• by Albert Cortez, Ph.D. • IDRA Newsletter • February 2006 • 

On November 22, 2005, the Texas Supreme Court issued its long-awaited ruling in the West Orange-Cove vs. Neeley case, the latest in a series of legal challenges involving Texas school funding. The court reviewed the earlier state district court ruling issued by Judge John Dietz that found the Texas school funding system unconstitutional for three reasons: (1) the state’s failure to provide sufficient state funding for local school districts to provide “local discretion”; (2) the state’s failure to provide sufficient funding to meet state requirements; and (3) the state’s failure to provide equitable access to funding required to build school facilities.

In a disappointing decision, the Texas Supreme Court fell far short of supporting either adequacy or equity in the Texas school funding system. The ruling simply upheld the lower court’s ruling on the $1.50 tax cap, agreeing that the existing tax cap limited discretion provided to school systems to supplement the level of funding provided by the state. This in turn made the $1.50 ad valorem tax, essentially a state property tax, which is prohibited by the Texas constitution. The court then ordered the legislature to modify the funding plan to address that issue and gave it until June 1, 2006, to adopt the required changes.

The challenge to the $1.50 cap on maintenance and operations was the only portion of the lower court’s ruling that was affirmed by the Texas Supreme Court, as it rejected the majority of the major legal challenges. The state contended that the state legislature had a legally exclusive right to determine what constituted an adequate education. The plaintiffs argued that: (1) the existing state funding system failed to provide an adequate level of funding, including and particularly for students with special needs; (2) growing inequity in expenditures violated legal standards established in earlier Edgewood court rulings; and (3) the state’s system for funding school facilities was both inadequate and inequitable.

The Courts’ Response to Legislative Prerogatives on School Funding

Creatively trying to make all challenges to Texas school finance void, the state’s initial legal position was that decisions regarding adequacy of funding were strictly political issues and not subject to judicial review. This elitist stance was summarily rejected by the Texas Supreme Court. The court noted that while it is the legislature’s role to “make suitable provisions for a general diffusion of knowledge” as required under the Texas constitution, state courts have a legitimate role in determining whether the state is meeting its constitutional obligation to do so.

Referring to its earlier ruling in Edgewood I, the court noted that it had “firmly rejected this view.” Dismissing the state claim that the issue of adequacy was essentially a political question not suitable for judicial review, the court stated: “This is not an area in which the constitution vests exclusive discretion to the legislature, rather the language of Article VII, Section 1 imposes on the legislature an affirmative duty to establish and provide for a system of public free schools. This duty is not commissioned unconditionally to the legislature’s discretion, but is instead accompanied by standards…The final authority to determine adherence to the constitution resides with the judiciary. Thus, the legislature has the sole right to decide how to meet the standards set by the people in Article VII, Section 1, and the judiciary has the final authority to determine whether they have been met.”

The court’s stance on the “legality” of challenges to levels of state funding (i.e., the basic opportunity to challenge legislative decisions regarding funding levels) may prove to be a critical juncture for future challenges to the Texas school finance system. Adequacy challenges brought in a number of other states had been rejected on the basis that, in those states, the legislature did have exclusive prerogatives in defining what was considered an adequate education. By ruling that, in Texas, the courts can and will intervene in such cases, it affirmed that Texas school districts can continue to turn to the courts when the legislature fails to meet its constitutional obligations.

Adequate is Called “Enough”

The Texas Supreme Court went on to overrule the lower court’s ruling that the state of Texas does not provide adequate funding to enable its public schools to meet state mandates. But data contained in the ruling reflect that the court recognized that the quality of education available to many students in the state was severely lacking.

The Supreme Court seemed to acknowledge the trial court’s assessment that the condition of education in Texas was far from adequate. It cited statistics on the number of students failing the Texas Assessment of Knowledge and Skills (TAKS); related the need for more remediation through summer school, remedial classes, curriculum specialists, reduced class sizes, and more math and science teachers; noted a worsening under-supply of teachers, aggravated by high attrition and turnover; observed that Texas was ranked last among the states in the percentages of high school graduates at least 25 years old in the population and that more than half of Hispanic ninth graders and approximately 46 percent of African American students leave the system before the 12th grade; and acknowledged that the unadjusted National Assessment of Educational Progress (NAEP) data (which the court recognized may more accurately reflect college preparation) show Texas sinking to 37th among states.

Given the above litany, one might have concluded that the Supreme Court, like the district court before it, would certainly find the system that provided such dismal outcomes is inadequate and thus unconstitutional.

Astonishingly, after citing fact after fact reflecting Texas’ educational shortcomings, the Texas Supreme Court elected to ignore this evidence and chose instead to focus on a handful of other indicators as “evidence” of sufficient state support for its public schools. Grasping for straws to support its position, the high court noted, “By all admissions NAEP scores, which the district court did not mention, show that public education in Texas has improved relative to other states.”

In that same segment of the decision, the court also stated, “In 2003, Texas ranked first in the nation in closing the gap between African American and White fourth graders in math, and second in the nation in closing the gap between Hispanic and White fourth graders in math and reading.” Implied in those observations is the notion that the Texas funding system can be considered “acceptable” as long it is doing better than other states. This is a rather creative side-stepping of the evidence of deplorable conditions within the state itself.

To further justify its stance, the court proposed: “Having carefully reviewed the evidence and the district court’s findings, we cannot conclude that the legislature has acted arbitrarily in structuring and funding the public education system so that schools are not reasonably able to afford all students the access to education and the educational opportunity to accomplish a general diffusion of knowledge” (emphasis added).

The Warning – Adequate for Now, But on the Brink

After ruling that even these dismal levels of performance were acceptable, the court then attempts to soften its position on the adequacy issue by noting, “While the current system meets the constitutional standard for efficiency and a general diffusion of knowledge, that standard can be violated” (emphasis added).

The high court then warned the state legislature that such a violation may soon be forthcoming, as it observed, “There is substantial evidence that the public education system has reached a point where continued improvement will not be possible absent significant change, whether that change takes the form of increased funding, improved efficiencies or better education.”

Yet the court stated, “But an impending constitutional violation is not an existing one, and it remains to be seen whether the system’s predicted drift toward constitutional inadequacy will be avoided by legislative action to widespread calls for change.”

It reinforced its warning, however, by including its only direct quote of all district court testimony as presented by former Senate Education Chairperson Bill Ratliff who testified, “I am convinced that, just by the knowledge of the overall situation in Texas, school districts are virtually at the end of their resources, and to continue to raise the standards… is reaching a situation where we are asking people to make bricks without straw.”

Funding for Special Student Needs – What Students?

A portion of the challenge to the current funding system included the contention that the state of Texas was not only under-funding general education for all pupils but was particularly under-funding programs designed to provide additional academic support for students with special needs, including low-income students and students whose native language was not English. The district court had agreed with the position that the state’s level of support – particularly for students with special-needs – reflected the system’s overall lack of adequacy.

In its review of the district court record, the Texas Supreme Court stated: “Additionally, the percentage of LEP [limited-English-proficient] and ED [economically disadvantaged] students, who generally cost more to educate, has increased. The FSP [Foundation School Program] provides extra bilingual… and compensatory education allotments… but the attendance weights used to determine those allotments have not increased since 1995.”

It also noted: “In the extensive record before us, there is much evidence, which the district court credited, that…many school districts are struggling to teach an increasingly demanding curriculum, with a growing number of disadvantaged students, yet without additional funding needed to meet these challenges.” The court also stated, “There are wide gaps in performance among student groups differentiated by race, proficiency in English, and economic advantage.”

Without arguing against any of the evidence presented, the Texas Supreme Court essentially ignored the plaintiff’s claims regarding inadequate funding for special needs students, ruling neither for nor against the plaintiffs on this issue. Some legal scholars suggest that failure to issue a definitive ruling on this aspect leaves it open to further challenges.

In the interim, Texas schools are left to their own devices unless or until the state addresses this critical issue. IDRA staff and other expert witnesses presented undisputed evidence that state funding for these special population programs provides only between one fourth and one half of what it actually costs to operate such programs in Texas.

Facilities – Do Buildings Really Matter in Student Achievement?

The state district court ruling issued by Judge Dietz had concluded that the state funding mechanisms in place to help schools cover the cost of facilities was both inadequate in terms of the amount of funding provided and inequitable because over-reliance on unequal property tax bases provided unequal burdens on local school systems. The state attorneys cited evidence suggesting that facilities funding was better than it had been in the past but took a new tack by arguing that the plaintiffs needed to have proven that a general diffusion of knowledge requires that school districts have access to more or better facilities than what was currently available.

The Supreme Court sided with the state and overturned the district court decision regarding unconstitutional inadequacy and inequities in school facilities funding. The court said: “The state argued that disparities in facilities are not proof of inefficiency absent evidence that districts’ needs are similar. They contend that facilities needs vary widely depending on size and location of schools, construction expenses and other variables. We agree [with the state’s position] that such evidence is necessary and lacking. The state defendants also argue that to prove constitutional inefficiency, the intervenors must offer evidence of an inability to provide for a general diffusion of knowledge without additional facilities and that they have failed to do so. Again, we agree. Efficiency requires only substantially equal access to revenue for facilities necessary for an adequate system” (emphasis added).

Unfortunately what constitutes “an adequate system” is not clearly defined – as in other areas – but one can be sure the courts will know it when they see it.

Funding Gap – Supposedly Not as Bad as it Looks

In one of the few areas where the district court and state supreme court agreed, the Texas Supreme Court ruled that growing inequities in funding available to low wealth and high wealth districts were not so large as to be unconstitutional. Noting that, while the equity gap (the difference in the amount of money available to the state’s wealthiest and poorest school districts) had increased since the Edgewood IV ruling, the gap in program funding had not grown so large as to make the system unconstitutional.

Plaintiff experts had presented evidence demonstrating that the gap in funding between the poorest and wealthiest districts has grown from $600 per pupil in 1993 to more than double that in 2003. The gap has grown in part because the equal return for tax effort promised in state funding plans was never provided. This means that for every penny of tax effort allowed the wealthiest school districts that resulted in significantly more spending money for them, the state did not evenly match for average wealth and low wealth districts.

These gaps were further exacerbated by hold harmless provisions that effectively guaranteed that wealthy districts would not be subject to reductions in state funding that would occur with the adoption of new funding formulae – giving these districts access to revenue that they no longer qualified for.

The Supreme Court contended that if the hold harmless clause that expanded the inequities had not been in effect, the widening of the equity gap would not appear as great (because the gap was really larger than what was projected when the hold harmless funding was excluded from these early projections). The court however failed to note (or perhaps understand) the fact that the reform system modeled and used as the basis for measuring the growth in the equity gap, was based on what the school finance legislation mandated at the time – which provided for elimination of these privileged provisions. To argue that the gap would not appear to have grown as much because the level of inequity was really larger than originally projected, is tantamount to arguing that one can be taller if one simply stands around shorter people.

The fact is that, in the Edgewood IV ruling, the court had expected the funding gap to be no larger than $600 per pupil, and no one challenged the fact that it has grown substantially since the 1995 court ruling. While accepting the existing level of inequity, the court gave no indication of how much inequality is too much inequality, setting the stage for even greater levels of unfairness than we now see in the system.

Unequalized Enrichment Re-Introduced – Inequity Supplementing Adequacy is Deemed OK

Compounding this questionable finding was the court’s re-statement of earlier Supreme Court rulings that established that some inequalities were acceptable, as long as equitable access to an adequate (minimum) system was provided by the state’s funding plan. Stated another way, an “adequate” education should be equally available for everyone, but a “better” education may be provided for a select few.

We disagree and propose that the system as a whole either is equal or it is not, and any attempt to justify a system of educational privilege for an elite few is unacceptable.

As IDRA and its fellow advocates fought for equal opportunity for all Texas school students. We have historically insisted that all districts be included in the state system and that none be left outside. The courts had originally concurred, noting that if “all were in the same boat” there would be more mutual interest in ensuring that a quality education was the norm for all rather than the exception for a few. As state funding declined over time, it was not accidental that wealthy school systems led the push for increased funding.

As long as some school districts are allowed to operate outside the system and to generate more funding that is limited to a handful of students in wealthy areas, those communities and their leaders will not be vested in improving education for all pupils. This will return the state of Texas to the system of gross inequality that existed in the 1960s.

Two Other Key Points – Be Careful What You Wish For

A careful reading of the latest opinion suggests that the court is signaling two structural areas that if addressed can help provide a more long-term, sustained reform in Texas public school finance. One area of concern is the state’s over-reliance on local property taxes to fund public education. At various spots in the opinion, the Supreme Court states its concerns, such as the point, “While the legislature’s decision to rely so heavily on local property taxes to fund public education does not in itself violate any provision of the state constitution… in the context of a proliferation of local school districts enormously different in size and wealth, it is difficult to make the result efficient.”

This statement suggests that the structural change called for in the opinion must involve less emphasis on local property taxation and more investment of state collected revenues.

The court also states: “The large number of districts, with their redundant staffing, facilities and administration make it impossible to reduce costs through economies of scale. Bigger is not always better, but a multitude of small districts is undeniably inefficient.”

This call for consolidation of small districts (and for many of the more than 600 Texas school districts with an enrollment of less than 1,000 students) was an unexpected wake-up call. Ironically, many of the original school districts that initiated this latest challenge happen to be small wealthy school districts.

The court quoted earlier decisions and noted, “In Texas many small school districts [lots of property value but few students] had originally been set up as tax havens, that allowed some property owners to escape paying their fair share of the cost of public education in Texas and making it more difficult to achieve efficiency.”

The court then questioned the assumption that local control is not compatible with efficiency, “The justification offered for this situation [the existence of so many smaller districts] is that as a matter of public policy, public schools should be locally controlled – although it has never been clear why the legitimate benefits of local control are so entirely inconsistent with efficiency in funding.”

Though school district consolidation is considered a bad word in the Texas legislature, the court’s concern with inefficiencies created by a large number of small school districts (many that are small by choice rather than by necessity), extensive consolidation may well be part of any longer term solution considered in the upcoming special session. For decades, IDRA has expressed reservations that consolidation of school districts is not the silver bullet some imagine. Plus, districts that are too big can create corresponding inefficiencies. But, it may well be time to consider reducing the number of school districts in a manner that contributes to reducing property wealth disparities. (Ironically, the County Education District-based system that IDRA helped to create in earlier reforms but rejected by an earlier Texas Supreme Court, may have been a less draconian way to address this aspect of inefficiency in the current system.) The court’s obvious call for consolidation will serve to add one more level of controversy to the proposed school funding reforms to be considered during the upcoming special session.


Rather than clarifying legal questions related to the Texas school funding system, the Texas Supreme Court decision in the West Orange-Cove case seems to have further compounded them. In ruling that the $1.50 tax cap in tandem with expanding state requirements provided insufficient local discretion and further in noting that simply raising the cap would be insufficient, the court now is pressing the legislature to make significant changes to a structure that is basically sound but under-funded. Had the state maintained its share of total costs, provided expanded funding for equalization and fixed the facilities formula, the latest legal challenge may have never been filed.

By ruling that the state is providing adequate levels of funding to meet its obligation to “make suitable provisions for a general diffusion of knowledge,” the court has put its stamp of approval on low expectations, declaring that schools where 50 percent of students fail state assessments are considered to be performing at acceptable levels.

By accepting an increasing gap in the level of equity that took decades to reduce, the court seems to affirm the old detrimental notion that it is acceptable for some students to have less access to quality schooling than others. Thus, it must be OK for an excellent education to be available only to a chosen few.

By seeming to require that each school prove that the quality of facilities are important to providing the education required by state mandates, the court has put schools in the position of having to “prove” that the quality of school buildings matters. One can argue that if facilities do not provide for better quality education, why is it that high wealth communities always invest in high quality school buildings?

Texas cannot afford an excellent system for some and a minimally adequate system for the rest. IDRA remains committed to working for the creation of a truly equitable funding system that provides equitable and high quality educational opportunities for all Texas students; one that provides all our citizens with the skills required for them to be full and productive members of our society.


Center on Budget and Policy Priorities
Articles and research on fiscal issues affecting low-income families. Includes a detailed article with graphics that presents an overview of education finance.

Center for Public Policy Priorities
Basic information on school finance in Texas.
Texas Kids Count, includes a section on finance, history and per pupil spending by county.

Education Commission of the States – Issue Paper
An ECS position paper discussing the past, present and future of school finance.

Equity Center

Provides updates on legislation and litigation as well as background and reference information.

Intercultural Development Research Association
Dedicated to educational equity and excellence, IDRA provides articles, research and tools for advocacy. See the policy updates and topical links to information on school finance. Also, get order information for the only comprehensive book on the history of school finance in Texas.

IDRA Fair Funding for the Common Good
Provides tools for learning about school finance and for taking action.

Texas Education Agency Finance Web Site
A resource for state funding guidelines, presentations on school finance, public school health insurance, and school-finance related correspondence to school districts.

Visit www.texans4fairfunding.org for more information and resources.

Albert Cortez, Ph.D., is the director of the IDRA Institute for Policy and Leadership. Comments and questions may be directed to him via e-mail at feedback@idra.org.

[©2006, IDRA. This article originally appeared in the February 2006 IDRA Newsletter by the Intercultural Development Research Association. Permission to reproduce this article is granted provided the article is reprinted in its entirety and proper credit is given to IDRA and the author.]