Court-Ordered Spending Mandates Raise Taxes, But Don’t Help Education in the Long Term

Published October 1, 2007

A new report questions the effectiveness of school funding lawsuits in generating the sustained results their plaintiffs seek.

“Appropriation by Litigation,” released by the Washington, DC-based Tax Foundation in late July, finds most states with education spending mandates imposed by the courts do not sustain the funding increases over the long-term.

Since 1977, courts in 27 states have dictated funding increases that resulted in short-term boosts to K-12 education funding. The nine states that explicitly raised taxes generated $13 billion in new taxpayer revenue to fund the mandates.

The study finds the 18 states whose 2004 data were available spent an average of $284 less per pupil than would have been forecast by spending growth trends before the judicial rulings.

“These lawsuits that deal with education tend to cause a lot of short-term pain, but they don’t appear to have much long-term gain,” said senior tax counsel Chris Atkins, the study’s author. “Money is fungible–it can be moved around in a budget, but these taxes remain.”

Seeking Opportunity

A prominent legal analyst and education funding advocate claims otherwise.

“I could write a report similar to this but from a different side, about accessing more opportunities for needy kids,” said Molly Hunter, managing director of the National Access Network, an advocacy group based in New York City. “People aren’t looking to appropriate by litigation, they’re looking to improve opportunity.”

Others disagree with Hunter, saying the shift since the 1990s from school finance “equity” lawsuits to “adequacy” lawsuits reveals a more cynical turn by those who habitually advocate increased funding for public schools.

“[The ‘adequacy’ lawsuits trend] tells me that ’60s-style liberalism is dead,” said John LaPlante, education policy fellow at the Flint Hills Center for Public Policy in Kansas. “This isn’t about the poor. This is about people in the establishment getting theirs through phony-baloney legal alchemy.”

Harmful Approach

Atkins points out filing lawsuits to increase education funding can have unintended harmful effects.

“The people who bring these lawsuits want to introduce more money to [public] schools, and they do so by adding a lot of friction between different branches of government,” Atkins said. “They want courts to make decisions that stretch interpretations of the constitution.”

Atkins said the objective may not necessarily be bad, but the method chosen is ineffective.

“It’s one thing for a community and a state to come together and say, ‘Let’s spend more money,’ and for a plan to be crafted that everyone agrees with,” Atkins explained. “It’s a different thing to have a court come out and say more money needs to be spent on schools. It’s a blunt instrument.”

LaPlante agreed, saying judicial interference in school funding decisions, as in the 2005 Kansas case Montoy v. State, makes inherently bad policy.

“It fails Civics 101 because we’ve got members of the judiciary making decisions about appropriations,” said LaPlante. “It fails Management 101 because they say, ‘We’re going to tell you to increase funding by this amount, and we don’t care what else you have to do.'”

Kentucky Failure

Hunter cites Kentucky as an example of a satisfactory outcome of the funding litigation strategy. Following a court order in 1990, the Bluegrass State increased sales tax and corporate income tax rates to generate $682 million in new revenue for schools. Per-pupil funding initially grew by more than $1,500, according to the Tax Foundation study.

“If people look back over the years, we did a really important and good thing in Kentucky,” said Hunter.

Atkins disputes the claim, noting the increases have not been sustained.

“At the end of the day, they’re now back in court,” Atkins said. “Per-pupil funding isn’t really up, and their students may not be performing any better as a result of the decision.”

Spending and Outcomes

Atkins said questions about the relationship between spending and academic performance were outside the scope of his study, noting the difficulty in choosing how to measure outcomes.

Atkins plans to deepen his research into the fiscal impact of judicial mandates and hopes the study can be expanded beyond the field of education. He suggested similar litigation might be used in the future to secure funds for other beneficiaries of state budgets.

“It will be interesting to see whether other groups try this strategy,” Atkins said.

Ben DeGrow ([email protected]) is a policy analyst for the Independence Institute, a free-market think tank in Golden, Colorado.

For more information …

“Appropriation by Litigation: Estimating the Cost of Judicial Mandates for State and Local Education Spending,” Chris Atkins, Tax Foundation, July 2007: