Standards push helps lawsuits

Simply filing a suit—or threatening to—can spur reform. Then political organizing kicks in.

By Daniel C. Vock

Note:2008: Illinois Still Using Property Taxes to Fund Education

Across the country, 25 states are now facing lawsuits challenging the way they pay for schools, according to the New York-based Campaign for Fiscal Equity, which tracks the progress of such suits.

Indeed, lawsuits are by far the most common tactic activists have used to try and force states to change their education funding systems. In all, 45 states have faced lawsuits filed by reformers looking to the courts for relief. And while every state constitution includes an education clause that can be used as a springboard to a lawsuit, courts in some states have been more willing than others to enter the political thicket to enforce them.

Between 1973 and 1988, funding reform advocates won only seven of 22 lawsuits. But since 1989 (State by State Recap in 1990s by NCES), activists have prevailed in 19 of 29 suits. (A number of states had lawsuits considered during both periods.)

Plaintiffs are succeeding more often largely because of the standards-based reform movement that’s been embraced across the country, says Michael A. Rebell, executive director and top lawyer for CFE, a coalition of parent organizations, community school boards, citizens and advocacy groups. CFE won its own lawsuit last year in New York State.

Rebell explains that these reforms require students to take standardized tests and hold teachers and schools accountable for how well students perform. Through these requirements, states define what the standards are for an adequate education and provide data to show whether or not those standards are being met. If students do not, the data eases the way for plaintiffs to prove to a judge that the state isn’t meeting its obligation, Rebell explains.

“It brings the Constitution alive,” he says. A 1989 Kentucky lawsuit was one of the first to link student progress on standardized tests to the adequacy argument, becoming the “blueprint” for subsequent lawsuits, says Steve Smith, an education policy specialist at the National Conference of State Legislatures.

Simply filing a suit—or threatening to—can also spur reform, even if the plaintiffs do not win a favorable verdict, Rebell and Smith both note. That happened in both Maryland and Pennsylvania.

“More and more, these litigation efforts are tied to a basic political organizing campaign,” Rebell says. And when plaintiffs have lost, organizations have helped push for the changes anyway, he adds.

Here are some highlights from other states, and their ranking on the annual Education Week survey. “Adequacy” is a measure of how many students received at least the national average ($6,580) in per-pupil funding for 2000-2001, and how close to the national average funding was for students whose districts did not provide that amount. “Equity” is a measure of the state’s contribution to education and the extent to which that money is targeted to low-income students.

NEW YORK STATE

In a June 2003 ruling, New York State’s highest court gave lawmakers until July 2004 to provide students in New York City with access to a “sound basic education.” The deadline came as the result of a 1993 lawsuit by the Campaign for Fiscal Equity.

The court also told the state to conduct a “costing-out” study to determine how much money would be needed. One such study, initiated in part by CFE, estimated that it would take $7 billion to give all students in the state that level of instruction.

Gov. George E. Pataki has formed a panel to come up with suggestions on how to comply. At Catalyst press time, the panel was scheduled to release its findings in mid-March.

ARKANSAS

Two ‘special masters,’ appointed by the Arkansas Supreme Court, will determine by mid-April 2004 if the state has met its obligation under the Arkansas charter to provide an adequate education to each schoolchild.

In November 2002, the state Supreme Court found the school funding system to be inadequate and inequitable. (The special masters it appointed are both former high court members.) The case had been in the courts for at least 20 years.

In response, the legislature passed a series of measures designed to comply with the court’s decision. It raised the sales tax to 6 percent from 5.125 percent, bringing in $364 million in the first year, and added corporate taxes designed to bring in $8 million. Lawmakers approved mandatory consolidation of districts with fewer than 350 students, beefed up state-funded pre-kindergarten programs and gave teachers in poor areas bonuses for teaching there for their first three years.

OHIO

Four times, the Ohio Supreme Court has ruled that the Buckeye State’s school funding system violates the state Constitution. The court even used one decision to outline changes to bring the state into compliance, but the legislature came up with other ideas. In 2002, the justices threw up their hands. They again found the system unconstitutional but decided there was nothing more they could do to force the legislature to comply.

The court has maintained since 1997 that lawmakers should conduct “a complete systematic overhaul” of the funding system, especially its reliance on property taxes. In response, legislators boosted funding and initiated a five-year, $3.5 billion school construction program. They also added a number of accountability requirements for districts.

But lawmakers have yet to change the “overreliance” on property taxes that the high court found problematic. Writing separately, two judges predicted that more lawsuits would ensue as a result of the 2002 decision. However, a month after the court issued that ruling, two new judges joined the seven-member court, which observers widely believe will now be less sympathetic to funding challenges.

PENNSYLVANIA

Court challenges have failed three times, most recently in 1998. But several grassroots organizations continue to push for changes, and made education funding a top issue in the 2002 governor’s race.

The Democratic victor, Gov. Ed Rendell, clashed with legislators during his first year on the job as he tried to boost the state’s share of school funding to 50 percent from 35 percent. The result was a six-month stand-off during which schools didn’t receive any money. In this year’s budget, Rendell proposed increasing subsidies to local schools by $250 million, compared to the $175 million he agreed to in order to break last year’s stalemate with the Republican-controlled legislature. Republicans have already objected.

MARYLAND

In 2002, Maryland lawmakers agreed to a six-year plan to overhaul school funding and eventually ramp up the state’s contributions to schools by $1.3 billion a year. The legislature and governor signed on to the report of the Thornton Commission—a panel of lawmakers, administration officials and private citizens—largely to avoid court intervention.

Back in 1994, the city of Baltimore and the Maryland chapter of the American Civil Liberties Union sued the state, alleging that Baltimore’s children were not receiving an adequate education. The case was settled before trial, but the plaintiffs went back to court in 2000, accusing the state of failing to live up to its end of the bargain. After the judge made a key ruling in favor of the plaintiffs, the two sides settled with the six-year plan.

Under the legislation, new money for schools initially came from higher cigarette taxes. Republican Gov. Robert L. Ehrlich Jr. has proposed allowing slot machines at racetracks and two other locations in order to pay for next year’s share of additional funds. But House Speaker Michael E. Busch, a Democrat, opposes Ehrlich’s plan.

WISCONSIN

The state is now operating under a “three-legged stool” of finance reforms hashed out under former Gov. Tommy Thompson, now the Secretary of Health and Human Services under President George W. Bush. Two court challenges that attempted to enact reforms failed, the last time in 2000.

Under the three-part plan, Wisconsin pays two-thirds of education costs. Teachers agreed to state-determined raises if collective bargaining negotiations fall through with their local school districts. And districts became subject to revenue caps set by the state, which limit the amount of money schools can raise through property taxes.

Last year, the state fell short of its two-thirds obligation—though not by much—because of budget constraints. The amount of money Wisconsin gives to each district depends on how much the district raises in property taxes, which creates disparities among districts. Currently, a panel is studying ways to alleviate some of those problems.

MICHIGAN

In the 25 years before 1994, Michigan voters defeated 11 referendum initiatives to revamp the way the state pays for schools. In 1994, though, they approved “Proposal A,” which raised the state sales tax from 4 percent to 6 percent and increased other taxes as well. The plan reduced property taxes and limited future increases. Most districts now cannot use property taxes to pay for operating costs.

Voters were given the choice to either approve Proposal A, or have income taxes increase automatically. Roughly 69 percent of voters opted for Proposal A.

The move was the end result of frustration over high property taxes, which came to a head in 1993. That year, Kalkaska, a small town in northern Michigan, closed its schools rather than raise property taxes. Later that year, the legislature abolished all school property taxes that weren’t used to pay off debts and came up with Proposal A.

Update:

The Massachuets Supreme Court court ruling that Massachuets is adequately funding Boston schools despite wide variances between school districts. While New York came to a different conclusion.

Equity and Adequacy

By Mike Kennedy, June 2005

State legislatures are responsible for determining how much funding school districts receive. But as more school systems and their constituents see that the legislative process leaves them short of the funds needed to provide an adequate education, they turn to the courts. Though even when a district has the law, facts and court rulings on its side, the ultimate goals sought in a legal challenge — increased funding and a more equitable distribution of that money — still may be a long way off.

For instance, in a lawsuit challenging the public-school funding system in New York, a judge set a deadline for the state legislature to deal with school funding inequities. That deadline passed more than nine months ago, and the legislature still has not acted. In Idaho, the Supreme Court has ruled the state's school finance system is unconstitutional, but the case, which first reached the Idaho Supreme Court in 1993, still is bouncing through the court system after several appeals, and no remedy is in place. In Kansas, the state Supreme Court has ruled in a 1999 case that the legislature has failed to provide suitable funding for public schools, and now the case is back before the court as the judges will determine whether the changes enacted by lawmakers this year meet the constitutional requirements.

Judges can issue legal rulings that school funding laws are unconstitutional and order legislatures to fix flawed funding formulas, but in many cases, numerous appeals and the reluctance of many lawmakers to impose the increased taxes required to solve school funding shortages mean that the inequities persist.

While school officials in inadequately funded systems wait for relief from the courts, facilities continue to deteriorate, maintenance is shortchanged, and students are deprived of resources that would allow them to compete with students in more well-heeled school systems.

Despite frustrations with the slow pace of the judicial system, legal challenges of school funding formulas are the best hope for districts and communities that believe their legislature is denying them a fair slice of the education funding pie.

“We have no other choice,” says Robert Huntley, the lead attorney for the Idaho Schools for Equal Educational Opportunity, a coalition of districts who have sued the state over school funding.

Equity and adequacy

After the U.S. Supreme Court ruled in 1973 that education is not a fundamental right under the constitution, most legal challenges to school funding laws have been filed in state courts. The early cases focused on questions of equity — whether students were being treated equally regardless of the wealth of the district in which they lived. In the last 15 years or so, lawsuits have focused on adequacy — whether a state is providing local districts with enough funding and resources to provide students with an adequate education.

Molly Hunter, director of legal research for the Campaign for Fiscal Equity (CFE), a not-for-profit educational advocacy group that is the plaintiff in the case challenging New York state's school funding system, says that adequacy lawsuits have been more successful than earlier equity litigation because most state constitutions include language that spells out the state's duty to provide an adequate education to students. In some states, the terminology may be “a suitable education,” “a thorough and efficient” education, or “a sound and basic education.”

Also, Hunter says, as states embraced standards-based education reforms and developed detailed standards for schools to follow, education advocates had a stronger case when the funding that states doled out to local districts wasn't enough to meet those standards.

Since 1989, plaintiffs have won 23 of 27 cases that were based on adequacy arguments, according to the CFE.

Ideally, states would define what is a suitable or adequate education, determine what the costs are, and provide the funding. But legislators tend to approach the question in a more politically expedient way. They look at how much funding is politically feasible and allocate that amount to school districts.

As state and federal governments impose higher standards on local districts, those school systems need more resources to meet those goals. Yet, as revenues decline and state funds become more scarce, legislators are hesitant to allocate more funds to education and are even more reluctant to approve additional taxes. Inevitably, schools and state legislatures must confront that conflict, and in most states, that conflict has taken the form of a lawsuit.

A ton of bricks

After 12 years of battling in court, plaintiffs seeking more funding for New York City schools won a victory earlier this year when a judge placed a precise pricetag on what it would cost to ensure students in the city school system a sound basic education. And, because New York City is the nation's largest school system, with more than 1 million students, the price tag is immense.

Judge Leland DeGrasse ordered the state of New York to devise a plan that provides New York City schools with $9.2 billion over five years for capital improvements. The ruling also directs the state “to take all steps necessary” to create a plan that will boost operational funding for New York City schools over four years by $5.63 billion a year. But even with the favorable ruling, the schools are no closer to receiving those added funds. The state legislature has failed to meet a July 2004 court-imposed deadline for addressing the flaws in its school funding formula, and Gov. George Pataki has appealed Judge DeGrasse's most recent ruling.

The $9.2 billion figure was derived from a proposal that the Campaign for Fiscal Equity has compiled. In a 2004 report, “Adequate Facilities for All,” the CFE proposes a BRICKS (Building Requires Immediate Capital for Kids) construction fund to “compensate for past state funding inequities.”

“New York State's building aid program has helped many districts improve their educational infrastructure over the last decades,” the report says. “However, New York City and certain other districts have been the glaring exception to this pattern. For example, under the current building aid formulas, New York City is reimbursed for only approximately 25 percent of its actual new school construction costs, compared with reimbursement rates of over 70 percent for some other high-need districts in the state.”

The report says New York City needs an additional 66,000 classroom seats in the city to alleviate crowding and another 52,000 seats to reduce class sizes. It calls for spending $169 million to create libraries at 125 schools that don't have one; $204 million to build auditoriums at 363 schools without one; $168 million to provide functional labs at 64 high schools, and $211 million to provide functional labs at 179 middle schools.

Other capital spending would pay for exterior modernization at 58 schools; window upgrades at 179 schools; roofing improvements at 119 schools; climate control improvements at 175 schools and heating plan upgrades at 43 schools. The system would receive $176 million to wire the 20 percent of district classrooms that are not wired; $125 million to buy new computers; and $150 million for library upgrades.

Appeals and delays

Idaho provides no state funds to aid school construction, and local districts must win the support of two-thirds of voters to pass a bond issue. Some districts, even if they could win approval of a bond issue, don't have a tax base large enough to generate the money needed for major school construction.

“With a low property value and a low per-capita income, massive increases in property taxes are not a viable option even where there is no question that a building is so dangerous to students that it needs replacement,” Judge Deborah Bail said in one of her rulings in the ongoing school litigation.

After a trial of several weeks, Judge Bail ruled in 2001 that Idaho's funding system was constitutionally deficient because of its exclusive reliance on property taxes to pay for construction and major repairs. That did not sway the legislature from its stance on facilities funding.

“A lot of people still hold on to the old idea that schools should be funded by local property taxes,” says Huntley.

The legislature reacted to the ruling with a law that did not offer any state assistance for school facility needs. Instead, the law authorized a judge to impose an unlimited property tax rate to repair or replace dangerous school facilities and prevented a judge from imposing any other remedy against the state or the legislature.

Bail ruled the law unconstitutional and the Supreme Court upheld that decision in 2004.

“Based upon the overwhelming factual evidence … (the law) does not cure the problem of the deficiency in the legislature's system of public school funding — it exacerbates it,” Bail said. “A crushing local property tax is not a minimally adequate remedy for the legislature's failure to establish a constitutionally adequate system of school funding.”

Huntley, the lawyer for plaintiffs in Idaho, says that with the review of that law concluded, the state Supreme Court is expected this summer to hear the appeal of Judge Bail's 2001 ruling.

Not every state drags its heels on school finance cases. “Some states have responded quickly and well — Vermont, Massachusetts, Kentucky, Iowa,” says Hunter.

State legislatures that have come up with satisfactory plans often have done so when economic conditions are favorable and the state has more revenue at its disposal.

“A lot of them weren't facing funding challenges,” says Hunter. “It's a little more difficult to accomplish when there are revenue problems.”

In other states, school finance cases have bounced several times from court to legislature as lawmakers try to resolve the flaws found by judges.

“Sometimes the early court decisions have been vague, and a kind of dialogue takes place with the legislature,” says Hunter. “When the courts weigh in again, they provide a little more guidance.”

In some “backsliding” states, Hunter says, legislatures adopt successful school finance reforms, but as lawmakers tinker with the provisions over the years or fail to keep up funding levels, the system again becomes constitutionally flawed.

In 1992, with a lawsuit pending, Kansas overhauled its school finance formula to address constitutional concerns. But in succeeding years, districts complained that the state did not maintain the funding levels schools required to maintain their quality. By 1999, the state was back in court defending the constitutionality of its system. Earlier this year, the state Supreme Court ruled the state was not providing suitable funding to schools and ordered it to correct the problem in its 2005 session.

The legislature adopted a plan that added $125 million in school funding this year and is now waiting to see if the Supreme Court believes the funding plan address its constitutional concerns.

“Backsliding is not inevitable,” says Hunter. “Some states have been able to maintain a funding system. But politics is politics. You need eternal vigilance.”

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Last modified: April 30, 2004

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