Neeley v. West Orange-Cove

Page 746

176 S.W.3d 746

Shirley NEELEY, Texas Commissioner of Education, et al., Appellants, v. WEST ORANGE-COVE CONSOLIDATED INDEPENDENT SCHOOL DISTRICT, et al., Appellees Alvarado Independent School District, et al., Appellants, v. Shirley Neeley, Texas Commissioner of Education, et al., Appellees Edgewood Independent School District, et al., Appellants, v. Shirley Neeley, Texas Commissioner of Education, et al., Appellees.

No. 04-1144.

No. 05-0145.

No. 05-0148.

Supreme Court of Texas.

Argued July 6, 2005.

Decided November 22, 2005.

Rehearing Denied December 16, 2005.

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Rafael Edward Cruz, Greg Abbott, Austin, Jeffrey L. Rose, Amy Warr, Danica Lynn Milios, Joseph Hughes, Merle Hoffman Dover, Shelley Dahlberg, Edward D. Burbach, Barry Ross McBee, for Appellants.

John David Thompson III, Dallas, Mark Ryan Trachtenberg, George W. Bramblett Jr., Kirk Lane Worleym, Nina Cortell, Dallas, Charles G. Orr, Philip D. Fraissinet, Houston, for Appellees.

Randall Buck Wood, Austin, Roger L. Rice, Jane E. Lopez, Norma V. Cantu, Hector Villagra, for Intervenors.

Doug W. Ray, Ray, Wood & Bonilla, LLP, Austin, Nina Perales, David G. Hinojosa, for Appellants and Intervenors.

Justice HECHT delivered the opinion of the Court, in which Chief Justice JEFFERSON, Justice O'NEILL, Justice WAINWRIGHT, Justice MEDINA, Justice GREEN, and Justice JOHNSON joined.

Once again this Court is called upon to determine whether the funding of Texas public schools violates the Texas Constitution.¹ Three groups of school districts raise three separate challenges.

The plaintiffs, 47 districts led by West Orange-Cove Consolidated Independent School District,² which educate over a fourth of the State's more than 4.3 million school children, contend that property taxes, though imposed locally, have become in effect a state property tax prohibited by article VIII, section 1-e of the Texas Constitution, because the State leaves districts no meaningful discretion to tax below maximum rates. Article VIII, section 1-e states simply: "No State ad valorem taxes shall be levied upon any property within this State."³ We held in Edgewood III that "[a]n ad valorem tax is a state tax when it is imposed directly by the State or when the State so completely controls the levy, assessment and disbursement of revenue, either directly or indirectly, that the authority employed is without meaningful discretion."⁴

The other two groups, intervenors, totaling an additional 282 districts, also educate about a fourth of the State's school children. One group is led by Edgewood Independent School District,⁵ the other by Alvarado Independent School District.⁶ Intervenors contend that funding for school operations and facilities is inefficient in violation of article VII, section 1 of the Texas Constitution, because children in property-poor districts do not have substantially equal access to education revenue.

All three groups also contend that the public school system cannot achieve "[a] general diffusion of knowledge" as required by article VII, section 1 of the Texas Constitution, because the system is underfunded.

Article VII, section 1 states:

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.⁷

This provision sets three standards central to this case. One is that the public school system be efficient. In Edgewood I, we held:

There is no reason to think that "efficient" meant anything different in 1875 [when article VII, section 1 was written] from what it now means. "Efficient" conveys the meaning of effective or productive of results and connotes the use of resources so as to produce results with little waste; this meaning does not appear to have changed over time.⁸

As applied to public school finance, we added, constitutional efficiency requires that "[c]hildren who live in poor districts and children who live in rich districts must be afforded a substantially equal opportunity to have access to educational funds."⁹ We have referred to efficiency in the broader sense as "qualitative", and to efficiency in the context of funding as "financial".¹⁰ The parties have also referred to financial efficiency as "quantitative".

Another standard set by the constitutional provision is that public education achieve "[a] general diffusion of knowledge. . . essential to the preservation of the liberties and rights of the people".¹¹ We have labeled this standard "adequacy",¹² and the parties have adopted the same convention. The label is simply shorthand for the requirement that public education accomplish a general diffusion of knowledge. In this context, the word "adequate" does not carry its broader dictionary meaning: "[c]ommensurate in fitness; equal or amounting to what is required; fully sufficient, suitable, or fitting."¹³ Our responsibility in this case is limited to determining whether the public education system is "adequate" in the constitutional sense, not in the dictionary sense. That is, we must decide only whether public education is achieving the general diffusion of knowledge the Constitution requires. Whether public education is achieving all it should — that is, whether public education is a sufficient and fitting preparation of Texas children for the future — involves political and policy considerations properly directed to the Legislature. Deficiencies and disparities in public education that fall short of a constitutional violation find remedy not through the judicial process, but through the political processes of legislation and elections.

A third constitutional standard is that the provision made for public education be "suitable". We have mentioned this requirement only once, in Edgewood IV:

Certainly, if the Legislature substantially defaulted on its responsibility such that Texas school children were denied access to that education needed to participate fully in the social, economic, and educational opportunities available in Texas, the "suitable provision" clause would be violated.¹⁴

In essence, "suitable provision" requires that the public school system be structured, operated, and funded so that it can accomplish its purpose for all Texas children.

Article VII, section 1, makes it "the duty of the Legislature" to provide for public education.¹⁵ The judiciary's role, though important, is limited to ensuring that the constitutional standards are met. We do not prescribe how the standards should be met.

In this case, the district court, after a five-week bench trial, found in favor of the school districts on all their claims except for inefficient operations funding and enjoined the defendants¹⁶ (collectively "the State defendants") from continuing to fund the public schools.¹⁷ The court issued its judgment on November 30, 2004, but stayed the effect of its injunction for ten months, until October 1, 2005, "to give the Legislature a reasonable opportunity to cure the constitutional deficiencies in the finance system".¹⁸ The Legislature convened in regular session in January 2005, and while it gave much attention to public education issues, it did not reach consensus. After adjournment, the Governor called the Legislature into special session on June 21, 2005, and that session was in progress when we heard oral argument in this case on July 6. That session also ended without enactment of public education legislation, and the Governor immediately called a second special session to convene July 21. Thirty days later, the Legislature again adjourned without enacting public education legislation. The district court's injunction has been stayed by the State defendants' appeal.¹⁹

We now hold, as did the district court, that local ad valorem taxes have become a state property tax in violation of article VIII, section 1-e, as we warned ten years ago they inevitably would, absent a change in course, which has not happened.²⁰ Although the districts have offered evidence of deficiencies in the public school finance system, we conclude that those deficiencies do not amount to a violation of article VII, section 1. We remain convinced, however, as we were sixteen years ago, that defects in the structure of the public school finance system expose the system to constitutional challenge.²¹ Pouring more money into the system may forestall those challenges, but only for a time. They will repeat until the system is overhauled.

The judgment of the district court is modified and affirmed in part, reversed in part, and remanded for reconsideration of the award of attorney fees.

I

We begin by summarizing first the structure of the public school finance system in Texas as relevant to the issues in this case, then the evidence regarding the adequacy of public education thus financed, and finally the procedural background of the case. The record contains evidence through the end of the 2003-2004 school year, and our discussion of the present status of the system generally refers to that time frame unless otherwise noted.

A

The basic structure of Texas' present public school finance system derives from Senate Bill 7 enacted by the Legislature in 1993.²² We have twice described the system thoroughly,²³ including its historical evolution,²⁴ and will not repeat here all that we have said before. In 1995, we held in Edgewood IV (among other things) that the system under Senate Bill 7 did not violate article VII, section 1, or article VIII, section 1-e of the Texas Constitution but noted that the system was "minimally acceptable only when viewed through the prism of history."²⁵ The parties in this case contend that the operation of the system has changed since Edgewood IV, and so in the discussion that follows we include several comparisons between...