Midland Independent School District trustees voted unanimously to authorize a constitutional lawsuit challenging Texas’ school-finance system. The lawsuit targets House Bill 3, the 2019 school-finance overhaul that created the current maximum compressed rate structure.

Local Control at Stake

The district argues that the state’s control over the school-finance system transforms a nominally local levy into a state property tax prohibited by the Texas Constitution. Midland contends that this level of state control denies local trustees meaningful control over Tier One revenue.

The Texas Education Agency calculates each district’s Tier One rate, and the petition argues that Midland must adopt it or face a corresponding funding reduction. The district’s 74-page proposed petition names Texas Education Commissioner Mike Morath and the State of Texas as defendants.

Recapture Payments at Issue

Midland’s lawsuit also challenges the recapture mechanism, which requires the district to send a portion of its tax revenue to the state. The district’s final 2025-26 maximum compressed rate was set at $0.5814 per $100 of taxable value, generating approximately $313 million in Tier One collections and requiring the district to send about $83 million through recapture by August 15.

Attorney Kevin O’Hanlon estimated that the litigation could cost approximately $1 million and take about a year and a half to work through the courts. O’Hanlon said Midland had not solicited other districts before the vote but expected other recapture districts to join and share the expense.

Original reporting: WBAP News/Talk (Dallas-Fort Worth) — read the source article.