Thursday, March 23, 2006

What If The School Property Tax Was Unconstitutional?

Texas High Court Throws Out Property Tax As Means Of School Finance; Could NY CourtsFollow Suit?

A general diffusion of knowledge being essential to the preservation of the liberties and rights of the people, it shall be the duty of the Legislature of the State to establish and make suitable provision for the support and maintenance of an efficient system of public free schools.
-Texas Constitution, Art. 7, sec. 1

Deep in the heart of Texas there may be some real heart after all. The State's Supreme Court, upholding (in part) a lower court ruling, determined that the existing system of setting tax rates -- which, by reason of a statutory cap coupled with legislative and constitutionally imposed mandates, essentially disenfranchises local school districts of any meaningful discretion in setting tax rates -- violates the Texas Constitution. [Click HERE for analysis of lower court decision.]

The Texas Supreme Court, in its discussion, stated, "The Legislature’s decision to rely so heavily on local property taxes to fund public education does not in itself violate any provision of the Texas Constitution, but in the context of a proliferation of local districts enormously different in size and wealth, it is difficult to make the result efficient — meaning 'effective or productive of results and connot[ing] the use of resources so as to produce results with little waste' - Compensation must be made for disparities in the amount of property value per student so that property owners in property-poor districts are not burdened with much heavier tax rates than property owners in property-rich districts to generate substantially the same revenue per student for public education... Also, many districts have been created as tax havens — lots of property and few students — allowing property owners to escape paying their fair share of the cost of public education in Texas and making it more difficult to achieve efficiency. The result is that substantial revenue is lost to the system. If the property in these and similar districts were taxed at substantially the same rate as the rest of the property in the state, the system could have hundreds of millions of additional dollars at its disposal. Whether this additional revenue were used to increase the attainable equalized funding level, ease the State’s burden, or lower the tax rate each district must impose, the system would be made more efficient simply by utilizing the resources in the wealthy districts to the same extent that the remainder of the state’s resources are utilized. A system that operates with an excess of resources in some locales and a dearth in others is inefficient..."

Disparity. Inequity. Inefficiency. Sounds alot like the way we finance education here in New York, doesn't it? Tack on unfunded State mandates, and the hands of local school districts, particularly here on Long Island, are all but tied.

The Decision of the Texas high court was not a broad nullification of school funding under the State Constitution, there being no finding that the entire system is either inefficient or unsuitable. Rather, as courts often do, the court's ruling narrowly held that "the State’s control of local taxation for education amounts to a state property tax in violation of article VIII, section 1-e" of the Constitution. [The Texas Constitution prohibits a State property tax. While Article VIII, sec. 10 of New York's Constitution sets specific tax limitations on real property, there is no prohibition, per se, of a state property tax.]

Ironically, given that Texas is typically last in education, the Texas Supreme Court quotes the landmark decision of the Supreme Court of the United States in Brown vs. Board of Education:

Today, education is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment. In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. Such an opportunity, where the state has undertaken to provide it, is a right which must be made available to all on equal terms.

The court then cites San Antonio Independent School District v. Rodriguez, decided some thirty years after Brown, the first case to challenge the constitutionality of the public school finance system in Texas, wherein the nation's highest court stated:

The need is apparent for reform in tax systems which may well have relied too long and too heavily on the local property tax. And certainly innovative thinking as to public education, its methods, and its funding is necessary to assure both a higher level of quality and greater uniformity of opportunity. These matters merit the continued attention of the scholars who already have contributed much by their challenges. But the ultimate solutions must come from the lawmakers and from the democratic pressures of those who elect them.

Texas does not stand alone in holding that the financing of public schools through a property tax, by disparate formulae with inequitable results, is unconstitutional. New Hampshire's method of school funding through a property tax was found similarly flawed, the court saying that the law, as applied, fails to define or determine the cost of an adequate education and leads to unfair taxation. [SEE N.H. School Funding System Again Declared Unconstitutional.]

In our own front yard, New York's courts have held that the manner in which the State funds public schools -- at least in New York City -- is violative of the State Constitution, mandating a still to be implemented change in the State Aid formula. In Campaign for Fiscal Equity vs. State of New York, the Court of Appeals (NY's highest court) ruled that the New York State constitution requires that the state offer all children the opportunity for a "sound basic education." That was in 1995. Today, the disparity-gap in what is spent per student is as broad in actual dollars as there are school districts in actual numbers, and the equity-gap -- in terms of what the State gives in aid to each district -- continues to widen.

Article XI, section 1 of the Constitution of the State of New York reads as follows: The legislature shall provide for the maintenance and support of a system of free common schools, wherein all the children of this state may be educated.

"The legislature shall provide..." We read this provision as "the State shall pay for." "Maintenance and support..." We read that as "dollars and cents." "A system of free common schools..." Which part of "free" requires further definition? "Wherein all the children of this state may be educated." Now wouldn't that be nice?

It appears to us, from a literal reading of New York's Constitution (no creative judiciary required here), that there shall be no unfunded mandates, that the State must provide 100% of the financial support necessary to maintain our public schools, and that New York's "common schools" (which have been interpreted by the courts to include public schools K-12, and should, by right, include higher education in the State's public colleges and universities) are required, under the highest law in the Empire State, to be FREE!

We now look to New York's Legislature to meet it's constituional obligations to the people of our great State -- students and property owners alike. Failing appropriate remedy, and with no less deliberate speed than was mandated by the court in Brown vs. The Board of Education, we should again look to the courts, for just as separate educational facilities are inherently unequal, so too is the disparate funding of our public schools -- in method and in application -- inherently inequitable.

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