Schools Challenge State Tax Adjustments

AUSTIN (CN) - Public school funding is a tangled mess in the United States, as shown by two recent lawsuits in Texas, in which school districts sued the state, insisting that the houses in their districts are worth less than the state thinks.

The Marathon Independent School District and the Terlingua Consolidated School District sued Texas Comptroller of Public Accounts Susan Combs, in separate but similar lawsuits, on Aug. 14 in Travis County Court.

Public schools in the United States receive most of their local funding from property taxes - with the result that wealthy communities generally pay a lower tax rate on property than poor communities do - as a higher tax rate is needed to raise the same amount of money from cheaper houses.

Because property taxes are insufficient, states and the federal government must make up the rest. Because of the obvious inequity of charging a wealthy community lower tax rates for better schools, while charging a nearby poor community higher rates for dilapidated schools, states have devised a welter of rules to redistribute the taxes - generally, without calling it redistribution. Often, local districts send all their tax revenue to the state capital, which then applies formulae to send it back.

According to the Marathon school district's lawsuit: "State aid to Texas school districts is distributed on the basis of their local wealth, with lower wealth districts receiving a proportionately greater share of state funds than higher wealth districts. For state funding purposes, each school district's wealth is measured by the results of an annual property value study conducted by the Comptroller, rather than by the values certified to each school district by its local appraisal district.

"No single factor in the state's school finance system is more important to a school district's level of state funding than the final results of this annual property value study. To the extent the Comptroller's study overstates a school district's property values, the district's state aid is reduced. This reduction occurs because the study has found the district to be 'wealthier' than reported by the local appraisal district."

So, in short, Marathon and Terlingua claim their residents are not as well-off as the state says, so they should get more money from the state. The specifically challenge the use of "local modifiers," which estimate the difference between local costs and national costs of "sample residential properties."

Marathon claims: "On two of the properties in the sample the Comptroller applied a local modifier of 1.23 and 1.25. However, the sales used by the Comptroller to develop these local modifiers could in no way support the local modifiers computed by the Comptroller due to the characteristics of the properties involved and these local modifiers were severely flawed. However, other sales not considered by the Comptroller should have been used and would result in a local modifier of .93."

Both districts ask the court to order the Comptroller to "correct the challenged local modifiers."

Both are represented by Doug Ray, with Ray & Wood.

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