School finance system is constitutional: Supreme Court of Texas

FILE - Classroom (KXAN File Photo)
FILE - Classroom (KXAN File Photo)

AUSTIN (KXAN) — In a Friday ruling, the Supreme Court of Texas said the state’s system for funding public schools is legal. In an unanimous decision, justices said standards are up to the legislature, not the court.

Justice Jeff Boyd issued an opinion stating, “All the Court concludes today is that they have not been so arbitrary and unreasonable as to fall below the minimum constitutional standards. The Court’s sole job — indeed, its constitutionally limited authority — is to answer that question.”

When lawmakers cut the education budget $5.4 billion in 2011, more than 600 school districts brought the lawsuit against the state. In 2014, a Travis County District Judge said the state’s system is unconstitutional because there isn’t enough money in the system and that the state has created a de facto statewide property tax. The Supreme Court determined the district court “erred in its overall analysis to find the Texas school-finance system unconstitutional.”

However, the justices did not fully endorse the state’s system. Justice Eva Guzman delivered a concurring opinion stating the court calls for “transformational, top-to-bottom reforms” and that more work needs to be done regarding “economically disadvantaged students.”

The case was argued before the Supreme Court of Texas last fall. State lawyers argued the nine supreme court judges should throw the case out, saying the high court doesn’t have the power to fund the schools.”This is a case about who gets to decide and who sets education policy in the state. Our argument is simple. It’s the people’s representatives in the legislature,” said Scott Keller, the Texas Solicitor General in September.

Response to Decision

Rep. Celia Israel, D-Austin, said she was disappointed in the ruling and asked Gov. Greg Abbott to call for a special session for funding public education fully.

“It was especially surprising to see the court label our system ‘Byzantine’ and ‘meeting minimal standards’ at the same time,” Israel said. “Texas deserves better. We cannot continue to crow about our economic growth and continue to act as if a ‘Byzantine’ system serves our children and our future well. I call upon Governor Abbott to immediately call a Special Session so Texas can fully invest in its education system.”

Gov. Abbott probably won’t call a special session like Rep. Israel wants. In fact, in a statement he praised the ruling.

“The Supreme Court’s decision ends years of wasteful litigation by correctly recognizing that courts do not have the authority to micromanage the State’s school finance system,” said Abbott. “I am grateful for the excellent work of the State’s lawyers at the Attorney General’s Office, without whom this landmark ruling could not have been achieved.”

The Austin Independent School District, the largest school district in Central Texas wasn’t happy with the decision. “We are disappointed in today’s ruling. Austin ISD educates an increasingly diverse population of 84,000 students, and the fact that we have to do so with outdated financial formulas is discouraging,” said Austin ISD Chief Financial Officer Nicole Conley.

KXAN’s John Dabkovich spoke with former school board president and state senate candidate Gina Hinojosa on the decision, who called it a “punch in the gut.”

“Tax Swap” Discussions Move Forward

While the Supreme Court of Texas Friday ruled the state’s school funding system constitutional, meaning districts like Austin’s will continue to lose tens of millions of dollars, AISD and the city of Austin are already working on a plan to keep that money at home.

In a flurry of pick-ups and drop-offs circling Zavala Elementary School in East Austin, KXAN met Jessica Benitez. A mother, who, like many, resents the fact that millions of school tax dollars are redirected to other parts of the state each year. Especially, when she sees the need.

“We should just keep the money here,” Benitez said, adding, “A lot of people are trying to move out of this area because the property taxes are getting pretty high and they can’t afford it.”

AISD reports 60 percent of its students receive free and reduced lunch, despite the fact that it is a property-rich district.

“I’m sure there are other ways to keep our money here,” Benitez said.

That’s where a tax swap comes in, something Mayor Steve Adler says may be able to do just that. Keep more money within city limits. Right now, AISD pays more to the state than any other school district. In the 2015 fiscal year, the school district paid more than $181 million. That’s about 12 percent of the state-wide total collected that year. According to a city memo, that number is expected to shoot up to $266 million next year. In 2017, it’s projected to jump to $380 million. By 2018, AISD is expected to hand over more than $445 million to the state.

“We’re voluntarily sending money to the state that we shouldn’t be sending to the state. Because our district is paying for what could be a municipal function. Why don’t we just pay for it,” Adler said.

In a tax swap, the city could theoretically pay for any AISD service not directly related to education. The money, would not be subject to recapture.

“The reality is, is we’re having to be more creative to figure out how we do more with less,” AISD Board of Trustees Vice President Paul Saldana said.

One idea is for the city to take over the cost of AISD’s social services, such as family resource centers and parent support specialists. Saldana said other examples include contracting social service providers that help families stabalize home situations, such as issues of homelessness, abusive family situations, working with children whose parents are incarcerated, as well as student health services.

In a memo to the mayor and council members, City Manager Marc Ott says there are other factors to consider in a tax swap moving forward, including the threat to the city’s ability to fund other programs, if AISD employees transfer to the city, personnel costs are generally higher, and the risk of legislative action against the city and AISD, since the concept is to “circumvent” the state’s school financing system, Ott wrote in the memo.

But they’re options council is willing to explore, as school funding continues to dwindle. Council directed the city manager to analyze how tax swap challenges may be addressed and come back with ideas in November.

You can read the Tax Swap analysis and Tax Swap report memos here.

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