Chapter 13: Public School Finance

CHAPTER 13 OVERVIEW
TAXATION FOR PUBLIC SCHOOLS
Taxation for Public Schools
Article I, Section 8, the General Welfare Clause, provides congress the power to
tax and spend for activities not expressly mentioned in the Constitution.
State and local tax account for over 90 percent of educational expenditures.
There are three basic types of taxes; progressive, regressive, and proportional.
Progressive tax comes from personal income
Regressive tax comes from gasoline and cigarette sales among
others.
Proportional tax comes from sales tax and estate wealth, it is a flat
tax.
Hawaii is the only exception, they use a single school district for the state and
education is provided for using the general fund.
TAX RATE
Tax rates are generally based on estimated revenue needed by the district to meet
its financial needs.
Supreme Court of Illinois held that it was unconstitutional for a school district to
levy taxes with the purpose of accumulating a fund to construct a school building.
In Pirrone v. City of Boston, a state court held that local school districts had no
inherent power to levy taxes.
Since local school districts are agents of the state, school taxes are viewed as state
taxes rather than local taxes.
Bonds are the only way a school district can levy a tax, as long as it is used
specifically for the purpose for which it is intended.
EQUITY FUNDING IN EDUCATION
Equity typically means that per-pupil expenditures are equally distributed
throughout a local school district
Equity formula includes state aid minus local effort s a mean of creating parity in
funding schools throughout the state
Equity educational opportunity occurs when all school districts within a state have
equal access to resources that are necessary to provide an education up to a prescribed
level
Equity formulas are input based and have been the target of legal challenges over
several decades based on funding disparities
LEGAL CHALLENGES TO SCHOOL FUNDING
Challenges center around claims that tax systems designed to generate school
revenue are unfair and do not apply equally to all taxpayers
Involve assertions by parents that their children are denied benefits of an equal
educational opportunity based on disparities in tax revenue and distristribution of revenue
among school districts within the state

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Most challenges are based on equal protection clause of the Fourteenth
Amendment to the U.S. Constitution as well as the equal protection provisions found in
state constitutions
Most states adopted minimum foundations programs using formulas that
distribute funds on a per-pupil basis based on the districts wealth and ability to pay
Wealth is not distributed equally among school districts
Funding gap between wealthy and poor districts creates disparities that affect perpupil expenditures
Few remedies are available for taxpayers who succeed in their claim that a tax law
is invalid
If an illegal tax was paid without coercion by a citizen, the underlying
presumption by the courts is that the taxpayer knew the tax was invalid
No recovery is permitted
Challenges by citizens representing poor school districts who challenged funding
formulas based on inequities
Other challenges based on issues involving adequacy of education
THE LANDMARK RODRIGUEZ CASE
San Antonio Independent School v. Rodriguez
Landmark decision affecting School Finance programs across the
nation
Mexican American parents filed a suit on behalf of minority
children throughout the state who were poor and who lived in low property tax
base
3-judge district held that Texas finance system was
unconstitutional under the 14th amendment, the State appealed, and U.S. Supreme
court reversed the ruling
The U.S. Supreme Court decided that the system didnt work at the
disadvantage of any class or group so they did not interfere with the right to an
education , even if the disadvantages occurred between districts due to finances,
but this is not a Constitutional right, so the system was deemed constitutional.
LITIGATION FOLLOWING RODRIGUEZ
State courts became the court of choice over the 14th amendment
States define equity different, and schools in poorer communities tend to score
lower on tests and have lower graduation rates.
States are not consistent nor reach similar decisions due to their equity outlooks
being different
POST-RODRIGUEZ CASES
The measures taken by the state of California represented an important victory for
poor students of color because it created new standards for measuring whether students
learned and whether students were provided the basic resources
Landmark case of CFE v. State of New York
Related case of Montoy v. State of Kansas

Chapter 13: Public School Finance

Contrasting Case Lewis E. v. Spagnolo
Funding distribution schemes to achieve quality and equity will be
continuously debated due to the many variables involved
EQUITY AND ADEQUACY OF FUNDING FOR PUBLIC SCHOOLS
Move from Equity to Adequacy
Equity denotes fairness, which suggested something that rarely happened with
communities having equal access to similar amounts of revenue per student.
Adequacy, on the other hand, focuses on a minimal level of funding needed for
every school to teach its students
LANDMARK CASES
San Antonio Independent School District v. Rodriguez
Landmark decision affecting School Finance programs across the
nation
Finances between one district to the next is not unconstitutional
because it was not for poor citizens of a specific class (see above for more in
depth explanation)
Edgewood Independent School et al. v. Kirby
Kirby alleged discrimination against students in poor districts
Texas Supreme Court unanimously confirmed the trial courts
ruling, and ordered the legislature to develop an equitable system to finance
schools.
Wound up holding 4 more cases up to Edgewood V where state
legislature responded by increasing tier-level funding. This suit has not been hard
by the state supreme court
CFE v. State of New York
New York Supreme court ruled schoolchildren were not receiving
the constitutionally mandated opportunity for a sound basic education
directed the governor and legislature to ensure that every school in
New York City had the resources necessary to provide the opportunity for a sound
basic education
Serrano v. Priest
Quality of a childs education should not be a function of the
wealth of the district in which the child resides
Instrumental in establishing the fiscal neutrality standard that was
used by the court to address wealth disparity
Robinson v. Cahill
Funding of public schools that relied heavily on local property
taxes violated the state constitution as well as the equal protection clause of the
Fourteenth Amendment

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APPLICATION FOR ADMINISTRATORS AND SCHOOL DISTRICTS
Public School Finance
1. The power of taxation for education resides with the state limited only by federal
and state constitutions.
2. State constitutional provisions allow the legislature to make provisions for a
system of public schools and to tax citizens for support of public education.
3. The legislature has the inherent power not only to tax citizens for support of
education but also to distribute funds for the operation of public schools.
4. The Equal Protection Clause establishes a minimum standard of uniformity to be
met by state tax legislation.
5. Tax distribution formulas are determined by the legislature based on the needs of
various types of school districts and the ability of citizens in those districts to support
public education.
6. The view held by the court in the Serrano case is that the quality of a childs
education should not be a function of the wealth of the district in which the student
resides.
7. The U.S. Supreme Court held in Rodriguez that there is no loss of a fundamental
right since education in itself is unprotected by the U.S. Constitution.
8. According to the Rodriguez ruling, a funding system based on local property tax
that provides a minimum education to all students is constitutional.
9. The Rodriguez decision removed Public School Finance litigation from the
federal courts to state courts.
10. Following the Rodriguez decision, courts have been more inclined to focus their
attention on educational quality as influenced by teacher quality, appropriate instructional
materials, student achievement scores, and graduation rates as a means of addressing
equal opportunity provisions for students.
11. Based on different conclusions reached by state courts in matters involving equity
in funding as well as differences in state constitutions, there is no uniformity among
courts in their decisions regarding adequacy for funding public schools.
12. Generally speaking, courts will not deem an act of the legislature unconstitutional
without a showing that the legislature exercised its authority in an arbitrary and
capricious manner.
13. The state may collect tax funds from wealthy school districts and redistribute
them to poorer districts to achieve a measure of equity.