Mike Morath, Commissioner of Education v. Sterling City Independent School District, Highland Independent School District, and Blackwell Consolidated Independent School District
499 S.W.3d 407
| Tex. | 2016Background
- Texas Education Code §42.2516 (as enacted in HB 1) created a "clawback" requiring the Commissioner of Education to recover state/local revenue per student that exceeded a district’s target when the excess resulted from increases in three FSP components (equalized wealth level, basic allotment, guaranteed level).
- Section 42.2516 also contained a Finality Provision: "A determination by the commissioner under this section is final and may not be appealed."
- After HB 1, the Commissioner applied the Clawback Provision to several West Texas districts whose per‑student revenue exceeded targets — in part because of higher local property tax collections (e.g., windfarm-driven property value increases), not solely the three statutory FSP components.
- Three districts (Sterling City ISD, Blackwell CISD, Highland ISD) sued for declaratory relief alleging the Commissioner acted ultra vires by clawing back amounts not attributable to the three listed FSP components.
- Trial court and court of appeals held the Commissioner acted ultra vires; the Commissioner sought review, arguing the Finality Provision bars judicial review of his determinations.
- The Texas Supreme Court reversed the court of appeals and dismissed for lack of jurisdiction, holding the Legislature made the Commissioner’s determinations under §42.2516 final and not subject to judicial review absent a manifest, conspicuous, and irreconcilable statutory conflict.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Commissioner exceeded statutory authority (acted ultra vires) by including non‑FSP tax increases in clawback determinations | Commissioner’s clawbacks exceeded §42.2516(h) because the statute permits clawback only for excess revenue "as a result of" the three listed FSP components | Commissioner contends §42.2516 did not prohibit recovering any revenue that caused a district to exceed target revenue and his broad determinations were consistent with the FSP | Court acknowledged the argument might be reasonable but did not decide the statutory‑interpretation dispute on the merits because of finality; treated Commissioner’s determination as within the unreviewable scope absent a manifest conflict |
| Whether the Finality Provision precludes judicial review (including ultra vires suits) | Districts: finality bars appeals but not ultra vires suits challenging actions beyond statutory authority | Commissioner: Finality Provision makes determinations final and unreviewable, barring jurisdiction | Held: Finality Provision precludes judicial review of Commissioner’s determinations under §42.2516; trial court lacked jurisdiction and case dismissed |
| Standard for allowing judicial review despite finality clause (is there an ultra vires exception?) | Districts: statutory violation claims (ultra vires) should be reviewable | Commissioner: only a manifest, conspicuous, irreconcilable conflict would permit review; otherwise finality stands | Court: reiterated that review is barred except possibly where there is a manifest/conspicuous/irreconcilable conflict — that high bar was not met here |
| Remedy scope (prospective vs. retrospective relief; sovereign‑immunity implications) | Districts sought declaratory relief and fees; some argued relief could be obtained by ledger adjustments (ongoing relief) | Commissioner argued retrospective monetary claims are barred by sovereign immunity; past payments cannot be recovered | Supreme Court dismissed for want of jurisdiction; concurring/dissenting opinions discussed that retrospective claims would be barred and some prospective relief issues could survive in narrow circumstances (remand suggested by dissent for limited claims) |
Key Cases Cited
- Houston Mun. Emps. Pension Sys. v. Ferrell, 248 S.W.3d 151 (Tex. 2007) (statutorily prescribed finality of administrative decisions precludes judicial review)
- Klumb v. Houston Mun. Emps. Pension Sys., 458 S.W.3d 1 (Tex. 2015) (ultra vires challenge to a decision made final by statute is permissible only where there is a manifest, conspicuous, and irreconcilable conflict with statutory terms)
- Houston Belt & Terminal Ry. v. City of Houston, 487 S.W.3d 154 (Tex. 2016) (distinguishes absolute from limited grants of discretion; acting outside limited statutory authority can be ultra vires)
- City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) (ultra vires suits may allow prospective relief but retrospective monetary relief is barred by sovereign immunity)
- Neeley v. West Orange‑Cove Consol. Indep. Sch. Dist., 176 S.W.3d 746 (Tex. 2005) (challenge to statewide property‑tax aspects of school finance; context for HB 1 reform)