Texas’ school finance system again overturned in court

by Terrence Stutz

Dallas school chief Mike Miles, visiting with Jimena James at Marsalis Elementary on the first day of school.
Dallas school chief Mike Miles, visiting with Jimena James at Marsalis Elementary on the first day of school.

A state judge overturned Texas’ school finance system for the second time in 18 months on Thursday, ruling that the Legislature’s funding boost last year failed to fix a system that is unfair and inadequate for the state’s 5 million public school students.

State District Judge John Dietz of Austin decided in favor of the more than 600 school districts that sued the state. They argued the Legislature has consistently underfunded schools while imposing new and expensive academic requirements for students.

In his ruling, the judge also pointed to inequities in the system that leave lower-wealth school districts with far less money to spend on their pupils than their wealthier counterparts across the state.

“The court finds that the Legislature has failed to meet its constitutional duty to suitably provide for Texas public schools because the school finance system is structured, operated and funded so that it cannot provide a constitutionally adequate education for all Texas schoolchildren,” Dietz wrote in his 21-page final judgment in the case.

He ordered funding to stop until the problems are corrected, though he put the ruling on hold until July 1, so schools won’t be immediately affected. The state plans to appeal, probably straight to the Texas Supreme Court, which last ruled on school finance in 2005. That order forced the state to revamp its method of funding education so that it was less reliant on local property taxes.

“The state will appeal and will defend this [school finance] law, just as it defends all laws enacted by the Legislature when they are challenged in court,” a spokesman for Attorney General Greg Abbott said in a written statement.

If the high court affirms Dietz’s new ruling, it would force the Legislature back to the drawing board. That would probably not occur until after the upcoming legislative session in January.

Abbott, the GOP nominee for governor, has sparred with his Democratic opponent, Wendy Davis, over the attorney general’s defense of the school finance system in the case.

“This ruling underscores the crucial need to invest in education and reminds us of just how much our schools, teachers and students have had to sacrifice over the past three years just to get by,” Davis said Thursday.

Plaintiff school districts praised the judge’s ruling, while legislative leaders cautioned that Dietz won’t have the final word on whether the funding system is constitutional. That rests with the Supreme Court.

Dietz also said lawmakers erred by sharply limiting the taxing ability of school districts, which amounts to an illegal statewide property tax. Texas annually spends nearly $60 billion a year on its schools, which includes billions in federal funding and local property tax revenue.

Last year’s ruling

The judge originally found the funding system unconstitutional in February 2013, after a 12-week trial pitting the state against school districts — including dozens from North Texas. But he withheld his final decision in the case after legislative leaders indicated they would address the issues raised by Dietz during their 2013 session.

Lawmakers did increase school funding by $3.4 billion in the current biennium. However, that did not make up for the $5.4 billion that was cut in 2011 to offset a severe shortfall in state revenue. Lawmakers also dropped 10 of the 15 high school tests that were slated to be required for graduation.

Dietz held additional hearings this year to decide whether the changes would temper his earlier decision.

They didn’t.

Senate Education Committee Chairman Dan Patrick of Houston, the GOP nominee for lieutenant governor, insisted that lawmakers restored most of the funding cuts last year.

“We have spent vast amounts of money towards education, and we’re still struggling to see significant improvement,” Patrick said. “Spending continues to rise steadily while the number of failing schools increases.”

Patrick also pointed out that “today’s decision is the sole decision of one judge in Travis County. The final say will come from the Supreme Court.”

His Democratic opponent, Sen. Leticia Van de Putte of San Antonio, said Patrick was partly responsible for the problem by resisting more education spending in last year’s legislative session.

“We do not need another court to tell us how to do our jobs,” she said.

The lawsuit was triggered by the massive funding reductions of 2011. For the first time in decades, lawmakers didn’t provide funding for student-enrollment growth in the booming state, leading to a sharp drop in per-pupil funding. That forced elimination of 11,000 teaching jobs and increased class sizes at thousands of campuses across Texas.

In Dallas, one of the state’s largest districts, with about 161,000 students, the district cut about $101 million over two years from its annual budget of about $1.3 billion. DISD eliminated 1,442 jobs in the 2012-13 school year and froze salaries for two years. Class sizes increased in every grade, and 10 schools were closed.

Despite the new money the Legislature provided in 2013, many school districts, including Dallas, still received less funding per student this year than they did before the 2011 cuts.

Dallas Superintendent Mike Miles applauded the court ruling Thursday. He said there was “undisputed evidence” during the trial that large performance gaps remain between students based on wealth. A majority of students in DISD are considered economically disadvantaged.

“We urge the Texas Legislature to fulfill its constitutional mandate to provide adequate resources so that all schoolchildren in the state receive an adequate education,” Miles said.

‘Large gaps’

Dietz agreed that the school finance system has particularly failed low-income and limited-English students, who have been “denied access to that education needed to participate fully in the social, economic and educational opportunities available in Texas.”

The judge also highlighted the “large gaps” in funding between high- and low-property-wealth districts, which he said violate a constitutional requirement that “children who live in poor districts and children who live in rich districts” be treated equally in funding their education. That includes money for both instruction and school facilities, according to Dietz.

In his original ruling, Dietz suggested it could take an extra $2,000 per child to meet all state standards — a total price tag of $10 billion to $11 billion a year. His judgment Thursday did not include a figure.

Highland Park ISD Superintendent Dawson Orr, whose district is wealthy but who is a vocal critic of the school funding system, noted that the district has had to depend more on private donations to supplement teacher salaries and pay other expenses. At the same time, Highland Park surrenders more than half of its annual property tax revenue to lower-wealth districts under “Robin Hood” requirements of the current school finance law.

David Thompson, the attorney for Dallas and 83 other districts that were among the plaintiffs in the case, said the Supreme Court warned lawmakers in 2005 that the funding system was close to unconstitutional because of inadequate funding.

“Since then, we have increased standards without regard to whether districts have the resources to meet them, while adding hundreds of thousands of students who come to school with more needs and challenges,” he said.

David Hinojosa of the Mexican American Legal Defense and Educational Fund, who represented poor districts in the suit, said lawmakers are on notice.

“If this ruling does not serve as the wake-up call for our Legislature to provide equal educational opportunities for all, then I’m not sure anything ever will,” he said.

A study by the National Education Association this year showed that Texas ranks 46th among the 50 states and the District of Columbia in spending per pupil. Last year, Texas ranked 49th.

Staff writers Matthew Haag and Melissa Repko in Dallas contributed to this report.

Follow Terrence Stutz on Twitter at @t_stutz.


School districts won their three major arguments against the Texas school finance system:

EFFICIENCY: Districts argued that the finance system distributes money to school districts inequitably, giving some districts thousands of dollars more per student than other districts despite having similar property tax rates.

Ruling: The inequities violate the state constitutional requirement that the system be efficient. Said state District Judge John Dietz: “All students do not have substantially equal access to the educational funds necessary to accomplish a general diffusion of knowledge.”

ADEQUACY: School districts said that they were not receiving enough money to pay for programs required by the state and to ensure students meet standards set by the Legislature.

Ruling: Dietz agreed, saying that all available measures — state and national tests, gaps in performance among student groups, and graduation and dropout rates — show that the amount of money in the system isn’t enough to educate students at the level required by the state constitution.

STATE PROPERTY TAX: School districts complained they lack discretion to raise enough funds because they’ve maxed out what they can tax property owners under state law.

Ruling: Dietz described district tax rates as stuck at both a floor and a ceiling. They must tax at the state-ordered cap of $1.17 per $100 valuation to meet state standards but can’t go any further to enhance local programs, he wrote.


Wendy Davis: The Democratic nominee for governor hailed the ruling as “a victory for our schools, for the future of our state and for the promise of opportunity that’s at the core of who we are as Texans.” Davis, as she has before, blasted Republican opponent Greg Abbott, the current attorney general, for defending the school finance system in court. “The reality is clear and indefensible: Insiders like Greg Abbott haven’t been working for our schools; they’ve been actively working against them,” she said. “This ruling underscores the crucial need to invest in education and reminds us of just how much our schools, teachers and students have had to sacrifice over the past three years just to get by.”

Greg Abbott: The attorney general, whose office will appeal the case, didn’t address the ruling directly. He pointed to his education proposals, saying he hopes to “improve education for our children rather than just doubling down on an outdated education system constructed decades ago.” He noted that as a candidate, he has pushed to “make Texas top-ranked in the nation for education by returning genuine local control to school districts, ensuring all children are reading and doing math at grade level by third grade, and graduating more students from high school than ever before.”



School funding can vary widely, even in neighboring districts. Here are some North Texas districts and their per-student funding for the 2013-14 year:


Allen $6,232
Arlington $5,731
Carrollton-Farmers Branch $5,749
Cedar Hill $5,667
Coppell $6,360
Dallas $5,585
DeSoto $5,646
Duncanville $5,716
Fort Worth $5,709
Frisco $6,244
Garland $5,714
Grand Prairie $5,671
Grapevine-Colleyville $5,909
Highland Park $6,505
Hurst-Euless-Bedford $5,706
Irving $5,658
Lancaster $5,638
Lewisville $5,798
McKinney $5,767
Mesquite $5,656
Plano $5,787
Richardson $5,526
Rockwall $6,045
Sunnyvale $6,310
Statewide $5,809

SOURCE: Legislative Budget Board

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