A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006.

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Entry from February 01, 2010
Robin Hood Plan (property tax)

Entry in progress—B.P.

Wikipedia: Robin Hood plan
The Robin Hood plan was a media nickname given to legislation enacted by the U.S. state of Texas in 1993 to provide court-mandated equitable school financing for all school districts in the state. Similar to the legend of Robin Hood, who “robbed from the rich and gave to the poor”, the law “recaptured” property tax revenue from property-wealthy school districts and distributed those in property-poor districts, in an effort to equalize the financing of all districts throughout Texas.

Background
Article 7 of the Texas Constitution states, in part, “. . . it shall be 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, the state of Texas only dedicates a $.0025 portion of the state sales tax and the net proceeds from the Texas Lottery, as well as earnings from the Permanent School Fund, to primary and secondary education. Otherwise, state funding is determined by the Texas Legislature. The primary source of education funding in Texas remains with the school districts’ ability to assess property taxes.

Initial lawsuit
In 1984, the Mexican American Legal Defense and Educational Fund filed suit against state Commissioner of Education William Kirby on behalf of the Edgewood Independent School District in San Antonio, citing discrimination against students in poor school districts. The plaintiffs charged that the state’s methods of funding public schools violated the Texas state constitution, which required the state to provide an efficient public school system.

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). The case, Edgewood Independent School District v. Kirby, eventually went to the Texas Supreme Court, which unanimously sided with Edgewood.

Passage
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 1995.

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:

. First, 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. The tax rate was not capped for additional taxes assessed to pay for bond packages for facility construction or renovation.
. Second, 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, Comptroller estimates a $10 billion dollar surplus from the revised tax system.

Criticism
The plan is also claimed to have been one of the worst financial disasters in US history by decreasing the value of Texas real estate by $81 billion, an amount far in excess of the revenues received. This resulted from unintended positive feedback forces. As taxes went to benefit districts other than those taxed, property values decreased. People moved to other districts with more favorable taxation, which further decreased values. Lower assessed values lowered tax revenues, and the “recapture” mentioned above (also known as “confiscation threshold") was lowered. Decreased tax revenues also meant increasing tax rates to pay for works within the district. “Although Robin Hood reduced the spending gap between Texas’ property-poor and property-rich districts by $500 per pupil, it destroyed about $27,000 per pupil in property wealth”. “Public policy experiments rarely produce complete successes or total failures. *** Occasionally, however, there’s a policy disaster so catastrophic that everyone agrees that something has to change. California’s convoluted attempt to deregulate electricity was one example. Texas’s decade-long experiment in school finance equalization—universally referred to as Robin Hood—is another”.

Wikipedia: Robin Hood
Robin Hood is a hero in English folklore, a highly skilled archer, marksman, swordsman, and outlaw. In particular, he is known for “robbing from the rich and giving to the poor”, assisted by a group of fellow outlaws known as his “Merry Men”. Robin and many of his men wore Lincoln green clothes.

There are many songs and stories about him, starting in medieval times, and continuing through more modern literature, films, and television series. In the earliest sources Robin Hood is a commoner, but he was often later portrayed as an aristocrat, wrongfully dispossessed of his lands and made into an outlaw.

Plano (TX) Independent School District
History of ‘Robin Hood’ Finance System
Since the 1970s, the State of Texas has been involved with lawsuits challenging the system of financing public schools. Following is a chronology of the funding dilemma, its impact on Plano ISD and Plano ISD’s legislative programs to address the issue.

See also on this Web site, a history of Plano ISD’s recapture payments to the state due to Robin Hood.

1987 - School Funding System Declared Unconstitutional
In 1987, the courts declared the system unconstitutional according to standards of the Texas Constitution. The ruling focused not only on operating revenues and expenditures, but also on facilities and capital financing. In the ensuing years, the Legislature has tried to remain a step ahead of the courts, but has had several efforts at satisfying the requirements of the Constitution found unconstitutional.

In 1992, the Supreme Court of Texas found Senate Bill 351, passed by the Legislature in 1991, to be unconstitutional in that it imposed a statewide property tax by creating “county education districts” (CEDs). A state property tax is prohibited by the Texas Constitution. Following this ruling, the Legislature called a referendum to constitutionalize the provisions of Senate Bill 351 and the CEDs. The voters of the state turned down the referendum issues, with 63% saying no.

1993 - Senate Bill 7 Challenged by Texas School Districts
The next effort at meeting the tests of equity, Senate Bill 7, passed by the Texas Legislature in 1993, was challenged by property-poor school districts as well as property-wealthy districts. Points litigated include the equity issue, the capital financing issues, and issues of adequacy and suitability. 

1995 - School Districts Ordered to Give Up Excess Wealth
The Texas Supreme Court ruled, in January 1995, that the law was constitutional at the time, but could become unconstitutional unless changes were made in the law over the next several years. Senate Bill 7 mandated that all districts having a wealth per weighted student (WADA) exceeding $280,000 must give up that excess wealth in one of several manners: 

1. consolidation with a property-poor district such that the combined wealth is less than $280,000 per WADA;
2. tax base consolidation with a property-poor district such that the combined wealth is less than $280,000 per WADA;
3. purchase of attendance credits from the State to reduce the wealth to less than $280,000 per WADA;
4. purchase of attendance credits from a property-poor district to reduce the wealth to less than $280,000 per WADA; or
5. disannexation of property from a property-wealthy district to reduce the wealth to less than $280,000 and attachment of that property to a property-poor district.

1995 - Senate Bill 1 - Rewrite of Texas Education Code
In 1995, the Texas Legislature passed Senate Bill 1, which rewrote the entire Texas Education Code. This new law made very few changes to the school financing provisions.

1997 - Legislature Revises ‘Recapture’ Formula
During the 1997 legislative session, the Texas Legislature revised the formula for calculating the recapture amount to exclude taxes collected for debt service from the calculation. The voters approved an additional $10,000 homestead exemption in August 1998. The 1997 legislature included provisions in the revised recapture calculation to hold the District harmless from any lost tax revenues caused by the loss in taxable value due to the increased homestead exemption.

1999 - House Bill 4 Provides Some Relief to Plano ISD
In the 1999 legislative session, the Texas Legislature passed House Bill 4. This new law increased the wealth per weighted student (WADA) that districts may retain to $295,000. This $15,000 increase in wealth per weighted student represents the first increase since Senate Bill 7 was enacted in 1993. This minimal adjustment to the wealth per weighted student provides some relief to the District regarding its equalization efforts.

2001 - House Bill 3343 Passes / Committee to Study Public School Finance
During the 2001 legislative session, the Texas Legislature passed House Bill 3343. This new law increased the wealth per weighted student (WADA) that districts may retain to $300,000 for 2001-02 and to $305,000 for 2002-03. During the legislative session the Legislature agreed to name an interim committee following the session to study public school finance in Texas. In September 2001 the Lieutenant Governor and Speaker of the House appointed this committee. 

The committee was charged with conducting a comprehensive review of the structure of the Texas public school finance system, including facilities and transportation issues; the method used to fund public schools; and the criteria used to determine state payments to school districts. 

The legislative leaders have also instructed the committee to carefully consider all of the equity issues that govern public school finance and fully examine all of the revenue resources for funding public schools, including the state’s property tax system. ...

7 November 1989, Dallas (TX) Morning News, “Lawmakers, educators cool to Clements’ no-tax stance” by Terrence Stutz:
AUSTIN—Texas will be forced to consolidate school districts or enact a “Robin Hood’ redistribution of state aid if Gov. Bill Clements carries through on his pledge to fight any tax increases for education, key legislators and educators said Monday.

Google Books
September 1991, Texas Mionthly, pg. 198:
Cutting School
HOW MUCH DAMAGE will the new school-finance law inflict upon the state’s wealthiest—and, in some cases, best—school districts? Most rich districts face a disastrous combination of higher local property taxes, less state aid, and “Robin Hood” assessments to help poorer districts.

GOogle Books
January 1992, Texas Monthly, pg. 172, col. 2:
Supreme Mess
AS OF EARLY DECEMBER, Lieutenant Governor Bob Bullock and other legislative leaders were betting that the Texas Supreme Court would invalidate the much-loathed Robin Hood school-finance law passed by the Legislature last spring. What then? The Legislature would have four unappealing choices. One if forced consolidation of school districts, so that rich areas will have to share their wealth with their poorer neighbors—a regional Robin Hood approach that would also devastate small towns.

Google Books
August 1992, Texas Monthly, pg. 192, col. 2:
Robin Hood II
ANOTHER SCHOOL-finance plan—yes, again—is making the Capitol rounds after an Austin judge vowed to cut off funding for public schools next June if the Legislature doesn’t come up with a solution to the crisis.

Posted by Barry Popik
Texas (Lone Star State Dictionary) • (0) Comments • Monday, February 01, 2010 • Permalink