Financing Public Education: Recent Developments and the Outlook for Nebraska

Nebraska Law Review, Dec 1973

Since 1968 suits have been filed in at least ten states alleging that public school financing systems which rely primarily on local ad valorem property taxes are unconstitutional in that they violate the equal protection clause of the Fourteenth Amendment. The legal basis for this contention is that these systems make the quality of education dependent upon the wealth of the particular school district, thereby favoring school children who happen to live in a district having high property values and discriminating against children who live in districts having relatively little assessable property. Two basic social principles are involved: (1) the fundamental importance of a system of free public education in a democracy, and (2) the belief that a government should not discriminate between the rich and the poor in providing essential services. In an effort to bring recent developments into sharper focus, this article examines the issue of public school finance and the requirements of the equal protection clause from two perspectives. First, the recent series of "school tax cases" are examined in detail, with particular emphasis placed upon the Serrano v. Priest decision. An attempt is made to determine the effect that these cases will have on existing state education funding systems. Second, the Nebraska system's vulnerability to constitutional attack in light of recent decisions is considered.

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Financing Public Education: Recent Developments and the Outlook for Nebraska

NEBRASKA LAW REVIEW-VOL. Financing Public Education: Recent Developments and the Outlook for Nebraska Kenneth Stephan 0 1 2 0 Thi s Article is brought to you for free and open access by the Law, College of at 1 University of Nebraska College of Law , USA 2 Kenneth Stephan and Richard Wegener, Financing Public Education: Recent Developments and the Outlook for Nebraska, 52 Neb. L. Rev. 77 (1973) Available at: https://digitalcommons.unl.edu/nlr/vol52/iss1/7 , USA - Article 7 "Today, education is perhaps the most important function of state and local governments." -Brown v. Board of Education' "Lines drawn on the basis of wealth or property, like those of race... are traditionally disfavored." -Harper v. VirginiaState Board of Elections 2 INTRODUCTION Since 1968 suits have been filed in at least ten states3 alleging that public school financing systems which rely primarily on local ad valorem property taxes are unconstitutional in that they violate the equal protection clause of the Fourteenth Amendment. The legal basis for this contention is that these systems make the quality of education dependent upon the wealth of the particular school district, thereby favoring school children who happen to live in a district having high against children who live in property values and discriminating districts having relatively little assessable property. Two basic social principles are involved: ( 1 ) the fundamental importance of a system of free public education in a democracy, and ( 2 ) the belief that a government should not discriminate between the rich and the poor in providing essential services. On August 30, 1971, the Supreme Court of California decided the leading case of Serrano v. Priest4, in which it held that: a public school financing system which relies heavily on local property taxes and causes substantial disparities among individual school districts in the amount of revenue available per pupil for the districts' educational grants invidiously discriminates against the poor and violates the equal protection clause of the Fourteenth Amendment. 5 Since all of the states except Hawaii have school financing systems which derive most of their revenue from local property taxes, 6 the Serrano decision has far-reaching implications. United States District Courts in Texas7 and Minnesota8 have applied the Serrano rationale to invalidate existing school funding systems in those states, and a New Jersey Superior Court has cited the Serrano decision with approval in a case in which the New Jersey school financing system was held to violate the equal protection clauseY Public interest in the so-called "school tax" issue is intense, especially in an election year in which rising property taxes constitute a major political issue.1 0 In an effort to bring recent developments into sharper focus, this article will examine the issue of public school finance and the requirements of the equal protection clause from two perspectives. First, the recent series of "school tax cases" will be examined in detail, with particular emphasis placed upon the Serrano decision. An attempt will be made to determine the effect that these cases will have on existing state education funding systems. Second, the Nebraska system's vulnerability to constitutional attack in light of recent decisions will be considered. EXISTING SCHOOL FINANCING SYsTEms: A BASIC EXPLANATION A thorough understanding of the constitutional principles involved in the school tax cases is dependent upon a basic familiarity with the characteristics of existing school financing systems. As noted earlier, all of the states except Hawaii have school funding systems which are characterized by reliance on ad valorem property taxes assessed and collected by the local school districts. This type of revenue is the largest single component of the state's total education expenditure. The concept of decentralized fiscal planning and policy-making is basic to the system of public education in America, and its sudden exposure to criticism comes as a social upheaval in many communities, especially those that fear that centralization of education funding will result in the diversion of some of their tax dollars to school districts having lower tax bases. The typical public school financing system is relatively simple in operation. Approximately 50-75% of each district's available funds are derived from a tax levied on real property located within the district. Therefore, the amount of money which can be spent for education in any given district is largely dependent upon two factors: ( 1 ) the assessed property valuation of the district, and ( 2 ) the mill levy, or rate of taxation, determined by the residents of the district based on recommendations of school district officials. The two factors are inversely proportional. For example, suppose that two school districts having roughly equal numbers of taxpayers and school children wish to provide the same amount o (...truncated)


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Kenneth Stephan, Richard Wegener. Financing Public Education: Recent Developments and the Outlook for Nebraska, Nebraska Law Review, 1973, Volume 52, Issue 1,