A Brief History of School Funding in Texas
In 1949, the Texas Legislature
adopted the Gilmer-Aikin Act, which prescribed the reorganization
of state education administration.
The Gilmer-Aikin Act also established the "Minimum Foundation
Program," which created a funding system that provided revenue
for education from both state and local sources.
The "Robin Hood" system
currently in place was precipitated by a 1984 lawsuit. At that
time, a group of school districts charged
that Texas ' use of property taxes to fund education resulted in
substantial inequity among school districts (Edgewood v. Kirby).
After making its way through the courts, the lawsuit reached the
Texas Supreme Court, which ruled the finance system unconstitutional
in 1989.
In 1990, the Texas Legislature
was convened in a special session and passed Senate Bill 1, which
provided more money for equalization,
but essentially left the system intact. After the Texas Supreme
Court struck down SB 1, the Legislature passed House Bill 351
in 1991,
creating 188 County Education Districts (CEDs). The CEDs were
allowed to levy state-mandated property taxes and redistribute
the revenues
to member districts.
The Texas Supreme Court
struck HB 351 down, and the Texas Legislature returned to work.
In 1993, it passed Senate Bill 7. the legislation
that invoked the property tax recapture provision, also known
as Robin Hood. The purpose for recapturing revenue from high-wealth
districts and using it to fund lower-wealth districts was to
improve
equity in the funding system.
By 2004, Robin Hood was
recapturing $1.2 billion per year from 134 school districts. The
Texas Legislature budgets those recaptured
dollars and uses them to fund the Foundation Program of finance.
As a result, it is very hard to end the Robin Hood provisions
because state government would have to find replacement funding
to maintain
support for schools.
During the 1990’s
dissatisfaction with recapture mounted. At the same time, modest
state funding increases were not keeping pace
with the cost of education in Texas. To meet revenue needs
of districts, school boards raised property tax rates. In fact,
by 2003, nearly
690 school districts were at or near the statutory maximum
tax rate of $1.50. This, in turn, sparked litigation to overturn
the system
because of high taxes and inadequate funding.
In 2001, a group of school
districts mounted a lawsuit that became known as West Orange-Cove
CISD v. Neeley. When
the
case went
to trial in 2004, over 300 school districts were involved
as plaintiffs
or
plaintiff interveners. Plaintiff school districts argued
that, because they must levy the maximum property tax
rate to maintain
equity and
adequacy, the local property tax had become equivalent
to a state ad valorem tax, which is prohibited by the
Texas Constitution.
They also argued that the state finance system underfunded
public
education,
preventing the districts from meeting their responsibilities
to promote the General Diffusion of Knowledge.
In September 2004, the
Travis County District Court ruled in favor of the plaintiffs and
set a date of October
1, 2005 for
the Texas
Legislature to remedy the unconstitutional aspects
of the school funding system, including unconstitutional
aspects
of facilities
funding. |
