Good News and Bad News on School Finance in Texas

Mark Pulliam May 16, 2016, 4:43pm


This column original appeared on Texas Scorecard on May 16.

The long-awaited decision from the Texas Supreme Court in the school finance case, Morath v. Texas Taxpayer and Student Fairness Coalition, was issued on May 13, 2016. (The case was argued over eight months earlier.) The court’s jargon-laden 100-page (!) decision can be summarized with this sentence: “Despite the imperfections of the current school funding regime, it meets minimum constitutional requirements.”

The unanimous decision, written by Justice Don Willett, is being described by headline writers as a “win” for the state, but in reality it is a mixed bag. The good news is that the state supreme court emphatically (and thoroughly) rejected the one-sided findings of Travis County district judge John Dietz, overturning his activist ruling in favor of more than 600 Texas school districts who sued the state seeking greater funding. Thus, Morath brings to an end a marathon, politically-inspired lawsuit begun nearly five years ago in the wake of the Legislature’s 2011 budget cuts. The months-long trial presided over by the now-retired Dietz, generating a transcript exceeding 200,000 pages, proved to be a complete and utter waste of time. So the Morath decision represents a definite (and welcome) setback for the lucrative cottage industry of school finance litigation.

Thankfully, the supreme court’s decision also remands to the trial court for reconsideration Dietz’s award of $8.5 million in attorneys’ fees to the suing school districts even if they did not prevail on appeal, and his denial of any attorneys’ fees to a conservative group advocating reforms including school choice (which the Morath decision called “intriguing suggestions . . . we hope the Legislature will consider”).

The bad news is two-fold.

First, the all-Republican court stubbornly declined to overrule the execrable 1989 Edgewood decision, which has spawned nearly non-stop litigation for 27 years by a blatant misreading of the state’s 1876 constitution.

Edgewood, authored by leftist pol Oscar Mauzy during an era when the court was controlled by liberal Democrats, opened the door to serial lawsuits by disgruntled school districts challenging the Legislature’s appropriation for K-12 education by holding that the phrase “efficient system of public free schools” in Art. VII, section 1 of the state constitution requires “equitable funding” by the state of all school districts (later expanded to also require “adequacy” and “suitability,” as the court continued to divine new meaning in the state’s “living constitution”). Edgewood invited endless lawsuits and put courts in the inappropriate role of second-guessing the Legislature’s appropriation decisions. Remarkably, Morath represents the seventh supreme court decision in this unfortunate, self-inflicted debacle.

Despite the state’s argument—made by both Gov. Greg Abbott and Attorney General Ken Paxton–that school finance claims under Art. VII, section 1 are non-justiciable “political questions,” the court in Morath refused to overrule Edgewood, declaring that “adherence to our prior decisions is particularly appropriate in this area of law.” Imagine the Roberts Court showing such fealty to, say, an opinion written by Justice William Brennan during the heyday of the Warren Court. As long as Edgewood remains a viable precedent, school districts will continue to sue, seeking a second bite at the political apple (first lobbying the Legislature, then suing for an even better deal). Indeed, the court in Morath explicitly acknowledged the possibility of future litigation. The unmistakable lesson of Edgewood is that courts are peculiarly ill-suited to micro-manage public education, and the Legislature doesn’t function well with a judicial gun to its head.

The second shortcoming of Morath is the supreme court’s failure to rule that the so-called “Robin Hood” law (Chapter 41 of the Texas Education Code, tellingly titled “Equalized Wealth Level”) is a de facto state property tax, in violation of the state constitution. Under Chapter 41, property taxes collected by “wealthy” school districts are “recaptured” by the state and then redistributed to “poor” school districts. (In the 2016-2017 fiscal year, Austin ISD alone will be compelled to send $406 million in locally-levied property taxes to other school districts, about a third of its entire budget. State law compels the transfer of well over $1 billion per year from “wealthy” districts to “poor” districts.) In light of previous precedents in the Edgewood saga (which the court supposedly felt bound to adhere to), refusing to recognize this scheme as an unconstitutional state property tax borders on fatuous.

The court’s opinion calls the state’s school finance system “Byzantine” and “Daedalean,” describing it as “undeniably imperfect” and resembling “Band-Aid on top of Band-Aid”—all true–but in fairness to the Legislature much of the Rube Goldberg funding mechanisms (clearly explained in TPPF’s March 2016 publication Texas School Finance: Basics and Reform) were hastily passed due to judicial edicts to the Legislature issued by the Texas Supreme Court in the course of Edgewood and its progeny. (Both the much-maligned “margins tax” and Chapter 41 were enacted by the Legislature to generate additional revenue to comply with prior supreme court rulings, which some observers believed were calculated to force the state to adopt an income tax.)

There were also two—to my mind, unnecessary–concurring opinions. Justice Eva Guzman, joined by Justice Debra Lerhmann (both, perhaps coincidentally, on the ballot in November), emphasized the importance of education, especially for the “economically disadvantaged” (who comprise more than 60% of all Texas students)–apparently offering policy advice to the Legislature. (Since when is it the court’s role to give policy advice?) Justice Jeff Boyd, joined by Justices Lehrmann and John Devine, stressed that the state constitution ultimately makes public education “the duty of the Legislature,” and that, accordingly, those disappointed with the court’s decision should hold the legislators accountable, not the justices. This Civics lesson would have been more appropriate had the court shed its role under Edgewood as a back seat driver.

In sum, Morath offers a respite, not a final solution. School finance litigation is over, for now, but it will not go away for good until Edgewood is overruled.

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