university dren attending private and parochial as well as fileequal educational opportunity. hence,...

Financial Support 37

I'd just like to close by saying that what we *Acting Professor of Law, Boaltought to be doing here is finding answers to the Hall, University of California.

educational financing problems of all our chil- 1. 5 Cal. 3d 584, 487 P.2ddren attending private and parochial as well as 1241, 96 Cal. Rptr. 601 (1971).public schools. They've been short-changed 2. Id. at 593, 487 P.2d at 1246,long enough. 96 Cal. Rptr. at 606.

3. Id. at 594, 487 P.2d at 1248,96 Cal. Rptr. at 608.

Steven Sugarman:* I have entitled my com-ments "The End of Public Education as WeKnow It," because this cry is coming from somequarters regarding the California SupremeCourt's decision in Serrano v. Priest.1 In-terestingly, it is coming from both sides. Somepeople who think the public schools today arefine fear that Serrano will mark their downfall.Others who feel there is a lot lacking in thepublic schools hope that with Serrano, andother cases like it, we can get public educationto address itself to the long advocated goal ofequal educational opportunity. Hence, the"end" if it comes, will be greeted with mixedcheers.

I will talk briefly about how we finance schoolsin this country. In practically all of our states,state government says to school districts, "Wewill guarantee some minimum level of educa-tion for each of you. By that, we mean we willguarantee you some minimum amount ofspending. After that, it is up to you to raisethrough local property taxes any additionalmoney that you want for your schools." In Cal-ifornia, for example, the minimum that the stateguarantees is approximately $400 a pupil 2 andthat number is fairly typical for the country as awhole.

What do you suppose happens? In rich placeslike Beverly Hills, the district adds on perhaps$800 or $1000 extra, so that they spend maybe$1400 a pupil.3 In poor districts like BaldwinPark, although the tax rate is more than doublethat of Beverly Hills since they don't have muchproperty wealth, they are barely able to raise$200 or $250 more; they wind up with some-

Vol. 3, No. 1, Summer 197338 Human Rights

4. In a footnote to the Ser-rano opinion the court con-cluded "bOlur analysis ofplaintiffs' federal equal protec-tion contention is also appli-cable to their claim under thesestate consitutional provisions"referring to the sections in theCalifornia constitution whichtogether have been interpretedto constitute a California equalprotection clause. Id. at 596 n.11,487 P.2d at 1249 n. 11, 96Cal. Rptr. at 609 n. 11.

5. Griffin v. Illinois, 351 U.S.12(1956).

6. Harper v. Virginia, 383 U.S.663 (1966).

7. Bullock v. Carter, 405 U.S.134 (1972).

thing less than $700 a pupil to spend. This dra-matic difference is the way of life for hundredsof thousands of children in California and else-where.

No one has challenged the right of parents toadd on out of their own pockets for the educa-tion of their children. No one is suggesting thatit is unconstitutional for parents to send theirchildren to summer camp, to give them musiclessons, to have them go to tutors or to haveanything like that. In this country that aspect offree enterprise democracy clearly exists; privatebenefit to your children is one of those thingsyou have a right to bestow.

What's being objected to, however, is astate-created school finance system, wherebythe state sets up districts, gives them the powerto tax, and then lets them have differentamounts of resources per pupil to tax. Thisstate action is the kind of discrimination which,it is alleged, violates the Equal ProtectionClause of the Fourteenth Amendment. This iswhat Serrano held; it also held that the systemviolates the California constitution. 4

Analogies relied upon stem from U.S. SupremeCourt cases in other fields that hold it's not fairfor wealth to be a hurdle when something veryimportant is at stake. For example, there is thecase which holds that a state may not requirean indigent to pay for the transcript of his crimi-nal trial because this too endangers his oppor-tunity for a fair appeal.5 Similarly, the Court hassaid a state may not condition the right to voteon the payment of a poll tax; 6 nor may a statecondition the right of a person to run for officeupon the payment of filing fees because therights of the indigent who wants to run for of-fice and of poor people who want one of theirown to appear on the ballot are effectively in-fringed.

7

Just as these fundamental rights cannot be con-ditioned on money, proponents seek to have


public education viewed by the Court as so fun- 8. James v. Valtierra, 402 u.s.damental that it, too, may not be conditioned on 137 (1971).

wealth. That is, the vast differences in local 9. Dandridge v. Williams, 397property wealth which the state allows to domi- U.S. 471 (1970).nate the financing of public education should 10. 337 F. Supp. 280 (W.D.no longer serve to provide better public educa- Tex. 1971), rev'd, 406 U.S. 965tion to some children and worse to other chil- (1973).

dren.

The case isn't cut and dried. Arguments on theother side seem largely based upon SupremeCourt cases involving housing 8 and welfare,9which the Court has characterized as importantbut not fundamental. The Court seems to differ-entiate between economic and social interestson the one hand, which the state may deal within a merely rational way, and more fundamentalrights on the other. In cases involving the latter,the state is held to a very strict standard andmay not condition them upon wealth. Hence,the main issue is whether education is closeenough- to voting, to contesting for office, tofree speech, or to other essential First Amend-ment and Bill of Rights interests, The other sidesays education is no more fundamental thanhousing.

The debate can be reduced to the issue ofwhether education is seen as good for yourhead or merely good for your stomach. I sug-gest, that while it may be good for your stomachbecause it will help you get a better job, whatmakes it crucial is that it's also good for yourhead because it helps make you the kind ofcitizen that we need in this country.

In 1973 the Supreme Court will decide the ques-tion. Shortly following Serrano, a three-judgefederal district court in Rodriguez v. San An-tonio Independent School District1 0 announcedthat the Texas school finance system is uncon-stitutional on the theory that I've described. Thedistrict court has given the Texas legislaturetwo years to come up with a new plan which isnot wealth-discriminatory. This decision wasrendered after a full trial on the merits and is in


11. Serrano was an appealfrom defendants' successfulmotion to dismiss.

12. On March 21, 1973, theU.S. Supreme Court, in a 5-4decision, reversed Rodriguez.

13. See 1 FLEISCHMANNREPORT ON THE QUALITY,COST, AND FINANCING OFELEMENTARY AND SECON-DARY EDUCATION IN NEWYORK STATE ch. 2 (1973).

14. See 1 FINAL REPORT TOTHE SENATE SELECT COM-MITTEE ON SCHOOL DISTRICTFINANCE (1972).

15. This is a label which mycolleagues, Prof. John Coonsand Prof. William H. Clune, andI gave to plans earlier initiatedby Prof. Charles S. Benson; seeJ. COONS, W. CLUNE & S.SUGARMAN, PRIVATEWEALTH AND PUBLIC EDUCA-TION (1970).

contrast with the California decision which wasmerely a preliminary announcement of a legalprinciple.1 The Supreme Court will hear Rodri-guiz.

Various interests are already lining up throughamicus briefs. I am filing an amicus brief onbehalf of the Serranos. California's Superinten-dent of Public Instruction, Dr. Wilson Riles, isfiling a brief on our side as are others, includinga number of governors. On the other side,amicus briefs are being filed by wealthy subur-ban school districts, a group of state attorneysgenerals and others who think that the presentsystem is constitutional. 12

Alongside of this litigation have come substan-tial efforts at the state and national levels toreform school finance regardless of court or-ders. In New York, the State Commission onCost, Quality and Financing of Elementary andSecondary Education, the so-called Fleisch-mann Commission, has come out for full statefinancing of elementary and high schools.' 3 Lo-cal adminstrative control of schools would con-tinue, but there would be no additional localschool taxation.

In California, a recent report to the CaliforniaSenate Select Committee on School DistrictFinance suggests that we do not go directly tofull state assumption of school costs but ratheradopt a system that allows local add-ons in amanner which is not biased in favor of the richschool districts.14 That is, through additional"state aid," poor districts are enabled to raiseextra school dollars as easily as rich districtscan. The system is called district power equal-izing.15

Please note that the continued use of propertytaxes, at least in some form, is not at stake inthese cases. We can still have local propertytaxes under a district power equalizing plan;and we certainly can have state property taxes.They may be unwise as a matter of tax policy,but they're not being challenged by these cases.


Finally, I'd like to comment on the possible ap-plication of the Serrano principle-that a funda-mental interest such as education cannot beparceled out on a wealth discriminatory basis-to other municipal services. There already hasbeen a suit filed in the San Francisco area sug-gesting that rich communities can afford betterpolice protection than poor communities and,therefore, under the Serrano doctrine this is un-constitutional. Poor communities, it is said,ought to be aided by the state so that they, too,can afford quality police protection. It's a veryinteresting proposition. The first issue, as I seeit, will be to decide whether police protectionshould be considered a fundamental interest.

These are very difficult cases to decide. Al-though Mr. Justice Rehnquist, in one of his firstopinions on the bench, bemoaned the fact thatin these kinds of cases judges are making valuejudgments, it seems to me that there is no waygetting around having courts make them. 16

Constitutional decision-making under the equalprotection clause has necessarily become toocomplex and important a process for courts totry to fashion easy black and white decisionrules. If this makes judges more active policymakers, I think there is nothing we, as lawyers,can do about it, except to argue the issues cre-atively here as we would on any other question.

Norman Karsh:* I'm very proud of the finalreport of the President's Commission on SchoolFinance' for at least two reasons. First, I'm will-ing to bet that it's the smallest report ever putout by a presidential commission. It's less than150 pages, and it should take about one hour toread. I would recommend that anyone in-terested in education obtain a copy of the re-port. It is available from the Government Print-ing Office and it's called "Schools, People andMoney." The second reason for feeling proud isthat the Commission reported on time-therewas no extension of the life of the Commission.

16. Weber v. Aetna Cas. Ins.Co., 406 U.S. 164, at 179 (1972)(dissenting opinion).

*Former Executive Director,President's Commission onSchool Finance.

1. THE PRESIDENT'SCOMM'N. ON SCHOOL FI-NANCE, SCHOOLS, PEOPLE,AND MONEY (1972).


"School finance" is a most misleading title. It'severything that's been said by the previousspeakers, but it includes much more. Let memention some of the things the Commission felthad to be considered before any recommenda-tions for national direction in school financecould be made.

A major consideration is what is commonlycalled the governance of education. This in-volves such questions as: Who is responsiblefor determining the level or allocation of re-sources for schools? Where does that powerreside? Does any level of government decidewhat should be spent for education?

Quite frankly, there is no single source or au-thority that makes such decisions. Funds spentfor education come from a variety of sourcesand each source renders its decision within itsown sphere of control. If it were desired thatresources for education should be doubled,tripled, cut in half, or allocated in any differentmanner than is now the case, it would be vir-tually impossible to do so. Further, there is nosingle authority to hold responsible for deci-sions made which affect the total level to bespent for education.

What does exist, is a shared-cost arrangementbetween state and local governments, with thefederal government providing a small part of theresources that go to schools. What does notexist is a single public body or official that canbe held responsible for financing elementaryand secondary education in each state. Educa-tion has often been cited as functioning as afourth level of government, highly political but,never-the-less, removed from the normal politi-cal decision-making process. That situationcreates one critical issue that must be dealt within any review of school finance.

A second consideration, and an area that's beenmentioned by Superintendent Riles, is thatschool finance is just one part of public finance.


In its larger perspective, it involves an entire 2. OFFICE OF EDUCATIONALrevenue system, a choice of tax sources and a RESEARCH, UNIVERSITY OF

NOTRE DAME, ECONOMICchoice of levels of government to utilize various PROBLEMS OF NON-PUBLICtax sources. SCHOOLS (1972).

There are three major revenue sources-income, sales and property taxes-and thereare a host of public functions in addition toeducation, that compete for the resources fromthese taxes. While Mr. Sugarman made thepoint that education is a "compelling interest"of the state, it is only one area of public activitywhich is in competition for public money.

We have a federal system of taxation, a statesystem of taxation and a local system of tax-ation. While each has its own characteristics,they all operate in relationship to each other,and a significant change in one invariably af-fects the other. Much of the recent discussionon tax reform has included the local propertytax. This tax currently serves as the majorsource of funds for schools, and any change inthe financing of schools which lessens the de-pendence on local property taxes could be thecatalyst for much of the reform that may takeplace over the next ten years in terms of whotaxes what and for what purpose.

Still another consideration of school finance isthe matter of the relative costs of providing aneducation to students. It's obvious that educa-tional services cost more to provide a com-parable education for a person with a learninghandicap than for a person whom we consid-er "normal." And who would deny that it costsmore to provide an education for a physicallyhandicapped child than it does for someonewho has not been afflicted? These also arethings that have to be examined if we are toknow what school finance is all about.

The subject of school finance cannot ignore theissues raised by the existence of non-publicschools. Ten percent of the children in thiscountry attend these schools. 2 That is a healthy

Vol. 3, No. 1, Summer 1973.44 Human Rights

3. THE RAND CORPO-RATION, HOW EFFECTIVE ISSCHOOLING? (1972).

segment of American education which must beconsidered not only in terms of the financesthat may be allocated from public revenues, butalso in recognititon of the fact that educationaffects everybody. We are a highly in-terdependent nation with great population mo-bility. Children educated in one state may even-tually live and work in another, and whetherthey attend public or non-public schools, theimpact of what they learn and how they apply it,is felt throughout the country. On this issue,constitutional considerations must play the de-ciding role.

Then there is the issue of what we are gettingfor our money. We're spending one heck of a lotof money in education, and the amount issky-rocketing. Are we getting services ren-dered commensurate with the dollars paid?That is a big, open question.

It has been generally believed that fewer chil-dren in a classroom result in improved educa-tion. Well, that's not necessarily true. As a mat-ter of fact, in one particular study3done for theCommission, every piece of research and everystudy in this field was reviewed in terms ofvarying class size and of varying all resourcein-puts into a classroom. They were examinedto see if there's any evidence that, in fact, addi-tional resources per child provide better qualityeducation. Ignoring the extreme cases of, sayone child per teacher as compared to 100 chil-dren per teacher, but within the range of 18 toone and 35 to one, the conclusion reached bythe study was that no single element or item ledto a difference in the achievement level of chil-dren-a startling conclusion.

The Commission was very concerned aboutequal educational opportunity and quality edu-cation. The Fourteenth Amendment to the U. S.Constitution, and the basis for the Serrano deci-sion, pin-points this issue. What do we owe ourchildren, all of them, in terms of equal oppor-tunity and in terms of a quality education?


The Commission first tried to define what itmeant by equal educational opportunity andquality education. Without a definition and with-out some means of quantifying it, we felt wewould be dealing with extremely subjective andnebulous concepts. For its own purposes and,hopefully, for the assistance of others who maywish to do the same thing, the Commission diddefine the concepts. I won't go through it all,but again, it is to be found within the relativelyfew pages of the report.

What I have told you so far should provide youwith the background of how the Commissionapproached its assignment. Now, let me tell youabout our findings and recommendations.

The Commission concluded that it is the statelevel of goverment that must bring about thereforms that are most necessary, not only forschool financing, but in the delivery of educa-tion equally throughout the state. The state gov-ernment, pre-eminent in the field of education,has to be the agent of change if there is goingto be any change at all.

Quite naturally, the most important recommen-dation of the Commission concerned the meth-od of financing schools in the states. I believethat it is important to note that while the Ser-rano decision4 was announced in the middle ofour deliberations, it did not change the direc-tion of our thinking. It's main effect was to rein-force our views.

The context in which the financing recommen-dation was made should first be explained.There are essentially two possibilities. One is acontinuation of the shared-cost arrangementwhereby local school districts raise what theycan and the state adds to it, hopefully, in amanner that minimizes extreme disparities inlocal wealth. The other possibility is to have thestate provide all, or predominantly all, funds re-quired for the schools.

4. Serrano v. Priest, 5 Cal, 3d534, 487 P.2d 1241,96 Cal.Rptr. 601 (1971).


5. J. COONS, W. CLUNE & S.SUGARMAN, PRIVATEWEALTH AND PUBLIC EDUCA-TION (1970).

Under a shared-cost arrangement, there are twoalternatives. One would be to reorganize theschool districts so that local taxes, equally ap-plied, would generate approximately equal re-sources around the state. If tax bases were ap-proximately equal, it would minimize wealth dis-parities amongst the school districts. It didn'ttake much time to see that this approach wouldinvolve the most horrendous gerrymanderingthat ever could take place and the Commissiondiscarded that alternative out of hand.

The other alternative under a shared-cost ar-rangement is the one developed in the bookthat Steve Sugarman co-authored, PrivateWealth and Public Education.5 This is the "pow-er equalizing" concept which would equalizefinancing of schools amongst school districts.In its simplest form, this means that given levelsof local tax effort would guarantee a given levelof return. What would be generated locally, ifbelow the guaranteed level, would be aug-mented by the state. We did not choose thismethod as our preference because we felt thatit did not speak to some of the other Commis-sion considerations I have mentioned. Never-theless, power equalizing could be a viable ap-proach, if states were to select this approach.

Under a full-state funding concept, there arealso some variations. One possibility is equaldollars for all-a kind of "one dollar-one pupilplan." But I think that it is obvious from what Ihave already said that this was discarded asimpractical, as equal treatment of inequals cer-tainly does not bring about equality of oppor-tunity. We adjusted this concept, however, totake into account the varying costs of educationaround the state. If equal dollars were adjustedto provide for the actual cost of buying equaleducational services, it would overcome themajor objection to the concept and provide afavorable alternative. But this still left unspokenthe problem of relative needs of differing chil-dren such as the physically handicapped, learn-ing difficulties amongst children, and other spe-cial educational problems.


Another alternative considered was the voucherplan. The Commission agreed with the view ofSuperintendent Riles that this would not be aviable way of financing public schools.

Our recommendation then, was a predominant-ly state-financed system of education thatwould have the state responsible for raisingvirtually all the revenue and distributing it on abasis that incorporated the cost of educationand relative educational needs.

Let me mention at this point that "educationalneed," though generally accepted by mostpeople as a reasonable consideration in financ-ing education, has not been accepted by thecourts. The difficulty of quantifying a subjectiveconcept such as this and then obtaining generalacceptance of the measures or factors reflec-ting such quantification has impeded its appli-cation. But this may be more a shortcoming inour knowledge than in the concept itself.

Now more about our recommendation. We haveall heard of a cost-of-living index. There arenumerous economic studies that deal with itsdevelopment and its application. We have laborunions that bargain to have their salaries ad-justed in accordance with changes in it. Whynot a cost-of-education index? With the knowl-edge that is currently available, I believe that itwould not be a difficult undertaking to developone, and we recommended strongly that everystate develop one and that the federal govern-ment assist them in doing so.

Regarding a relative educational need index,some work recently done by the NationalEducational Finance Project-an Office of Edu-cation funded research project with the Univer-sity of Florida in Gainesville-provides an ex-cellent base for states to work with. Their workinvolved the development of such an index andit could be adapted to each individual state'sneed.

To implement our recommendation, we sug-


gested that local school taxes be phased outand that state revenues be used to 'replacethese funds, in at least an equal amount. Wefelt strongly that the states should choose theirown tax systems. In spite of the fact that we feltuncomfortable with the local property tax forschools, we did not recommend that all statesmove away from property taxes. As a matter offact, there was a significant body of opinion thatwanted the Commission to come out stronglyfor a state property tax. Personally, I favoredthat, for several reasons, and in at least anamount that would replace fifty percent of cur-rent local school revenues. But, we didn't gothat far. There are states which do not have anincome tax and to move from the property taxto an income tax-or a sales tax-would havebeen to mandate their tax policy. In the federalsystem of government, this was felt to be in-appropriate. Instead, we recommended thateach state decide what system of taxationwould best serve their need as they move fromlocal funding to state funding for schools.

We recommended that no school district re-ceive less resources than it had before the tran-sition began. In other words, we felt it wrong totake away from an educational offering some-thing that's already satisfactory and to requireany school system to arbitrarily cut back its pro-gram.

We recommended that the federal governmentprovide financial incentives for states to movefrom local to state financing by providing ap-proximately 25 percent of all local resourcesnow being devoted to education. That's roughly$5 billion, which would be over and above theexisting level of state and local money now de-voted for this purpose.

To provide for some degree of local enrichment,we also recommended that local school dis-tricts be able to augment the state's allocationby a maximum of ten percent of what the stateprovides. This should not be required or neces-


sary for an adequate and proper education, butpermissible if the local district desired it. In lightof the legal considerations now existing, wewere not sure that such a local add-on would beappropriate, but we did not feel that a schooldistrict should be absolutely precluded fromdoing so. Our reasoning was based on the feel-ing that two very basic philosophies were atwork in this situation; liberty and equality. Whencarried to their extreme, they become con-tradictory. There must be room for the exerciseof individual freedom to operate within our sys-tem of government, and by the same token, wemust recognize the equal rights guaranteed byour Constitution. Somehow, there has to be abalance, and the ten percent local option wasan attempt to bridge both concerns.

Another major recommendation of the Commis-sion was the initiation of a special urban educa-tion assistance program that would help bothpublic and non-public schools in the in-ner-cities of the country. Roughly 20 percent ofthe school population in the urban centers ofthis country come from non-public schools.6There are enough problems in the cities of thiscountry without aggravating them. The citiesare facing critical situations and education isbut one of them. Non-public school childrenand their families are an integral part of urbanlife. Some have said that the existence of thenon-public schools is a major reason for fami-lies whose children attend them to remain in thecity. We recommended a federal program at alevel of at least one billion dollars annually forat least five years to help in this area. Recogniz-ing the constitutional issues pertaining to thenon-public schools, we recommended that thefunds and services flow through the publicschool system as they currently do under Title Iof the Elementary and Secondary Education Actof 1965. 7

I would like to make one last point. We all haveread in the newspapers about the financialproblems of the schools, particularly in the

6. ECONOMIC PROBLEMSOF NON-PUBLIC SCHOOLS,supra note 2.

7. 20 U.S. C. § 821 note,241a note (1965).


large cities. Schools in New York, Chicago, SanFrancisco, Detroit, Los Angeles, to mentionjust a few, have had to close down before thefull term expired, or are threatening to do so. Isubmit that the primary cause of these prob-lems results from the shared-cost arrangementin those states for supporting elementary andsecondary education. Contracts for in-structional salaries, negotiated locally, arebeing entered into without the money to honorthem. Local school districts have not had themoney available to them to support their part ofthe agreement. But they conduct the negotia-tions, complete them, and then run to the statecapital for help to bail them out. That help doesnot always come.

In my judgment, that best describes the majorproblem of financing schools throughout thecountry. As long as we continue to financeschools under the shared-cost arrangement,with local school districts paying the majorshare, we can expect our financial problems toremain with us.

university dren attending private and parochial as well as fileequal educational opportunity. hence,...

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