• by Albert Cortez, Ph. D. • IDRA Newsletter • February 2005

Dr. Albert CortezLate last November 2004, Judge John Dietz issued his long awaited final ruling in the West Orange-Cove school finance case, the latest in a long string of successful challenges to the Texas school finance system. Following more than two months of testimony and thousands of documents submitted, the judge issued an eight-page final judgment and an accompanying 125-page “findings of fact and conclusions of law” where he went into great detail presenting the rationale for his decision.

Overview of the Case

This litigation deviates from the prior five cases in that the lead plaintiff was not the property-poor Edgewood school district. Neither was the case focused exclusively on equity or equal access to revenue.

Instead, the lead plaintiffs included a group of high-wealth and moderate-wealth school districts whose primary complaint was that the existing funding system does not provide them or let them raise enough money to provide an “adequate” education to their students.

A related claim proposed that the state’s $1.50 tax for maintenance and operations costs constitutes a local property tax, which is not permitted under the Texas Constitution. In this regard, Texas joined a growing number of states where the adequacy of the funding provided to its public schools was challenged in court.

IDRA provided expert testimony in the case last fall.

In his final ruling, the judge identified four areas where the current Texas school funding mechanism violates state constitutional requirements. These areas are:

  • the existing $1.50 tax limit on local maintenance and operations taxes;
  • the level of funding provided to schools under current formulas;
  • the extent of equity and adequacy of existing state facilities funding mechanisms; and
  • the level of funding provided under current bilingual education and compensatory education funding formulas.

Based on his findings, Judge Dietz has given the state until October 1, 2005, to modify the funding system to correct the constitutional violations identified in this legal challenge.

To support his sweeping court order, Judge Dietz compiled an extensive collection or “findings of fact” that provide justification for the opinions reached in this case. The findings are arranged into sections that facilitate finding the factual basis the court used to come to specific conclusions. The findings of fact includes an extensive table of contents from which IDRA has extracted critical findings statements below that reflect the court’s sweeping judgments.

Academically Acceptable is Not Adequate

To the extent that the Texas Supreme Court presumed that the “general diffusion of knowledge” is the equivalent of an “academically acceptable” accreditation ranking, plaintiffs have rebutted this presumption. This portion of the ruling was, in part, based on a re-assessment of what was required of Texas public schools since the initial Edgewood rulings.

The judge stated that the legislature has defined the objectives and mission of the public education system much more expansively than simply the provision of an “academically acceptable” education, as defined in the accountability system. He proposed that, an “academically acceptable” ranking is not the equivalent of an adequate education. The Foundation School Program is intended to provide sufficient funding not only to maintain an “academically acceptable” ranking, but also to meet “other applicable legal standards.”

The court also noted that the costs of education have increased over time as have the academic standards that schools must achieve. The finding referenced changing demographics in Texas schools, a trend that points to increasing proportions of low-income students and those who may need specialized instruction. The judge also notes, “Districts face many large, uncontrollable costs that are not adequately addressed in the state’s existing financing formulas,” and that costs vary based on student characteristics.

In his discussion, the judge focused on funding provided for compensatory, bilingual and special education in the current system. The primary impact cited includes difficulty in recruiting and retaining specialized teachers and related increases in dropout rates and related costs.

Judge Dietz acknowledged that current state taxing provisions do not provide property poor school districts with sufficient revenues to meet state requirements. He cited pages of evidence of the impact of the state funding system on local school operations and facilities, indicating that these focus districts are representative of districts all over the state.

Current Funding Formula is Inadequate

After defining and addressing key issues argued in the case, the court then presented the evidence considered in making those judgments. Much of the remaining segment addresses the West Orange-Cove claims (pages 34-60) on the inadequacy of current funding formulae. In this portion of the judgment, the judge rejected the state’s claim that all school systems could meet all state requirements at existing funding levels, citing major flaws in the “adequacy” study presented to support the state’s position.

The remainder of the opinion presents the evidence accepted as supporting the intervenors’ contentions related to adequacy, facilities funding and monies allocated to school districts to educate students with special needs.

The first major findings in this section relate to facilities. The judge concludes that unmet facilities needs in Texas schools have been substantial and long-standing. Property-poor districts, like the Edgewood intervenors, have been unable to meet their facilities needs, and thus their facilities remain inadequate. For support, the judge referenced testimony of school superintendents from some of the Edgewood intervenor districts and the state’s own assessment of facilities conditions reported on state performance reviews of these districts.

The court also concluded that property-poor districts cannot meet their facilities needs because the state fails to provide substantially equal access to facilities funding: “There is no equalized wealth level and no recapture for state facilities funding; there is no state assistance for districts too poor to pass bonds; and there is no guarantee that property-poor districts that pass bonds will receive state facilities assistance.”

The court concluded its critique of the existing funding plan by observing that the inadequacies of the current system also impact intervenor districts’ ability to provide quality library collections and library staff and to retain teachers, especially the highly credentialed and specialty staff needed in many of their schools.

In a noteworthy new finding, the court stated that inadequate school funding also impacts school district dropout rates and affects the ability of schools to develop and implement effective dropout prevention programs.

Five Major Findings

After this comprehensive review of the evidence the court presents its five major findings, listed below as they are written in the opinion.

West Orange-Cove Plaintiffs’ Claims

  1. “The court declares that the Texas school finance system is unconstitutional in that it violates Article VIII, section 1-e of the Texas Constitution, because the $1.50 cap on M&O [maintenance and operation] tax rates has become both a floor and a ceiling, denying school districts ‘meaningful discretion’ in setting their tax rates.
  2. “The court declares that the Texas school finance system is unconstitutional in that it violates the ‘general diffusion of knowledge’ clause (or adequacy clause) set forth in Article VII, section 1 of the Texas Constitution, because the constitutional mandate of adequacy exceeds the maximum amount of funding that is available under the state’s current funding formulas.
  3. “This court declares that the state’s school finance system is financially inefficient, inadequate and unsuitable, in violation of Article VII, section 1 of the Texas Constitution because the school finance system fails to recognize or cover the costs of meeting the constitutional mandate of adequacy, or the legislature’s statutory definition of a comprehensive adequate program.

Intervenors’ Claims

  1. “The court declares that the prohibition on the use of Tier 2 funds for facilities, combined with the legislature’s failure to make the Instructional Facilities Allotment and/or Existing Debt Allotment programs statutorily permanent and the legislature’s inadequate funding of the IFA program, means that property-poor districts do not have substantially equal access to facilities funding in violation of the efficiency and suitability provisions of article VII, section 1 of the Texas Constitution.
  2. “The court declares that the current funding capacity of the Texas school finance system fails to provide intervenor districts with sufficient access to revenue to provide for a general diffusion of knowledge to their students, in violation of the efficiency, suitability and adequacy provisions of Article VII, section 1 of the Texas Constitution, particularly when taking into account (1) the inadequacy of the weight adjustments for bilingual, economically disadvantaged, and other special needs students and (2) the greater burden borne by intervenor districts of the inadequacy of those weights, given their student populations, which are disproportionately LEP and economically disadvantaged.”

In January 2005, the State Attorney General announced that he will appeal the state district court ruling and will request an expedited hearing in the Texas Supreme Court.
Though there has been much speculation about the extent to which the district court’s ruling will be upheld by the Texas Supreme Court, the thorough review of the issues rivals earlier school finance judgments that were upheld in whole or in part by the state’s Supreme Court.

In the interim, the Texas legislature will have to struggle with this during the current 79th biennial session. Some legislators prefer to wait for final court ruling – fearing that they will be faced with a second vote for increasing taxes if the plan adopted is not acceptable to the state’s high court. Other legislators, in typical Texas fashion, suggest that the legislature need not wait for a court to dictate their actions since they “already know what must be done” to address the current issues.

At this writing it is too early to tell which camp will prevail, and the answer may not be clear until very late in the current session that ends in early June. Several plans have been proposed and are under review. Stay tuned for future updates. Sign up for free e-mail updates by visiting www.texans4fairfunding.org.


Helpful School Finance
Online Resources

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.

Texans for Fair Funding
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 IDRA Institute for Policy and Leadership. Comments and questions may be directed to him via e-mail at feedback@idra.org.

[©2005, IDRA. This article originally appeared in the February 2005 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.]