Updated: School Finance Ruling Favors Districts

Updated, 3:43 p.m.:

In a decision certain to be appealed to the Texas Supreme Court, state district Judge John Dietz ruled Monday in favor of more than 600 school districts on all of their major claims against the state's school finance system. With a swift ruling issued from the bench shortly after the state finished its closing arguments, Dietz said that the state does not adequately or efficiently fund public schools — and that it has created an unconstitutional de-facto property tax in shifting the burden of paying for them to the local level.

"There is no free lunch," he said. "We either want increased standards and are willing to pay the price, or we don't."

Dietz said that issues raised by another party in the lawsuit, Texans for Real Efficiency and Equity in Education — a group representing parents, school choice advocates and the business community that argued the current system was inefficient and overregulated — were better solved by the Legislature. He also declined to find the state cap on charter school contracts, or the charters' lack of access to facilities funding, unconstitutional.

Moments after Dietz spoke, Texas Education Agency Commissioner Michael Williams issued a statement emphasizing that the ruling is "simply one step on this litigation’s path."

“All sides have known that, regardless of the outcome at the district level, final resolution will not come until this case reaches the Texas Supreme Court," he said. "I’m appreciative of the strong case presented by the Attorney General’s Office on behalf of the state. The Texas Education Agency will continue to carry out its mission of serving the students and educators across our state.”

As he presented his ruling, Dietz discussed what he called the "civic, altruistic and economic" reasons for supporting public education.

"We realize that others provided for us when we were children. We realize that children are without means to secure their education. Just as others provided for us when we were in school, now is the time when we provide for others," he said, going on to describe the societal benefits of a well-educated population: lower crime rates, fewer people who need public assistance and a greater state income.

Though he did not rule in favor of TREEE's claims, which challenged the statutory cap on charters, the alleged overregulation of public schools and the state's system for rating for financial accountability, Dietz said that they should "bear the Legislature's scrutiny."

The judge, who is expected to issue a more detailed decision in several weeks, did not elaborate further on his ruling against the charter school plaintiffs. He said that it was within the Legislature's discretion to fund charter schools differently than traditional public schools, and that any disparities in funding "do not rise to the level" of unconstitutionality.

The executive director of the Texas Charter School Association, David Dunn, issued a statement in response to the ruling Monday evening.

“We are disappointed that Judge Dietz ruled against charter school students and their parents, denying them constitutional protections,” he said. “They have the same constitutional right to facilities funding as every other Texas public school student.  Parents and students do not give up their right to facilities funding by choosing the best public school option for their child.  However, we are thrilled that the judge ruled the overall public education system, of which charters are an integral part, inadequate.”

Original story:

A ruling from state District Judge John Dietz is expected Monday afternoon in the sweeping school finance trial involving more than 600 school districts that began Oct. 22.

The districts, which serve three-fourths of the state's 5 million public school students, argue that the state is not meeting its constitutional obligation to adequately fund public education. They sued following a $5.4 billion state budget cut lawmakers passed in 2011, just before the state transitioned to a rigorous new student assessment and accountability system.

"Texas should be ashamed. These numbers don’t lie, and yet this is the system that our kids are being educated in," said Rick Gray, an attorney for the districts. "The evidence is clear that money matters. Money spent wisely matters. Whether you look at SAT scores, ACT scores, dropout rates, those that have more, do better."

Along with the state, all six parties in the lawsuit —four groups of school districts, charter schools, and a coalition of business interests and school choice advocates — are delivering their closing arguments Monday. Before the court broke for lunch, lawyers for the districts and charters reviewed key pieces of testimony presented by the long line of school finance experts, superintendents, parents, state education officials and national policy researchers who have served as witnesses over the past three months.

The court will reconvene at 1:30 Monday afternoon to hear from the state and the final group of plaintiffs.

While school districts have sued the state over funding six times since 1984, there are new players in the courtroom this time. The interests of charter schools, which have existed in the state since 1995, and school choice advocates are represented in the litigation for the first time.

Lawyers for the charter schools argue that they have been short-changed by the state because they do not have access to the same funding for facilities as traditional school districts. Their lawsuit also attacks the “arbitrary” limit of 215 charter contracts that the state may grant.

Dietz also served as the trial court judge during the most recent round of litigation in 2004. Whatever he decides will probably be appealed to the Texas Supreme Court. If the final decision is in favor of the school districts, it will be up to the Legislature to restructure the system.

Lead budget writers in the House and Senate indicate that lawmakers are not inclined to tackle the question of whether to restore the eliminated funds — or how the state delivers money to districts—  during the current legislative session. At a Texas Tribune forum last week, state Rep. Jim Pitts, R-Waxahachie, and Sen. Tommy Williams, R-The Woodlands, said that they believed funding levels wouldn't be re-examined until a special session, likely in 2014. They expressed views common among many lawmakers that the consequences of last session's cuts have not been as dire as predicted.

“We’ve grown a little cottage industry here in Austin to sue the Legislature over school finance,” said Williams, who accused attorneys involved in the lawsuit of “egging” the districts on.