Carlsbad Union Sch. Dist. of San Diego County v. Rafferty, Civ. No. 69-29.

• Citation: 300 F. Supp. 434
• Decision Date: 12 May 1969
• Docket Number: Civ. No. 69-29.
• Court: United States District Courts. 9th Circuit. United States District Court (Southern District of California)
• Parties: CARLSBAD UNION SCHOOL DISTRICT OF SAN DIEGO COUNTY et al., Plaintiffs, v. Max RAFFERTY, Superintendent of Public Instruction, et al., Defendants.

300 F. Supp. 434

CARLSBAD UNION SCHOOL DISTRICT OF SAN DIEGO COUNTY et al., Plaintiffs, v. Max RAFFERTY, Superintendent of Public Instruction, et al., Defendants.

Civ. No. 69-29.

United States District Court S. D. California.

May 12, 1969.

Bertram McLees, Jr., County Counsel, San Diego County, by Joseph Kase, Jr., Deputy County Counsel, San Diego, Cal., for school district plaintiffs.

Thomas C. Lynch, Atty. Gen., for California, by Richard L. Mayers, Deputy Atty. Gen., Sacramento, Cal., for defendants.

I. OPINION OF SINGLE-JUDGE COURT

KUNZEL, Chief Judge.

This is probably the fifth challenge¹ in the United States District Courts to state laws which provide for the deduction of certain percentages of federal impact funds² from the amount of state aid which would otherwise have been allocated by the state to impacted school districts. All other challenges have been sustained, just as this must be.

Here plaintiffs fall into two classes: (1) the impacted school districts which qualify for federal aid pursuant to Pub. L. No. 81-874, 64 Stat. 1100; and (2) resident taxpayers in the affected districts. Each class has complained on behalf of themselves and all others similarly situated "who are deprived of the benefit of Pub.L. No. 874 of the 81st Congress by virtue of the action of the state of California in reducing state aid by substantial amounts of federal aid received by said school districts."³

Very briefly, California has a comprehensive scheme of school aid called the Foundation Program. The principles and policies of such a program can be found in Cal.Ed.Code, § 17300. This program consists of "Basic Aid", "District Aid", and "Equalization Aid". Basic Aid is required by the state constitution. It is computed according to the average daily attendance (ADA) of students within the various districts. District Aid is based upon the assessed valuation of property within the districts. Equalization Aid is an additional form of aid payable to the districts if the amount of Basic Aid and District Aid for any district is less than the amount of the Foundation Program computed for that district. It is the Equalization Aid that concerns us here.

Cal.Ed.Code, §§ 17602, 17602.5, 17603, 17603.5, and 17605⁴ provide for a reduction of state Equalization Aid going to school districts receiving federal funds under Pub.L. No. 81-874. While the federal funds do not equal what would have been otherwise available as tax revenue, they do amount to substantial aid — approximately $75,000,000.00 statewide for the 1968-69 fiscal year. Plaintiffs allege that the above state statutes allow the state to reduce Equalization Aid by approximately 25% to those districts receiving Pub.L. No. 81-874 funds. They seek a permanent injunction against defendants Rafferty, Superintendent of Public Instruction, Flournoy, State Controller, et al., enjoining implementation of the state statutes in question, viz, against any reduction in the state's Equalization Aid to the impacted school districts because of availability to any such district of federal funds under Pub. L. No. 81-874.

Plaintiffs' argument in support of their motion for a permanent injunction is two pronged: (1) that the state statutes are repugnant to federal law and, therefore, must fall in the face of the Supremacy Clause, Art. 6, Cl. 2;⁵ and (2) that the statutes violate the Equal Protection clause of the Fourteenth Amendment and are, therefore, unconstitutional.

Plaintiffs requested the convening of a three-judge court pursuant to 28 U.S.C. § 2281, and a temporary restraining order pending a full hearing. After an adverse hearing the parties submitted the matter. At that time the court had before it only the complaint with its prima facie allegations of a substantial constitutional claim affecting the taxpayer plaintiffs, and the knowledge that other district courts considering similar claims were three-judge courts.⁶ No responsive pleading had been filed by defendants. On February 11, 1969, the court granted the motion for a temporary restraining order and, pursuant to 28 U.S.C. § 2284, notified the Chief Judge of this circuit that a three-judge court seemed necessary. Circuit Judge Carter, Chief Judge Pence, of Hawaii, and Chief Judge Kunzel were named therefor.

Thereafter followed successive motions by defendants, (1) to drop the individually named plaintiffs on the ground that they have no standing to sue and their presence was but sham and illusory; (2) to dissolve the three-judge court because the complaint raised no substantial constitutional question other than that embraced by the Supremacy Clause; and (3) to dismiss the complaint on the ground that plaintiffs had failed to state a claim upon which relief could be granted. These were followed by plaintiffs' motions (1) to determine that class actions can be brought both as to the individually named plaintiffs and the school districts; and (2) for a default judgment based on defendants' failure to file a formal answer to the complaint.

The hearing on April 4, 1969, at which time all of these motions were before the court, found this judge sitting in a dual capacity, both as a member of the three-judge court as well as a single-judge court. At that time both parties agreed that defendants' motion to dismiss be treated as a motion for summary judgment in view of the matters outside the pleadings. Counsel for defendants also at that time stipulated that there was no dispute as to the facts. Counsel also stated he did not intend to file an answer and would stand on the motion to dismiss.

As appears in the opinion of the three-judge court, infra, plaintiffs have not established an Equal Protection claim. In reaching such a conclusion the three-judge court: (1) denied plaintiffs' motion for a permanent injunction; (2) denied defendants' motion to dissolve the three-judge court; (3) granted defendants' motion to drop the individually named plaintiffs; and (4) granted defendants' motion for summary judgment as to the Equal Protection claim.

The three-judge court having dismissed plaintiffs' Equal Protection claim, this court has jurisdiction to pass upon their Supremacy Clause claim. 28 U.S.C. § 1331(a); Swift & Co. v. Wickham, 382 U.S. 111, 86 S.Ct. 258, 15 L.Ed.2d 194 (1965); Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908).

Since it is conceded by defendants that in regard to the school districts this is a proper class action, this court must now face plaintiffs' motions (1) for a permanent injunction, and (2) to enter default judgment; and defendants' motion for summary judgment as to the Supremacy Clause claim.

I. Plaintiffs' motion to enter default judgment.

This motion is denied. At the time it was made defendants had not answered the complaint. The motion was merely a protective device, made at a time when plaintiffs were unaware of defendants' strategy. However, there was never any doubt that defendants were actively defending the lawsuit. Plaintiff concedes that no one was prejudiced by defendants' slight delay in noticing its motion.

II. Plaintiffs' motion for a permanent injunction.

Defendants' motion for summary judgment as to the Supremacy Clause claim.

These two motions raise the same issue, i. e., whether plaintiffs have established a Supremacy Clause claim. At the hearing defendants orally entered an answer (incorporated in earlier motions and memorandums)⁷ tantamount to a "confession and avoidance." Defendants admit that Pub.L. No. 81-874 as amended by Pub.L. No. 90-576, 82 Stat. 1064⁸ prohibits the State from taking into account during the 1969-70 fiscal year (beginning after July 1969) or thereafter, funds received by local school districts pursuant to Pub.L. No. 81-874 for the purpose of computing or apportioning state aid to public schools. They also acknowledge the validity of the holdings in the three district court cases preceding this one.⁹

However, defendants contend that Congress in enacting Pub.L. No. 90-576 tacitly condoned the reductions in state aid until the effective date of the amendment, thus giving the state time to deal with the fiscal impact created by such a change in the law. This is essentially an argument of avoidance which, for reasons discussed shortly, this court rejects.

All parties agree that the "fiscal impact" on California for the period involved in this suit, i. e., the current undisbursed sum now withheld under this court's restraining order for the 1968-69 fiscal year, is about $16,000,000.00 — in funds neither budgeted nor appropriated.

It is likewise conceded that the California Legislature is now in session and has before it for consideration — and presumed passage — legislation aimed at avoiding the prohibitions of Pub.L. No. 90-576. The instant litigation, however, is not concerned with what the California Legislature may or may not do between now and the deadline date of July 1, 1969. Whatever the California Legislature may do cannot alter the fact that the statutes here questioned have violated the Supremacy Clause of the constitution.

Defendants can find nothing in the legislative history of Pub.L. No. 90-576 to support their novel theory that a stay or legal vacuum was intended by Congress because it fixed the deadline for prohibition of all federal aid to impacted areas at a determinable future date. This court believes that Congress still meant in 1968 what it said in the 1966 House of Representatives Committee Report # 1814, dated August 5, 1966, which, in proposing an amendment to Pub.L. No. 81-874 stated:

"Fifteen States offset the amount of Public Law 874 funds received by their school districts by reducing part of their State aid to those districts. This is in direct contravention to congressional intent. Impact aid funds are intended to compensate districts for loss of tax revenues due to Federal connection, not to substitute for State funds the districts would otherwise receive." U.S.Code Cong. & Admin. News

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