court acts.

“Today’s ruling . confirmed what many of us long suspected, that the current ‘Robin Hood’ school finance system fails to meet constitutional standards,” Speaker of the House Tom Craddick said in a statement.

Mr. Craddick asked Gov. Rick Perry to declare school finance an emergency measure, which will give the topic top priority when the legislature convenes in January.

In his own statement, the governor said he would prefer that the legislature solve the problem rather than the courts, but he didn’t specify whether he would declare the issue an emergency.

The legislature failed to pass a school finance overhaul in its 2003 session and again in a special session last spring. (“‘Robin Hood’ Still Alive After Texas Special Session,” May 26, 2004.)

In this year’s session, the governor, Mr. Craddick, and Lt. Gov. David Dewhurst all agreed to several principles and goals in changes to school finance, including eliminating the revenue-sharing formula and offering property-tax relief.

But even the three Republicans couldn’t agree on what revenues would be tapped to offset the loss of property taxes.

Judge Dietz’s decision last week will give policymakers the incentive to actually fix the system, whether it’s before or after the supreme court rules on the appeal, according to Mr. Pierce of the Equity Center.

“We now have the opportunity to fix this thing,” he said. “We’re going to see to it that everybody is funded at an appropriate level.”

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