School Lawsuits Multiply

In June, when the Legislature passed the latest round of school finance reforms, there was one question pending in the Capitol press corps: Would school districts sue the state as one bloc, or would the property-rich and property-poor districts file separate suits? Well, guess one more time: Com­mis­sioner of Education Robert Scott, Comptrol­ler Susan Combs, and the State Board of Education now face three distinct legal challenges from three separate groups of school districts. However, among the legal actions is one unified theme: The school finance system is critically broken, and the only way to force lawmakers to fix it is through the courts.

Two large groups of school districts – the Texas School Coalition and the Texas Taxpayer & Student Fairness Coalition – had already announced their intentions to sue. On Oct. 24, the Austin Independent School District board of trustees approved $65,000 in legal fees to join a third suit represented by the Houston-based law firm of Thompson & Horton. While the two dozen districts in this latest suit are mainly larger districts like Houston, Fort Bend, and Fort Worth, they include both winners and losers under the current "Robin Hood" recapture system. Attorney David Thompson said, "It's kind of a recognition that, wherever you are on the spectrum, the system isn't working well and there are common issues that all districts face."

At the core of all three complaints are four constitutional issues, and each group is targeting a different selection.

1) State property tax: Because districts have so little control over their local tax rates, school finance has become a de facto and unconstitutional statewide property tax.

2) Adequacy: The current tax system provides inadequate funding to meet the state constitutional guarantee of a quality education for all children, and a new, unified set of funding formulas should be put in place.

3) Efficiency: The multiple funding formulas created by target revenue are arbitrary and create multiple funding systems.

4) Equity: As poorer school districts receive less money per student than wealthier districts, the system is inherently inequitable.

This is hardly the first time the Texas school finance system has been challenged in court. In fact, the current version was introduced in 2006 after West Orange-Cove Consolidated ISD sued then-Education Com­missioner Shirley Neeley, successfully arguing that the old system was a de facto statewide property tax. This time around, the Texas Taxpayer & Student Fairness Coa­li­tion, which represents more than 285 school districts in Texas and is represented by the Austin-based Equity Center, was the first to actually file suit; it's focusing on the equity claim.

Both the Texas School Coalition and Thompson & Horton are still receiving inquiries from school districts and will file together in either the second or third week in November. Mark Trachtenberg, whose law firm Haynes and Boone represents the Texas School Coalition, said he plans to work closely with the plaintiffs in the other suits, because they are all seeking the same ends. However, the 30 districts he represents are concerned that the equity challenge could allow lawmakers to just reslice the meager school finance pie, pitting rich districts against poor ones. "We are bringing only claims that will benefit all districts in the state if we are successful," he said. "The adequacy claim and the state property tax claim, if they prevail, will require the state to extend the pie, to make more money available for districts and make capacity available in the school finance system."

Trachtenberg noted that the roots of the current cases started with the flawed system created in 2006 and with the failure of lawmakers to tap the multibillion-dollar Rainy Day Fund during this year's session. The one positive outcome from those failures is that they may make this litigation easier, he said: "For the first time, they're not even funding the amounts that are called for under the statutory formulas."

Thompson worked with Trachtenberg on West Orange-Cove and is frustrated to be fighting the same wars again: "Any time you have a long, protracted lawsuit that results in a big decision like the [Texas] Supreme Court declaring the entire school finance system unconstitutional, you certainly hope not to be back in court any time in the near future, but sometimes it works out that way." In 2005, the justices simply ordered the state to come up with a new system; this time, Thompson will ask the court to focus on "the dynamics of implementation." He said, "Obviously, the court will never specify a formula [a legislative function], but I think we will ask the court for a little more guidance this time on what a constitutional system should look like."

The Texas Education Agency is not commenting on the litigation, but spokesperson Debbie Graves Ratcliffe said, "Ultimately, the funding system will be decided by the courts and the Legislature, and we'll implement whatever they approve."

Plaintiffs' Claims Vary on School Finance Violations

	Statewide Prop. Tax	Adequacy	Efficiency	Equity
Thompson & Horton	X	X	X
Texas School Coalition	X	X
Texas Taxpayer	X	X	X	X
& Student Fairness Coalition

Three different consortia of school districts are suing the state of Texas, claiming multiple violations of the Texas Constitution. While the three groups are expected to work together, their attorneys have varying arguments for how exactly the system is unconstitutional and damaging to the districts and their students.