Cave Creek Unified Sch. Dist. v. Ducey

Citation233 Ariz. 1,670 Ariz. Adv. Rep. 31,308 P.3d 1152
Decision Date26 September 2013
Docket NumberNo. CV–13–0039–PR.,CV–13–0039–PR.
PartiesCAVE CREEK UNIFIED SCHOOL DISTRICT; Casa Grande Elementary School District; Crane Elementary School District; Palominas Elementary School District; Yuma Union High School District; Arizona Education Association; Arizona School Boards Association; Scott Holcomb; Frank Hunter; and Nancy Putman, Plaintiffs/Appellants, v. Doug DUCEY, in his Capacity as State Treasurer; and State of Arizona, Defendants/Appellees.
CourtSupreme Court of Arizona

OPINION TEXT STARTS HERE

Timothy M. Hogan, Arizona Center for Law in the Public Interest, Phoenix and Donald M. Peters (argued), LaSota & Peters, Phoenix, for Cave Creek Unified School District, Casa Grande Elementary School District, Crane Elementary School District, Palominas Elementary School District, Yuma Union High School District, Arizona Education Association, Arizona School Boards Association, Scott Holcomb, Frank Hunter, and Nancy Putman.

Thomas C. Horne, Arizona Attorney General, Kathleen P. Sweeney (argued), Assistant Attorney General, Kevin D. Ray, Assistant Attorney General, Jinju Park, Assistant Attorney General, Phoenix, for Doug Ducey and the State of Arizona.

Peter A. Gentala, Pele K. Peacock, Arizona House of Representatives, Phoenix; and Gregrey G. Jernigan, Arizona State Senate, Phoenix, for Amicus Curiae Andrew Tobin and Andy Biggs.

Michael T. Liburdi and Michelle M. Carr, Snell & Wilmer, LLP, Phoenix, for Amicus Curiae Arizona Free Enterprise Club.

Justice PELANDER, opinion of the Court.

¶ 1 Arizona voters approved a referendum in 2000 that statutorily directed the Arizona Legislature to annually “increase the base level ... of the revenue control limit” for K–12 public school funding. A.R.S. § 15–901.01. The issue here is whether the voters could constitutionally impose this mandate. Finding no constitutional impediment to the electorate's directive, we further hold that legislative adjustments to § 15–901.01's funding scheme are limited by the Voter Protection Act (“VPA”), Ariz. Const. art. 4, pt. 1, § 1(6)(B)-(C), (14).

I. BACKGROUND

¶ 2 Public elementary and secondary school funding is set by a statutory formula. SeeA.R.S. §§ 15–941 to –954. One aspect of that formula is the “base level,” a statutorily fixed “dollar amount that is multiplied by a weighted student count and other factors to determine the base support level for each school district.” Cave Creek Unified Sch. Dist. v. Ducey, 231 Ariz. 342, 345 ¶ 2 n. 1, 295 P.3d 440, 443 n. 1 (App.2013); see alsoA.R.S. § 15–901(B)(2 defining “base level”). During the pertinent time, the base support level and the transportation support level were the only two components of the “revenue control limit,” a budget expenditure limit used to calculate the amount of certain state funds provided to school districts. A.R.S. §§ 15–901(A)(12), –947, –971.

¶ 3 In 2000, the legislature approved SB 1007, which proposed a sales tax to increase funding for public schools, community colleges, and universities, as well as other changes to the “financial accountability” requirements of K–12 schools. 2000 Ariz. Sess. Laws, ch. 1 (5th Spec. Sess.). The legislature referred portions of SB 1007 as Proposition 301 for voter approval in the 2000 general election. Approved by the voters, that measure included a requirement that the legislature make annual inflation adjustments to the budget for K–12 public schools:

If approved by the qualified electors voting at a statewide general election, for fiscal years 20012002 through 20052006, the legislature shall increase the base level or other components of the revenue control limit by two per cent. For fiscal year 20062007 and each fiscal year thereafter, the legislature shall increase the base level or other components of the revenue control limit by a minimum growth rate of either two per cent or the change in the GDP price deflator, as defined in [A.R.S. § ] 41–563, from the second preceding calendar year to the calendar year immediately preceding the budget year, whichever is less, except that the base level shall never be reduced below the base level established for fiscal year 20012002.

Id. § 11. That provision is codified as A.R.S. § 15–901.01.

¶ 4 From 2001 to 2010, the legislature adjusted the base level and transportation support level annually for inflation. The 2010–11 budget (HB 2008), however, included an adjustment only to the transportation support level. 2010 Ariz. Sess. Laws, ch. 8, § 2 (7th Spec. Sess.). The 2011–12 and 2012–13 budgets likewise did not include base level adjustments.

¶ 5 Several school districts and other parties (collectively, Cave Creek) sued the State Treasurer and the State of Arizona (collectively, the State), alleging that HB 2008 amended or repealed a voter-approved law, violating the VPA. Cave Creek sought a declaratory judgment that Proposition 301 now § 15–901.01 requires the legislature to annually adjust all components of the revenue control limit for inflation. Ruling that Proposition 301 was “not self executing,” that § 15–901.01 was “precatory, not mandatory,” and that “the voters cannot require the legislature to enact a law that provides for [the] appropriation” prescribed in the statute, the superior court dismissed Cave Creek's amended complaint for failing to state a claim.

¶ 6 The court of appeals reversed and remanded the case for entry of a declaratory judgment in favor of Cave Creek.1Cave Creek, 231 Ariz. at 353 ¶ 37, 295 P.3d at 451. The court held that § 15–901.01 “requires the legislature to provide for annual inflationary increases in each component of the revenue control limit, including the base level.” Id. at 345 ¶ 1, 295 P.3d at 443. Because the statute was enacted through a voter referendum, the court further concluded, it “is subject to the provisions of the VPA,” id. at 348 ¶ 10, 295 P.3d at 446, and [a]bsent an amendment or repeal of § 15–901.01 by the voters, the legislature is bound by the VPA to give full effect to the statute's requirements,” id. at 353 ¶ 32, 295 P.3d at 451. The court, however, did not expressly determine whether [HB] 2008 violates the VPA,” instead remarking that the legislature “would risk violating the VPA” if it failed to adjust the base level for inflation in future fiscal years. Id. at 352 ¶ 31, 295 P.3d at 450.

¶ 7 We granted the State's petition for review to determine whether the voters could constitutionally direct the legislature to annually increase the base level education funding component, and, if so, whether the legislature could disregard that statutory directive without violating the VPA. Both are legal questions of statewide importance. We have jurisdiction under Article 6, Section 5(3) of the Arizona Constitution and A.R.S. § 12–120.24.2

II. DISCUSSION

¶ 8 The legislature and electorate “share lawmaking power under Arizona's system of government.” Ariz. Early Childhood Dev. & Health Bd. v. Brewer, 221 Ariz. 467, 469 ¶ 7, 212 P.3d 805, 807 (2009). Through the initiative and referendum processes, the people reserve[d] the power to propose laws and amendments to the constitution and to enact or reject such laws and amendments at the polls, independently of the legislature.” Ariz. Const. art. 4, pt. 1, § 1(1); see also id.§ 1(2)-(3 defining the initiative and referendum powers).

¶ 9 “The Voter Protection Act, added to the Arizona Constitution by voters in 1998, limits the legislature's authority to modify voter initiatives and referenda. Ariz. Early Childhood, 221 Ariz. at 469 ¶ 6, 212 P.3d at 807. Before the VPA's adoption, the legislature could repeal or modify a voter-approved law passed by less than a majority of all registered voters. Id. ¶ 7;see Adams v. Bolin, 74 Ariz. 269, 284–85, 247 P.2d 617, 627–28 (1952) (interpreting former Article 4, Section 1(6) of the Arizona Constitution). The VPA, however, imposes heightened constitutional restrictions. Now the legislature cannot repeal “an initiative [or referendum] measure approved by a majority of the votes cast thereon.” Ariz. Const. art. 4, pt. 1, § 1(6)(B). Nor may it amend or supersede a voter-approved law unless the proposed legislation “furthers the purposes” of the initiative or referendum measure and is approved by a three-fourths vote in the House of Representatives and Senate. Ariz. Const. art. 4, pt. 1, § 1(6)(C), (14).

A.

¶ 10 The legislature drafted and referred Proposition 301 to the voters for approval in 2000. Nonetheless, the State argues that the resulting directive in § 15–901.01 for annual education funding adjustments is unconstitutional or otherwise unenforceable.

¶ 11 A party challenging a statute generally has the burden of establishing that it is unconstitutional. State v. Tocco, 156 Ariz. 116, 119, 750 P.2d 874, 877 (1988). When the statute in question involves no fundamental constitutional rights or distinctions based on suspect classifications, we presume the statute is constitutional and will uphold it unless it clearly is not. See id. We likewise presume that, in drafting and referring Proposition 301 for voter approval, the legislature acted “with full knowledge of relevant constitutional provisions,” including the VPA. Roylston v. Pima County, 106 Ariz. 249, 250, 475 P.2d 233, 234 (1970).

¶ 12 The State argues that, absent a constitutional provision that authorizes them to do so, the voters cannot restrict the Legislature's otherwise plenary discretion by ordering it by statute to exercise its discretion in a particular manner.” Relying on pre-VPA Arizona case law, the State contends that only a constitutional provision can limit the legislature's plenary authority, see Home Accident Ins. Co. v. Indus. Comm'n, 34 Ariz. 201, 208, 269 P. 501, 503 (1928), and therefore the voters could not, by statute, limit prospective legislative discretion. And, the State further asserts, neither the VPA nor any other constitutional provision “authorizes the voters to give the Legislature statutory commands.”

¶ 13 We reject ...

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