Gannon V Victory

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Group of Elementary Pupils In Classroom

The Supreme Court issued Gannon V this afternoon declaring SB19 and the school finance system unconstitutional again, both on adequacy and equity grounds. The court did not require a legislative response this fall and gave the legislature until April 30, 2018, to take another swing at it.  This is a good decision!

Here is a link to the full opinion:

http://www.robblaw.com/PDFs/2017-10-02%20Gannon%20V%20Decision.pdf

The court first traced the history of the cases on school finance and the specific history of the Gannon case. It then detailed the adequacy and equity violations.

Adequacy.

It was the state’s burden to show that through SB19 “the public education financing system provided by the legislature for grades K-12-through structure and implementation——-is reasonably calculated to have all Kansas public education students meet or exceed the standards set out in Rose.”  The state did not meet this burden.

The court once again found that it was proper to take judicial notice of appropriate matters rather than forcing a new trial for a trial judge to “find the facts.” This allows the case to keep moving rather than sending it back to square one.

The court then found that the “structure” of the new formula, which is, in essence, the old formula, is acceptable. This is a wonderful finding. While we knew the old formula passed constitutional muster, it was unclear that a simple return to that formula would suffice. It does. The court said that items we had raised in our brief concerning the underfunding of parts of the formula (sped, professional development, mentor teacher program) do not relate to the “structure” of the formula. We can positively assert that the “formula” is structurally sound… it is just underfunded.

The court then spent a good amount of time explaining that the state had not “shown its work” in justifying why SB19 purportedly fixed anything. The court was extremely critical of the legislative sole reliance on a four page Kansas Legislative Research memo setting forth a purported “successful schools” approach to justify the base in the new formula.

Recall that the legislature concocted its own version of a successful schools approach and then attempted to fund the rest of the districts on what these schools were spending. The court, however, said “Simply put, merely performing “better than expected”— while perhaps a test for efficiency– is not our Kansas test for constitutional adequacy.” The court highlighted the failure rates in these 41 “successful schools” and said:

“Stated simply and starkly, the State’s “successful schools” model does not contain enough schools or districts meeting student performance standards——much less constitutional standards of adequacy——to warrant that label.”

“Given these flaws, we must conclude the State has not established any valid figure through its calculations-based upon the schools it calls successful-to show S.B. 19 is constitutionally adequate. In short, the State has not met its burden: to show that the public education financing system provided by the legislature in S.B. 19 for grades K-12 is reasonably calculated to have all Kansas public education students meet or exceed the standards set out in Rose….”

The court restated its Gannon IV conclusion that more money was needed.

“Accordingly, we concluded more funding was needed to raise performance to at least reach the minimum standards….”

The court focused on the state’s failure to show how the funding levels in SB19 fixed anything.

“But as the State currently professes to provide adequacy, it does not indicate why, how, or by how much, any of these levels are going to be improved by its proposed level of funding in S.B. 19….”

Very notably, the court rejected the state’s attempt to claim that simply fixing at-risk spending was all that the case was about. It is about ALL kids. The court said:

“(W)e must also expressly reject the State’s occasional contention throughout its brief that in Gannon IV we were concerned exclusively with the underperforming subgroups and that only their performance caused by inadequate funding was the basis for the Article 6 violation.”

The court then commented on the increased reliance on the LOB and the election/protest petition process. The court points out that by increasing reliance on local funding to replace diminished state funding may initially be a legislative decision but it is subject to review by the court on equity grounds.

The court did NOT set out a “number” for new money needed for compliance. The court did say the following:

“Finally, we further note other calculations in the record of “new money needed” for fiscal year 2018 and fiscal year 2019 are considerably higher than the $292.5 million presented by the State. At the high end is $1.7 billion as calculated by the plaintiffs by averaging the legislatively ordered cost studies performed by A & M in 2002 and the LPA in 2005-2006 and then adjusting for inflation. And next highest is approximately $893 million as presented to the governor by the Kansas State Board of Education (SBE) in its budget for fiscal year 2018 (base of $4,604 for around $565 million) and fiscal year 2019 (base of $5,090 for approximately $328 million). The next highest is $819 million as calculated by plaintiffs using the panel’s fiscal year 2014 proposed base of $4,980 in fiscal year 2018 and continuing to adjust for inflation by increasing that base to $5,055 in fiscal year 2019. The fact these wide-ranging calculations have been presented does not alone resolve the issue of adequate funding. The magnitude of the difference between those calculations and S.B. 19’s, however, emphasizes the need for the State to truly demonstrate the validity of its funding approach and the financial figures that approach produces.”

We think that the State BOE request is still the best evidence as to what increase is needed. The State BOE need was $893M. The legislature funded $293M. They are still $600M short.

Equity.

The court found in our favor on all four major equity concerns. It did not void these provisions for this year but called them unconstitutional moving forward. Gone are:

  • Expanding capital outlay for property and casualty insurance and utilities
  • Reinstating a protest petition/election procedure for increasing LOB
  • Equalizing LOB on previous year’s LOB
  • Setting a 10% floor for at-risk to benefit two districts

The court found that each of these provisions violated the equity test and found them unconstitutional.

As to the expanded capital outlay to insurance and utilities the court said;

SB19’s expansion of capital outlay spending categories “clearly underscore(s) the disparity that results not only from the capital outlay equalization formula but also, and more importantly for this discussion, a disparity that is exacerbated by allowing a shift of more types of expenses to be paid from that fund…. [The capital outlay amendments] exacerbate wealth-based disparities, resulting in unacceptable levels.”

As to the protest petition/election LOB process, the court said:

“The panel’s finding—a correlation exists between a district’s wealth and its ability to gain voter approval of a board resolution that is certain to raise mill levies—is supported by the LOB election history contained in the record on appeal…. These results indicate that reinstating the protest-petition process will exacerbate wealth-based disparities among the districts—except, of course, for those 38 districts already at the 33% maximum LOB authority…. As such, we conclude S.B. 19’s provision reinstituting the LOB protest-petition process for all increases violates the equity requirement of Article 6. In short, many districts are effectively denied an access reasonably equal to the one afforded these other districts—access that is needed in order to make a similar tax effort, e.g., impose a comparable mill levy. So it logically follows that because of this lost access they cannot as readily avail themselves of the advantages that would flow from that tax effort, i.e., a substantially similar educational opportunity.”

As to equalizing LOB on previous year’s LOB the court said:

“Unfortunately, S.B. 19’s LOB lookback provision does not limit this disparate effect of local funding. Rather, it widens the gap between property-poor and property-wealthy districts…. S.B. 19 withholds some equalization funds, and this lookback provision therefore affects only property-poor districts…. As such, S.B. 19, § 17(b) exacerbates wealth-based disparities and violates Article 6….”

Finally, as to the 10% at-risk floor (the Blue Valley and DeSoto $2M for at-risk kids they do not have) the court said:

“In other words, this provision of S.B. 19 uses a wealth-based standard…. In sum, we cannot discern from the legislative record how the legislature determined that a 10% cutoff could be justified, e.g., from an actual cost basis—both as to the districts that benefit from this alternative calculation and as to those that may be excluded despite the costs of educating underperforming students who do not qualify for the free-meal program…. On the record before us, the State has failed to meet its burden of establishing that S.B. 19, § 23 complies with the equity standard of Article 6.”

The remedy.

The court requires that the legislature fix these matters by April 30, 2018. The court went on to stay its decision until June 30, 2018, which allows time to judge the April 30 remedy and issue Gannon VI decision prior to June 30. The court then did two things to show it was serious about this timeline.

First, the court said:

“With that regrettable history in mind, while we stay the issuance of today’s mandate through June 30, 2018, after that date we will not allow ourselves to be placed in the position of being complicit actors in the continuing deprivation of a constitutionally adequate and equitable education owed to hundreds of thousands of Kansas school children.”

Second, the court actually set the briefing schedule on the constitutionality of the bill that the legislature must adopt by April 30.  Initial briefs are due to the court April 30, Response briefs are due by May 10 and oral arguments to the court will be on May 22. (Mark your calendars!)

The decision brought three concurring and dissenting opinions of the seven justices. Justices Johnson and Rosen agreed with the decision but would have required a legislative response by December 31, 2017. Justice Biles is ok with the April 30 deadline but would have stayed the equity pieces for THIS year instead of waiting a year.

Gannon V is a great decision. It went for Kansas children on all issues that count. The only downside was the timing of the remedy.   Should the next legislative attempt fail, count on a special session for sure next summer.

 

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