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Education Reporter

School Funding Litigation
Alabamians Vote No to Opening
Education Spending Floodgates
Roy Moore
Roy Moore
On November 2 Alabama voters narrowly defeated a stealth measure to amend the state constitution to remove language protecting against court-ordered educational spending increases that have become common in other states. Conservative groups successfully mobilized against the measure, which was appended to a non-controversial amendment to repeal archaic and unenforceable language concerning school segregation.

The vote was so close that a recount was ordered. Both the original and the recounted margins of defeat were fewer than 2,000 votes statewide.

Former Alabama Chief Justice Roy Moore said of the proposed amendment: "This is the most deceptive piece of legislation I have ever seen, and it is simply a fraud on the people of Alabama." The unwanted language concerned whether there is a constitutional "right to an education," which has given rise to numerous activist judicial decisions requiring school spending increases.

Opposition to the amendment was complicated by the combination of the "right to an education" language changes with language eliminating racist "Jim Crow" provisions (which had been unenforceable for many decades). Opponents of the changes concerning the "right to an education" were fully supportive of eliminating the racist provisions, but because all the changes were part of the same ballot measure, opponents had the delicate task of explaining to voters why they had to oppose the measure as a whole. They succeeded.

As the Education Reporter reported in October, about half the states face various court cases concerning school financing. Another 21 have only recently settled similar suits, and most will start litigating again soon. Only five states have avoided litigation entirely. Spending lawsuits began in the 1970s, when they focused on equalization of spending between rich and poor districts. (The Economist, 11-25-04)

By the 1990s, the focus of spending litigation shifted from the allocation of resources to demanding a subjectively "adequate" overall level of spending and education, often in reliance on general phrases in state constitutions. Plaintiffs are winning most of the cases despite the constitutional argument that tax-and-spend decisions are solely a legislative prerogative.

NY told to spend billions more 
A court-appointed panel in a New York lawsuit found in late November that an additional $5.6 billion must be spent on New York City's schoolchildren every year to provide the opportunity for a sound, basic education that they are guaranteed by the state constitution. In addition, $9.2 billion worth of new classrooms, laboratories, libraries and other facilities are needed to relieve overcrowding, reduce class sizes and provide adequate places for learning. The judge overseeing the case is expected to draw heavily from the panel's findings. (New York Times, 12-1-04) Tax increases on New Yorkers appear inevitable.

New Montana decision 
Meanwhile, in Montana, the supreme court unanimously decided in November that the school financing system is fatally flawed and demanded better legislation to effectuate the state constitution's guarantee of "a basic system of free quality public elementary and secondary schools." That decision marked the second time the state's funding formula has been struck down since 1989. (Education Week, 11-17-04)

Kentucky is still in court 16 years after the first decision there. A 1981 lawsuit filed against New Jersey was decided four years later but has returned to the court nine times since, including in 2004. "Courts have moved from broad principles to micromanagement, telling schools how much money to spend and where - right down to the correct computer or textbook," The Economist reports.

Texas litigation update 
However, the relation between school spending and student performance is extremely tenuous. In the ongoing litigation concerning the adequacy of Texas public education, George Mason University public policy professor David Armor recently testified that family background, not school spending, has the greatest effect on student performance.

After adjusting for family income and English skills, "Texas has one of the best-performing educational systems in the nation," he told the court. "People expect us to eliminate this [performance] gap when it's caused by something that schools have no control over." (statesman.com, 9-13-04)

In a separate development concerning Texas school funding litigation, a study by Harvard economist Caroline M. Hoxby has concluded that a 10-year attempt by education finance lawyers to reduce per-pupil spending disparities in Texas schools by means of a so-called "Robin Hood" scheme has produced a smaller spending gap but also resulted in the destruction of an estimated $81 billion worth of property wealth.

The soon-to-be-abandoned Texas program involved the forced redistribution of about $30 billion annually in school property taxes, taking from so-called "property-rich" districts and giving to "property-poor" districts. Hoxby's analysis shows the plan did not succeed in equalizing per-pupil spending throughout Texas, although it did reduce the gap between the highest-spending quartile and the lowest-spending quartile from about $2,000 to $1,500 per pupil.

That $500 reduction was achieved at a cost of $27,000 per pupil in property value destruction across the state. This destruction resulted from increased property taxes in the wealthier districts, which depressed real estate values, leading inevitably to additional tax increases (and further declines in real estate values) as revenues fell short of projections.

"Good intentions about redistribution are not enough in school finance: understanding the economics is important too," write Hoxby and Ilyana Kuziemko in their July 2004 report, "Robin Hood and His Not-So-Merry Plan: Capitalization and the Self-Destruction of Texas' School Finance Equalization Plan."

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