Gannon v. State

• Decision Date: 14 June 2019
• Docket Number: No. 113,267,113,267
• Parties: Luke GANNON, by His Next Friends and Guardians, et al., Appellees, v. STATE of Kansas, Appellant.
• Court: Kansas Supreme Court

443 P.3d 294

Luke GANNON, by His Next Friends and Guardians, et al., Appellees,

v.STATE of Kansas, Appellant.

No. 113,267

Supreme Court of Kansas.

Opinion filed June 14, 2019.

Toby J. Crouse, solicitor general, argued the cause, and Jeffrey A. Chanay, chief deputy attorney general, Arthur S. Chalmers, assistant attorney general, M.J. Willoughby, assistant attorney general, Dwight R. Carswell, assistant solicitor general, Bryan C. Clark, assistant solicitor general, and Derek Schmidt, attorney general, were with him on the briefs for appellant State of Kansas.

Alan L. Rupe, of Lewis Brisbois Bisgaard & Smith LLP, of Wichita, argued the cause, and Jessica L. Skladzien, of the same firm, and John S. Robb, of Somers, Robb & Robb, of Newton, were with him on the briefs for appellees.

Per Curiam:

Last June we held the State had resolved nearly all of the issues in this long-running school finance appeal. Gannon v. State , 308 Kan. 372, 420 P.3d 477 (2018) ( Gannon VI ). We specifically concluded that through legislation enacted in 2017 and 2018, the State had met its burden of complying with the equity requirements of Article 6, § 6(b) of the Kansas Constitution (obligating the Legislature to "make suitable provision for finance of the educational interests of the state"). 308 Kan. at 373-74, 420 P.3d 477.

We further held that the State had not met § 6(b)'s adequacy requirement, although we acknowledged the State had "expressed an intent to comply with the adequacy threshold discussed in Montoy v. State , 282 Kan. 9, 138 P.3d 755 (2006) ( Montoy IV )" through its self-styled "Montoy safe harbor" plan. 308 Kan. at 374, 420 P.3d 477. Specifically, we held the State needed to make timely financial adjustments in response to two inflation problems we identified to "satisfactorily address the remaining constitutional infirmities in adequacy appearing in its chosen plan and particularly in the implementation." 308 Kan. at 374, 420 P.3d 477.

Because of the problems with adequacy we retained jurisdiction and stayed the issuance of our mandate more than one year—until June 30, 2019—or further order of the court. We reasoned this gave the State ample opportunity to make those financial adjustments and reach constitutional compliance. The State now claims to have done so through legislative passage of 2019 House Substitute for Senate Bill 16 (S.B. 16), which the Governor signed into law on April 6, 2019.

We now hold that through S.B. 16's additional funding of its Montoy safe harbor plan, the State has substantially complied with our mandate from Gannon VI . And we retain jurisdiction to ensure continued compliance with that mandate.

FACTUAL AND PROCEDURAL BACKGROUND

2006-2013: Post -Montoy IV

This case has a long history—one that dates back at least as far as the conclusion of the last major school finance case, Montoy IV . The Montoy litigation ended on July 28, 2006, when we held the State had enacted legislation in substantial compliance with our orders. Montoy IV , 282 Kan. at 24-25, 138 P.3d 755. And we dismissed the case.

Before the State fully implemented the financial solution we accepted in Montoy IV , however, it started making significant cuts to education funding in school year (SY) 2008-09 (fiscal year 2009). The plaintiffs filed this lawsuit in 2010 in response to those cuts. After a 16-day bench trial, a three-judge district court panel concluded the State had failed to provide suitable funding for K-12 public education in violation of Article 6 of the Kansas Constitution. The State appealed.

2014: Gannon I

On March 7, 2014, we remanded for the three-judge panel to apply a refined test for education adequacy partially based on Rose v. Council for Better Educ., Inc. , 790 S.W.2d 186 (Ky. 1989), whose standards the Legislature essentially had codified in 2005. Gannon v. State , 298 Kan. 1107, 319 P.3d 1196 (2014) ( Gannon I ).

2015: Panel decision and CLASS

On remand, the panel applied our refined test for adequacy and held the Legislature underfunded education between fiscal years (FY) 2009 and 2012.

This decision led the 2015 Legislature to repeal its longstanding—and chief—vehicle for public school financing: the School District Finance and Quality Performance Act (SDFQPA). The Legislature replaced the SDFQPA with the Classroom Learning Assuring Student Success Act (CLASS). CLASS established block grants in place of the SDFQPA formula and froze funding levels for FY 2016 and FY 2017 at the FY 2015 level until CLASS was to expire on June 30, 2017.

Upon review, the panel held CLASS also was unconstitutional. And the State again appealed to this court.

2016: Gannon II and III

The next five months brought a series of legislative actions and this court's decisions solely on the issue of § 6(b)'s equity requirement. On February 11, 2016, we agreed with the panel that CLASS created constitutional equity violations. Gannon v. State , 303 Kan. 682, 368 P.3d 1024 (2016) ( Gannon II ). After later legislative action, we held on May 27, 2016, the inequities had not been cured. Gannon v. State , 304 Kan. 490, 372 P.3d 1181 (2016) ( Gannon III ).

Less than one month later, the Legislature revived the structure of the SDFQPA. The parties filed a joint stipulation agreeing the State was now in compliance with the constitutional equity requirement. By order filed June 28, 2016, we held the Legislature had satisfied our orders in Gannon I , Gannon II , and Gannon III regarding equity for SY 2016-17. We retained jurisdiction of the case and all issues and provided the parties time to brief and argue the adequacy portion of the litigation yet to be decided.

2017: Gannon IV, Gannon V, and S.B. 19

On March 2, 2017, we addressed the adequacy issues in Gannon v. State , 305 Kan. 850, 390 P.3d 461 (2017) ( Gannon IV ). There, we held the school finance system was constitutionally inadequate in both structure and implementation. In particular, the State had failed to show that the finance system was reasonably calculated to have all Kansas public education students meet or exceed the standards set out in Rose , 790 S.W.2d 186. We gave the State until June 30, 2017, to provide adequate funding. Gannon IV , 305 Kan. at 919, 390 P.3d 461.

The 2017 Legislature responded to the adequacy structural violation by passing 2017 Senate Bill 19 (S.B. 19), which enacted the Kansas School Equity and Enhancement Act (KSEEA). It essentially provides a base aid formula for distributing education funds in the same way the SDFQPA had done. S.B. 19 also added $317 million over two years—FY 2018 and FY 2019.

On October 2, 2017, we examined S.B. 19 in Gannon v. State , 306 Kan. 1170, 402 P.3d 513 (2017) ( Gannon V ), and rejected plaintiffs' claims that failure to fund three statutory requirements rendered S.B. 19's structure unconstitutional. Of significance to the issues now before us, although millions of dollars had been added, we also held the State had failed to meet its burden to satisfactorily demonstrate S.B. 19 was reasonably calculated to address the inadequate implementation of funding. And S.B. 19 created four equity violations. 306 Kan. at 1212-13, 402 P.3d 513. We stayed issuance of the mandate—allowing S.B. 19 to take effect—until June 30, 2018, giving the State sufficient time to provide adequate funding and cure the inequities. 306 Kan. at 1239, 402 P.3d 513. The KSEEA temporarily became law and is now codified at K.S.A. 72-5131 et seq.

2018: S.B. 423, S.B. 61, and Gannon VI

In response to the funding shortfall identified in Gannon V , the 2018 Legislature passed 2018 Substitute for Senate Bill 423 (S.B. 423) and 2018 House Substitute for Senate Bill 61 (S.B. 61). These bills amended the provisions of S.B. 19 enacted in 2017. Among other things, they scheduled adding $522 million over a five-year period—SY 2018-19 to SY 2022-23. Together with S.B. 19's funds, the Legislature was projected to add approximately $854 million over a six-year period.

Based on the recent passage of S.B. 423 and S.B. 61, the State filed a notice of cure, which we reviewed on June 25, 2018, in Gannon VI . There, we held that under the present circumstances the State had corrected the Gannon V constitutional infirmities regarding equity and created no others. 308 Kan. at 374, 420 P.3d 477.

As for adequacy, we observed the State had rejected the report and financial opinions of its expert witness and instead presented a financial remediation plan it called the Montoy safe harbor. 308 Kan. at 384-87, 420 P.3d 477. The State essentially contended:

1. because the three-judge panel ruled the State's K-12 education funding reached constitutional adequacy within several years after Montoy IV and before cuts began; and

2. because the panel's determination of adequacy was based upon the formula's funding increases after the decisions in Montoy v. State , 278 Kan. 769, 120 P.3d 306 (2005) ( Montoy II ), Montoy v. State , 279 Kan. 817, 112 P.3d 923 (2005) ( Montoy III ), and Montoy IV ;

3. then the State's return to the basic formula of that time—and its resultant funding (plus accounting for inflation)—should again produce a constitutionally adequate level of funding. See Gannon VI , 308 Kan. at 387, 420 P.3d 477.

Through a series of calculations we analyzed in detail in Gannon VI , the State asserted that by adding $522.2 million to the K-12 school budget via S.B. 423 and S.B. 61 over five years, it would reach the Montoy safe harbor. 308 Kan. at 384-93, 420 P.3d 477. The increases included additional funding for base aid, special education, pre-kindergarten at-risk programs, ACT and WorkKey assessments, teacher mentoring, mental health and JAG-K pilot programs, transportation weighting, supplemental general state aid effects, authority for the local option budget, and KPERS. See 308 Kan. at 378, 380-82, 389, 420 P.3d 477 (discussing all of these types of additional funding). Thus, the State contended it had provided funding comparable in value to that existing before the cuts began...