Judge Rules Texas School Finance System Unconstitutional

September 15, 2004

AUSTIN – State District Judge John Dietz ruled today, after a twenty-six day trial, that the State’s school finance system is unconstitutional.  Judge Dietz found in favor of the West Orange Cove Plaintiffs, a coalition of 47 districts, including Dallas ISD, Austin ISD, and Houston ISD, on both of their constitutional claims.

Judge Dietz held that the current school finance system fails to provide the plaintiff districts access to funds sufficient to provide a constitutionally adequate education.

Judge Dietz also found that the school finance system has evolved into an unconstitutional state property tax because districts lacked “meaningful discretion” in setting their local property tax rates.

The current school funding system, now deemed unconstitutional, caps tax rates at $1.50 per $100 of property valuation.  494 of the State’s 1031 school districts, which educate roughly 60 percent of the State’s student population, are taxing at the capped rate.  These districts, including most of the plaintiffs, are unable to raise additional funds, leaving these districts unable to address inflation, increases in uncontrollable costs (utilities, insurance, etc.), and the cost of attaining higher levels of student performance.

Judge Dietz announced his key findings from the bench shortly after the conclusion of the parties’ closing arguments on Wednesday.  The court’s written findings are expected to be issued soon.  This ruling almost certainly will be appealed by the State.

Haynes and Boone LLP attorney George W. Bramblett, Jr., co-counsel for the West Orange Cove Plaintiffs, remarked “Judge Dietz made the right ruling and we are confident that the appellate courts will affirm him.

“The State has been under funding the system, even while raising the bar by imposing higher and higher standards.  As former Lieutenant Governor Bill Ratliff testified, the State has been asking districts ‘to make bricks without straw,’” Bramblett continued.

Even with their legal victory in hand, the West Orange Cove Plaintiffs still hope for a prompt legislative solution to the funding crisis.  Bracewell & Patterson L.L.P. attorney David Thompson, co-counsel for the West Orange Cove Plaintiffs, stated “We applaud the higher standards that the Legislature has put in place for our schools, but as Judge Dietz recognized, there has been a disconnect between these standards and the resources that the State has made available to achieve them.  The State has been passing the buck onto local property taxpayers, with the effect being that the State’s share of funding has dropped to its lowest levels since World War II.  It always has been and continues to be our position that it is ultimately the Legislature’s responsibility to fix the school finance system.  It is time for the State to significantly increase its funding of the school system, while also providing local property taxpayers some measure of tax relief.”

During the six-week long trial, the plaintiff districts submitted evidence that they have been forced to cut important academic and extracurricular programs, eliminate teaching positions, and increase class sizes.  The financial pressures on districts have been aggravated by higher standards imposed by the State’s new assessment test and curriculum requirements, the federal No Child Left Behind Act, a shortage of certified teachers, as well as a growing population of “special need” students, including students with limited English proficiency, with disabilities, or from an economically disadvantaged background.  During his closing argument, Bramblett likened this confluence of events to “a perfect storm.”

The West Orange Cove Plaintiffs collectively educate roughly 1,150,000 students, over 25% of the State’s student population.

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