Opinion

Court: Texas Court of Appeals, 3rd District (Austin)
Filed: Apr 30, 1998
Status: Published
Cited by: 0 cases
Authority: More cited than 35.8%

The opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-97-00539-CV

Socorro Independent School District, et al., Appellants

State Board of Education, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT

NO. 96-10863, HONORABLE F. SCOTT McCOWN, JUDGE PRESIDING

This is a school finance case. Appellant Socorro Independent School District and

other school districts (1) (collectively "Socorro") argue that pursuant to constitutional and statutory

appropriations, they were deprived of approximately $90 million of a supplemental technology

allocation that the appellee State Board of Education (the "Board") refused to distribute. After an

extensive review of the constitutional and statutory provisions at issue, the trial court declared that

the Board had no authority to distribute the amount sought by Socorro to increase the technology

allotment. We will affirm.

BACKGROUND

This case presents the question of whether funds from the available school fund

were properly allocated between the state textbook fund and the school finance system pursuant

to Texas Education Code section 31.021. In order to fully understand the issues presented in this

case, we will first briefly describe how public schools in Texas are financed. Public schools in

Texas are financed by three mechanisms: 1) local ad valorem tax revenue, 2) the available school

fund, and 3) general revenue from the state. Tex. Educ. Code Ann. § 42.251 (b) (West 1996).

The state's financial responsibility to fund public schools comes from the latter two sources.

Depicted below is a flowchart illustrating the interrelationship between the available school fund

and general revenue. (2)

The available school fund is a constitutional and statutory fund that contains

revenue dedicated for public education. See Tex. Const. art. VII § 5; Tex. Educ. Code Ann.

§ 43.001 (b) (West 1996) . It consists primarily of income derived from the assets of the permanent

school fund, which is a perpetual endowment for the public schools that draws enormous amounts

of interest, dividends, and rental income. See Tex. Educ. Code Ann. § 43.001 (b) (West 1996) .

The available school fund also includes one-fourth of all revenue derived from state occupation

and gasoline taxes, as well as other appropriations to the fund made by the Legislature for public

school purposes. See id.

Article VII, section 5(a) of the Texas Constitution commands that "[t]he available

school fund shall be applied annually to the support of the public free schools. . .[and] shall be

distributed to the several counties according to their scholastic population and applied in such

manner as may be provided by law." Tex. Const. art. VII § 5 (a). As demonstrated by the right

side of the flow chart, each year the Legislature divides the total amount in the available school

fund between the school finance system and the state textbook fund. The majority of the fund is

allocated to the school finance system and distributed per capita to the school districts based upon

the average daily attendance of the pupils within each district. See Tex. Educ. Code Ann.

§ 43.001 (c) (West 1996). The balance of the fund is directed to the state textbook fund pursuant

to Texas Education Code section 31.021. See Tex. Educ. Code Ann. § 31.021 (West 1996).

On May 27, 1995, the 74th Legislature passed Senate Bill No.1, which included

new provisions now codified under Texas Education Code section 31.021. Texas Education Code

section 31.021 provides in relevant part:

(a) The state textbook fund consists of:

(1) an amount set aside by the State Board of Education from the available

school fund;

(2) all funds accruing from the state's sale of disused textbooks; and

(3) all amounts lawfully paid into the fund from any other source.

(b) The State Board of Education shall annually set aside out of the available

school fund of the state an amount sufficient for the board, school districts, and

open-enrollment charter schools to purchase and distribute the necessary

textbooks for the use of the students of this state for the following school year.

The board shall determine the amount of the available school fund to set aside

for the state textbook fund based on:

* * *

(2) a requirement to provide an allotment to be distributed to each district

equal to $30 per student in average daily attendance, or a greater amount

as determined under Subsection (c) to be used only to:

(A) provide for the purchase by school districts of electronic textbooks

or technological equipment that contributes to student learning; and

(B) pay for training educational personnel directly involved in student

learning in the appropriate use of electronic textbooks and for

providing for access to technological equipment for instructional

use;

* * *

Education shall determine the amount remaining in the available school fund

that is available for distribution under Chapter 43 for the following school

year. The board shall use any amount by which the amount available for

distribution under Chapter 43 for the following school year exceeds the amount

available for distribution under Chapter 43 for the 1995-1996 school year to

increase the allotment under Subsection (b)(2)

Tex. Educ. Code Ann. § 31.021 (West 1996) (emphasis added).

Thus, section 31.021 mandates that the Board fund: (1) an amount necessary to

cover costs for print textbooks; (3) (2) an amount equal to $30 per student for electronic textbooks

or technological equipment; (4) and, if available , (3) a supplemental amount per student in addition

to the $30 to be used for technology and electronic textbooks. It is this third element, the

supplemental technology allotment, that forms the basis of the controversy at issue.

Subsection (c) of 31.021 mandates that after setting aside the amounts necessary

for purchasing textbooks and providing $30 per student for electronic textbooks and technological

equipment, as well as emergency expenses caused by unexpected attendance increases, the Board

must :

1. Determine the amount remaining in the available school fund that is available

for distribution under Chapter 43 for the following school year; then,

2. Increase the technology allotment under subsection (b)(2) by the difference

between the amount available for the following school year and the amount

available for the 1995-1996 school year.

Thus, pursuant to section 31.021(c), any surplus from that calculation must be distributed to

supplement the technology allotment and not diverted to the school finance system .

However, it appears from the record that the General Appropriations Act, passed

a few days prior to the enactment of section 31.021, conflicts with the section 31.021(c) mandate. (5)

In the General Appropriations Act, the Legislature followed its constitutional mandate and

appropriated the entire available school fund for the upcoming biennium . However, w hile section

31.021(c) mandated that any increase in the available school fund from the 1995-96 school year

be directed to the state textbook fund in order to supplement technology, the General

Appropriations Act instead increased the amount appropriated to the school finance system for the

1996-97 school year. The state textbook fund was not increased. It was allocated a sum certain

amount of $109 million. This allocation does not provide for any supplemental technology

allotment pursuant to section 31.021(c). Thus the Legislature, in the General Appropriations Act,

committed the amount necessary for the supplemental technology allotment to the school finance

system.

The flowchart more accurately depicts this situation. The middle of the flow chart

shows the appropriation of approximately $1.09 billion made by the General Appropriations Act

to the school finance system for the 1996-97 school year. This allocation is contrary to the

formula set forth in section 31.021(c). Under that formula, the 1996-97 per capita distribution

should have remained the same as the 1995-96 distribution, which was approximately $970

million. Any amount in the available school fund in excess of $970 million should have been

directed to the state textbook fund to supplement technology. Therefore, as demonstrated by the

dotted line on the right side of the flowchart , if the Board issued a supplemental technology

allotment pursuant to the formula set forth by section 31.021(c), the necessary funds for this

allotment would have to be transferred back to the state textbook fund from the school finance

system. This would leave the school finance system short approximately $60 million dollars. (6)

To avoid a $60 million shortfall, the Board authorized a distribution of $30 per

student and refused to authorize a distribution of the $60 million as a supplemental technology

allotment as mandated by section 31.021(c). The Board contends on appeal that because the

Legislature only appropriated an amount equivalent to $30 per student for technology, that is all

it can distribute despite the mandate of section 31.021(c). Socorro, on the other hand, argues that

pursuant to section 31.021(c), the Board must distribute $60 million to supplement technology,

despite any resulting shortfall.

Moreover, Socorro argues that because only $44 million of the $77 million

appropriated to the state textbook fund for the purchase of printed textbooks was actually spent

on printed textbooks for the school year for which it was appropriated, the $30 million surplus

(i.e., the dollars not needed for printed textbooks) should also be used to supplement technology.

In summary, Socorro argues that there is a total of approximately $90 million that should have

been allocated to supplement technology--$60 million allegedly misappropriated to the school

finance system and $30 million not used for purchasing printed textbooks. This $90 million could

have supplemented the technology allotment by about $25 per student.

In an extensive written opinion, the trial court (7) declared that the Board had no

authority to distribute the increased technology allotment provided for in Texas Education Code

section 31.021(c) because the Legislature in the General Appropriations Act had not funded this

section of the Code. With regard to the $30 million not yet used for purchasing printed textbooks,

the court held that the issue was not ripe for decision and retained jurisdiction to grant the school

districts further relief in the event that the available school fund was not distributed in its entirety

for use in the school year for which it was appropriated. Because the trial court refused to

supplement the technology fund, Socorro appeals.

DISCUSSION

Socorro argues that the language of Article VII, section 5 of the Texas Constitution

is a constitutional appropriation which is directed by legislation. Therefore, Socorro argues that

section 31.021 of the Texas Education Code is the directive of a constitutional appropriation, or

alternatively, is the appropriation itself. Socorro contends that the legislative appropriations in

the General Appropriations Act should, therefore, give way to section 31.021.

Socorro is correct in its assertion that Article VII, section 5 constitutionally

appropriates the funds at issue. See Tex. Const. art. VII, § 5(a). Article VII, section 5(a) of the

Texas Constitution states:

[T]he available school fund should be applied annually to the support of the public

free schools . Except as provided by this section, no law shall ever be enacted

appropriating any part of the permanent or available school fund to any other

purpose whatever; nor shall the same, or any part thereof ever be appropriated to

or used for the support of any sectarian school; and the available school fund

herein provided shall be distributed to the several counties according to their

scholastic population and applied in such a manner as may be provided by law .

Id. (emphasis added).

This constitutional appropriation mandates that the funds be spent "in support of

the public free schools" on a per capita basis. That, however, is the end of the constitutional

mandate. Beyond this, authority is given to the Legislature to allocate the money to the public

schools as it sees fit. The constitutional provision specifies that the fund shall be distributed "in

such a manner as may be provided by law ." Id. (emphasis added). Such language has always

empowered the Legislature to direct how the fund shall be distributed within the constraints of an

equal per capita distribution by county. See Travis Cent. Appraisal Dist. v. FM Properties

Operating Co. , 947 S.W.2d 724, 733 (Tex. App.--Austin 1997, pet. denied) (when used in a

constitutional provision establishing a general legal principle or administrative framework, the

phrase "as may be provided by law " clearly vests the Legislature with authority to exert

substantial control over the mechanics of the subject matter addressed).

In this case, the $60 million at issue was allocated by the Legislature to the school

finance system through the General Appropriations Act. The Legislature then provided a formula

under section 31.021(c) of the state textbook fund for the allocation of surplus funds to provide

a supplemental technology allotment. Thus, this case presents two statutes by the Legislature that

are conflicting: the mandate in section 31.021(c) directing the Board to set aside $60 million to

supplement technology; and the General Appropriations Act which directs those same funds to the

school finance system. Therefore, the Board is faced with an unfunded mandate to supplement

technology pursuant to section 31.021(c).

The Board does not have the power to expend more money under the state textbook

fund than it is appropriated by the Legislature. This issue was squarely addressed in Attorney

General Opinion H-507, which we find persuasive. (8) In that case, the Legislature had intentionally

changed from appropriating an estimated amount for textbooks to a sum certain appropriation.

Because of this, the Comptroller indicated that he would refuse to honor any bill payable from the

state textbook fund that would cause expenditures of the fund to exceed the amount specifically

allocated in the appropriations act. The opinion stated that only the Legislature had the authority

to limit the amount of funds that the Board can set aside out of the available school fund for use

in providing free textbooks, and that it had done so by appropriating a sum certain amount to the

state textbook fund. Op. Tex. Att'y Gen. No. H-507 (1975) (Legislature has authority to limit

amount of funds State Board can set aside out of available school fund for textbooks). In its

reasoning, the opinion quoted the following language from Attorney General Opinion O-561:

[I]t would be a radical departure from recognized principles of our form of

government to place control over a large amount of public funds in the hands of

such an administrative board, free from all control of the Legislature. . . . In view

of all of the considerations discussed above, it is our opinion that the Legislature

retains control over the expenditure of the Textbook Fund. . . .

Id. (citing Op. Tex. Att'y Gen. O-561 at 17-18 (1939)).

Moreover, given the chronology in which the General Appropriations Act and

section 31.021 passed, the Legislature had the opportunity to revise the General Appropriations

Act to provide the Board with funding pursuant to section 31.021(c). However, the Legislature

chose not to do so. If the Legislature did not see fit to provide funding for this mandate, we can

not do it for them. This Court addressed this very issue in Mutchler v. Texas Dep't of Public

Safety , stating:

To transfer unrelated surplus funds to pay for a program that the Legislature has

consistently refused to fund...would thwart the intent of the Legislature and violate

the spirit, as well as the letter of the Texas Constitution. While the members of

this Court are not unsympathetic to the cause advocated persuasively by the

appellants, the time honored principle of separation of powers prohibits us from

doing what the legislature has refused to do.

681 S.W.2d 282, 285 (Tex. App.--Austin 1984, no writ). Socorro's first point of error is

overruled.

Socorro next contends that the excess $30 million dollars appropriated to the state

textbook fund for printed textbooks should be distributed as the supplemental technology

allotment. Socorro claims that after the Board purchased all of the printed textbooks for the

school year in question, $30 million dollars remained in the textbook fund. However, rather than

using these excess funds to supplement technology, the Board sought to use the funds to purchase

printed textbooks for the following school year.

The Board argues that Socorro is not entitled to review of this issue because it is

unsupported by the pleadings. Socorro responds that the issue was tried by consent. The trial

court did consider this issue, but specifically reserved judgment, holding that it was not ripe for

consideration at the time of trial. Furthermore, it is unclear from the record how this $30 million

dollars was subsequently spent. (9) Since there is no ruling on this issue from the trial court, nothing

is preserved for our review. Socorro's second point of error is overruled.

CONCLUSION

Having overruled Socorro's two points of error, we affirm the judgment of the trial

court.

Mack Kidd, Justice

Before Justices Powers, Kidd and B. A. Smith

Affirmed

Filed: April 30, 1998

Publish

Other appellants are: Alpine Independent School District, Balmorhea Independent School District,

Belton Independent School District, Commerce Independent School District, Copperas Cove Independent

School District, Crowell Independent School District, Del Valle Independent School District, El Paso

Independent School District, Everman Independent School District, Fayetteville Independent School

District, Florence Independent School District, Friendswood Independent School District, Frisco

Independent School District, Goree Independent School District, Hardin-Jefferson Independent School

District, Harleton Independent School District, Hays Consolidated Independent School District, Hitchcock

Independent School District, Hudson Independent School District, Hurst-Euless-Bedford Independent

School District, Jasper Independent School District, Kenedy Independent School District, Kilgore

Independent School District, Lamar Consolidated Independent School District, Little Cypress-Mauriceville

Independent School District, Lockhart Independent School District, Los Fresnos Consolidated Independent

School District, Lumberton Independent School District, Lytle Independent School District, Manor

Independent School District, Mason Independent School District, Maypearl Independent School District,

Mesquite Independent School District, Midland Independent School District, Millsap Independent School

District, Mission Independent School District, Munday Independent School District, Nederland

Independent School District, New Boston Independent School District, Orangefield Independent School

District, Pflugerville Independent School District, Port Arthur Independent School District, Port

Neches-Groves Independent School District, Rocksprings Independent School District, Sabinal Independent

School District, San Antonio Independent School District, San Augustine Independent School District, San

Saba Independent School District, Savoy Independent School District, Schertz-Cibolo-Universal City

Independent School District, Seguin Independent School District, Silverton Independent School District,

Stamford County Line Independent School District, Talco-Bogata Consolidated Independent School

District, Texarkana Independent School District, Valley View Independent School District (Hidalgo

County), Vidor Independent School District, Waco Independent School District, Wallis-Orchard

Independent School District, and Waskom Independent School District.

2. The trial court attached this flowchart to its Final Order as an aid to understanding the issues

presented in this case.

3. This amount is mandated by the Texas Constitution, art. VII, § 3, which states, "it shall be

the duty of the State Board of Education to set aside a sufficient amount of the said tax to provide

free textbooks for the use of children attending the public free schools of this State. . . ." Tex.

Const. art. VII, § 3.

4. This allotment has been in effect since the 1992-1993 school year.

5. The General Appropriations Act was passed on May 25, 1995 as House Bill 1.

6. It is unclear how this $60 million dollar balance was calculated. Both parties, however, seem

to agree that this is the correct number to use. Therefore, while we express no opinion as to the

validity of this amount, we will use this figure throughout the opinion as a symbolic number to

represent the excess amount, which according to § 31.021(c) should have been used to supplement

the technology allotment, but which already had been appropriated to the school finance fund.

7. We note that the trial judge in the instant cause presided over

Carrollton-Farmers Branch

Independent School District v. Edgewood Independent School District , 826 S.W.2d 489 (Tex.

1992) and gained considerable expertise in the area of school finance.

8. Although Attorney General Opinions are not binding on the courts, they are entitled to

careful consideration.

Joe Wisnoski, Coordinator for School Finance and Fiscal Analysis at the Texas Education

Agency, testified that as of the date of trial, December 19, 1996, he was not aware of any current

accounting encumbrances against the $30 million, but he believed that the State Board had

designated the funds for the purpose of pre-purchasing textbooks for the following year. The

parties' briefs do not address the subsequent treatment of these funds, so it is unclear if the funds

were spent in the current (1996-97) year, in order to pre-purchase printed textbooks for the next

year, or whether the funds were transferred to and spent in the following year (1997-98).

ndent School District, El Paso