LBJ School News Brief

Courting Disaster—
Education and
Equity in Texas

LBJ School alumna Debra S. Haas (M.P.Aff 1978) is president and principal consultant for Haas Policy Consulting, Inc., an Austin firm specializing in issues related to public education and school finance. This year she is a visiting faculty member at the LBJ School, where she teaches a seminar on public school finance.

The West Orange Cove v. Neeley decision handed down by Judge Dietz in November 2004 is the most recent in a 30-year history of Texas litigation aimed at creating an equitable system of state-supported public education.

To engage in any meaningful discussion of equity as it relates to public education, one must go back 50 years to the words of a unanimous Supreme Court in Brown v. Board of Education, who found that “education is perhaps the most important function of state and local governments.”¹

Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment. In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. Such an opportunity, where the state has undertaken to provide it, is a right which must be made available to all on equal terms.²

Nearly 20 years later, in 1973, the U.S. Supreme Court, in deciding the Texas case San Antonio v. Rodriguez, found that while the provision of a public education must be made available to all children, the financing structure and determination of equitable and appropriate levels of funding was solely a state issue.³ With this decision, the fight over what constitutes an equal educational opportunity returned to the states.

Since 1984, the Texas courts, Legislature and school district plaintiffs have been playing a game of litigious Ping-Pong with school finance. From 1984 to 1995, there were four major Texas Supreme Court decisions and countless other lower court and related decisions handed down in an effort to establish a constitutional standard for equity in Texas public schools. In this same time period, the Texas Legislature passed multiple school finance plans in response to each new court ruling.

The final result, in 1995, was Senate Bill 1, which created a series of options that enabled property wealthy districts to lower their effective property value per pupil to meet a threshold deemed acceptable by the courts while at the same time raising the amount of tax revenue that could be generated by property poor districts. Collectively, these options and their wealth redistribution have come to be known as “Robin Hood.”

In addition to requiring equalization in the ability to tax property and generate revenue, the Texas Supreme Court stipulated that school districts must be able to provide an accredited educational program within the statutory maximum tax rate of $1.50.

Finally, the Court left open the possibility of additional litigation if the state failed to meet the requirements established in the Edgewood IV decision—another landmark public school finance case—or in Senate Bill 1. Specifically, if any of the following occurred, the Court would entertain the possibility of a new round of litigation.

The school finance laws are repealed without a substitution that produces substantial equity.
The laws are amended in a manner that significantly reduces equity.
The Foundation School Program is not sufficiently funded in future bienniums to produce substantial equity.
The $1.50 tax cap on the local M&O tax rate is abandoned or raised without corresponding increase in the guaranteed equalized yield.

Over the next several years following this Texas Supreme Court decision, tax rates and property values continued to rise. As a result, more and more of the cost of equalization was borne by property taxpayers in relatively wealthy districts and less of the cost of education was paid from state revenues.

By 2003, the strain on the system was beginning to show at both ends of the property value spectrum. At tax rates approaching the $1.50 maximum, low-wealth districts were unable to provide all that their students needed, and high-wealth districts were cutting programs in order to comply with the recapture provisions of the finance laws.

In 2004, using the Texas Supreme Court’s requirements from the Edgewood IV case, a large number of districts came together to argue that the system’s ability to provide sufficient revenue to fund a basic education had fallen to a level that should be deemed unconstitutional and unacceptable. The collective plaintiff districts represented virtually every wealth category in the state and once again called the on the courts to review the school finance system in the case of West Orange Cove v. Neeley.⁴

Unlike past school finance cases, the District Court did not find that the structure of the school finance system had failed, but rather, that the levels of funding and service delivery did not meet the requirements of the Texas Constitution. The plaintiffs contended, and Judge Dietz agreed, that tax rates had risen to be so close to the $1.50 statutory cap that districts no longer had any meaningful discretion in setting those rates. The result, wrote Dietz, is that the tax cap has become a de facto statewide property tax.

Perhaps even more important than the Judge’s finding that the tax structure had exceeded the constitutional limit, is his analysis of the state constitution’s requirement that the system of public education must provide each student with “a general diffusion of knowledge.”⁵

The State’s defense of the system rests on the academic accreditation system used to determine student mastery of essential knowledge in core subject areas. If districts meet the minimum passing rates established by the State, then a district is considered to be “academically acceptable.” Judge Dietz concluded that this is a flawed and inconsistent argument and wrote:

[t]hese passing rates were not set to constitute a minimum level of adequacy but rather to ensure that most districts and campuses fell upon the “academically acceptable” side of the line, which is consistent with longstanding practice in Texas. The State cannot on one hand draw the “academically acceptable” line with specific intention of ensuring that the vast majority (if not all) of the districts in Texas fall on the “right” side of it, and on the other hand claim that this line is the measure of adequacy.⁶

In making this argument, Dietz harkens back to the language of Brown. He finds that the facts of the case substantiate that the current system is underfunded and fails to meet the needs of a population in need of increasingly costly educational services. Using testimony from state demographer Steve Murdock⁷ and numerous school officials from around the state, Judge Dietz paints a picture of two speeding trains—the need for the elimination of the property tax as the primary funding source for public school and the need to recognize and address the changing face of Texas. The result is an impending collision of need and cost as these two trains—both on the same track—hurdle toward each other.

Due to what he asserts are egregious shortcomings in the current system, he enjoins the state from the distribution of any funds “under the current finance system until the constitutional violations are remedied.” The injunction is stayed until October 1, 2005, giving the Legislature time to consider its options.

As the 79th Texas Legislature addresses the issue of financing public education, the task before it will be to pull the brakes in time to prevent a head-on collision.

Notes
1. Brown v. Board of Education, 347 U.S. 483, 74 S.Ct. 686, 98 L.Ed. 873 (1954).

2. Ibid., at 493, 74 S.Ct., at 691.

3. San Antonio v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278 (1973).

4. Judge John Dietz, 250th District Court, Austin, Texas, November 30, 2004.

5. Texas Constitution, art. VI, sec. 3.

6. West Orange Cove v. Neeley, 250th District Court, Austin, Texas, November 30, 2004.

7. For additional information on Texas demographics produced by Steve Murdock, see http://txsdc.utsa.edu/, Institute for Demographic and Socioeconomic Research.

18 January 2005

Comments to: lbjweb@uts.cc.utexas.edu

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