Charter Schools to File School-Finance Lawsuit

Texas is now about to face six lawsuits that target the way it funds public schools.

The Texas Charter School Association announced Tuesday that it would enter the legal fray, arguing that the state has short-changed charter schools because it does not provide funding for facilities. 

“Just because a parent puts his or her students in a charter school doesn’t mean that they deserve that funding any less,” said David Dunn, the association’s executive director. “It’s a pretty simple argument: They get billions, we get zero.”

Along with TCSA, which represents most of the charter schools in the state,  there are six parents of children in Dallas, Houston, San Antonio and Austin charters who are plaintiffs in the suit. Former Texas Solicitor General James Ho is also serving as a legal consultant.

Traditional public school districts primarily pay for facilities through bonds levied with local tax dollars. But they also receive some state assistance in meeting bond payments through two state programs passed in 1997 and 1999. Because charters do not have a local tax base or have access to state aid for facilities funding, they must dip into money allocated for instruction at a rate that Dunn said amounted to about $830 a student.

"That $830 a kid is significant. That is $830 a kid that could go to more teachers, smaller class sizes, higher teacher pay, instructional materials," he said.

In the court filing, the group argues that a finance system that denies facilities funding to charters is not efficient, and therefore violates the Texas Constitution. The lawsuit also attacks the “arbitrary” limit of 215 charter contracts that the state may grant for the same reason. A spokeswoman said that the Texas Education Agency had not yet received the suit, but that it was not commenting on school finance litigation.

Since the early 1970s, groups of school districts have sued the state roughly twice a decade over discrepancies in its school finance system. But the courts have never addressed the legal issues from the perspective of charter schools, which have existed in Texas since 1995. Almost 500 charter campuses — one charter holder can have multiple campuses — now educate about 133,000 of the state’s 4.8 million public school students. Charters are exempt from state regulations like those on minimum employee salaries, class size and enrollment, but still must meet the same accountability standards as traditional public schools.

The state funds charter schools based on the average per-student funding that all traditional school districts receive. In some instances, that means charters actually receive more state per-student funding than school districts, which also draw heavily on local tax revenues to pay for operating and facilities expenses. But the lawsuit argues that because charters’ funding is based on the same outdated formulas that the traditional school districts are attacking and “only receive a one-size-fits-all averaged adjustment” without any support for facilities, charter school students suffer the most from inequities in the current system.

"The traditional ISD suits we recognize will help our schools if they are successful,” said Dunn. “But the key point of difference is that charter schools get zero money for facilities.”

A $425,000 grant from the Walton Foundation will cover a significant portion of the legal expenses. The TCSA board has also agreed to pay $2 per student toward the lawsuit, Dunn said. Last session, charters did receive some relief on the facilities front — a bill passed allowing charters to access the Permanent School Fund like traditional school districts to guarantee facilities bonds, resulting in lower interest rates. But legislation that would have lifted the cap on charter school contracts failed.

Dunn said the lawsuit would probably follow the same timeline as other school finance suits, with a trial sometime in the fall and a ruling expected next summer. A judge could also decide to consolidate it with the others that have already been filed. 

One of the five previously filed suits, brought by Texans for Real Efficiency and Equity in Education, also focuses on issues related to charter schools — like lifting the cap on charter contracts the state may grant — but Dunn said that the two groups were not coordinating. He said that while the two groups would make some of the same arguments, the charter school association’s lawsuit had a different focus.

“The TREE lawsuit claims that money is not the only issue,” he said. “We agree that it's not the only issue, but it's a darned important issue, and it clearly matters."