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An Updated Guide to the School Finance Lawsuits

The latest school finance lawsuit following the state's $5.4 billion cut to public schools suggests that schools need more competition.

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One consequence of lawmakers' $5.4 billion cut to Texas public schools? Five school finance lawsuits filed against the state, covering more than 500 districts and 3 million students. 

With the latest suit, filed Feb. 24 by a group called Texans for Real Efficiency and Equity in Education, comes a twist: The plaintiffs aren't school districts, but parents who support charter schools, bringing a new voice into courtrooms that until now have been populated with veterans of past school finance battles. Instead of challenging the state on whether it has given enough money to schools — a component of the four other lawsuits — it questions how that money is being spent. 

We’ve updated our guide to keeping all the lawsuits and issues straight. (Download all of the available pleadings in the lawsuit and the state's response, to the left.)

2011-12 School Finance Lawsuits
 Texas School CoalitionTaxpayer and Student Fairness CoalitionDavid ThompsonMALDEFTexans for Real Efficiency and Equity in Education (TREE)
Who About 60 property-wealthy districts, including Alamo Heights ISD, Eanes ISD and Highland Park ISD More than 400 districts, primarily mid-to low-property wealth A variety of districts, including the state's largest, Houston ISD Districts with large portions of low-income and English-language-learning students, including San Antonio's Edgewood ISD. Six parents along with TREE; executive director is Kent Grusendorf
Property Tax X X X X X
Adequacy X X X X
Equity X X
Efficiency X
Representation Haynes & Boone, with attorney Mark Trachtenberg Equity Center, with attorneys Toni Hunter and Rick Gray Thompson & Horton, with attorney David Thompson MALDEF, with attorney David Hinojosa Attorney Chris Diamond and former Supreme Court Justice Craig Enoch

Note: Many of the lawsuits will combine several arguments. We’ve categorized them above based on their primary focus. We’ll continue to update this with new developments. 

The newest lawsuit, dubbed “Waiting for Superman,” won’t affect the timeline or the strategy behind the other litigation, said David Thompson, an attorney representing school districts in one of the suits. Once at trial, a judge will likely require the groups making the same arguments to consolidate, meaning they’ll likely share some experts and discovery costs.

Historically, districts have sued the state on three different grounds: efficiency, adequacy and what's called “meaningful discretion.” The Texas Constitution requires that the state provide efficient and adequate funding for public schools. It also says that school districts must have the ability to choose how they spend money they bring in from property taxes.

The latest lawsuit aligns with the previous four on the property tax argument — that the state, by continuing to leave much of the responsibility for funding schools up to local authorities, has left them no choice but to raise property taxes. In many cases, school districts must levy the maximum taxes allowed under the law to meet minimum educational standards, leading to what the lawsuit alleges is effectively a statewide property tax.  

But it diverges from the other four on a key point: It does not argue that public schools need more money to meet state standards. In addition to the property tax argument, all four of the other suits claim that the state has failed to adequately fund its public schools well enough to meet increasingly rigorous accountability standards. The TREE pleading leaves that question open, saying that more funding “may or may not” lead to more efficient public schools. 

The lawsuit, which has the support of former Republican state Rep. Kent Grusendorf (a past House public education chairman who was defeated in 2006 after supporting public school vouchers) and former Republican Supreme Court Justice Craig Enoch, offers some suggestions as to how the state might curtail what TREE attorney Chris Diamond pointed out that previous court rulings have called the “gross bureaucratic waste" in the system — including increasing competition. The suit suggests the state should lift the cap on the number of charter schools it allows, and that traditional school districts should operate under the same regulatory burden as charters, which are exempt from certain state requirements like minimum employee salaries, class size and enrollment. It says it should be easier for students to transfer from district to district if they wish, and calls for an independent third party to evaluate the efficiency of the public school system.

Now for a quick review of the interests behind the other four suits. Chapter 41 schools, the property-wealthy schools that give local revenue back to the state under Robin Hood laws, are joining together as the Texas School Coalition and suing the state, primarily to ensure that they don’t end up handing over even more money. 

A broader coalition of schools led by Thompson will attack on both the adequacy and property tax fronts. 

The two remaining lawsuits represent the interests of poorer districts. They both attack the "target revenue" system established in 2006, when lawmakers reduced the property tax rate but promised school districts that the state would give them enough money to maintain their revenue. Because of that measure, some school districts receive a lot of money from the state to make up the difference, while others receive far less. That has resulted in a funding scheme in which neighboring school districts can have as much as a $7,000 difference in state spending per student.

A group known as the Texas Taxpayer and Student Fairness Coalition is suing on behalf of suburban, rural and inner-city schools of varying sizes, arguing that the target revenue system is wildly inefficient and unfair. The Mexican American Legal Defense and Educational Fund argues in its lawsuit that the target revenue system disproportionately hurts school districts that serve large contingents of low-income and English-language-learning students. 

Until now, all the plaintiffs agreed that the current level of state funding was inadequate. It's hard to say whether this latest suit will affect the likelihood of a favorable ruling on that point. But it does present some new possible remedies — some of which could have a wide-ranging impact on Texas public schools. 

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