Before 1971, California public schools are funded by local property taxes. In two major decisions, Serrano v. Priest I and Serrano v. Priest II, the California Supreme Court finds that the system of school funding that relies exclusively on property taxes violates the state constitution’s equal protection clause.
The court says the system discriminates against poor communities that have a significantly smaller tax base to support their schools than wealthier communities. In response, the state legislature passes a law designed to equalize school revenues by increasing state funds for poor communities. The law also caps revenues in wealthier districts and redistributes some of the local property taxes from wealthier areas to poor districts. Critics decry the cap on revenues in high-spending districts because they say that many poor children who live in wealthier areas actually receive less funding per pupil.