Texas' school funding system was designed to try and level the playing field between school districts that can raise a lot of money from local property taxes and those that can't.
Commonly called Robin Hood, property-wealthy districts send part of what they collect back to the state, which redistributes it to other places.
But Midland ISD says the state has gone well beyond just sharing the wealth. The district argues now that the law effectively dictates how much local schools have to tax and how much of that money they can keep and spend.
This is the subject of a new lawsuit against the Texas Education Agency.
Isaac Yu, who covers state politics for the Houston Chronicle, said the district wants the school finance system to be reformed.
"Midland is saying that the most recent overhaul to that Robin Hood system in 2019 gave the state too much discretion, and they're arguing that that constitutes a statewide property tax which is not allowed under the state constitution," Yu said. "They've also made noise about how much bigger recapture payments [are], which is the check that they send annually, along with about 200 other school districts to the state government."
Those payments have swelled in recent years to a much higher than they once were.
Midland ISD serves tens of thousands of students, and the district has had budget woes in the past.
"They're sending an $80 million check to the state (this year) — roughly a billion over the last 10 years," Yu said. "And those checks have been painful, and I think they're frustrated and wanting to bring this fight to court."
Midland is especially hard hit because on paper, they're property-wealthy since they have commercial oil and gas property in the Permian Basin, but roughly 60% of students are from low-income households.
The lawsuit focuses less on how the funding is redistributed and more on who actually controls local taxation, Yu said. The Texas Supreme Court last weighed in on the recapture system about a decade ago.
"(Midland) just wants to keep more of their local property taxes. The board president, Josh Guinn, has likened this to King George taxing the American colonies. They are really unhappy with it. And Midland ISD, I'll say, is not alone," Yu said. "A lot of large urban districts, Austin ISD included, also pay a lot into recapture and would love to see those numbers lifted."
Yu said that while many people are not opposed to recapture as a concept, districts say that the restrictions and the amount of wealth transfer here has increased too quickly. However, even if the court rules in Midland's favor, that doesn't mean recapture is going to disappear.
"The state Supreme Court, when it has ruled on this in the past in favor of plaintiffs, has asked lawmakers and said 'you have to rewrite this somehow' and given them a certain degree of latitude to do so," Yu said. "They've also turned back these challenges in the past. So that's possible as well, but I don't know that this would necessarily force a complete overhaul."
Another factor here: Gov. Greg Abbott has made it part of his policy platform as he's running for another term as governor to abolish the school tax system altogether.
"It's not totally clear what the effects (of the lawsuit) could be. It's obviously coming at an interesting time," Yu said. "Gov. Greg Abbott has not said anything about this lawsuit, neither has his Education Commissioner Mike Morath, who was the named defendant in the lawsuit."
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