The Texas Supreme Court ruled Tuesday that local property taxes used to pay for public schools amount to an unconstitutional statewide tax.
Justices have given the state until June 1 to fix the system.
By a seven-to-one vote, the state's highest civil court agreed with one of three arguments made against the state by hundreds of school districts.
But justices also found that overall school funding is adequate and that poor districts have equal access to facilities funding.
Justice Scott Brister was the only member of the nine-member court to dissent. Newly sworn Justice Don Willett did not participate.
Hundreds of property-rich and poor school districts sued the state, contending its method of paying for public education was inadequate. The state argued that great strides had been made in Texas public education over the past decade. It said changes to the funding system should be made by the Legislature, not the courts.
The road leading to Tuesday's ruling began in September 2004, when an Austin judge agreed with hundreds of Texas school systems that the state school-finance system was unconstitutional.
State District Judge John Dietz had ordered that the problems be fixed or the state would have to stop funding its schools. But lawyers for the state appealed to the all-Republican Texas Supreme Court.
Money for the $30 billion Texas school system comes primarily from property taxes and a loophole-ridden franchise tax.
Dietz ruled the system is unconstitutional because so many Texas school districts are forced to tax property owners at the limit. He ruled that amounts to an illegal statewide property tax.
The Legislature failed to solve the issue during its regular session this year and two special sessions Governor Rick Perry called during the summer.
Here's a look at major dates in Texas' school finance battle:
-- 1989: The Texas Supreme Court throws out the state's school
funding law after finding "glaring disparities" between rich and poor school districts. The high court later rules two other Texas school funding plans unconstitutional in the early 1990's.
-- 1993: Days before a court-imposed deadline threatened to close Texas schools, the Legislature forces property-rich school districts to share some wealth with poorer ones.
-- 1995: The Texas Supreme Court upholds the share-the-wealth
system, sometimes called "Robin Hood."
-- 2001: Then-acting Lieutenant Governor Bill Ratliff, who as a state senator authored the "Robin Hood" funding plan, says it needs review and possible change.
-- 2003: Attorneys for property-wealthy school districts argue before the Texas Supreme Court that Robin Hood has created an illegal statewide property tax after many districts have pushed collections to the legal limit.
-- April 20, 2004: The Legislature meets in a special session called by Republican Gov. Rick Perry to address school finance. The session ends two days early when lawmakers fail to pass a new plan.
-- September 15, 2004: After a trial brought by 300 districts, both rich and poor, a judge rules the education funding system unconstitutional and threatens to order the state to halt school spending in October 2005. Following the judge's written ruling in late November, the state appeals to the Texas Supreme Court.
-- January 11, 2005: Legislature convenes in regular session and Perry declares education funding an "emergency." Lawmakers fail to pass a new system before session expires May 30.
-- June 18: Perry vetoes $35 billion in education spending, forcing lawmakers into 30-day special session.
-- June 21: Special session begins.
-- July 6: Attorneys for hundreds of school districts tell Texas Supreme Court justices in oral arguments the state has abdicated its obligation to educate its children. State lawyers argue the Legislature -- not the courts -- should repair Texas' education finance system. The court does not immediately rule.
-- July 19: Lawmakers tout their progress on an education spending plan but acknowledge defeat in the current special session of an accompanying bill to reduce property taxes.
-- July 20: Special session ends at midnight without passage of an education spending plan or property tax relief bill. Perry calls lawmakers back for another 30-day special session beginning the next day.
-- July 21: New special session begins.
-- July 26: In bipartisan fashion, the Texas House votes down its own multibillion-dollar school funding bill and property tax relief measure, dimming chances that lawmakers would pass a school finance package this session. House Speaker Tom Craddick says school superintendents were instrumental in persuading lawmakers to
oppose the legislation.
-- August 4: Craddick says the special session is a waste of time and urges legislative leaders to pull the plug on the remaining two weeks. He suggests lawmakers wait for the court ruling before proceeding. But the Senate rejects the suggestion and vows to press ahead.
-- August 9: After a thwarted attempt the previous week, the Senate approves a revised $2.8 billion education spending plan that would have given teachers a pay raise. But the bill was still dependent on a tax-swap bill that had to originate in the House and that never materialized.
-- August 15: All but declaring the special session dead, Lieutenant Governor David Dewhurst, who presides over the Senate, says solving school funding crisis this late in this session will be extremely difficult because of legislative rules and deadlines.
-- August 19: The 30-day special session ends.
-- September 21: Perry appoints one-time Democratic rival John Sharp, the former state comptroller, to lead a panel charged with trying to restructure the state tax system that pays for public schools.
-- November 14: Sharp says a court-ordered deadline to repair the broken school finance system could be the only way to prompt
action from the Legislature.
-- November 22: The Texas Supreme Court rules that local property taxes for school funding amount to an unconstitutional statewide tax and gives the state until June First to fix the system. The court agreed seven-to-one with one of three arguments brought against the state, but found that overall school funding is adequate and that poor districts have equal access to facilities funding.