## Facts

- California funded public schools through a combination of state aid and substantial reliance on local property taxes.
- Differences in district property wealth produced wide disparities in per-pupil school revenues and expenditures.
- Plaintiffs alleged that children in property-poor districts received inferior educational opportunities even when those districts imposed higher tax rates than property-rich districts.
- Plaintiffs claimed the system made educational quality depend on neighborhood wealth, amounting to wealth-based discrimination.
- Plaintiffs sought declaratory and injunctive relief to bar continued operation of the funding structure unless restructured to meet constitutional standards.
- The trial court sustained defendants’ demurrers without leave to amend and dismissed the action; plaintiffs appealed.

## Issues

1. Whether a school-finance system that produces substantial wealth-based disparities in educational funding violates equal protection under the Fourteenth Amendment and the California Constitution.
2. Whether public education is a fundamental interest for equal protection purposes.
3. Whether wealth-based disparities created by reliance on local property taxes constitute a suspect classification.
4. Whether the alleged funding scheme can survive strict scrutiny by showing a compelling state interest.

## Decision

- The court reversed the dismissal and remanded for further proceedings.
- Accepting the pleaded facts as true, the complaint stated an equal protection claim under both federal and state guarantees.
- The court treated education as a fundamental interest and the alleged wealth-based discrimination as suspect, triggering strict scrutiny.
- On the pleadings, the court could discern no compelling state purpose necessitating the existing method of financing and its resulting disparities.
- The ruling was a pleading-stage determination, not a final merits judgment, and required further factual development on remand.

## Legal Principles

- When a governmental financing scheme conditions the quality of public education on local wealth, plaintiffs may state an equal protection claim.
- For equal protection analysis in California, public education may be treated as a fundamental interest that cannot be conditioned on wealth.
- Wealth-based discrimination affecting a fundamental interest may be treated as suspect, requiring strict scrutiny.
- Under strict scrutiny, the state must show a compelling interest and that the financing structure is necessary to achieve it; absent such justification, the scheme is unconstitutional.
- A demurrer tests legal sufficiency; reversal is appropriate where the complaint’s allegations, if proven, would establish an equal protection violation.

## Conclusion

The court held that allegations of large, wealth-driven disparities in school funding caused by heavy reliance on local property taxes stated a strict-scrutiny equal protection claim under federal and state law, requiring reversal of the demurrer-based dismissal and remand for proceedings on the merits.


Serrano v. Priest, 487 P.2d 1241 (Cal. 1971)