Serrano v. Priest

The 1971 case of Serrano v. Priest-known commonly as Serrano I-marked the first major decision in a state supreme court that struck down a state educational funding system as unconstitutional. In Serrano I, the Supreme Court of California ruled that the state's school funding system violated the equal protection clause of the Fourteenth Amendment to the U.S. Constitution. In a footnote, the court mentioned that the state's funding practices also violated the California state constitution's equal protection clause.

In Serrano I, the Supreme Court of California acknowledged that the state's public school general fund financing structure resulted in large variations in per-pupil expenditures and depended largely on a school district's property tax base. The court explained that these kinds of tax-base disparities resulted in inequalities in actual educational expenditures per pupil, because districts with higher property values could generate more funding with lower tax rates. The court added that the state aid mechanisms in place at the time were inadequate to offset the large disparities. A year later, in 1972, the California legislature enacted Senate Bill 90, which established a formula to begin leveling school district incomes based on the average daily attendance revenue limits, the amount of funds that public schools receive to pay for the operations.

The Supreme Court of California based Serrano I on two main constitutional findings: First, education in the public schools is a fundamental interest or right; and second, a school district's wealth, namely, its real-property tax base, is a suspect classification. In making this second determination, the court was of the opinion that wealth was a suspect classification, declaring that the school “funding scheme invidiously discriminated against the poor because it made the quality of a child's education a function of the wealth [Page 749]of his parents and neighbors” (p. 1244). The court invoked strict-scrutiny review and rejected the state's compelling governmental interest argument for tying per-pupil education expenditures to the assessed value of a district's realty and that the current system was necessary to maintain local control.

However, the court's interpretation of wealth as a suspect classification under the federal Constitution did not hold for long. Two years later, the U.S. Supreme Court's opinion in San Antonio Independent School District v. Rodriguez (1973), its only case ever on school finance, reasoned that the Equal Protection Clause of the U.S. Constitution does not extend to schools. Rodriguez effectively precluded litigants from using the federal Equal Protection Clause as a vehicle for school finance reform.

In the 1976 case of Serrano v. Priest (known as Serrano II), the Supreme Court of California returned to its earlier, brief mention of the state constitution's Equal Protection Clause. The court essentially rendered the same judgment as it had five years earlier, but its sole authority now was the California constitution. According to Serrano II, the finance reform legislation passed in response to Serrano I was insufficient. The court clearly established education as a fundamental right under the state constitution. The court maintained that the state's property tax-based school-finance system violated the state's Equal Protection Clause, because it did not withstand the strict scrutiny that is given to the denial of a fundamental right. The court indicated that property tax rates and per-pupil expenditures should be equalized, charging the legislature with the task of leveling revenue such that, by 1980, the difference in revenue limits per pupil would be less than $100. This figure, called the “Serrano band,” included a built-in inflation factor that increased the size of the band to $300 by the year 2000.

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