Opinion of the Court

3

411 U.S.

plaint was filed in the summer of 1968 and a three-judge court was impaneled in January 1969. In December 1971 the panel rendered its judgment in a per curiam opinion holding the Texas school finance system unconstitutional under the Equal Protection Clause of the Fourteenth Amendment. The State appealed, and we noted probable jurisdiction to consider the far-reaching constitutional questions presented. 406 U. S. 966 (1972). For the reasons stated in this opinion, we reverse the decision of the District Court.

I

The first Texas State Constitution, promulgated upon Texas' entry into the Union in 1845, provided for the establishment of a system of free schools. Early in its history, Texas adopted a dual approach to the financing of its schools, relying on mutual participation by the local school districts and the State. As early as 1883, the state

3 A three-judge court was properly convened and there are no questions as to the District Court's jurisdiction or the direct appealability of its judgment. 28 U. S. C. §§ 1253, 2281.

The trial was delayed for two years to permit extensive pretrial discovery and to allow completion of a pending Texas legislative investigation concerning the need for reform of its public school finance system. 337 F. Supp. 280, 285 n. 11 (WD Tex. 1971).

5337 F. Supp. 280. The District Court stayed its mandate for two years to provide Texas an opportunity to remedy the inequities found in its financing program. The court, however, retained jurisdiction to fashion its own remedial order if the State failed to offer an acceptable plan. Id., at 286.

6 Tex. Const., Art. X, §1 (1845):

"A general diffusion of knowledge being essential to the preservation of the rights and liberties of the people, it shall be the duty of the Legislature of this State to make suitable provision for the support and maintenance of public schools."

Id., §2:

"The Legislature shall as early as practicable establish free schools throughout the State, and shall furnish means for their support, by taxation on property

.

constitution was amended to provide for the creation. of local school districts empowered to levy ad valorem taxes with the consent of local taxpayers for the "erection... of school buildings" and for the "further maintenance of public free schools." Such local funds as were raised were supplemented by funds distributed to each district from the State's Permanent and Available School Funds. The Permanent School Fund, its predecessor established in 1854 with $2,000,000 realized from an annexation settlement," was thereafter endowed with millions of acres of public land set aside to assure a continued source of income for school support.10 The Available School Fund, which received income from the Permanent School Fund as well as from a state ad valorem property tax and other designated taxes," served as the disbursing arm for most state educational funds throughout the late 1800's and first half of this century. Additionally, in 1918 an increase in state property taxes was used to finance a program providing free textbooks throughout the State.12

Until recent times, Texas was a predominantly rural State and its population and property wealth were spread

7

Tex. Const. of 1876, Art. 7, §3, as amended, Aug. 14, 1883. 8 Id., Art. 7, §§ 3, 4, 5.

93 Gammel's Laws of Texas 1847-1854, p. 1461. See Tex. Const., Art. 7, §§ 1, 2, 5 (interpretive commentaries); 1 Report of Governor's Committee on Public School Education, The Challenge and the Chance 27 (1969) (hereinafter Governor's Committee Report).

10 Tex. Const., Art. 7, § 5 (see also the interpretive commentary); 5 Governor's Committee Report 11-12.

11 The various sources of revenue for the Available School Fund are cataloged in A Report of the Adequacy of Texas Schools, prepared by Texas State Board of Education, 7-15 (1938) (hereinafter Texas State Bd. of Educ.).

12 Tex. Const., Art. 7, §3, as amended, Nov. 5, 1918 (see interpretive commentary).

relatively evenly across the State. 13 Sizable differences in the value of assessable property between local school districts became increasingly evident as the State became more industrialized and as rural-to-urban population shifts became more pronounced.14 The location of commercial and industrial property began to play a significant role in determining the amount of tax resources available to each school district. These growing disparities in population and taxable property between districts were responsible in part for increasingly notable differences in levels of local expenditure for education.15

In due time it became apparent to those concerned with financing public education that contributions from the Available School Fund were not sufficient to ameliorate these disparities.16 Prior to 1939, the Available School Fund contributed money to every school district at a rate of $17.50 per school-age child." Although the amount was increased several times in the early 1940's,

18

131 Governor's Committee Report 35; Texas State Bd. of Educ., supra, n. 11, at 5-7; J. Coons, W. Clune, & S. Sugarman, Private Wealth and Public Education 48-49 (1970); E. Cubberley, School Funds and Their Apportionment 21-27 (1905).

14 By 1940, one-half of the State's population was clustered in its metropolitan centers. 1 Governor's Committee Report 35.

15 Gilmer-Aikin Committee, To Have What We Must 13 (1948). 16 R. Still, The Gilmer-Aikin Bills 11-13 (1950); Texas State Bd. of Educ., supra, n. 11.

17 Still, supra, n. 16, at 12. It should be noted that during this period the median per-pupil expenditure for all schools with an enrollment of more than 200 was approximately $50 per year. During this same period, a survey conducted by the State, Board of Education concluded that "in Texas the best educational advantages offered by the State at present may be had for the median cost of $52.67 per year per pupil in average daily attendance." Texas State Bd. of Educ., supra, n. 11, at 56.

18 General Laws of Texas, 46th Legis., Reg. Sess. 1939, c. 7, pp. 274– 275 ($22.50 per student); General & Spec. Laws of Texas, 48th Legis., Reg. Sess. 1943, c. 161, pp. 262-263 ($25 per student).

the Fund was providing only $46 per student by 1945.1 Recognizing the need for increased state funding to help offset disparities in local spending and to meet Texas' changing educational requirements, the state legislature in the late 1940's undertook a thorough evaluation of public education with an eye toward major reform. In 1947, an 18-member committee, composed of educators and legislators, was appointed to explore alternative systems in other States and to propose a funding scheme that would guarantee a minimum or basic educational offering to each child and that would help overcome interdistrict disparities in taxable resources. The Committee's efforts led to the passage of the Gilmer-Aikin bills, named for the Committee's co-chairmen, establishing the Texas Minimum Foundation School Program.20 Today, this Program accounts for approximately half of the total educational expenditures in Texas.2

21

The Program calls for state and local contributions to a fund earmarked specifically for teacher salaries, operating expenses, and transportation costs. The State, supplying funds from its general revenues, finances approximately 80% of the Program, and the school districts are responsible-as a unit-for providing the remaining 20%. The districts' share, known as the Local Fund Assignment, is apportioned among the school districts

19 General & Spec. Laws of Texas, 49th Legis., Reg. Sess. 1945, c. 52, pp. 74-75; Still, supra, n. 16, at 12.

20 For a complete history of the adoption in Texas of a foundation program, see Still, supra, n. 16. See also 5 Governor's Committee Report 14; Texas Research League, Public School Finance Problems in Texas 9 (Interim Report 1972).

21 For the 1970-1971 school year this state aid program accounted for 48% of all public school funds. Local taxation contributed 41.1% and 10.9% was provided in federal funds. Texas Research League, supra, n. 20, at 9.

under a formula designed to reflect each district's relative taxpaying ability. The Assignment is first divided among Texas' 254 counties pursuant to a complicated economic index that takes into account the relative value of each county's contribution to the State's total income from manufacturing, mining, and agricultural activities. It also considers each county's relative share of all payrolls paid within the State and, to a lesser extent, considers each county's share of all property in the State.22 Each county's assignment is then divided among its school districts on the basis of each district's share of assessable property within the county.23 The district, in turn, finances its share of the Assignment out of revenues from local property taxation.

The design of this complex system was twofold. First, it was an attempt to assure that the Foundation Program would have an equalizing influence on expenditure levels between school districts by placing the heaviest burden on the school districts most capable of paying. Second, the Program's architects sought to establish a Local Fund Assignment that would force every school district to contribute to the education of its children 24 but that would not by itself exhaust any district's resources. 25 Today every school district does impose a property tax from which it derives locally expendable

22 5 Governor's Committee Report 44-48.

23 At present, there are 1,161 school districts in Texas. Texas Research League, supra, n. 20, at 12.

24 In 1948, the Gilmer-Aikin Committee found that some school districts were not levying any local tax to support education. Gilmer-Aikin Committee, supra, n. 15, at 16. The Texas State Board of Education Survey found that over 400 common and independent school districts were levying no local property tax in 1935-1936. Texas State Bd. of Educ., supra n. 11, at 39-42. 25 Gilmer-Aikin Committee, supra, n. 15, at 15.