School finance lawsuits to be heard in court this fall

Cy-Fair ISD hopes system is deemed unconstitutional

Cy-Fair ISD is among nearly 600 Texas school districts that have joined one of six school finance lawsuits in the hopes of the development of a new finance system.

"The majority of the districts in the lawsuits are suing over taxpayer student equity issues and advocacy funding issues," said Ray Freeman, deputy executive director of the Texas Equity Center, which was formed to address inequities in the school finance system. "When the legislature cut $5.4 billion from public education for this biennium, that was the final straw for everyone."

The lawsuits

Last December, Cy-Fair ISD joined the Fort Bend ISD vs. Robert Scott lawsuit, which revolves around the notion that the school finance system should be adequate and equitable.

"We hope the district court, and ultimately the state Supreme Court, will determine the current school finance system is unconstitutional," said Stuart Snow, CFISD associate superintendent for business and financial services. "As a result of that, we hope the legislature will develop a system that addresses our claims."

CFISD leadership said they hope several issues are focused on during the trial, ranging from the need for funding of new mandates to the issue of cost per student. They would also like the legislature to perform a cost funding study on education, Snow said.

"When our neighboring districts receive $500 to $1,200 per student in funding more than Cy-Fair, how is that an equitable and efficient type of funding?" said Stacye Anderson, chairwoman of the CFISD Leadership Committee, which aims to educate community members on legislative issues. "We also believe the legislature hasn't provided the means and the resources to achieve the state's education goals."

Travis County Judge John Dietz is expected to combine similar arguments of the lawsuits into a six-week trial, which begins Oct. 22. Whatever the outcome of the lawsuit, it is expected to be appealed to the state's Supreme Court.

"I think most districts want the system to become one that is fair for all children," Freeman said. "It should be a system that doesn't treat some students better than others because of the ZIP code [in which] they live."

A broken system

The state's school finance system has had problems since the '60s when Rodriguez vs. San Antonio was tried, Freeman said.

"Then the Edgewood cases in the '80s and '90s dealt with issues in hope of bringing more equity into the system," he said. "Over time the gains that those lawsuits made were eroded by changes in legislation that complicated the funding system and made it less and less equitable."

In 2006, legislation mandated a statewide reduction in property taxes by one-third, which resulted in a loss of revenue for school districts. To make up for the lost funding, the legislature guaranteed that each district would receive target revenue based on money it would have received from weighted average daily student counts and the district's maintenance and operations tax rate from the 2005-06 school year.

"Until the recession hit, the state was doing good enough economically that they could use increased revenue from sales tax to offset the shortage and the lack of a permanent funding system to offset what [districts] gave up," Freeman said. "Taking away that third of the property tax revenue was the major cause of the [budget] shortfall last session."

In addition, the amount of target revenue a district receives can differ by thousands depending on local property values, rate of increase in property values, enrollment growth, level of tax collections and loss of value from a local homestead exemption when House Bill 1 was passed in 2005.

"The factors that originally impacted and caused the differences in target revenue in 2005 are essentially the same in the current finance system," Snow said. "The school finance system has not been overhauled, just patch-worked."

Local effects

In Cy-Fair ISD, an explosion of student growth and a local property tax exemption hindered the amount of state funding the district received after the target revenue system was put into place.

"In 2005 and 2006, it was the period of greatest enrollment growth the district had seen in its history," Snow said. "Over that two-year period we grew by about 13,000 students, and our property value growth increased rapidly as well."

Despite property value growth, CFISD's optional homestead exemption limited the amount of property taxes collected by the district, which resulted in less funding per student from the state. About 60 percent of CFISD's taxable value comes from residential homes, which is a higher percentage than the other Harris County school districts with a local exemption, Snow said. In addition, student enrollment growth outpaced the property value increase, resulting in less funding.

The potential amount of property tax a district collects depends on whether it has smaller properties, such as houses, or larger commercial facilities such as an oil refinery or a power plant, said Chandra Villanueza, policy analyst with the Texas Center for Public Policy Priorities.

"A lot of suburban districts are bedroom communities and have all houses, so they have a high number of students, but property values aren't as high, even if it is more expensive housing," she said.

Next session

Legislation regarding education and school finance is expected to gain steam slower than before the last session, Anderson said. This may be because two members of the legislature's public education committee are leaving: state Rep. Rob Eissler, R-The Woodlands, lost his seat in the primary election, and state Rep. Scott Hochberg, D-Houston, is stepping down, Anderson said.

"Both of them are very knowledgeable about school finance, so to have two experts gone next year is a concern," Anderson said.

Additionally, it is unlikely legislators will make any changes to the school finance system until there has been a final ruling in the lawsuits.

"We could be looking at the legislative session ending in 2015 before we start seeing any movement on school finance," Snow said.

By Marie Leonard
Marie came to Community Impact Newspaper in June 2011 after starting her career at a daily newspaper in East Texas. She worked as a reporter and editor for the Cy-Fair edition for nearly 5 years covering Harris County, Cy-Fair ISD, and local development and transportation news. She then moved to The Woodlands edition and covered local politics and development news in the master-planned community before being promoted to managing editor for the South Houston editions in July 2017.


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