districts with equal capacity to raise educational dollars. Some of the recent school finance cases recognize district reorganization or consolidation as a possible and feasible solution to inequities in school financing. For example, in Rodriguez v. San Antonio Independent School District 345 as an alternative to ordering that the State restructure its educational finance system to assure that funds are distributed without regard to a district's wealth the plaintiffs requested that the court order "the defendant school districts in Bexar County be abolished and that the county School Trustees establish new boundary lines for school districts or districts of approximately equal taxable property per child." 346 Similarly, in Robinson v. Cahill,347 the plaintiffs requested that the court order the defendants "to change the boundary lines of the districts in a way that will equalize the amount of tax base per student. 9 348 The authority of the courts to order school district consolidation has been an issue in school desegration cases. Most recently, in Bradley v. The School Board of the City of Richmond, Virginia et al,349 Richmond and its two contigious counties of Henrico and Chesterfield were ordered to adopt a metropolitan student assignment plan that would consolidate city and county school systems in order to achieve racial integration in the schools of the three political subdivisions. The court's reasoning in support of its order might well be equally applicable to cases where consolidation is requested to remedy financial disparities. The court regarded consolidation as the only feasible solution and said: "At present the disparities are so great that the only remedy promising immediate success-not to speak of stable solutions-involves crossing these [county] lines.' "350 351 Referring to other cases in which school consolidation was required or the creation of separate districts was prohibited in school desegregation cases," the court concluded there was ample precedent to support its order and said: The equal protection clause has required far greater inroads on local government structure than the relief sought here, which is attainable without deviating from state statutory forms. Compare Reynolds v. Sims, 377 U.S. 533 (1964); Gomillion v. Lightfoot, 364 U.S. 339 (1960); Serrano v. Priest, 40 U.S. L. W. 2128 (Calif. Sup. Ct. Aug. 30, 1971. . . . In any case, if political boundaries amount to insuperable obstacles to desegregation because of structural reasons, such obstacles are self imposed. 352 School district consolidation also has been an issue in the Detroit school segregation case, Bradley v. Milliken 353 where the court concluded that de jure segregation existed in the Detroit schools. The court emphasized that the obligations imposed by the Fourteenth Amendment fall upon the State,354 that Michigan's central educational administrators have extensive powers over the State's educational system, including that of school district reorganization, and that State law provides mechanisms for annexation and consolidation of school districts. Although the court did not order a merger of school districts, it indicated that such a device would be considered in drawing up its final order. Accordingly, the ordering of school district consolidation or redistricting as a means of equalizing educational expenditures would be within the authority of a court, and, without question, within the authority of a State legislature. Were a court to seek to equalize, through consolidation, the ability of school districts to raise funds, it would be important for the court to recognize the other demands on a district's tax base besides funds for education. As we have shown, "municipal overburden" places great strains on the revenues raised by cities. 355 353 C. A. No. 35257 (E. D. Mich. 1971)., 354 See also note supra. 355 See Schoettle, op. cit. supra note at 1411: "The scheme by which tax bases are arbitrarily parceled out among different municipal juisdictions, while perhaps necessary in an earlier era when records and data were not available, presently has no reasonable justification. In this respect, the present inequalities are analogous to the unequal distributions of voting power that preceded Baker v. Carr." In order to insure that districts have eqaul capacity to raise funds for education, the size of the district's tax base must be adjusted to insure that other unequal demands are taken into account.356 Thus, a system designed to eliminate fiscal disparities between districts would not necessarily result in uniform tax bases; the tax bases would have to be adjusted to provide adequate funds to meet each district's particular needs. VII. THE SCHOOL FINANCE CASES: RELATED PROBLEMS A. The Property Tax A frequent misinterpretation of the school finance cases is that they invalidate the use of the local property tax as a source of revenue for educational finance. The focus of the cases, however, is on unequal educational expenditures; property taxes are important to the decisions only as they relate to unequal expenditures.857 The school finance cases permit continued reliance on the property tax so long as the distribution of revenues collected are free of any wealth criteria. Nevertheless, the school finance cases may provide an important impetus for property tax reform. These cases highlight the extensive use or property taxes and they make a dramatic and reasoned appeal for the removal of financial inequities in school finance. Further pursuit of dragons of inequity will lead to the lair of the property tax. 359 Property taxes are the principal local source of revenue for all local government, not just schools.358 Nationwide it produces $33 billion in tax revenues. 95 percent of all education tax revenue comes from the property tax-$17.4 billion, out of a total of $18.4 billion. 3 360 Although two-thirds of the states require that property be assessed at its full value, according to 1962 data, locally assessed real property averaged less than 30 percent of market value.861 Even more disparate are the huge variations between and within assessment districts.362 The property tax has three major deficiencies as a source of local school support. First, it is a poor measure of ability to pay since today wealth is meas 356 See Schoettle, ibid.: "Though education accounts for the major expenditures of local governments, there is no justification-once the focus has been shifted from education to fiscal disparities-for restricting the requirement of a rational distribution of tax base to school districts. Other maldistributions are equally significant and equally offensive." See also Robinson v. Cahll, op. cit. supra note a 66: "Even if districts were better equalized by guaranteed valuations, the guarantees do not take into consideration 'municipal and county overload'. Poor districts have other competing needs for local revenue." 357 In Serrano the court upheld the plaintiff parents' cause of action which in addition to incorporating the children's claim, also alleged that under the current financing scheme they are required to pay a higher rate than taxpayers in many other districts in order to secure for their children the same or lesser educational opportunities. The court upheld this second claim on the basis that it seeks to prevent public officers from acting under an allegedly void law and if the * * * law is unconstitutional, then county officials may be enjoined from spending their time carrying out its provisions." (citations omitted) Serrano v. Priest op. cit. supra note at 625. Therefore, the parents injunctive claim against public officials apparently depends on a favorable holding in regard to the children's claim of differential educational expenditures based on wealth. The court does not hold that the system of collection and administration of the property tax is itself invalid. Further, the court's statement in the second line of its opinion also shows that discriminatory expenditures, not property taxes, were the evil proscribed by the court. "We have determined that this function scheme invidiously discriminates against the poor because it makes the quality of a child's education a function of the wealth of his parents and neighbors." Id. at 604. It also should be noted that the parents' cause of action, complaining of higher property taxes, if made independent of the children's claim for equal expenditures, would not fall under the fundamental interest doctrine used by the court in reaching its decision. In Hollins v. Shofstall op. cit. supra note at 5, 6 the court apparently upholds the taxpayers' claim. Although the court's reasoning and holding is unclear on this issue, it seems to follow Serrano in linking taxation with expenditures in a way that does not require the elimination of the property tax. 358 J. Kelly, Equal Educational Opportunity Hearings, pt. 160-1 at 7470. 359 S. Carey, Id, pt. 16B at 6875. 360 Final Report, Pres. Comm'n on School Finance, op. cit. supra note at 27. 361 Statement of J. Kelly, Equal Educational Opportunity Hearings, pt. 16D-1 at 7470. 363 For instance, this Report found that in Texas assessments are generally higher in predominately Mexican American districts than in primarily Anglo school districts. Every real dollar's worth of property in districts 80 percent or more Chicano, for example, is valued at about 35 cents. In districts 20 to 30 percent Mexican American the same dollar's worth of property is valued at 25 cents. Report at 37. "The 1962 Census of Governments disclosed that in over two-thirds of the assessment units studied the top quarter of parcels in assessment ratio were assessed on the average at more than twice the ratio for the lowest quarter." J. Kelly, Equal Educational Opportunity Hearings, pt. 16D-1, at 7470. ured in terms more than the amount of real estate a person may own. 366 Highly unsatisfactory administration of the property tax, including failure to use modern appraisal methods or reassess at frequent intervals, has resulted in gross inequity in relative tax burden. Local governments "need to improve local property tax administration to remove the haphazard way in which the tax applies to properties of equal values." Critics have claimed, for example, that proper assessment of big business could reduce local property taxes on residences and small businesses by 25% while still increasing local property tax revenues. "All of which is to say that property value as a measure of wealth for purposes of equalization has all of the problems inherent in the property tax itself." 369 370 Property tax reform is sorely needed. The Federal and State governments are showing interest as taxpayers across the country register their disapproval by refusing to support property-tax financed municipal and educational programs. In the meantime property tax reform is being pressed in the courts. In Russman v. Luckett,31 the Kentucky Court of Appeals (the State's highest court) held that the land assessment practices were in violation of the State laws and constitution. Plaintiff, taxpayers, parents of school children, and students, sought a declaratory judgment and injunctive relief against tax officials. The court upheld their right to sue on the basis that "a justiciable controversy is presented" and "[t]here are no other adequate remedies which may be invoked by these plaintiffs.372 The court noted that in the different taxing districts real estate and tangible personal property were assessed at percentages ranging from 30 to 122 percent of value and that the statewide median real estate assessment ratio was approximately 27 percent. The problem with the system was said by the court to be that it made for disparities in the tax burden upon taxpayers in different counties and taxing districts, and that it produced extreme fund raising difficulties for taxing authorities whose maximum tax rates were limited. More significant to the court was the fact that the current method of assessment was in violation of a provision of the Kentucky Constitution and implementing statutes requiring assessment at 100 percent of fair cash value. The court rejected as "appalling" the defendant's argument that the constitutional provision was 363 "When we were a Nation largely of farmers and home owners, real estate comprised the bulk of the wealth and offered a valid basis for taxation. Wealth could reasonably be measured by holdings of real estate. *** "But the growth of manufacturing and other industries, the relative decline in the importance of agriculture, the migrations to cities and to suburbia have created enormous imbalances in this traditional system. Real estate is no longer the fundamental measure of the ability of people to pay for government services or of their need for them." Id. at 28 and 29. See also Comment, "The Evolution of Equal Protection: Education, Municipal Services, and Wealth" op. cit. supra note at 111. 364 D. Netzer, Economics of the Property Tax, at 46 (1966); J. Burkhead, State and Local Taxes For Public Education 28 (1963); This Report at 47, 48. 365 D. Netzer, op. sit. supra not at 173; Advisory Commission on Intergovernmental Relations, State Aid to Local Government 35 (1969). 366 Ibid. 387 Ibid. 368 S. Carey, Equal Educational Opportunity Hearings, pt. 16B, at 6875. Many of the Nation's cities which are suffering the greatest fiscal decline have 30-50 percent of their property exempt. Id. 6875 n. 1. See also testimony of Ralph Nader, Equal Educational Opportunities Hearings, pt. 16B at 6768 where he cited a series of specific examples of powerful corporations extracting local property tax concessions and went on to state, "The pattern continues across the country. Our files are filled, Mr. Chairman, with examples and documentation of this explicit means of corporate crime; this willful and knowing refusal to pay the most bare minimum taxes to support local services such as education." 369 Comment, "The Evolution of Equal Protection: Education, Municipal Services and Wealth," op. cit. supra note at 167. 370 New York Times, op. cit. supra note at 4, col. 1. See also Equal Educational Opportunity Hearings, pt. 16D-2 at 8015. 371 391 S.W. 2d 694 (Ky. 1965). 372 Id. at 696. impliedly repealed because of its continued violation by public officials.373 The court also rejected the defendant's argument that court decisions had nullified the constitutional provision and its implementing statutes by substituting the test of uniformity in place of fair cash value. Finding further that the question of assessment was not a discretionary matter with the commissioner of revenue, the court ordered compliance by the beginning of the following calendar year, approximately six months following the decision. Similar suits have been brought successfully in other States." 374 On June 29, 1971, a three judge federal district court held that assessment practices and laws in Alabama were in violation of the Federal Constitution. Weissinger v. Boswell.37 Plaintiffs attacked two separate aspects of the assessment process: first, the failure of the State officials to equalize assessment rates violated the Alabama Constitution and laws and also the due process and equal protection clause of the 14th Amendment of the United States Constitution; and second, the Alabama statute granting State and local tax officials wide discretion in setting assessment rates was so vague and indefinite that it too violated the Federal due process and equal protection guarantees. This statute was also attacked on the ground that it was contrary to the provision of the Alabama Constitution requiring that all bills for raising revenue originate in the State House of Representatives. The court found that the Alabama constitutional provision requiring that property be assessed at value and that the property of private corporations and individuals be taxed at the same rate have been consistently interpreted by the Supreme Court of Alabama as requiring "uniformity and equality among all taxpayers, private corporations, associations and individuals alike, both as to ratio and percentage of taxation and also as to rate of taxation." 376 Nevertheless, the court noted that the median assessment ratio for the State of Alabama was approximately 16.9 percent of fair market value and the median ratios for individual counties ranged from lows of 6.7 and 7 percent to highs of 23.1 and 26.8 percent. 377 Such inequality of treatment was found by the court to violate not only the Alabama Constitution but also the due process and equal protection clauses of the 14th Amendment of the Federal Constitution. The court noted that "[w]hile distinctions based on geographic areas are not, in and of themselves, violative of the 14th Amendment,a state must demonstrate, if it wishes to establish different classes of property based upon different geographic localities... that the classification is neither capricious nor arbitrary but rests upon some reasonable consideration of difference or policy." The court was unable to find any legitimate State objective to be served by the vast disparities in the present system. " 378 Plaintiffs' second cause of action attacked the Alabama statute that directed that taxable property within the State be assessed not to exceed thirty percent of its fair market value. The court found that contrary to the Alabama Constitution, the bill creating the statute had originated in the State Senate rather than the State House. Furthermore, the court found the statute to be contrary to the Federal constitution in that it delegated legislative power to an agency without formulating a definite and intelligible standard. Noting that the type of discriminatory treatment found in the assessment practices were deep-seated and of long standing, the court gave the defendant up to a year's time to comply with the mandate of the opinion. B. Intradistrict School Disparities While the recent school finance cases are likely to produce radical changes in the disparities of educational funds available among school districts, it should be emphasized that these cases do not affect inequities that may exist within particular school districts. One notable demonstration of intradistrict disparities 373 Id. at 697. 374 S. Carey, Equal Educational Opportunity Hearings, pt. 16B at 6876. See also Village of Ridgefield Park v. Bergen County Board of Taxation, 31 N.J. 420, 157 A. 2d 829 (1960); Bettigole v. Assessors of Springfield, 343 Mass. 223, 178 N.E. 2d 10 (1961); McNayr v. State, Fla. 166 So. 2d 142 (1964); State ex rel. Park Investment Co. v. Board of Tax Appeals, 175 Ohio St. 410, 195 N.E. 2d 908 (1964); Pierce v. Green, 229 Iowa 22, 244 N.W. 237. was Hobson v. Hansen,379 a case involving the District of Columbia school system. Judge J. Skelly Wright found that in a variety of ways children from lower income families had less educational resources available to them than children from higher income families. Similarly, a New York City Court found that fewer regularly licensed teachers were assigned to the schools in Harlem than to schools in more affluent sections of the city." 380 Intradistrict disparities also have been identified in Denver. In Keyes v. District Number One 381- -a case currently pending before the Supreme Court-382 it was demonstrated that in the schools populated predominately by black and Mexican American students, 23.9 percent of the teachers had had no previous experience in the Denver public schools and 48.16 percent of the faculty held probationary appointments.383 By contrast, in twenty schools not populated mainly by minority students, only 9.8 percent of the faculty had had no previous experience and only 25.6 percent held probationary appointments.384 It generally is believed that intradistrict disparities are a wide-scale problem.385 Professors Kirp and Yudof have commented: 386 There is empirical evidence that school districts allocate substantially fewer dollars to schools in poor and black neighborhoods; indeed, withindistrict disparities may be as significant as disparities in a given state." Although cases involving intradistrict disparities involve difficult and expensive matters of proof,* 387 there is ample legal precedent to support litigation in this area.388 Once interdistrict differentials are removed, efforts will be required to eliminate whatever intradistrict disparities exist. 379 269 F. Supp. 401 (D.D.C. 1967), aff'd. sub. nom. Smuck v. Hobson, 408 F. 2d 175 (D. C. Cir. 1969), on motion for further relief, Hobson v. Hansen, 327 F. Supp. 844 (D.D.C. 1971). 380 In re Shipwith, 14 Misc. 2d 325, 180 N. Y. S. 2d 852, 866 (Dom. Rel. Ct. 1958); cf. Dobbins v. Virginia, 198 Vir. 697, 699, 96 S. E. 2d 154, 156 (1957). 381 313 F. Supp. 61 (D. Colo. 1970), rev'd in part, 445 F. 2d 990 (10th Cir. 1970). 382 Cert. granted, 40 L.W. 3335 (1972). 385 See Schoettle, op. cit. supra note at 1360-62. 388 Kirp and Yudof, op. cit. supra note at 146. See also Statement of Mark G. Yudof, Equal Educational Opportunity Hearings, pt. 16B at 6862, 6866. 387 See Coons, Clune and Sugarman, "Educational Opportunity: A Workable Constitutional Test for State Financial Structures", 57 Cal. L. Rev. 305, 356 n. 147 (1969). 388 See Schoettle, op. cit. supra note at 1412-1416. See also Comment, "Equal Protection in the Urban Environment: The Right to Equal Municipal Services", 46 Tul. L. Rev. 496 (1972); Horowitz, "Unseparate But Unequal-The Emerging Fourteenth Amendment Issue in School Education", 130 U.C.L.A. L. Rev. 1147 (1966); Abascal, "Municipal Services and Equal Protection", 20 Hastings L. Rev. 1367 (1969). Ratner, "Inter-Neighborhood Denials of Equal Protection in the Provision of Municipal Services", 4 Harv. Civ. Rights— Civ. Lib. L. Rev. 1 (1968). |
