Texas Supreme Court Finds Public School Financing Constitutional

On May 13, the Texas Supreme Court ruled the state’s public school funding structure constitutional after hearing oral arguments in September 2015. This decision comes after Travis County District Court Judge John Dietz ruled the system unconstitutional in February 2014.

“Our Byzantine school funding ‘system’ is undeniably imperfect, with immense room for improvement. But it satisfies minimum constitutional requirements, ” said Justice Don Willett in his court opinion. Willett called for the Legislature to make transformational changes from top to bottom and remove “Band-Aids” that merely cover up the problem rather than address it.

In 2011, the Legislature cut $5.4 billion from the public education budget as the result of economic downturn. Nearly 600 school districts sued the state after the budget cut over several issues relating to the funding structure, including amount of funding, disparity between districts, and tax rates.  Let me provide a bit of background information on each.

In terms of funding per school district, the state’s public school finance system is not a “one size fits all” approach. Each of the state’s 1266 school districts has vastly differing needs and resources available. It is almost impossible to apply funding fairly and appropriately to each district. Of the ten categories of the 2016-17 budget, the state spends the most on education, with 28% of all funds appropriated for the 2016-17 biennium going towards public education. This is a 4.2% increase from the 2014-15 biennium.

As for the property disparity by district, the difference in money allocated per student between property-poor and property-wealthy districts is much closer together today than it was in the first school finance court case.  In the 1989 Edgewood I case, the spending disparity was $19,333 to $2,112.  The Supreme Court said that today’s numbers show, for 2013-14, the wealthiest at $7,673 in maintenance and operation revenue dollars per student while the poorest had $5,797.

Currently, only about 24% of districts, who serve about 13% of students, tax at the cap of $1.17. Around 69% of districts, who serve about 76% of students, tax at or below $1.04, 13 cents below the cap. If every school district taxed at their maximum rate, there would be an additional $2.3 billion. This is about 6% to 7% of the total Foundation School Program (FSP).  In the last Texas Supreme Court case over education funding, that revenue was estimated to be about 3% of the FSP, meaning the untapped capacity has roughly doubled.  Since that 2012 calculation, the legislature has added more funding to the system. Therefore, the Texas Supreme Court threw out the notion of a non-constitutional statewide property tax.

So what does this mean going forward? While the Texas Supreme Court ruled our public school finance system constitutional and they did not order any directives to the Legislature, it’s clear there are still challenges to solve.  In the 85th Legislative Session beginning January 2017, school finance reform will be a major consideration, I look forward to your input.