DALLAS – The system used by Texas to finance public schools is unconstitutionally inadequate, insufficient, ineffective, and arbitrary, a district court judge ruled Monday in a landmark decision in a lawsuit joined by more than 600 local school districts.

The state’s cap on local property tax rates is in effect a statewide property tax, which is banned by the Texas Constitution, said Judge John Dietz in his ruling from the bench following final arguments.

Many districts are forced to levy at the state maximum operational rate of $1.17 per $100 of valuation to meet state standards, Dietz said, with no meaningful local discretion in funding. The cap of 50 cents per $100 for debt service was not an issue in the case.

Current state funding is inadequate and inequitably distributed to meet the constitutional standard of “a general diffusion of knowledge” in Texas, he said.

Dietz chided state leaders for cutting $5.4 billion from public education in fiscal 2012 and 2013 while raising educational standards for graduation. Voters also bear a responsibility, he said.

“As the economists say, ‘There is no such thing as a free lunch,’“ Dietz said. “Either we want the increased standards and are willing to pay the price, or we don’t.”

The decision came after 240 hours of testimony since the trial began in October.

A written opinion will be issued within six to eight weeks, Dietz said.  When that happens, the state can appeal his decision to the Texas Supreme Court.

The 2013 Legislature is currently meeting in Austin, and the statutory 140-day-session will be over before lawmakers get a final ruling from the high court.

A special session in 2014 may be needed to comply with whatever the court decides. The current system will remain in place until then.

Gov. Rick Perry and Attorney General Greg Abbott declined to comment on Dietz’s ruling, but Lt. Gov. David Dewhurst defended the funding system as providing a good education to Texas students.

“I disagree with today's school finance ruling by the district court in Austin, but I expect an immediate appeal to the Texas Supreme Court,” Dewhurst said.

Michael Williams, commissioner of the Texas Education Agency and one of the defendants in the case, said a final decision is a long way off.

“All sides have known that, regardless of the outcome at the district level, final resolution will not come until this case reaches the Texas Supreme Court," he said.

The school finance lawsuit is the sixth one filed since 1984 and the second time in 10 years that Dietz has directed lawmakers to revise the system of state support for local school districts.

Dietz said the funding system was unconstitutional in 2004, but the Texas Supreme Court reversed most of that decision.

Republicans control the Texas Legislature.

It’s time for lawmakers to do their duty to fund public education and put an end to the court battles, said Sen. Rodney Ellis, D-Houston.

"Hopefully this latest in a long line of decisions will force the Legislature to truly and systemically address the inequities in our school finance system to ensure that every child in every school, regardless of wealth, has access to a top-notch education," Ellis said.

Rick Gray, who represented a group of property-poor districts in the suit, said the state funding system is broken and needs to be replaced.

"Texas should be ashamed," he said in Monday’s closing arguments.

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