Download PDF

“The history of education since the Industrial Revolution shows a continual struggle between two forces: the desire by members of society to have educational opportunity for all children, and the desire of each family to provide the best education it can afford for its own children.” Rodriguez v. San Antonio Independent School District, 411 U.S. 1, 49 (1973) (citation omitted). 

As a case currently pending before the Kansas Supreme Court, Montoy v. Kansas, No. 04-92032-S, aptly demonstrates, after decades of litigation and scholarly debate, this struggle has transformed into ongoing litigation over how to measure the equality and adequacy of educational opportunity and which entities are best suited to do that measuring – legislatures or courts. Increasingly, state courts are called upon to evaluate the equality and adequacy of the education financing systems adopted by state legislatures, with results that carry weighty implications for the separation of powers – between branches of government as well as political subdivisions – within the states.

Background

In Rodriguez, the Supreme Court effectively foreclosed federal constitutional challenges to inter-district funding disparities by rejecting a federal equal protection challenge based on inequality in funding between local school districts within Texas. The Court found no fundamental right at issue, and accordingly applied rational basis scrutiny. Because the state’s education system assured a basic education for every child in the state and encouraged local control of each district’s schools, the Court concluded that it bore a rational relationship to a legitimate state purpose and did not violate the equal protection clause of the Fourteenth Amendment. 

By contrast, early state court decisions provided a viable alternative to federal litigation over state education financing. In 1971 the California Supreme Court held that education was a fundamental right under the California constitution. Serrano v. Priest, 557 P.2d 929 (Cal. 1971). And, just a few weeks after the Supreme Court’s rejection of a federal equal protection challenge in Rodriguez, New Jersey’s Supreme Court found that state’s system of financing public education, which relied heavily on local taxation and lead to disparities in spending per pupil, violated the state constitution’s provision requiring the state to furnish a thorough and efficient system of public schooling. Robinson v. Cahill, 303 A.2d 273 (N.J. 1973).

Encouraged by Serrano and Robinson, advocates for equalization and centralization of school funding have given numerous state courts occasion to evaluate their education finance systems in light of state constitutional requirements. As the progeny of these two benchmark cases, education finance litigation generally attacks state funding schemes on one or both of two theories: an equity challenge under a state equal protection clause, or an adequacy challenge under a state education clause. Results have been mixed. “Since Serrano, the highest courts in 36 states have issued opinions on the merits of funding litigation suits, with 19 upholding state funding systems and 17 declaring state funding systems unconstitutional.” John Dayton, Anne Dupre, & Christine Kiracofe, Education Finance Litigation: “A Review of Recent State High Court Decisions and Their Likely Impact on Future Litigation,” 186 ED. LAW REP. 1 (2004) (collecting cases). Indeed, litigation is ongoing and public policy advocates seeking to reform the provision of education across the nation plan to initiate more litigation in the near future.1

Montoy v. Kansas

During the week of August 30, 2004, the Kansas Supreme Court is scheduled to hear oral argument in Montoy v. State of Kansas, the most recent litigation battle over equity and adequacy in education financing. This case will serve as an indicator of whether the use of civil litigation to challenge states’ school finance systems is destined to dramatically reshape the states’ traditional approach to public education. If the Plaintiffs prevail, this trend will have significant consequences for the continued vitality of states’ decisions about how to structure their internal self-governance and fundamental notions of separation of powers between the judiciary and the legislatures within states.

In 1999, two school districts and approximately three dozen students filed suit in the District Court of Shawnee County, Kansas, alleging the financing system established by the state Legislature does not meet the Kansas Constitution’s requirement that the Legislature “make suitable provision for finance of the educational interests of the state,” Art. 6, § 6(b), that it runs afoul of plaintiffs’ equal rights under the Kansas Bill of Rights, § 1, and violates their substantive due process rights.

Initially, the District Court found the claims to be insufficient as matters of law, but the Kansas Supreme Court reversed, finding sufficient questions of fact and allowing the plaintiffs’ case to proceed. Montoy v. State, 275 Kan. 145 (2003). Back before the District Court, the plaintiffs challenged various elements of Kansas’ financing system, which, pursuant to the School District Finance and Quality Performance Act (“SDFQPA”), establishes a base or foundation rate for the minimum level of revenue a district will receive per pupil. The base rate set by the state is then adjusted based on “weights” for various district and student characteristics deemed by the legislature to necessitate different funding levels. Examples of “weights” at issue in this case include adjustments for declining enrollment, new facility start-up costs, transportation, as well as the prevalence of students enrolled in vocational, bilingual and at-risk education programs. In addition to the “weights” that adjust per pupil revenues, the state permits school districts to adopt a local option budget (“LOB”) to supplement their spending through an additional tax levy. This LOB is capped and districts raising too little funds per pupil statewide receive state supplemental aid. Finally, Kansas law authorizes school districts to assess property taxes for certain capital expenditures that are separate and distinct from state funding mechanisms.

Plaintiffs alleged that these mechanisms resulted in unconstitutional disparities in educational expenditures per pupil between districts, and that the overall state level of funding failed to provide an adequate or suitable education for certain groups of students. The state defended the system by arguing that each category and weight was rationally related to a legitimate government purpose. For example, the new facilities weight was enacted in recognition of generally higher startup expenses facing new schools, and the transportation weight is generated based on a district’s density and the number of students who live more than 2.5 miles from the school. These weights are not necessarily based on the actual costs attendant to any one particular student or district, but rather are based on formulae derived from legislative determinations about district characteristics and the differential funding needs likely created by those characteristics. The state noted that many of the weights challenged in this litigation were previously upheld by the state Supreme Court under rational basis review. See U.S.D. No. 229 v. State, 256 Kan. 232, 266 (Kansas 1994). The state further told the court that the LOB and local property tax mechanisms enacted by the state Legislature promote the state’s legitimate interest in fostering local control over various aspects of education. According to the state, these legitimate state interests, coupled with evidence of high achievement, such as the high national rankings of the state’s schools, rendered the state system of education financing constitutional under both provisions of the state constitution.

Legal Standards Crafted by the Trial Court

On September 8, 2003, Judge Terry Bullock issued a Memorandum Decision and Order laying out a series of legal conclusions that would frame the court’s analysis of the Plaintiffs’ challenge. See Montoy v. State, 2003 WL 23171455 (Kan. Dist. Ct., Sept 8. 2003) (“Pre-trial Order”). The court elucidated standards for both prongs of the Plaintiffs’ challenge to the constitutionality of the school finance system: (1) equity, and (2) suitability. 

Critical to the court’s equity analysis was the allocation of the burden under rational basis review. Notably, the court acknowledged that rational basis scrutiny applied to per pupil spending discrepancies, but found that it had been refined in U.S.D. No. 229 v. State, 256 Kan. 232 (1994) and in an unpublished district court case, Mock v. State, Case No. 91-CV-1009, 31 WASHBURN L.J. 475 (Kan. Dist. Ct., Oct. 14, 1991), to shift that burden. The language in U.S.D. 229 interpreted by the Judge as a refinement of rational basis scrutiny provided that the test “contains two substantive limitations on legislative choice: legislative enactments must implicate legitimate goals, and the means chosen by the legislature must bear a rational relationship to those goals. In an alternative formulation, the court has explained that these limitations amount to a prescription that all persons similarly situated should be treated alike.” Pre-trial Order, at *18 (quoting U.S.D. 229, 256 Kan. at 260). Judge Bullock interpreted this quote, which he found “fundamentally synonymous” with the unpublished opinion in Mock, to mean that “if challenged, the legislature must be prepared to justify spending differentials based on actual costs incurred in furnishing all Kansas school children an equal education opportunity.” Pre-trial Order, at *18. In so holding, the Judge placed the burden on the state to justify spending differences between districts based on actual costs, rather than placing the burden on the plaintiffs to show an absence of a rational basis for such differences. On appeal, the state argues this allocation of the burden was directly contrary to established precedent governing rational basis review, and irretrievably tainted the trial and decision with fundamental legal error. 

With respect to suitability, the analysis depended heavily on what standard the court adopted to gauge the adequacy of the overall spending level in the state. Judge Bullock stated in both his Pre-trial Order and his December 2 Memorandum Decision that he found no guidance in case law, the state constitution or statutes, or even in the State Board’s accreditation standards. “Accordingly, in the absence of any appellate court or even legislative suitability standard, this court must craft one.” Memorandum Decision and Preliminary Interim Order, Montoy v. Kansas, No. 99-C-1738, 2003 WL 22902963, at *23 (Kan. Dist. Ct. Dec. 2, 2003) (“Memorandum Decision”). Explaining his intent to craft such a standard, the Court’s Pre-trial Order explicitly eschewed the “objective criteria” preferred by some courts for determining the adequacy of states’ provision of education. Rather, he held that “a constitutionally suitable education (much like an efficient or an adequate education as provided for in the constitutions of our sister states) must provide all Kansas students, commensurate with their natural abilities, the skills necessary to understand and successfully participate in the world around them both as children and later as adults.”

Factual and Legal Conclusions of the District Court

On December 2, 2003, after an eight day trial, Judge Terry Bullock issued his Memorandum Decision and Preliminary Interim Order. Judge Bullock found Kansas’ school funding system unconstitutional under the state and federal equal protection clauses because it permitted inter-district funding disparities unsupported by empirical evidence of actual differences in the cost of education in those districts, and under the state education clause because it failed to provide what the court considered adequate total resources to provide all Kansas children with a suitable education, as defined by the court. See Memorandum Decision, at * 49.

Finding Kansas’ inter-district disparities in per-pupil spending unconstitutional, Judge Bullock applied the reasoning contained in his September 8, 2003 conclusions of law. He reasoned that such disparities, even if caused by legislative policy choices, can pass rational basis scrutiny “only if there are rational reasons that are based on actual increased costs necessary to provide children, or particular children, in that district with an equal educational opportunity. Again, the increased costs must be essential in providing the students in that district with educational opportunities equal to that provided to students in that and other districts.” Memorandum Decision, at *21. With the burden thus allocated, the court concluded that Kansas’ system of weights and local control resulted in unconstitutional disparities, despite the explanations offered by the state, because there was no “evidence of any rational basis premised upon differing costs to educate the children who receive more,” id. at *37, because the differences were not tied to actual and documented cost disparities, but rested on legislative determinations about general characteristics that affect costs, and on local districts’ willingness and ability to raise supplemental revenue.

As for the Plaintiffs’ suitability challenge, the court concluded that the system failed to provide a constitutionally adequate education. In coming to this conclusion, Judge Bullock applied the non-objective standard he had presaged in his September 8, 2003 pre-trial order, and relied heavily on a study commissioned by the state legislature in 2001. This study was an evaluation by consultants of “the cost of a suitable education for Kansas children.” K.S.A. 46-1225. The firm, Augenblick & Myers, using independent criteria for evaluating whether the overall level of funding was sufficient, concluded that the then current level of aggregate financing was inadequate because it excluded some of what it deemed “big ticket” items like transportation and capital outlay costs covered by localities. The state argues on appeal that the district court’s reliance on that study is misplaced: the study was “policy research” not scientific analysis producing reliable results; the methodologies used were admittedly imprecise; and the questions addressed are not susceptible to “correct” or “incorrect” answers. Moreover, the state notes that the criteria in the report have not been adopted by the legislature or the state Board of Education, and should not be used to define the state constitution’s mandate to “make suitable provision for finance of the educational interests of the state.” Kansas Const., Art. 6, § 6(b).

Remedy

Though it found the Kansas education finance system unconstitutional under both its equity and suitability standards, the court delayed entering a final order in the case to afford the state legislature time to remedy the deficiencies. As widely reported in the press, the legislature did not jettison or reform its school funding system during that session. Accordingly, in May 2004, after his “grace period . . . encompassing the entire 2004 legislative session” expired, the court concluded that “the legislative and executive branches failed to utilize the time provided by the court and none of the adjudicated constitutional defects in the school funding scheme were addressed and none corrected.” Thus, the court entered its remedial order in which Judge Bullock ordered schools to close statewide if the problem is not remedied by the state legislature. Decision and Order Remedy, Montoy v. State, 2004 WL 1094555, at *1 (May 11, 2004). The Supreme Court of Kansas has stayed this order pending appellate review. Order, Montoy v. Kansas, No. 92,032 (May 19, 2004)

Implications of this and Other Nationwide Litigation

Though few other cases have included such sweeping remedial orders, Judge Bullock is correct in noting that he is not the first state court judge to invalidate statewide educational financing systems. However, the litigation presently pending in Kansas demonstrates uniquely well the fundamental jurisprudential and public policy ramifications that accompany judicial intervention in, and invalidation of, statewide education finance systems.

As a matter of legal reasoning, in reaching its conclusion the court in Montoy fundamentally modified the rational basis test traditionally applied to equity challenges. By repudiating – under the rubric of rational basis scrutiny – any rationale other than evidence of actual, essential, and incurred cost differentials for inter-district per pupil funding differences, Judge Bullock’s decision rejects any legitimate state interest in fostering local control as a justification for funding disparities. By contrast, in rebuffing a similar challenge, the United States Supreme Court declined what it saw as an invitation “to condemn the State’s judgment in conferring on political subdivisions the power to tax local property to supply revenues for local interests.” Rodriguez, 411 U.S. at 40. Such a challenge was described as “nothing less than a direct attack on the way in which Texas has chosen to raise and disburse state and local tax revenues.” Id. Since Rodriguez, the Supreme Court has recognized that “[n]o single tradition in public education is more deeply rooted than local control of the operation of schools,” Martinez v. Bynum, 461 U.S. 321, 329 (1983), and that this local control has intrinsic value even though it may generate some funding disparities based on different local wealth. See Papasan v. Allain, 478 U.S. 265, 287 (1986). Indeed, numerous state high courts continue to recognize the importance of local control to the states’ administration of public school systems. See e.g., Committee for Educational Rights v. Edgar, 174 Ill.2d 1, 39 (Ill.1996); City of Pawtucket v. Sundlun, 662 A.2d 40, 62 (R.I. 1995).

In addition to occasioning the forced departure from a long-standing tradition of local control over school financing and administration, the invalidation of state education financing systems implicates the traditional separation of powers between branches of government within states. The state argues on appeal that Judge Bullock’s decision usurps the proper role reserved to the legislative branch of state government by substituting his judgment for that of the legislature, and cites numerous cases espousing deference to state legislatures or declining to adjudicate what are essentially political questions. Indeed, Judge Bullock’s May 11, 2004 Decision and Order Remedy demonstrates the political tension inherent in judicial oversight of an inherently political question such as education funding. He takes the Kansas legislature to task for its inaction and perceived disrespect in failing to remedy the deficiencies he found: “[i]n fact, rather than attack the problem, the Legislature chose instead to attack the court. From the outset, legislative leaders openly declared their defiance of the court and refused to meaningfully address the many constitutional violations within the present funding scheme, all of which were created by the Legislature itself.” Montoy v. State, 2004 WL 1094555 at *5. The court concluded that “[g]iven these facts, coupled with the attitudes and inaction of the Legislature, the court now has no choice but to act and to act decisively.” Id. at *5.

Conclusion

The resolution of Montoy v. Kansas will indicate the willingness – or lack thereof – of state judicial officers to invalidate and reorder their states’ systems of education financing. If more states follow this path, redefining the traditional rational basis scrutiny and reducing deference to legislatures in administering school systems, the jurisprudential and practical effect may be to substantially erode the functional and structural separation of power between branches of state government, as well as the traditional reliance on political subdivisions to implement, finance and administer local public school systems.

*The author, Megan Brown, is an attorney at Wiley, Rein & Fielding in Washington, DC.

 

Endnotes

1 See “Adequacy Lawsuits Planned in at Least Four States,” available at http://www.accessednetwork.org/litigation/ 8-8-03AdequacyLawsuitsPlanned.htm. (last visited June 21, 2004).

Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We welcome responses to the views presented here. To join the debate, please email us at [email protected].