When the Levers Broke: Education Finance in Texas

When the Levers Broke: Education Finance in Texas

by Zak Newman

On May 16, 1968, 400 students at Edgewood High School in San Antonio, Texas staged a walkout in protest of the dire state of their school facilities. The windows were cracked; the air conditioning was non-­‐existent; the school was crumbling—all despite the fact that the Edgewood Independent School District (ISD) had one of the highest property tax rates in San Antonio. Parents, among them Demetrio Rodriguez, a sheet metal worker at the nearby Kelly Air Force Base, shared their childrens’ concerns and quickly formed the Edgewood District Concerned Parents Association to investigate the situation.1 Arthur Gochman, the attorney representing the Parents Association, found that even though tax rates were considerably higher in Edgewood, low property values meant that the school district could raise only a small percentage of the tax revenue in comparison to that other school districts, such as the nearby Alamo Heights ISD.2

Filing Papers
Gochman filed suit against Edgewood ISD as well as six surrounding school districts and the Attorney General of Texas on behalf of Rodriguez and the Parents Association in the federal district court for the Western District of Texas on June 30, 1968. The papers claimed that Texas’ education statutes were “unconstitutional and unenforceable insofar as they interfere with the creation of a system of providing for equal education….”3 Specifically, the petitioning parents contended that the Texas education system violated the Equal Protection Clause of the Fourteenth Amendment for impinging on their students’ constitutionally protected right to an education. Gochman and his clients believed they would be aided in the case by the Supreme Court’s then liberal use of the Equal Protection Clause.
Based on existing case law, Gochman would need to show that the Texas funding system unjustly discriminated against Texas students based on their wealth or based on their race.4 Success on either front would call the court to use strict scrutiny in evaluating the finance system. The Court ultimately rejected both his claims on discrimination and his claim on the existence of a fundamental right to education. To understand why, the history of the education finance system in the state should first be considered.

Texas Education Finance, Pre-Rodriguez: Urbanization Shifting Taxing Powers
The current Texas State Constitution, adopted in 1876, provided for an “efficient system of public free schools,” to be supported and maintained by the state legislature.5 Texas schools would be funded through a mix of local and state funding. At the local level, school districts were granted the power to levy ad valorem property taxes6 for schools even though the state government was barred from mandating property taxation (Article VII, §3e). For the 19th and into the 20th century, this system of school finance was sufficient given the highly rural nature of the state and the fairly equitable property values across the state. But as noted by Justice Lewis Powell in the decision of San Antonio Independent School District v. Rodriguez, 20th-century industrialization in Texas began to urbanize the state and disproportionately increase the taxing power of urban school districts relative to those in rural areas.
The Gilmer-Aikin bills passed in 1949 aimed to address these funding disparities by establishing minimum funding levels for schools but were unsuccessful due to the new system’s continued reliance on local tax revenue. In 1967, average land values and median family income in the Edgewood ISD attendance zone were both the lowest in the city, at $5,960 and $4,686, respectively. With those property values, Edgewood ISD could raise only $26 per pupil more than its Local Fund Assignment with a property tax of 1.05%. At that rate, Edgewood ISD families took on the highest tax rate burden in the city. A mere eight miles away in the Alamo Heights attendance zone, average property values were greater than $49,000 and median family income was $8,001. The considerably higher property values found in the Alamo Heights area allowed the district to tax property values at a lower rate than in Edgewood, a mere .85%. At that rate, the district was able to bring in $333 above its minimum requirement7.

Refusing to Pull the Lever
In writing the Opinion of the Court, Justice Powell first considered the petitioners’ contention that the funding system was discriminatory. Based on the evidence, the poorest area in San Antonio had far fewer resources for education under the Gilmer-Aikin system than did the wealthiest area in the city. However, all students did receive an education, just potentially a less expensive one if they lived in an area with lower property values. As such, the Court found no evidence that a certain class of “poor” were all universally discriminated against within the system. The claim that the system discriminated against minorities was also rejected because many other school districts in the city had significant numbers of minority students.
The Court then took up and ultimately rejected Gochman’s claim that there was a right to education, as it found education finance an inappropriate area for judicial intervention. Gochman argued the importance of education for the exercise of First Amendment rights and the right to vote: “[T]he electoral process… depends on an informed electorate; a voter cannot cast his ballot intelligently unless his reading skills and thought process have been adequately developed.” Justice Powell refused to accept Gochman’s argument for education as a fundamental right, as establishing a right to education would open the door to countless other fundamental rights instrumental to the right to vote (like a right to food or housing) and would make the Court’s authority limitless.
Justice Powell’s most critical argument against a judicially protected fundamental right to education was that the area of education policy was too contested for courts to be able to effectively intervene and supply a beneficial remedy. Intervening in education finance issues as they relate to adequacy was simply not prudent for the Court, he claimed. The Court believed that “the consideration and initiation of fundamental reforms with respect to state taxation and education are matters reserved for the legislative process” and ought not be led by the judiciary. Despite this warning, Edgewood parents and the Supreme Court of Texas continued to look for judicial remedies.

Aftermath of Rodriguez in Texas: The Edgewood Cases
In a move that would only ultimately vindicate Justice Powell’s warning, many of the original petitioners from the Rodriguez case went to the state trial court in the spring of 1984 claiming that the system violated the Texas Constitution’s Article VII mandate that the legislature “make suitable provision for the support and maintenance of an efficient system of public free schools.”8 When their case, Edgewood Independent School District v. Kirby, went to the Texas Supreme Court in 1989, the Court read the word efficiency to convey “the meaning of effective or productive results and [to connote] the use of resources so as to produce results with little waste”9. Though this did not mean that all students were guaranteed a certain education as Gochman had pursued in Rodriguez, it did invalidate the Texas system of high taxes in property-poor areas and low taxes in property-wealthy areas for being “inefficient.” To remedy this defect, the Court ruled that there must be a “direct and close correlation between a district’s tax effort and the educational resources available to it.” The state was given seven months to codify this remedy in legislation before all state funding for public education would be cut completely.10
In finally acknowledging the funding disparities suffered by Edgewood students and opening the finance system to judicial review, the Texas Supreme Court started a volley of case law and state legislation that continues to the present day. As a response to the Court’s mandate in Edgewood, the state quickly mandated that 95% of the state’s schools receive the same amount of funding per student11. But the Court almost immediately shot down the system in 1991 for not putting in place “efficient” caps on local property taxes12. The state legislature then passed Senate Bill 351 to create county-based taxing districts that would allow for funding equalization at the county level based on payroll taxes in each school district in the county. In the eyes of the court, this system was tantamount to an unconstitutional statewide property tax.
The state legislature was able to arrive at a temporary peace with the funding system it created in Senate Bill 7 in 1993. The plan created a complicated tier system with maximum and minimum taxing requirements and opportunities for property-rich districts to earn “credits” to increase their local property tax revenues if they supported other districts nearby13. However, this system too was shot down in the case West Orange Cove Consolidated ISD v. Neeley (2005). Because of increased expenses, districts were forced to tax at the upper limit of the state’s prescribed tax system—thus effectively creating a statewide mandated tax.
The state enacted a number of reforms as a result of the West Orange Cove case, nearly all of which locked in earlier funding inequalities or encouraged greater inequalities. Dr. Richard Middleton, superintendent of the Northeast Independent School District of San Antonio, confirmed this: “Winning the Supreme Court case for us created the dilemma that we find ourselves in today [with even more entrenched inequalities across the board].”14 One measure the state implemented was a Target Revenue system wherein state funding formulas were reoriented so as to ensure that districts received as much state aide as they had before 2006.15 Despite its good intentions, the policy was largely successful at locking in poor school districts in a funding system that was inherently to their disadvantage.
The damaging effects of this transition are most salient in the aftermath of the recent budgeting process in the state legislature. Whereas Senate Bill 7 had been successful in reducing funding disparities from a 700-to-1 ratio to a 28-to-1 ratio, a local education policy think tank found that property-poor school districts brought in an average $2,189 less per student than property-rich school districts under the West Cove system.16 As part of its budgeting process in the legislative session ending this past June, the legislature cut approximately $4 billion from the state’s public education system. Property-poor districts will most likely be the hardest hit. Targeted revenue systems that make it difficult to receive more funding from the state and the reliance on state minimum funding in the tier system will bind property-poor districts to the fewer funds the state has allowed for public education. Meanwhile, property-rich school districts will be able to make use of unequalized local enrichment above and beyond the state minimum and will look to private donations from wealthy families for the funding that they need to weather the storm. The state Supreme Court has made the situation even more difficult for property-poor districts. The Equity Center in Texas is currently exploring what legal action would be most effective.17

The Damage Done
The judicial interference offered by the Texas Supreme Court in its work to make education in Texas “efficient” and has been anything but productive. The Supreme Court’s decision not to intercede seems to have been wise. The Texas Supreme Court’s endeavors to find meaningful remedies where Rodriguez stood silent created a years-long exchange between the Supreme Court and the legislature on the competing constitutional prohibition of a statewide tax and requirement for educational efficiency and adequacy. As of today, the standard sanctioned by the Supreme Court allows for less funding equality than that offered by previously rejected frameworks. Property-poor districts stand only to be further harmed by this system under the state’s new budget. The Texas Supreme Court’s indecisive and harmful efforts to find a judicial remedy vindicate Justice Powell’s warning in the Rodriguez opinion that courts are poorly equipped to adequately adjudicate questions of education finance and should avoid doing so at all costs.

Zak Newman is a junior in Jonathan Edwards College.

1 Sracic, San Antonio v. Rodriguez and the pursuit of equal education: the debate over discrimination and school funding, 20
2 Ibid.
3 Ibid., p.36
4 He would also argue that education was a fundamental right, although this argument would not have been necessary to render the financing unconstitutional under the Equal Protection Clause.
5 Texas Constitution, Art. VII
6 Taxes based on the value of the real estate.
7 Rodriguez
8 Sracic, 126-­‐127
9 Edgewood
10 Sracic,, 128
11 Ibid, pg. 129
12 Êdgewood
13 Imazeki and Reschovsky, 2003, page 7
14 Middleton, 2011
15 Cortez, 2008
16 Cortez, pg. 9
17 Philpott, 2011

Cortez, A. (2008). The status of school finance equity in Texas. Intercultural Development Research Association. Retrieved May 7, 2011, from http://www.idra.org/IDRA_Newsletter/May_2008_Enlightened_Public_Policy/The_Status_of_School_Finance_Equity_in_Texas/
Cortez, A. (2009). The status of school finance equity in Texas – 2009 update (pp. 1-20, Issue brief). San Antonio, TX: Intercultural Development Research Association.
Edgewood Indep. Sch. Dist. v. Kirby, 777 S.W.2d 391 (Tex. 1989) [Edgewood I]
Edgewood Indep. Sch. Dist. v. Kirby, 804 S.W.2d 491 (Tex. 1991) [Edgewood II]
Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717 (Tex. 1995) [Edgewood IV]
Imazeki, J., & Reschovsky, A. (2003, May). School finance reform in Texas: a never ending story? [Scholarly project].
Kemerer, F. R., & Walsh, J. (2000). The educator’s guide to Texas school law. Austin, TX: University of Texas Press.
McGrew, J. W., Ivy, G. H., Barnes, A. E., & Bearden, L. H. (1972). Public school finance problems in Texas. an interim report (pp. 1-76, Rep.). Austin, TX: Texas Research League.
Middleton, R. (2011, May 7). SAISD v. Rodriguez and its aftermath [Telephone interview].
Nance, J. M. (n.d.). REPUBLIC OF TEXAS | The Handbook of Texas Online| Texas State Historical Association (TSHA). Texas State Historical Association (TSHA) | A Digital Gateway to Texas History. Retrieved May 9, 2011, from http://www.tshaonline.org/handbook/online/articles/mzr02
Philpott, B. (2011, May 5). Schools Consider Legal Action Over Budget Cuts. Texas Tribune. Retrieved May 7, 2011, from http://www.texastribune.org/texas-education/school-finance/schools-consider-legal-action-over-budget-cuts/
Plummer, B. (2011, May 7). SAISD v. Rodriguez and its aftermath [Telephone interview].
San Antonio Independent School District v. Rodriguez, 411 U.S. 1, (1973)
Schoelwer, S. P. (n.d.). SAN ANTONIO DE VALERO MISSION | The Handbook of Texas Online| Texas State Historical Association (TSHA). Texas State Historical Association (TSHA) | A Digital Gateway to Texas History. Retrieved May 9, 2011, from http://www.tshaonline.org/handbook/online/articles/uqs08
Sracic, P. A. (2006). San Antonio v. Rodriguez and the pursuit of equal education: the debate over discrimination and school funding. Lawrence, KS: University Press of Kansas.
Sutton, J. (2008). San Antonio Independent School District v. Rodriguez and its aftermath. Virginia Law Review, 94, 1963-2008.
TEA. (n.d.). 2009-10 District AEIS Report. Texas Education Agency – AEIS Report. Retrieved May 9, 2011, from http://ritter.tea.state.tx.us/perfreport/aeis/2010/district.srch.html
Texas Const., Art. VII
US Census. (n.d.). San Antonio (city) QuickFacts from the US Census Bureau. State and County QuickFacts. Retrieved May 9, 2011, from http://quickfacts.census.gov/qfd/states/48/4865000.html
West Orange-Cove Consolidated ISD v. Neeley, 176 S.W.3d 746 (Tex. 2005)

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