2005 Texas Supreme Court Ruling on School Finance System

November 22, 2005 -- In a 7–1 opinion, the Texas Supreme Court today struck down the school finance system, finding that it had evolved into an unconstitutional state property tax. The Court also found that there was substantial evidence that “the public education system has reached the point where continued improvement will not be possible absent significant change” and that “it remains to be seen whether the system’s predicted drift toward constitutional inadequacy will be avoided by legislative reaction to widespread calls for changes.”

The Court gave the Legislature until June 1, 2006 to address the constitutional deficiencies in the system. For the full ruling and summary, select the links below:

• The full court ruling can be found on the Texas Supreme Court website.
• An excellent summary (65k) of the ruling is provided by plaintiffs' attorneys.

The West Orange-Cove Plaintiffs, the lead plaintiffs in the lawsuit, hailed the Court’s ruling. Haynes and Boone LLP attorney George W. Bramblett, Jr., co-counsel for the West Orange-Cove Plaintiffs, remarked: “Today is a great day for the State of Texas. The Court’s historic decision will be applauded by educators, teachers, parents, and students across the state.

"The Court’s ruling on our state property tax claim means that the Legislature must build financial capacity into the school funding system so that districts can hire quality teachers and provide the type of programming that communities across our state need and expect. And, the Court reaffirmed that the Legislature has a constitutional duty to provide an adequate level of funding for our public educational system and that this duty is enforceable in court,” said Mr. Bramblett.

Bracewell & Giuliani LLP attorney David Thompson, co-counsel for the West Orange-Cove Plaintiffs, continued: “For the past decade, the Legislature has been shifting the responsibility of funding Texas schools onto local districts and onto the local property tax, but the local property tax can no longer bear this heavy burden. The Supreme Court’s decision makes clear that it is time for the Legislature to step up to the plate and pay for the high academic standards it has imposed on districts and students.”

Currently, more than two-thirds of school districts in Texas – which educate more than 80% of the students in the state – are taxing at or very near the maximum tax rate. The Supreme Court concluded that these districts lacked “meaningful discretion” to reduce their tax rates without jeopardizing their ability to provide a constitutionally adequate education. While the Court concluded that the system is “adequate” now, it reserved the right to revisit the issue in the future. In doing so, the Court rejected the State’s claim that the adequacy of the educational system is a “political question” not subject to judicial review.

The Legislature has failed to address the looming school finance crisis on multiple occasions, including its 2003 regular session, a 2004 special session, the 2005 regular session, and two special sessions called by Governor Perry this summer.

“The Legislature’s focus has been on simply trading property taxes for consumer taxes, without adding any real new money into the school system. And they could not even accomplish that meager goal. We hope that the Legislature will heed the Supreme Court’s call and adopt ‘big picture’ reforms that will place the Texas public school finance system on firm financial footing for years to come,” remarked Haynes and Boone LLP attorney Mark Trachtenberg, co-counsel for the West Orange-Cove Plaintiffs.

Representing West Orange Cove Plaintiffs