308 P.3d 1152 (Ariz. 2013), CV-13-0039, Cave Creek Unified School Dist. v. Ducey

Docket Nº:CV-13-0039-PR.
Citation:308 P.3d 1152, 233 Ariz. 1
Opinion Judge:PELANDER, Justice
Party Name: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, Plaintiffs/Appellants, v. Doug DUCEY, in his Capacity as
Attorney: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...
Judge Panel:Justice PELANDER authored the opinion of the Court, in which Chief Justice BERCH, VICE Chief Justice BALES, JUSTICE BRUTINEL, and Justice TIMMER joined.
Case Date:September 26, 2013
Court:Supreme Court of Arizona
 
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Page 1152

308 P.3d 1152 (Ariz. 2013)

233 Ariz. 1

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, Plaintiffs/Appellants,

v.

Doug DUCEY, in his Capacity as State Treasurer; and State of Arizona, Defendants/Appellees.

No. CV-13-0039-PR.

Supreme Court of Arizona.

September 26, 2013

Page 1153

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.

Page 1154

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.

OPINION

PELANDER, Justice

¶ 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. See A.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 also A.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 2001-2002 through 2005-2006, the legislature shall increase the base level or other components of the revenue control limit by two per cent. For fiscal year 2006-2007 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 2001-2002.

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,"

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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.1 Cave 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...

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