As California lawyers approach the new millennium, some may look back and try to identify cases that profoundly affected society. Serrano v. Priest -- which spanned three California Supreme Court opinions between 1971 and 1977, trial court rulings in 1974 and 1983, Proposition 13 and numerous legislative enactments -- is a case in point. See Serrano v. Priest, 5 Cal.3d 584 (1971) (Serrano I); Serrano v. Priest, 18 Cal.3d 728 (1976) (Serrano II); Serrano v. Priest, 20 Cal.3d 25 (1977) (Serrano III).
Serrano originated in Los Angeles County Superior Court as a class action brought by public-interest attorneys on behalf of a class of all California public-school pupils. The case reflected pressing issues of its time: the fundamentality of public education, the struggle of haves vs. have-nots and the battle against discrimination. In hindsight, however, Serrano was at best incomplete and arguably a failure at accomplishing equality in education.
Serrano I struck down California's public-school, general-fund, financing structure as a violation of equal protection because under this system per-pupil expenditures varied greatly and depended on a school district's tax base. These kinds of tax-base disparities resulted in inequalities in actual educational expenditures per pupil that the state-aid mechanisms -- designed to assure a minimum "foundation" level of expenditure -- were wholly inadequate to offset.
After Serrano I, the Legislature enacted SB90, which established a "squeeze formula" to begin a leveling of recurring school-district income based on the average daily attendance revenue limit. The Superior Court in Serrano ruled in 1974 that, although SB90 was a step in the right direction, "wealth-related disparities" were still impermissible. Serrano II affirmed the trial court's judgment, giving the state six years to bring the system into compliance.
Serrano I was based on two dispositive points: First, education in the public schools is a "fundamental" interest or right, and second, the "wealth" of a school district -- meaning its real-property tax base -- is a "suspect classification." Under the new equal-protection analysis, this invoked strict-scrutiny review. Since the court found no compelling governmental interest in tying per-pupil education expenditures to the assessed value of a district's realty, it invalidated the system.
The statistics recited in Serrano I were provocative. Recurring public-school funds came primarily from local district taxes on real property (55.7 percent) and State School Fund aid (35.5 percent). The Legislature authorized each county to levy taxes on real property within a school district at a rate needed to meet the district's annual education budget.
Thus, in 1968-69, the Baldwin Park School District spent $577.49 to educate each of its pupils, while Pasadena spent $840.19 and Beverly Hills spent $1,231.72. This "economic chasm" between various districts with respect to tax base and expenditures meant "poorer" districts had to tax themselves at much higher rates to match the expenditures of wealthier districts, if this was even possible. As the Supreme Court put it, "affluent districts can have their cake and eat it too; they can provide a high quality education for their children while paying lower taxes. Poor districts, by contrast, have no cake at all."
In reply to the objection that past precedents viewed wealth as a suspect classification only with respect to individuals, not governmental entities, the Serrano I court stated, "The simple answer to this argument is that plaintiffs have alleged that there is a correlation between a district's per pupil assessed valuation and the wealth of its residents and we treat these material facts as admitted by the demurrers."
The Serrano I decision represents both the strengths and weaknesses of judicial resolution of complex social issues. Lacking sufficient staff and the ability to gather public comment like the Legislature, the court essentially was captive to the litigants' briefing and evidence. Consequently, the court focused only on recurring general-purpose income and never dealt with the system of how school districts fund capital expenditures, facilities and infrastructure costs -- which to this day depend on the very inequities the court found so objectionable about recurring income.
Serrano I revolutionized equal-protection analysis of wealth as a suspect classification by extending it for the first time to government institutions, that is, school districts: "The commercial and industrial property which augments a district's tax base is distributed unevenly throughout the state. To allot more educational dollars to the children of one district than to those of another merely because of the fortuitous presence of such property is to make the quality of a child's education dependent upon the location of private commercial and industrial establishments."
The argument that moving from the relative wealth of a class of individuals to that of government entities was illogical did not trouble the Serrano I court. Nor did the argument that the "fortuitous presence" of high-tax-base industrial and commercial properties (as well as population) within a district reflects a local agency's conscious zoning decisions made by balancing factors such as quality of life, jobs, housing issues and tax revenues.
The press extensively discussed and praised Serrano I. The Legislature embarked on a series of funding revisions that reduced but still perpetuated funding disparities. Proposition 13 remade the landscape of local taxes. California's K-12 system was facing a surging population that would increase the number of students from 3.1 million in 1980 to 5.1 million in 1990, creating massive infrastructure issues.
By 1983, on remand, the Superior Court found sufficient compliance with Serrano's ruling, notwithstanding continuing disparities within a minority of districts. In 1983, the Legislature enacted SB813 to reform further school finance.
However, claiming that disparities in school funding or educational opportunity had been remedied would be erroneous. In 1991-92, for example, the disparity in K-8 fundable revenue limit per average daily attendance in Contra Costa County ranged from $2,849 for the lowest-funded district to $3,806 for the highest-funded district.
In the early 1990s, a consortium of dozens of school districts attempted another Serrano-type court challenge that the court ultimately dismissed. Low-wealth districts repeatedly attempted legislative reforms with mixed success. Ironically, well after the final Serrano trial court decision in 1983, the Legislature did engage in three rounds of equalization aid, beginning in the last year of the Pete Wilson administration. Nonetheless, in Contra Costa County, for example, by 1996-97, those same K-8 districts still reflected a revenue-limit funding disparity between $3,239 and $4,014.
Serrano I's federal underpinnings soon left. Only two years after Serrano I, the U.S. Supreme Court's decision in San Antonio Independent School Dist. v. Rodriguez, 411 U.S. 1 (1973), rejected its reasoning in interpreting the U.S. Constitution's Equal Protection Clause. Serrano's federal constitutional analysis thus became a "dead letter."
Perhaps the best measure of Serrano's impact is not the empirical one of whether the opinion itself actually defined, let alone achieved, educational equality. Many educators would argue that it was a well-intentioned step in the right direction but that it never addressed the truly complex issues at hand. Nevertheless, it played its part in the revision of school finance in the past three decades.
Arthur F. Coon and Scott A. Sommer are shareholders in the Walnut Creek office of Miller, Starr & Regalia