Robin Hood plan

This article is about school financing. For the proposed "Robin Hood" tax on banks, see Robin hood tax.

The Robin Hood Plan is a somewhat pejorative nickname given to a provision of Texas Senate Bill 7 (73rd Texas Legislature) (officially referred to as "recapture"), originally enacted by the U.S. state of Texas in 1993 (and revised frequently since then) to provide equity of school financing within all school districts in the state of Texas.

The original bill was passed in response to numerous court rulings (both Federal and state, notably the Texas Supreme Court's ruling in Edgewood Independent School District v. Kirby) that previous financing schemes were in violation of the Texas Constitution's requirements regarding what constitutes "an efficient system of public free schools" as that provision interacts with another provision prohibiting a statewide ad valorem property tax. Though the legislation has been revised since then, its basic premise remains the same: it limits both the amounts that school districts can both spend on public schools and the amounts that they can raise through locally assessed property taxes and further requires that any amounts in excess be "recaptured" by the state and given to other districts which are unable to raise the required revenue.

Constitutional and Statutory Requirements

Article 7, Section 1, of the Texas Constitution states:

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

However, state funding is constrained, in part, by Article 8, Section 1-e, of the Texas Constitution, which states:

No State ad valorem taxes shall be levied upon any property within this State.

As such, and because Texas has no personal income tax (which it repeatedly mentions when encouraging businesses and individuals to relocate), the Legislature has been required to provide other sources of dedicated revenue for to fund public education. Some of the more prominent ones are:

• Dedicating specified proceeds from the Permanent School Fund (which are transferred into the Available School Fund)
• Dedicating 25% of all motor fuels taxes collected
• Dedicating 25% of all business occupational taxes collected
• Dedicating net proceeds (after payout of prizes, operating costs, and specified transfers for veterans' assistance) from the Texas Lottery

Otherwise, outside of other minor dedicated revenue sources, public education funding is primarily provided by Legislative appropriations, and a school district's ability to assess property taxes in amounts sufficient to provide an adequate education. The ability of local school districts, specifically those which are "property poor", when considered in conjunction with the Constitutional requirement to provide an adequate education and the prohibition against a statewide property tax, have formed the bases for the numerous lawsuits against the State of Texas, claiming violations.

Lawsuits and Legislative Actions

School finance lawsuits must take place in state court, since the U.S. Supreme Court ruled in 1973 that education is not a fundamental right protected by the U.S. Constitution (San Antonio v. Rodriguez, a case which originated in Texas). However, in response, between 1975-1977 the Legislature increased the minimum teacher salary schedule and increased the number of instructional days required.

Edgewood I

The first of four lawsuits (all of which would involve the Edgewood Independent School District of Bexar County, Texas, a low-income school district in San Antonio) which would ultimately give rise to Robin Hood would be filed in May 1984 against then state Commissioner of Education William Kirby by the Mexican American Legal Defense and Educational Fund, citing discrimination against students in poor school districts. Edgewood ISD charged that the state's methods of funding public schools, which resulted in a wide variation of funding between districts, violated the Texas Constitution. The Texas Supreme Court would rule in October 1989 that the funding mechanisms in place were in violation of the Texas Constitution, ruling that an "efficient system" required "substantially equal access to similar levels of revenue per pupil at similar levels of tax effort".

In response, the Legislature passed legislation increasing the state's basic allotment and guaranteed yield to provide equalization at the 95th percentile, but specifically excluded the state's most "property wealthy" districts from the requirements.

Edgewood II

The exclusion of the wealthiest school districts from the requirement led Edgewood ISD to again file suit against Commissioner Kirby, this time in September 1990. Once again, the Texas Supreme Court ruled in the district's favor, determining in January 1991 that excluding the wealthy districts made the legislation unconstitutional. One month later, the Court would later issue a (rare) "advisory opinion", stating that once the Legislature created an "efficient system", it may authorize local enrichment upon voter approval.

The Legislature responded by creating 188 "County Education Districts", designed to equalize the tax base by consolidating property-wealthy districts with property-poor ones.

Edgewood III

The creation of the County Education Districts would lead Edgewood ISD into court yet again. But this time, it would be the defendant in a June 1991 suit brought by the Carrollton-Farmers Branch Independent School District (a district north of Dallas), which argued that the districts were unconstitutional. The Court would rule in January 1992, agreeing that the districts were unconstitutional.

The Legislature responded by proposing a constitutional amendment to allow for the "County Education Districts"; however, the amendment was rejected by voters. It also passed Senate Bill 7 with the "Robin Hood" aspect.

Passage

Passage came in 1993, after the Texas Supreme Court threw out two attempts by the Texas Legislature to write a constitutional school-finance system. The Legislature finally passed a funding plan that was accepted by the Court, in 1993.

The goal of the system was an attempt to prohibit wealthy districts from being able to raise revenue to provide benefits which poorer districts could not. Two provisions of the legislation would seek to implement this:

1. School districts were strictly limited to a $1.50 tax rate per $100 assessed property value for maintenance and operations (M&O). School districts already over the limit could continue at that rate. At that time, the tax rate was not capped for additional taxes assessed to pay for interest and sinking fund (I&S), which cover repayment of bond packages for facility construction or renovation (a later change in the law would cap this portion of the rate to $0.50).
2. Notwithstanding the rate cap, districts were limited to M&O revenues which did not exceed a statewide rate per student. Any revenues in excess of the statewide rate were "recaptured" by the state and given to poorer districts. The wealthy district could, in lieu of state recapture, enter into an agreement with a poorer district to transfer funds. It is this portion of the legislation which earned it the "Robin Hood" name.

Ersatz state property tax, reform

But 10 years later, the Robin Hood plan was in jeopardy again. In November, 2005, the Texas Supreme Court ruled that, since the vast majority of school districts were having to tax at the maximum maintenance-and-operations (M&O) tax rate of $1.50 per $100 of property valuation just to raise enough money to meet state mandates, the school-finance system was, in effect, a state property tax, which is prohibited by the Texas Constitution. The Texas Legislature, meeting in a special session in April and May, 2006, passed legislation that met the court's requirements that local districts have "meaningful discretion" in setting tax rates. A series of bills changed the school finance system to cut school M&O property taxes by one-third by 2008, but allowed local school boards to increase tax rates from the new, lower levels, although generally only with voter approval. Some of the local property tax revenue lost by the one-third cut will be replaced by state revenue from a new business tax and higher cigarette taxes. The Comptroller estimated a five-year $23 billion shortfall from the revised tax system.

The revisions gave birth to what is officially called "Tier II Enrichment" funding. Under the revisions, school districts could increase the tax rate by up to $0.17 above the state-mandated cap; the increased amounts have been given the nicknames "golden pennies" and "copper pennies" based on how they work in conjunction with the Robin Hood statutes:

• A district can increase its rate by up to $0.08 of "golden pennies". Each one cent increase provides a guaranteed return of no less than $7.9 million to the district: if the increase does not yield that much, the state makes up the difference. Any amount over $7.9 million is kept by the district, and none of this increase is subject to the Robin Hood recapture mechanisms. The district's board can increase the rate by up to five "golden pennies" solely on its own action; the remaining three pennies require voter approval in what is officially termed a Voter Approved Tax-Rate Ratification Election or VATRE (pronounced "vater").
• A district than, after assessing the maximum eight "golden pennies", a district can then propose an increase of up to $0.09 of "copper pennies". Each one cent increase provides a lower rate of return than for the "golden pennies" and is subject to the Robin Hood recapture mechanism. These increases require voter approval via VATRE.

The "golden pennies" and "copper pennies" can only be used for M&O; the increased amounts cannot be used for capital projects or to repay bonds.

See also

• Serrano v. Priest (California)
• Abbott v. Burke (New Jersey)
• Redistributive change

Resources

• Robin Hood Plan is Working World Internet News
• "EDGEWOOD ISD V. KIRBY". The Handbook of Texas Online. Retrieved 27 October 2008.
• Schools and Taxes: A Summary of Legislation of the 2006 Special Session [2]
• An Introduction to School Finance in Texas (Fifth Edition, Revised March 2022), TTARA Research Foundation (TTARA).