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Court rules school finance system unconstitutional

By Erika Pedroza | Published Wednesday, February 6, 2013

Members of the Texas School Coalition, a statewide group that includes the Northwest and Chico school districts, celebrated on Monday a small but crucial victory.

State District Judge John Dietz in Austin agreed with the group of Chapter 41 (or Robin Hood) school districts and found Texas’ system of funding public education to be unconstitutional.

The ruling in a long-running lawsuit held that the school finance system has evolved into a state property tax and does not enable the revenue-contributing districts to provide a constitutionally adequate education, according to a press release issued by the coalition Monday afternoon.

“I think it’s the correct ruling,” said Chico ISD Superintendent Mike Jones. “It’s a good, solid decision and a good first step. The state is making it more costly to educate our kids with things like STAAR and new end-of-course exams that are supposed to be more rigorous to make our kids more college-prepared. But that costs money. They’ve imposed more expenses but lowered their dollar contribution and then they turn around and tell us they are doing their part. That just doesn’t ring true. The evidence has been overwhelming and strongly demonstrates that the state is not doing its fair share to help educate as the constitution requires.”

Northwest Superintendent Karen Rue added: “I am pleased that Judge Dietz recognized that not only is the current system an unconstitutional statewide property tax, but it is also inadequately funding Texas public schools.”

It’s likely the state will appeal the ruling.

“The Texas Supreme Court will have the final say. If [they] uphold the decision, it will go back to the legislature to see how it could best pass constitutional muster,” Jones said. “The sooner they can get this to the Texas Supreme Court, the sooner the evidence and findings can be reviewed to decide whether to uphold or overturn the decision. If it is upheld, the governor might call a special session. I don’t see how something of this magntiude would go through in time to come before the legislative session that is currently in session.”

Regardless of when it happens, both superintendents called on the state legislature to resolve the discrepancies.

“Ultimately, the Texas legislature must address the inadequacies of the Texas public school finance system,” Rue said. “Meanwhile, we will continue to educate children and focus on the learning that will prepare students for their future.”

The school finance case, known as the Calhoun County ISD lawsuit, was filed Dec. 9, 2011, by the coalition of Robin Hood schools – property-wealthy districts, small and large districts, rural and urban districts – a good representation of the various types of school districts across Texas.

Represented by Mark Trachtenberg and John Turner, attorneys with Haynes and Boone LLP, this group of revenue-contributing districts challenged the constitutionality of the Texas school finance system.

The group was one of six plaintiff groups who filed lawsuits.

In addition to decreasing the state’s dollar contribution, the state also recaptures funds raised locally by the districts through the Chapter 41 designation. The label is slapped onto districts when their equalized wealth exceeds $319,500 per weighted student.

Jones said factors like the oil and gas industry’s boom, the area’s rock quarries and a good tax base of local businesses add value to property in his district.

“But we’re not in Chico sitting with palacial estates and kids driving Hummers and Mercedes,” he said. “It’s a district of hard-working, modest people who earn everything they get. We have a lot of Chevys and Fords in our parking lot. We don’t have extravagent facilities. Yes, we have nice, clean facilities voters approved. They are adequate, and we are proud of them. We have been good stewards of the taxpayers’ money. But we have other needs that we have to address.”

That “property-wealthy” tag hinders districts not only in the money they must send to Austin – it is misleading to taxpayers, Jones said.

“As property values go up, taxpayers are paying more for taxes, and they assume Chico ISD is the beneficiary of those tax dollar increases. But we aren’t,” he said. “That money goes to the state’s coffers to be redistributed, and we don’t see that.”

Chapter 41 school districts have contributed more than $15 billion in recapture since 1993. Since receiving the designation six years ago, Chico ISD has contributed more than $1.4 million annually.

“If we could keep that funding locally, that would go a long way with needs we have here,” Jones said. “We have buses that need to be replaced, an HVAC system on top of the middle school that needs to replaced. We need a roof for the middle school. We have real educational facility-type needs and issues but have no way to fund them.

“We can’t continue taking that out of fund balance and using our savings for that,” he continued. “The Robin Hood money is a lot of money that could do a lot of good if you could use it locally. Why would I go to the school board, to our voters here in Chico and say, ‘We need you to tax yourself more so we can send back 60 cents on every dollar to the state.’? It doesn’t make sense.”

Bridgeport Superintendent Eddie Bland said his school district didn’t join one of the lawsuits, but like just about every other school official, he has kept a close eye on the court case.

“I know there are those out there who say there is too much burden on the taxpayer, that there is already enough money to fund education, but I couldn’t see the judge ruling any other way,” he said. “In 2011, for the first time since World War II, funding got reduced to public schools, but we’ve continued to up the standards of expected student achievement.”

He doubts the ruling will add a sense of urgency among legislators to accomplish something in the current session.

“Do I think this ruling will have any impact on the current legislative session on funding of public schools? No, I don’t. They’ve already said they wouldn’t do anything drastic with public school funding.”

Decatur ISD Superintendent Rod Townsend called the ruling “a good first step.”

“It (the ruling) lends itself to what we’ve been saying for the past few years – that there is a significant problem and no one is paying attention to us down there (in Austin). I think Judge Dietz saw that and he’s spoken,” Townsend said.

While he doesn’t feel like the legislature will touch school finance in the current session, he thinks there is a chance that the state might at least look at adjusting the accountability system.

“I think they’ve heard from the public enough that they will make some changes to accountability,” Townsend said.

He went on to say that schools “don’t need less accountability, we need better accountability.”

Decatur ISD joined 83 other school districts headed by Fort Bend ISD to file a lawsuit in the case.

Brian Knox contributed to this story.

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