History of Public School Finance in Texas

1839 - The Education Act of 1839 provided public lands to public schools.

1853 - San Antonio established the first comprehensive free public school system in Texas.

1840-1861 - Legislation was passed establishing a Permanent School Fund.

1869 - Texans adopted the Constitution of 1869. Twenty five percent of the general revenue was to go to public education and all sales of public land were for the Permanent School Fund. Local school districts were required to provide school buildings and a ten-month school year supported through local property taxes.

1875 - Texas legislature voted to allow incorporated towns and cities taxing authority for education purposes.

1876 - The new Texas constitution established a permanent endowment, the Permanent School Fund, based largely on the value of half the land in the public domain. The revenue from this fund was divided to schools on a per student basis.

1877 - Payments were distributed at $3.59 per student. Other sources of revenue for state education funding were available; funds from the Permanent School fund were the only actual state education expenditure until 1915.

1900 - All Texas students lived in 11,460 rural school districts.

1915 - The first attempt to equalize school funding. The state legislature appropriated $1 million in school aid for rural school districts that taxed the maximum legal rate.

1918 - The legislature established a state property tax to pay for textbooks. The use of general revenue funds for education was allowed during this time. To address a funding crisis, Governor Hobby issued the first state general appropriation.

1949 - The Gilmer-Aikin Committee (formed by the state legislature in 1947) proposed the establishment of a Minimum Foundation Program (MFP). Eighty percent of the funding came from the state and the rest of the funding was to come from the local level. The ability for local school districts to fund above the state level was allowed.

1965 - Governor John Connally appointed a committee on public education.

1968 - The Governor’s Committee published a report, The Challenge and the Chance. The report called for a complete overhaul of public education in Texas, consolidation of small school districts, a more comprehensive minimum foundation program and increased state funding of public education.

1870 - 1970 - Texas school finance evolved. Through Bills regulating local taxation for education purposes, state studies determined the quality of public education in Texas. State aid to rural education were all passed and/or amended many times during this period.

1971 - The federal district court issued its opinion in Rodriguez v. San Antonio ISD. The court ruled Texas’ method of funding public education to be in violation of the equal protection clause of the Fourteenth amendment to the United States Constitution. The court found that students in poor districts received an inferior level of education compared to the students who lived in wealthy school districts. The court also noted that the tax rates in the poor school districts were frequently higher than the rates in wealthy districts.

1973 - The decision was appealed to the United States Supreme Court. The Supreme Court reversed the federal court's opinion. The Supreme Court felt that the manner in which the state chooses to fund education is a state decision and not a federal issue.

1983 - Governor White appointed a Select Committee on Public Education to investigate the status of public education in Texas.

1984 - House Bill 72 was passed which included finance reforms.

1986 - Edgewood ISD v. Kirby was similar to the Rodriguez case except that it alleged that the current practices violated state law not federal law.

1987 - Judge Clark ruled that the Texas system of financing schools is in violation of the Texas Equal Protection Clause as well as other state constitutional provisions and laws. Clark held that the students of Texas possess a “fundamental right” to an education and that equality of access to funds is the key and is one of the major requirements of this fundamental right. As a result, Judge Clark found inequities in the wealth of the local school districts. The district court judge ruled the Texas system of financing public education to be unconstitutional and that the current system will be set aside. The judge ordered the state legislature to re-work the state’s funding system.

1988 - The case was appealed to the Court of Appeals of the Third District of Texas. The Circuit Court of Appeals overturned Judge Clark's’ opinion.

1989 - The Supreme Court overturned the ruling of the Third Court of Appeals and sustained the original ruling of the District Court by Judge Clark. The justices ruled that the Texas funding system violated “fiscal neutrality and required the state to provide the public school students of Texas sustainable equal access to educational revenues.

1990 - In June, the Texas Legislature began a special session to address the educational funding system. After four special sessions and public outcry, Senate Bill 1 was passed. In September, the Supreme Court of Texas ruled that the new funding formula was unconstitutional.

1991 - In January, the Supreme Court of Texas ruled unanimously in upholding the district courts unconstitutional ruling on the Senate Bill 1 funding formula. It declared that the plan did not address the deficiencies noted in Edgewood I.

Thereafter, the property poor districts filed for a rehearing to overrule the 1931 Love v. City of Dallas decision, stating that local property taxes could not be used to educate students outside the district. Considered the Edgewood II decision, The court refused to overrule Love, stating that tax base consolidation could be achieved through the creation of new districts.

During this time, property-rich districts filed a brief asking the court to clarify whether unequalized local enrichment was still possible under the state constitution. Five of the justices agreed that local school districts might supplement education resources if the local property owners agree to pay an additional property tax.

1992 - In January, the Texas Supreme Court declared Senate Bill 351 unconstitutional in the Carrollton-Farmers Branch ISD v. Edgewood ISD case, considered Edgewood III. The problem was that the county education districts violated constitutional provisions requiring local voter approval of local property taxes and prohibiting a state property tax.

1993 - The legislature passed Senate Bill 7. The law required school districts above a certain wealth level by transferring wealth to poorer school districts. This was considered the “Robinhood” plan.

1994 - The Texas Supreme Court upheld Senate Bill 7 as constitutional.

2002 - TASA/TASB address school finance in Texas
http://www.tasanet.org/depserv/govrelations/selectcommittee/crisis.pdf

2003 - The legislature "sunsets or investigates" the school finance code. It establishes education finance as the top priority for the state. It repeals Chapters 41, 42, and 46 of the Texas Education Code as of September 1, 2005. It ensures that no later than September 1, 2005, the Texas Legislature will have replaced the current funding system.

Vornberg, J.A. (1996).Texas Public School Organization and Administration: 1996.
     Dubuque, Iowa: Kendall/Hunt Publishing Company.

Questions? Danna Diaz BoricuainAustin@aol.com, Enrique Aleman ealeman@tea.state.tx.us, Sheila Guzman sguzman@austin.isd.tenet.edu