The system Texas uses to fund public schools violates the state's constitution by not providing enough money to school districts and failing to distribute it fairly, a judge ruled Monday in a landmark decision that could force the Legislature to overhaul the way it pays for education.
Moments after closing arguments in his packed courtroom, state District Judge John Dietz ruled the funding mechanism does not meet the Texas Constitution's requirements for a fair and efficient system that provides a "general diffusion of knowledge." He declared that funding was inadequate and that there were wide discrepancies in state support received by school districts in wealthy parts of Texas versus those in poorer areas. He also said the system is tantamount to an income tax, which is forbidden by the state constitution.
It was the second time in less than a decade the state has been ordered to remake its school finance system. Dietz said he would issue a written ruling elaborating on his announcement in about a month. The state can then appeal the case directly to the Supreme Court, which could order the Legislature to remake the system.
But a ruling from the high court is not likely to come until the end of the legislative session in May, meaning Gov. Rick Perry would need to call a special session in 2014. In the interval, the state's school finance system remains unchanged.
This was the sixth case of its kind since 1984. During a round of litigation eight years ago, Dietz issued a similar ruling, but the all-Republican Supreme Court reversed his findings on funding — while still declaring the system unconstitutional since it violated state guarantees against an income tax.
This time around, more than 600 school districts across Texas responsible for educating three-quarters of the state's 5 million-plus public school students sued. At issue were $5.4 billion in cuts to schools and education grant programs the Legislature imposed in 2011 — but the districts said simply restoring that funding won't be enough to fix a fundamentally flawed system.
"It's not just dollars; it's how we use them," David Thompson, an attorney representing school districts that educate about 2 million students, said in reaction to Dietz's ruling. "I think there's a lot of room there to begin a discussion with the Legislature."
The districts noted that the cuts came as the state requires schools to prepare students for standardized tests that are getting more difficult and amid a statewide boom in the number of low-income students and those who need extra instruction to learn English, both of whom are more costly to educate.
"There is no free lunch," Dietz said while issuing his ruling. "We either want increased standards and are willing to pay the price, or we don't."
The trial, which began Oct. 22, took more than 240 hours in court and 10,000 exhibits to get this far.
Sen. Rodney Ellis, D-Houston, said Dietz's decision confirms what his party has been saying all along.
"Hopefully this latest in a long line of decisions will force the legislature to truly and systemically address the inequities in our school finance system to ensure that every child in every school — regardless of wealth — has access to a top-notch education," Ellis said in a statement.
The state attorney general's office declined to comment. But Texas Education Commissioner Michael Williams said he'd wait for appeal.
"The Texas Education Agency will continue to carry out its mission of serving the students and educators across our state," he said in a statement.
A spokeswoman for Perry declined to comment. But Lt. Gov. Dewhurst said he was disappointed in Deitz's decision and that he would work with other top state leaders to "ensure that Texas continues to have an accountable, efficient system of public education that produces graduates ready to compete in college and in our global economy."
Texas relies on local property taxes to fund its schools. But attorneys for the school districts said the bottom 15 percent of the state's poorest districts tax an average of 8 cents more than the wealthiest 15 percent of districts, but receive about $43,000 less per classroom.
Rick Gray, a lawyer representing districts mostly in poorer areas of the state, said during closing arguments that the funding system was "woefully inadequate and hopelessly broken." He said Texas must begin producing better educated college graduates, or it would see its tax base shrink and needs for social services swell due to a workforce not properly prepared for the jobs of the future.
"Texas should be ashamed," Gray said of the funding system.
The state countered that the system is adequately funded and that school districts don't always spend their money wisely. "We are not here to debate whether the state is providing the best system money can buy," argued Assistant Attorney General Shelley Dahlberg. "We are here asking if the state system is a constitutional one and we believe that it is."
Districts in rich and poor parts of the state are on the same side of the case since the funding mechanism relies on a "Robin Hood" scheme where districts with high property values or abundant tax revenue from oil or natural gas resources turn over part of the money they raise to poorer districts.
But many "property wealthy" districts say that while they are in better shape than their poorer counterparts, the system still starves them of funding since local voters who would otherwise support property tax increases to bolster funding for their schools refuse to do so, knowing that most of the money would be sent somewhere else.
Also suing were charter schools, which wanted state funding for their facilities and for Texas to ease or a remove a cap allowing only 215 licenses to operate charter schools statewide. Dietz said those complaints did not violate the state constitution.