Despite acknowledging flaws in the school finance system, the Texas Supreme Court upheld its constitutionality in a decision announced May 13, ending a nearly five-year legal battle.

More than 600 school districts, including Katy ISD, joined a lawsuit in 2011 that challenged the state’s funding formula, which twice was deemed unconstitutional by former District Court Judge John Dietz in 2013 and 2014.

“I think a lot of folks are unhappy about it,” new KISD Superintendent Lance Hindt said. “I think just the verbiage that was used in the decision—anytime you have a system come out and say, ‘Well, our funding system meets the minimum expectations.’ Well, that’s not what Texas education’s all about. We’re not about meeting the minimum expectations in the classroom. Why should we be that way at the state level when it comes to school funding?”

With no change to the school finance system, local officials said they are forced to contend with the same funding challenges the formula has created over decades—namely that tax revenue associated with increased property values accrues to the state and not to local districts.

“If we have a growth in our property values a year ago, then the state—for the next year—takes the value away,” KISD Chief Financial Officer Chris Smith said. “Basically, you have a temporary increase in taxes, and the next year the state recognizes that and then decreases it by that amount. It’s an abrupt transition.”

State Rep. John Zerwas, R-Katy, who served as a member of the Appropriations and Conference committees in previous legislative sessions, supported the 2011 funding bill that resulted in $5.4 billion in education funding cuts after it was approved by the Legislature. He said the school finance system will be a top priority in the next legislative session, which begins in January.

“I was satisfied that we had upheld our constitutional obligation,” Zerwas said. “I think the [state] Supreme Court has been appropriate in saying, ‘There’s a lot of work that can be done here.’ And it should be the first and most important thing that we deal with as a legislative body.”

Supreme Court decision

After almost a year of deliberation,  the state Supreme Court declared Texas’ school finance system constitutional. In the court’s 100-page opinion, Justice Don Willett called the formula “Byzantine” but said it met the minimum standards of the state constitution.

It was the seventh time since the 1980s the Texas Supreme Court ruled on the constitutionality of the system. [totalpoll id="165209"]

Although Willett expressed the need for reform, he said the role of the court was not to micromanage policy but determine the finance system’s legality.

“Texas’ more than 5 million school children deserve better than serial litigation over an increasingly Daedalean ‘system,’” he wrote in his opinion. “They deserve transformational, top-to-bottom reforms that amount to more than Band-Aid on top of Band-Aid. They deserve a revamped, nonsclerotic system fit for the 21st century.”

Gov. Greg Abbott supported the Supreme Court’s ruling, labeling it a victory for Texas taxpayers and the state’s constitution.

“The Supreme Court’s decision ends years of wasteful litigation by correctly recognizing that courts do not have the authority to micromanage the state’s school finance system,” Abbott said.

Rebecca Fox, president of the KISD board of trustees, said she is disconcerted by political interests negatively affecting students across the state.

“It’s very disappointing for me to think that my Supreme Court says that the way Texas funds it schoolchildren meets minimum standards,” she said. “I don’t know one person who wants minimum standards for education for any child. We demand excellence for all children in Texas.”

Funding challenges

When it comes to the school finance system, officials agree on one thing: it is complex. The state funding formula is about four pages long, and other related formulas fill up dozens of pages in spreadsheet documents, Smith said.

The school finance system includes problems with equity and adequacy, local officials said. However, they said difficulties stemming from state funding begin with the complexity of the formula as well as its relevance to each individual school district.

Smith said KISD uses its own template in an attempt to keep calculations pertinent to its own circumstances.

“We have our own template that we’ve developed,” he said. “It’s very simplified, but it’s unique to Katy. It works for us because there’s so many different variables that could happen.”

According to data from the Region 4 Education Service Center, KISD receives more funding than 77 percent of the school districts in the Greater Houston area, falling above the state average for revenue per pupil, which is based on weighted average daily attendance.

WADA is a formula used to determine state funding and accounts for district enrollment as well as students who may require additional resources, such as special needs and English as a second language students.

Smith said demographics and WADA are essential in determining funding, but KISD’s revenue per pupil number has been inflated in recent years as the district has experienced unsustainable property value increases.

Fast-growth districts, like KISD also face particular challenges, Smith said.

KISD is growing by about 2,500 students each year, which forces the district to deal with a variety of issues, such as increasing staff and resources.

The district expects to spend $18 million in new positions for KISD’s three new schools that are set to open for the 2016-17 school year, he said.

“The formulas do give us new money for those new students,” he said. “However, it is a challenge to keep up with those expenses, especially when we have the fixed cost when we open new schools.”

Looking ahead

Local school officials agreed the school funding formula as it stands continues to benefit the state as opposed to its school districts. Texas stands to gain more from increased home values, they said.

Smith said KISD’s property tax value is expected to increase by around 8 percent next year, which is still down nearly 10 percent from its decade-high of 18 percent in 2014.

“Property values have been increasing statewide, and so the state’s budget ultimately is the one seeing the benefit of those increases in property values,” he said. “We only see them one year, and they’re gone. [The state sees] them continually.”

Zerwas said he recognizes the necessity for change heading into the next legislative session.

“I look at us having a very deep and robust conversation about how we finance our schools to make it a fair and equitable distribution of the revenue so that—despite where you live—you can expect to get a good quality foundational education,” he said.

Smith said KISD is in a “healthy condition,” but he could see how the district and others in a similar position could experience difficult times in the future if changes to the school finance system do not occur.

“Everybody I know in Katy ISD comes to work every day to give it their all for the children of this district,” he said. “And to hear that we’re satisfied with the minimum is very depressing when you dedicate your life’s work to educate the kids [and] you want to give them the best.”