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• by Albert Cortez, Ph.D. • IDRA Newsletter • February 2014 •

After closing arguments in the trial last year involving the legal challenge by six groups to the Texas school finance system, the district court ruled from the bench that the current funding system is “inefficient, inequitable and unsuitable…” (2013). Judge Dietz planned to have the written ruling four to six weeks later wherein he would provide more specificity regarding its findings of fact and rulings of law.

At roughly the same time, the 83rd Texas Legislature voted to increase the basic allotment from $4,765 to $4,950 per student and to slightly increase the “golden penny” guaranteed yield from $59.95 per penny of tax effort to $61.86 beginning in 2014-15. Along with a couple of other formulae changes, the adjustments in state aid restored most but not all funding that had been cut from public schools two years earlier. Those cuts triggered the 2012 lawsuit by more than half of the school districts in Texas – representing three-fourths of the students – and even charter school proponents.

At the recommendation of some of the plaintiff groups, the district court agreed to convene new hearings in the case, slating the continuation of proceedings for January 2014. By early January, the updated arguments had been presented by plaintiff groups. The state offered its perspective that enough new funding has been allocated that the system should now be ruled both equitably and adequately funded. But the key position taken by plaintiffs who sued the state over inequity in the funding system is that the limited amount of increased funding did little to narrow the funding gap between low and high property wealth school districts.

All plaintiffs agree that, even with the increased funding, school districts do not have the resources necessary to ensure that all students have access to an adequate education, as required in recent state court rulings. Plaintiffs contend that to reach adequate funding levels – defined as ranging from between $5,300 to $6,400 per weighted student – some school districts have reached maximum tax rates permitted by the state, thus creating a state property tax that is prohibited by the state constitution. Some groups also have reinforced earlier arguments that state funding formulae provide insufficient revenue to meet the needs of low-income and English language learner students enrolled in Texas public schools.

IDRA presented expert testimony showing the continuing inequity in the state funding system, noting that, despite increased funding levels, disparities remain at existing tax rates as well as if all school districts were at the maximum allowable tax rate of $1.17.  IDRA also testified that districts of varying wealth have to exert very different levels of tax effort to generate similar amounts of funding. Key findings from IDRA’s analyses include the following.

• Despite the re-investment of $4 billion of the $5.2 billion in funding cuts made to school districts in the 2011 Texas legislative session, there remain large differences in revenues available to the lowest and highest wealth school districts in Texas.
• For the 2012-13 school year, at districts’ adopted maintenance and operation (M&O) tax rates, the state’s 10 percent lowest property wealth districts had an estimated revenue per weighted student of approximately $5,617– or $1,098 less revenue per weighted student (WADA)  than the estimated $6,715 revenue available to the state’s 10 percent highest property wealth districts.
• These per pupil disparities translate to over $27,450 per classroom at adopted tax rates. These huge differences in turn result in very different educational expenditure options available to educators and communities throughout the state.
• Even allowing for increased revenue that is projected for the 2103-14 school year, using 2013 adopted M&O tax rates, the disparities in revenue remain. The state’s lowest wealth districts could access approximately $5,800 per student (WADA), compared to the $6,750 per WADA available to the wealthiest sub-group of Texas districts – a disparity of approximately $950 per WADA.
• At current return per penny of tax effort, lowest wealth districts must tax themselves at 10 percent higher levels to generate the same revenue as their wealthiest counterparts – raising serious questions about the taxpayer fairness features in the current system. Despite the fact that taxpayers may be paying higher rates in some districts, their efforts are allowed to produce substantially less than similar tax payers in other school districts, often translating these into higher tax rates for thousands of Texas property owners subject to local school taxes.

Due to the fact that only 80 percent of state funding cuts was restored by the Texas legislature in 2013, a small percentage of what many believe is required to achieve both equity and adequacy in the Texas school finance system, plaintiffs expect to prevail in the case. If the school funding system is once again ruled unconstitutional by the district court in Austin>, it is expected that the decision will be appealed to the Texas Supreme Court. Due to the time required for the state high court to schedule oral arguments and then for it to issue its ruling, no decisive ruling is expected before late 2014, or perhaps as late as mid-2015. If the Texas Supreme Court once again finds that the Texas public school funding system is unconstitutional, legislative action may not happen during the upcoming 2015 session – requiring yet another special session to fix flaws outlined by the state’s high court.

Critics of the ongoing school funding equity litigation have suggested that the complexity of the system needs to be eliminated and that a simpler funding plan be created in its stead. Those pushing for simplicity overlook the complexity of the more than 1,100 schools districts and the various educational needs among the state’s 4.6 million students. While necessarily complex, the current system could benefit from some streamlining, including elimination of archaic hold harmless features that date back to 1993. It can also be improved by adopting mechanisms that will create and sustain equity for students and school districts and ensure that all students have access to high quality education regardless of the neighborhood or area of the state they happen to reside in. The ability to achieve both equity and excellence in Texas schools however will depend on whether state leaders have the political courage and will that has eluded them for over five decades of court cases. If they fail to achieve those goals, it is a sure bet that there will be another round of court cases before the end of this decade.

Resources

IDRA. Report of the Intercultural Development Research Association – Extent of Equity in the Texas School Finance System and Its Impact on Selected Student Related Issues (San Antonio, Texas: Intercultural Development Research Association, October 2013).

IDRA. Report of the Intercultural Development Research Association Related to the Extent of Equity in the Texas School Finance System and Its Impact on Selected Student Related Issues (San Antonio, Texas: Intercultural Development Research Association, August 2012).

Cortez, Albert. The Status of School Finance Equity in Texas – A 2009 Update (San Antonio, Texas: Intercultural Development Research Association, September 2009).

Albert Cortez, Ph.D., is the IDRA director of policy. Comments and questions may be directed to him via email at feedback@idra.org.

[©2014, IDRA. This article originally appeared in the February 2014 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.]