Market Watch: Litigation

A district judge in Texas has upheld the constitutionality of the state's school finance formula.

The law governing school finance has become known as the “Robin Hood” law because it requires wealthy districts to contribute a portion of their tax revenues to poorer school systems. Wealthier districts had contended that the law was unfair and constituted an illegal statewide property tax, but Judge F. Scott McGown found that the distribution of funds was on solid legal ground.

The suing districts argued that the state should be providing poor districts with more funding instead of redistributing it from rich to poor districts. But McGown said the level of funding is one that the legislature should address, not the courts. Legislative leaders have said they will revamp Texas school finance laws in 2003.