Montoy v. State

• Citation: 138 P.3d 755
• Decision Date: 28 July 2006
• Docket Number: No. 92,032.,92,032.
• Parties: Ryan MONTOY, et al., Appellees/Cross-appellants, v. STATE of Kansas, et al., Appellants/Cross-appellees.
• Court: United States State Supreme Court of Kansas

Page 755

138 P.3d 755

Ryan MONTOY, et al., Appellees/Cross-appellants, v. STATE of Kansas, et al., Appellants/Cross-appellees.

No. 92,032.

Supreme Court of Kansas.

July 28, 2006.

Alok Ahuja, of Lathrop & Gage L.C., of Overland Park, and Stephen R. McAllister, special assistant attorney general, argued the cause, and Jeffrey R. King, of Lathrop & Gage L.C., of Overland Park, David W. Davies, assistant attorney general, and Phill Kline, attorney general, were with Alok Ahuja on the briefs for appellant/cross-appellee State of Kansas.

Dan Biles, of Gates, Biles, Shields & Ryan, P.A., of Overland Park, argued the cause, and Rodney J. Bieker, of Kansas Department of Education, was with him on the briefs for appellants/cross-appellees Janet Waugh, Sue Gamble, John Bacon, Bill Wagnon, Connie Morris, Kathy Martin, Kenneth Willard, Carol Rupe, Iris Van Meter, Steve Abrams, and Bob Corkins.

Alan L. Rupe, of Kutak Rock LLP, of Wichita, argued the cause, and Richard A. Olmstead, of the same firm, and John S. Robb, of Somers Robb & Robb, of Newton, were with him on the brief for appellees/cross-appellants.

Patricia E. Baker and David C. Cunningham, of Kansas Association of School Boards, of Topeka, were on the brief for amicus curiae Kansas Association of School Boards.

Lara M. Owens and Mark R. Thompson, of Seigfreid, Bingham, Levy, Selzer & Gee, P.C., of Kansas City, Missouri, were on the brief for amicus curiae Kansas Families United for Public Education.

David M. Schauner and Robert M. Blaufuss, of Kansas National Education Association, of Topeka, were on the brief for amicus curiae Kansas National Education Association.

Stephen R. McAllister and Todd N. Thompson, of Thompson, Ramsdell & Qualseth, P.A., of Lawrence, were on the brief for amicus curiae Legislative Coordinating Council.

Bernard T. Giefer, of Giefer Law LLC, of WaKeeney, was on the brief for amici curiae Unified School District No. 208, Trego County, Kansas (WaKeeney), et al. (126 other Kansas school districts).

Bradley R. Finkeldei and Peter C. Curran, of Stevens & Brand, L.L.P., of Lawrence, were on the brief for amicus curiae Unified School District No. 229 (Blue Valley School District).

Thomas R. Powell and Roger M. Theis, of Hinkle Elkouri Law Firm L.L.C., of Wichita, were on the brief for amicus curiae Unified School District No. 259, Sedgwick County, Kansas.

Anne M. Kindling, of Goodell, Stratton, Edmonds & Palmer, L.L.P., of Topeka, was on the brief for amicus curiae Unified School District No. 512, Shawnee Mission, Kansas.

PER CURIAM:

This is the fifth time this case has been before this court since the district court sua sponte dismissed the case on November 21, 2001. In that initial appeal by the plaintiffs, we reversed the district court and remanded the case for further proceedings in Montoy v. State, 275 Kan. 145, 62 P.3d 228 (2003) (Montoy I). On remand, the district court held that the Kansas School District Finance and Quality Performance Act (SDFQPA), K.S.A. 72-6405 et seq., was unconstitutional. The defendants appealed, and on January 3, 2005, this court affirmed the district court in part, concluding that the legislature had failed to make suitable provision for the finance of the public schools as required by Article 6, § 6 of the Kansas Constitution. Montoy v. State, 278 Kan. 769, 120 P.3d 306 (2005) (Montoy II). We stayed the issuance of the mandate to allow the legislature a reasonable time to correct the constitutional infirmity in the school finance formula and set a deadline of April 12, 2005, for that to be accomplished.

Although we held that increased funding would be required, we did not dictate the manner in which the legislature should amend the financing formula to bring it into constitutional compliance, noting, as did the district court, that "there are `literally hundreds of ways' the financing formula can be altered to comply with Art. 6, § 6." 278 Kan. at 775, 120 P.3d 306. However, we did make it clear that the actual costs of providing a constitutionally suitable education and the equity with which the funds are distributed are critical factors for the legislature to consider in crafting a suitable formula for financing public education. 278 Kan. at 775, 120 P.3d 306.

The legislature responded by enacting changes to the school finance formula on March 30, 2005. (2005 H.B. 2247 [L.2005, ch. 152], modified by 2005 S.B. 43 [L.2005, ch. 194] [collectively referred to as H.B. 2247].) See Montoy v. State, 279 Kan. 817, 819, 112 P.3d 923 (2005) (Montoy, III). H.B. 2247 provided a funding increase of approximately $142 million for the 2005-06 school year.

The changes made by H.B. 2247 included modifications to the weighting components of the finance formula and changes to the authority of certain districts to raise revenue through local ad valorem property taxes. H.B. 2247 modified the funding formula by increasing the Base State Aid Per Pupil (BSAPP), bilingual, and at-risk weightings; phasing in increases in special education funding; eliminating the correlation weighting (while retaining the low enrollment weighting); and providing for annual adjustments to general state aid funding levels in accordance with the Consumer Price Index-Urban (CPI-U).

With respect to local revenue generating provisions, H.B. 2247 provided for incremental increases in the 25 percent cap on local option budgets (LOB) over the following 3 years to 30 percent in the 2007-08 school year; authorized districts with high housing costs to levy a "cost-of-living" ad valorem tax to pay enhanced teacher salaries; and authorized districts with extraordinary declining enrollment to apply to the Board of Tax Appeals (BOTA) for permission to levy an additional ad valorem tax.

H.B. 2247 also provided for a cost study to be performed by the Legislative Division of Post Audit to "`determine the costs of delivering the kindergarten and grades one through 12 curriculum, related services and other programs mandated by state statute in accredited schools.'" 279 Kan. at 821, 112 P.3d 923.

After the new legislation became law, this court issued an order to show cause directing the parties to address whether the amendments to the financing formula met the legislature's constitutional obligation to "`make suitable provision for financing'" of the public schools. 279 Kan. at 820, 112 P.3d 923. The parties were directed to address whether the actual costs of providing a suitable education were considered with respect to each component of the formula, as well as the formula as a whole, "and whether H.B. 2247 exacerbates and/or creates funding disparities among the districts." 279 Kan. at 820, 112 P.3d 923.

After an expedited briefing and argument schedule, on June 3, 2005, this court held that the changes made by H.B. 2247 failed to bring the state's school financing formula into compliance with Article 6, § 6 of the Kansas Constitution. 279 Kan. at 840, 112 P.3d 923. This court considered each component of the formula, the new local ad valorem tax authorizations, and the overall funding provided by the changes as a whole and held that although H.B. 2247 provided a significant funding increase, it still failed to provide constitutionally suitable funding for public education because the changes were not based on considerations of the actual costs of providing a constitutionally adequate education and exacerbated existing funding inequities. 279 Kan. at 839-40, 112 P.3d 923.

Specifically, this court found that the increases in the BSAPP, at-risk weighting, bilingual weighting, and special education funding all varied substantially from the cost information in the record, and that the State had failed to provide any cost basis to support the amount of funding provided. 279 Kan. at 831-33, 839, 112 P.3d 923. Further, this court noted that the low enrollment weighting was not altered, and although we had specifically sought cost justifications for this significant funding component, none was provided. 279 Kan. at 836, 112 P.3d 923.

Moreover, this court found certain components of the amended formula exacerbated unjustified inequities in the distribution of funding. For example, we found that the funding disparity caused by the low enrollment weighting was exacerbated by the elimination of the correlation weighting for middle-sized and large districts. By rolling those funds into the BSAPP, low enrollment districts were given "even more of the funds that previously were devoted to balancing the disparities in per pupil funding caused by the low-enrollment weighting." 279 Kan. at 836, 112 P.3d 923.

We also found that "H.B. 2247's increased dependence on local property taxes, as decided by each school district, exacerbate[d] disparities based on district wealth." 279 Kan. at 839, 112 P.3d 923.

We held that the new cost-of-living property tax provision was not based on any evidence that there was any link between high housing costs and higher education costs or that the 17 districts that would benefit from the provision pay higher teacher salaries. We noted that the evidence at trial demonstrated the opposite—that the districts with high-poverty, high at-risk student populations are the ones that need help attracting and retaining teachers. 279 Kan. at 835, 112 P.3d 923.

This court also held that H.B. 2247's two extraordinary declining enrollment provisions were potentially "extremely disequalizing because they are unlimited and have been designed to benefit a very small number of school districts." 279 Kan. at 838, 112 P.3d 923.

With respect to the increase in the LOB cap, this court found that the failure to provide for equalizing state aid for the new level of LOB authority worsened wealth-based disparities between districts, because districts with high assessed property values can generate maximum LOB revenues with far less tax effort than districts with lower assessed property values and median family incomes. 279 Kan. at 834, 112 P.3d 923...