Missouri Court Upholds State School Funding Formula

In 2004, Plaintiffs, which include two not-for-profit education advocacy groups, 271 out of 524 Missouri school districts, students, parents, and taxpayers, originally brought suit to challenge Missouri’s school funding formula, alleging the formula was unconstitutional under Article IX, Section 1(a) of the Missouri Constitution because it resulted in inadequate and inequitable funding to Missouri’s public schools.¹  Defendants included the State of Missouri, the State Treasurer, the State Board of Education, the Department of Elementary and Secondary Education, the Missouri Commissioner of Education, the Commissioner of Administration, and Missouri’s Attorney General.²

In 2005, while Plaintiff s’ case was ongoing, the Missouri legislature amended the school funding formula, under then-existing Senate Bill 380 (SB380), in an attempt to remedy inequities resulting from school funding that is financed in part by state funds and in part by local funds.³  Senate Bill No. 287 (2005) (SB287) is codified in Chapter 163, RSMo Supp. 20084 and provides state aid to Missouri’s public schools utilizing a calculation that determines the amount of state funding needed by subtracting “local effort”⁵ from “subtotal of dollars needed.”⁶  The formula reflects the idea that “schools with greater ‘local effort’ contributions require less state financial assistance to meet the costs of providing a free public education.”⁷ The legislature planned to phase in SB287 over seven years, while the old formula was being phased out.⁸ 

At trial, Plaintiffs alleged that Missouri’s school funding formula used incorrectly calculated tax assessment data.  This faulty data, in turn, rendered the “local effort” contributions incorrect and directly impacted the adequacy and equity of the education provided in Missouri’s schools.⁹  Plaintiffs based their argument on a critical study of Missouri’s school funding formula, Disparity of Assessment Results: Why Missouri’s School Funding Formula Doesn’t Add Up, which was conducted at the Public Policy Research Center (PPRC) at the University of Missouri-St. Louis and was published in October 2006.¹⁰  In addition to information from the study, Plaintiffs provided an expert on education finance who testified that Missouri’s system was “one of the most disparate systems in existence in the United States” because it placed a “greater financial burden on local school districts by increasing their responsibility for funding public schools.”¹¹  In response, the State of Missouri argued that the formula was constitutional and that it incorporated appropriate tax assessment data.¹² 

The trial court agreed with Defendants that the constitution does not require the State to provide funding beyond 25 percent of the State’s revenues, although the legislature may choose to allocate more funding to schools.¹³  In addition, the trial court held that Plaintiffs “had not shown that SB287 violated the Missouri Constitution’s Hancock Amendment¹⁴ or that it provided the remedy sought.”¹⁵  Finally, the trial court dismissed the assessment calculation issues on standing and jurisdictional grounds and rejected Plaintiffs’ claims that the legislature wrongly relied on the State Tax Commission’s 2004 assessment data.¹⁶

Plaintiffs appealed the trial court’s decisions, raising four challenges to Missouri’s school funding formula: (1) the formula “inadequately” funds schools in violation of Article IX of the Missouri Constitution; (2) the formula violates equal protection; (3) the formula violates Missouri’s Hancock Amendment; and (4) the legislature violated Article X of the Missouri Constitution and certain statutes by incorporating inaccurate assessment figures into the formula.¹⁷

First, the Missouri Supreme Court held that the school funding formula does not violate Article IX of the Missouri Constitution.  Plaintiffs argued that SB287’s failure to provide school funding beyond that granted by section 3(b) violates Missouri Constitution Article IX, Section 1(a), because the SB287 school funding formula fails to “adequately” provide the “general diffusion of knowledge and intelligence” mandated by Section 1(a).¹⁸ The court held that Section 1(a) provides no specific directive or standard for how the State must accomplish the goal of “diffusion of knowledge.”¹⁹  Plaintiffs’ attempts to “read a separate funding requirement into section 1(a) that would require the legislature to provide ‘adequate’ education funding in excess of the 25 percent requirement contained in section 3(b).”  This, the court said, does not exist.²⁰  The court found that “[r]eading a free-standing obligation to provide certain school funding into the introductory language of section 1(a) would be contrary to the specific flexibility afforded the legislature in Article IX, Section 3(b).”²¹  Section 3(b) provides the legislature a flexible framework for funding Missouri’s public schools, said the court, and it is this section that provides the constitutional parameters for funding Missouri’s public schools.²²  The court concluded that the Plaintiffs’ claims that SB287’s funding formula is unconstitutional because it fails to provide funding required by Article IX, Section 1(a) are without merit and not justiciable because “[t]he judiciary cannot invade the legislative branch’s province to fund schools beyond the requirements of section 3(b).”²³

Second, the court held that the school funding formula does not violate equal protection because SB287’s funding formula satisfies the highly deferential rational basis standard in that funding free public schools in Missouri is clearly a legitimate end.²⁴  Education is not a fundamental right under the United States Constitution’s equal protection provision, and Missouri courts have followed the federal approach in defining fundamental rights.  Therefore, the Missouri Supreme Court reviewed the equal protection claim under a rational basis review.²⁵  The Missouri Constitution does not forbid funding schools “in a way that envisions a combination of state funds and local funds, with the state funds going disproportionately to those schools with fewer local funds,” and “no mandate requires that per-pupil expenditures be equal.”²⁶

Third, the court held that the school funding formula does not violate the Hancock Amendment because the purpose of the Hancock Amendment is “to limit government expenditures” and the relief that Plaintiffs request is “a declaratory judgment that results in increased funding.”²⁷  According to the court, “[t]his remedy is unavailable under the Hancock Amendment... [b]ecause Plaintiff s expressly disaffirm that they seek to be released from any mandate.”²⁸  As a result, their Hancock Amendment challenge “necessarily fails.”²⁹

Finally, the court held that the legislature did not violate Article X of the Missouri Constitution and certain statutes by incorporating inaccurate assessment figures into the formula.  The duties of the commission are outlined by the constitutional and statutory provisions cited by Plaintiffs.³⁰  The allegations by Plaintiffs were not that the statute itself imposes non-uniform taxes, but that the legislature relied on the Commission’s erroneous property assessment figures from 2004.³¹  The court noted that the Commission “was never joined as a necessary party to this case, which prevents evaluation of its actions.”³²  The role of the court is “limited to deciding the issues before it and not making advisory opinions,” therefore this question was left “for another day.”³³

In addition, the court held that Plaintiffs “cannot show that the constitutional provisions they invoke restrict the legislature’s discretion in shaping the school funding formula.”  The only claim left to Plaintiffs is “to argue that the legislature acted irrationally or arbitrarily when relying on the Commission’s 2004 assessment data.”³⁴  The court held that there is no record to find that the legislature’s reliance on the Commission’s 2004 assessment data was irrational.³⁵  The PPRC report was created after the passage of SB287, thus the “legislature did not have this information available when debating revisions to the school funding formula in 2005.”³⁶ It was not irrational for the legislature to use the Commission’s 2004 data, even if “imperfect,” because “property assessment is not an exact science.”³⁷  The 2005 amendments incorporated the most recent data. The reliance by the legislature on the Commission’s report “was a rational attempt toward the legitimate end of funding Missouri’s free public schools.”³⁸  The court acknowledged the importance of judicial review of legislative enactments, but noted that “[a]ssessing the wisdom of the legislature’s reliance on the Commission’s data would invade the legislature’s deliberative process and violate the separation of powers between the judicial and legislative branches of government.”³⁹

Finally, the Court found “no basis to declare the decision to phase in SB287 over seven years irrational” nor did they find “the act of freezing in the 2004 data irrational.”⁴⁰  The court found that the legislature “may have wished to promote continuity between the old and new funding systems and their actions were consistent with the historical practice of revisiting the school funding formula approximately every 10 years.”⁴¹ The dissent agreed with the primary opinion that the “inquiry here should be limited to specific constitutional provisions” and that the “Missouri Constitution does not mandate equality among school districts.”⁴²  However, it parted from the “majority’s refusal to provide a remedy for the violation of specific constitutional requirements as to property tax assessments.”⁴³  The constitutional flaws in the 2005 revision, according to the dissent, have resulted in “constitutionally inadequate” adequacy of funding.⁴⁴ The flaw is founded in the General Assembly’s definition of “adequate funding,” which has disparate results between property-rich districts and their property-poor counterparts.⁴⁵  The dissent analogized the current funding system to a racecourse, where some districts are forced to run uphill; in such a situation, the only remedy must be determined by the judiciary.⁴⁶  By “failing in its role of enforcing specific constitutional provisions,” the dissent stated that the court is perpetuating the harm caused by such violations of the Missouri Constitution.⁴⁷ Ultimately, the court found no error in the trial court’s findings upholding the constitutional validity of SB287’s school funding formula.⁴⁸ 

* Carolyn Hamilton is a third year law student at the University of Missouri in Columbia.  She is the Chair of the Board of Advocates and was the President of the Federalist Society during her 2L year.

 

Endnotes

1  Comm. for Educ. Equal. v. State, 2009 Mo. LEXIS 386, 2, 3 (Mo. Sept. 1, 2009).

2  Id. at 2. 

3  Id. at 4. 

4  All statutory references in this opinion were made to RSMo Supp. 2008, unless otherwise indicated.

5  “Local eff ort” is calculated according to section 163.011 (10).

6  Id.  “Subtotal of dollars needed” is calculated using the formula: weighted average daily attendance (accounts for the average number of students and student needs) X state adequacy target (perpupil spending target defi ned and calculated according to section 163.011(18); for 2007 & 2008, the target was set at $6,117) X the dollar value modifi er (adjusts for variations in costs across the state).

7  Id. at 4-5. 

8  Id.

9  Id. at 2. 

10  Id. at 6. 

11  Id. 

12  Id. at 2.

13  Id. 

14  Audit Report, REVIEW OF ARTICLE X, SECTIONS 16 THROUGH 24, CONSTITUTION OF MISSOURI; Report No. 2000-18, March 22, 2000 (On November 4, 1980, the voters of Missouri passed Constitutional Amendment No. 5, which added Article X, Sections 16 through 24 to the Constitution of Missouri.  The amendment, commonly referred to as the Hancock Amendment, requires that no greater portion of Missourians’ personal income be used in any future year to fund state government than was the case in fi scal year 1981, except as authorized by a vote of the people).

15  Id. 16  Id.

17  Id. at 7-8. 

18  Id. at 15. 

19  Id. 

20  Id. 

21  Id. 

22  Id. at 16-17. 

23  Id. 

24  Id. at 20. 

25  Id. at 18-19, 20; see San Antonio Indep. Sch. Dist. v. Rodriguez, 411 U.S. 1 (1973); In re Marriage of Woodson, 92 S.W.3d 780, 783 (Mo. banc 2003).

26  Id. at 20. 

27  Id. at 21, 22. 

28  Id. at 22. 

29  Id.  

30  Id. at 24. 

31  Id.

32  Id. 

33  Id. at 25. 

34  Id. 

35  Id. at 26. 

36  Id. 

37  Id. 

38  Id. at 27. 

39  Id.

40  Id. 

41  Id. 

42  Community for Education Quality v. Missouri at 2.

43  Id. at 3. 

44  Id. at 34. 

45  Id. at 19.

46  Id. at 34.

47  Id. at 34-35.

48  Id. at 28.

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].