Texas school finance case returns to court

BY KATE ALEXANDER | Monday, Jan. 20, 2014, 12:00 AM

Lawyers representing hundreds of Texas school districts will return to court Tuesday to argue that the Legislature is still failing students even after restoring some of the education funding cut in 2011.

It is the next chapter — though far from the last — in a legal saga that eventually could affect students, parents, teachers and taxpayers across the state.

A year ago, the school districts won a big victory when state District Judge John Dietz ruled the state’s school finance system unconstitutional after a three-month trial. The multitude of claims raised in the trial were a culmination of nearly 30 years of school finance litigation.

Dietz’s ruling in the mammoth case was based in part on the Legislature’s decision in 2011 to cut $5.4 billion in education funding just as the state-imposed academic standards were getting tougher.

“As the economists put it, there is no free lunch. We either want the increased standards and are willing to pay the price or we don’t,” Dietz said as he ruled from the bench last February.

Dietz also found that wide funding disparities had emerged among school districts based on their property wealth and that the state had exerted too much control over local property tax rates in violation of the state constitution. The share-the-wealth system, often called Robin Hood, was not challenged in this litigation.

Lawmakers restored about two-thirds of the amount cut in 2011 and used a good chunk of that $3.5 billion to lessen the funding disparities between districts. Never before had the Legislature enacted school finance remedies without a directive from the Texas Supreme Court.

The legislators also reduced from 15 to five the number of state exams required for graduation, in response to political, rather than legal, pressure. Despite the reduction in tests, lawmakers did not back off the state’s standard that students graduate college- and career-ready.

In light of all the changes, Dietz has called everyone back to his Travis County courtroom Tuesday to begin up to four weeks of testimony that will inform his final written order but is not expected to change his ruling.

Only then will the lawsuit head toward the high court.

New tests, higher standards

The fundamental question all sides will have to answer is this: How much of a difference have the legislative changes made?

A spokeswoman for Texas Attorney General Greg Abbott said the state’s lawyers had no further comment beyond the legal briefs, in which they argue that it is too soon to tell.

The school districts “ignore the fact that never, in the history of school finance litigation, has there been substantial, material intervening changes in the laws regarding the public education system that were key to the adequacy claims and thus every other claim in the lawsuit between the trial court’s ruling and the eventual appeal to the Texas Supreme Court,” lawyers for the state wrote in a recent brief.

The state joined an unsuccessful effort to get the Supreme Court to stop the new proceedings, saying Dietz is giving the school districts a second chance to make their case before facing judgment from the high court.

The various school district plaintiff groups, while differing on some points, all agree that the structural problems that led to Dietz’s initial ruling were not addressed by the Legislature.

“These bills, for the most part, moved the system in the right direction; however, they were not enough to cure the unconstitutionality of the system,” wrote lawyers representing more than 600 lower-funded school districts, including Pflugerville and Hutto.

At the heart of the school districts’ arguments is that Texas has systematically raised the academic standards for students but has not provided adequate resources for schools to get students to that higher level of performance.

After two years using the tougher State of Texas Assessments of Academic Readiness, student performance has not improved as the state had predicted.

Among last year’s ninth- and 10th-graders, more than half failed at least one end-of-course exam last spring and thus were off-track for graduation. Four of the five exams that remain as graduation requirements are ninth- and 10th-grade tests.

And the passing standards will be rising in coming years to a level the state has deemed college-ready. At that higher standard, more than three-quarters of the students missed the mark.

That challenge has become particularly acute given the state’s changing demographics. The number of economically disadvantaged students increased 45 percent between 2000 and 2010, and they now account for 60 percent of the student population. Low-income students as a whole have typically struggled far more than their wealthier peers to meet state standards.

“Do we have different standards for different kids? If the answer is no, then we have to recognize that it is going to take more for some kids to meet our standards than for other kids,” said David Thompson, a lawyer representing 82 districts, including Austin, Houston and Dallas.

Funding gap persists

The Legislature last year made a concerted effort to begin lifting up the lower-funded school districts by dedicating more to those districts.

But a significant gap persists, said Wayne Pierce, executive director of the Equity Center, which represents districts considered property-poor. Those districts are on average taxing property owners at higher rates and yet still getting less even after the changes.

None of the legislative changes affected the school districts’ final argument — that the state has effectively imposed a statewide property tax in violation of the constitution.

In the last round of school finance litigation, the Texas Supreme Court upheld that argument because, the justices determined, that school districts had little discretion over their property tax rates.

The justices warned in 2005 that the state runs afoul of the constitution when districts must tax at or near the maximum rate to meet state requirements because it deprives “school districts of any meaningful discretion to tax below the rate cap set by the state or to spend on programs other than those required by the state and the constitution.”

More than 200 school districts — about one-fifth of the total — are taxing at the maximum rate of $1.17, while most of the rest remain at $1.04, the top rate a school district may levy without seeking voter approval.


School finance litigation timeline

Late 2011: Lawsuits are filed by four groups of school districts, which together amount to two-thirds of Texas school districts, challenging the constitutionality of Texas’ school finance system. Two other plaintiff groups later join the case: one represents charter schools; the other, which includes the Texas Association of Business, argues for scrapping much of the education code to improve efficiency.

October 2012: Trial begins in Travis County courtroom of state District Judge John Dietz.

February 2013: Dietz rules Texas’ school finance system unconstitutional, finding that the Legislature failed to live up to its constitutional obligation by instituting historic budget cuts at the same time as it ratcheted up academic standards for students and schools.

May 2013: Texas Legislature passes a 2014-15 budget that restores $3.5 billion of the $5.4 billion in school funding that had been cut in 2011. Lawmakers also trim from 15 to five the number of high-stakes tests required of students for graduation.

June 2013: Dietz decides to reopen the trial in January 2014 to take new evidence based on the changes made by the Legislature. The delay allows for updated funding and student performance data to be introduced.

Tuesday: Trial restarts. Proceedings could last up to four weeks.

EXPERT REPORTING

Kate Alexander has covered legislative battles over public school issues for six years as a member of the American-Statesman Capitol staff and has followed the court case on school finance since it began

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