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OCTOBER 2, 2017 DIGEST

Posted By Administration, Tuesday, October 10, 2017

KANSAS SUPREME COURT 

 

Civil

 

SCHOOL FINANCE
GANNON V. STATE
SHAWNEE DISTRICT COURT—STATE FAILED TO SHOW THAT REMEDIAL LEGISLATION MEETS THE ADEQUACY AND EQUITY REQUIREMENTS OF ARTICLE 6
NO. 113,267—OCTOBER 2, 2017

FACTS: Article 6 of the Kansas Constitution requires the legislature to "make suitable provision for finance of the educational interests of the state." These plaintiffs filed suit in 2010, alleging both inequitable and inadequate funding of K-12 public education. In 2013, a three-judge panel agreed, finding that the State's school finance formula failed both equity and adequacy tests. After the legislature's CLASS legislation was struck as constitutionally insufficient, the legislature was tasked with bringing the state's education finance system into compliance with Article 6. The legislature responded with Senate Bill 19. The centerpiece of that legislation is the new Kansas School Equity and Enhancement Act, which established a new education funding formula under which some funds come from the State via an amount arrived at by formula, and some funds come from local option budgets. The base aid per student for year 2018-18 is $4,006; that amount increases to $4,128 in 2018-19. School districts may add on local funding up to 33% of the district's total foundation aid. Less wealthy districts may also qualify for supplemental state aid, in recognition of varying property wealth among districts. This appeal follows from the plaintiffs' challenge to the KSEEA.

ISSUES: (1) Adequacy requirements; (2) equity requirements; (3) equal access to substantially similar educational opportunity through similar tax effort; (4) effect of change to LOB equalization calculation; (5) at-risk funding procedures; (6) remedies

HELD: The State did not meet its burden to show that the public education financing system established by SB 19 is constitutionally adequate. Over-reliance on local option budget (LOB)-generated funds tends to create an unconstitutional funding structure. Although the formula allots additional funds to at-risk students, the State failed to prove that the additional funds were calculated to improve student performance. Similar outcomes were shown for funding allotted for full-day kindergarten and early childhood education programs. A school finance formula is inequitable if it increases wealth-based disparities between districts. SB 19 allows school districts to use capital outlay funds to pay property and casualty insurance and utility expenses. This allows general funds or LOB funds to be used for other purposes, giving districts more flexibility in their spending, and this variable flexibility is tied to district wealth. A district's wealth is tied to its ability to gain voter approval of a proposed mill levy increase. For this reason, the provision in the school finance formula that allows some districts to impose a mill levy increase without facing either a protest-petition process or a mandatory election is inequitable. SB 19's lookback provision—which changes how supplemental aid is calculated relative to LOB funding—exacerbates the discrepancies caused by local funding that is tied to property values. As such, it is inequitable. SB 19 established a 10% floor for at-risk students in any given district. This provision uses a wealth-based standard and, as such, it is inequitable. The court declined to provide a specific dollar amount that would be constitutionally adequate. The state educational system has been more or less underfunded since the 2002-03 school year. The mandate in this case is stayed until June 30, 2018, but no longer.

CONCURRENCE AND DISSENT: (Johnson, J., joined by Rosen, J.) Justice Johnson agrees with the majority's rulings on adequacy and equity. But he disagrees that the State should be given additional time to come into compliance. He would have the State provide a proposed remedy by the end of this year.

CONCURRENCE AND DISSENT: (Biles, J.) Justice Biles agrees with the majority findings on adequacy and equity. But he would have immediately enjoined SB 19's inequitable features from being operational in the 2017-18 school year.

STATUTES: Kansas Constitution, Article 6; K.S.A. 2016 Supp. 72-1127, -6470, -6471(e), -8255, -8801(a), -8804, -9608; K.S.A. 2014 Supp. 72-6407(a), -6407(c), -6407(e), -6407(f), -6414(a), -6431, -6433, -6434, -6460, -8801, -8814(b); K.S.A. 2013 Supp. 72-6433(a)(1), -6434(a), -8814; K.S.A. 2012 Supp. 72-6414a(b); K.S.A. 2011 Supp. 72-6414a(b); K.S.A. 2008 Supp. 72-6433c(b)(9)(B); K.S.A. 2006 Supp. 72-6454; K.S.A. 2005 Supp. 46-1131(b), 72-1127; K.S.A. 60-409(b), -412(c), 72-6433(b)(9)(B)

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