Gwinn Area Community Schools v. State of Mich., M82-199 CA2.

Decision Date01 September 1983
Docket NumberNo. M82-199 CA2.,M82-199 CA2.
Citation574 F. Supp. 736
PartiesGWINN AREA COMMUNITY SCHOOLS, a Michigan governmental body; Derek Swajanen, by Donald Swajanen, his Next Friend; Dr. Allen Ahola, individually as a taxpayer and property owner; Bark River-Harris Schools, a Michigan governmental body; Jason Wanic, by Lawrence Wanic, his Next Friend; and Gerald Sundquist, individually as a taxpayer and property owner, Plaintiffs, v. STATE OF MICHIGAN; State Board of Education, and Phillip E. Runkel, Superintendent of Public Instruction; United States of America; United States Department of Defense, and Caspar W. Weinberger, Secretary of Defense; United States Department of Interior, and James Watt, Secretary of the Department of the Interior; the United States Department of Education, and Terrel H. Bell, Secretary of the Department of Education, Defendants.
CourtU.S. District Court — Western District of Michigan



Dennis Valkanoff, Butch, Quinn, Rosemurgy, Jardis & Valkanoff, Escanaba, Mich., for plaintiffs.

John Smietanka, U.S. Atty., Grand Rapids, Mich., and Vincent M. Garvey and Ann M. Sheadel, Dept. of Justice, Civil Division, Washington, D.C., Frank J. Kelley, Atty. Gen., State of Mich. by Gerald Young and Paul Zimmer, Lansing, Mich., for defendants.


HILLMAN, District Judge.


This is an action for declaratory and injunctive relief challenging, on federal and state statutory and constitutional grounds, the validity of the "equalization formula" contained in the Michigan State School Aid Act of 1979, M.C.L.A. § 388.1621. Under the equalization formula, the State considers "federal impact aid," provided to local school districts affected by certain federal activities pursuant to the Educational Agencies Financial Aid Act, 20 U.S.C. §§ 236-240 (as amended), in determining the amount of state school aid to which local school districts are entitled.

The following matters are now before the court:

1. Motion for summary judgment on behalf of defendants, the State of Michigan, the State Board of Education, and the State Superintendent of Public Instruction;
2. Motion to dismiss on behalf of defendants, the United States Department of Defense, Secretary of Defense Caspar Weinberger, the United States Department of the Interior, and James Watt, Secretary of the Department of the Interior; and
3. Motion for certification of certain unresolved issues of state constitutional law to the Michigan Supreme Court on behalf of plaintiffs.

In addition, plaintiffs recently filed a motion for preliminary injunction upon which the court heard oral argument in Marquette, Michigan, on July 19, 1983. Having considered the briefs as well as the arguments of counsel, I will now address the pending motions in the order listed above.

A. Facts.

Gwinn Area Community School District (Gwinn Area), plaintiff in this action, encompasses the K.I. Sawyer Air Force Base. Gwinn Area maintains that for the year 1982-1983, 1,902 students, or approximately 63% of the 3,036 students attending schools within the Gwinn Area district, are the children of military and civilian personnel assigned to the Air Force Base. Plaintiff, Bark River-Harris School District (Bark River-Harris), encompasses the Hannahville Indian Community, predominantly occupied by the Potawatomi Indians. Bark River-Harris maintains that 39 of the 726 students attending its schools, or about 5% of the total enrollment, reside on the reservation.

Also plaintiffs in this action are Dr. Allen Ahola, Superintendent of plaintiff Gwinn Area, and a property owner within that district, as well as Derek Swajanen, a student from Gwinn Area. In addition, Gerald Sundquist in his capacity as a property owner and taxpayer in plaintiff Bark River-Harris, and Jason Wanic, a student in Bark River-Harris, are plaintiffs in this action.

Defendants are the State of Michigan, the State Board of Education and Philip E. Runkel, Superintendent of Public Instruction. In addition, the United States Departments of Education, Defense and Interior as well as their respective secretaries, are defendants in this action.

Section 236 of the Educational Agencies Financial Aid Act, 20 U.S.C. § 236 (as amended) (the "Federal Act"), provides that in recognition of the responsibility of the United States for the impact which certain Federal activities have on local educational agencies, financial assistance shall be given to those agencies under certain circumstances. Thus, "federal impact aid," as the funds have been aptly designated, is provided when

"(1) the revenues available to such agencies from local sources have been reduced as the result of the acquisition of real property by the United States; or
(2) such agencies provide education for children residing on Federal property; or
(3) such agencies provide education for children whose parents are employed on Federal property; or
(4) there has been a sudden and substantial increase in school attendance as the result of Federal activities."

20 U.S.C. § 236(1)-(4).

Plaintiff school districts in this action receive federal impact aid pursuant to the provisions of 20 U.S.C. §§ 236-240. In addition, the plaintiff school districts receive state school aid payments from the State defendants, pursuant to the State School Aid Act of 1979, M.C.L.A. § 388.1601, et seq. (the "State Act"). Prior to 1974, the provisions of the Federal Act prohibited any state from considering federal impact aid payments in determining state aid to local school districts. 20 U.S.C. § 240(d). However, in the Educational Amendments of 1974, Pub.L. No. 93-380, 88 Stat. 484 (codified at 20 U.S.C. §§ 240(d)(2)), Congress enacted a provision which allows states to consider impact aid payments as "local resources" under state equalization formulas if it is determined "that such formulas provide appropriate recognition of the relative tax resources per child to be educated which are available to local educational agencies." H.R.Rep. No. 93-805, 93rd Cong., 1st Sess. 3, reprinted in 1974 U.S.Code Cong. & Ad.News 4093, 4129.

In the instant case, plaintiffs challenge section 21 of the State Act, M.C.L.A. § 388.1621, which provides in part as follows:

"(1) Except as otherwise provided in this act, from the amount appropriated in section 11, there is allocated to each district an amount per membership pupil sufficient to guarantee the district for 1982-83 a combined state-local yield or gross allowance of $328.00 plus $54.00 for each mill of operating tax levied. For purposes of this section, only taxes levied for purposes included in the operation cost of the district as prescribed in section 7 shall be considered operating tax. The net allocation for each district shall be an amount per membership pupil computed by subtracting, from the gross allowance guaranteed the district, the product of the district's state equalized valuation behind each membership pupil and the millage utilized for computing the gross allowance."

The theory of plaintiffs' case is based on the argument that in determining "gross membership state aid," pursuant to section 21(1), the "local" portion of the "combined state-local yield" must include federal impact aid received by local school districts. Plaintiffs maintain that federal impact aid funds "are the equivalent of local revenue and are used for exactly the same purposes by satisfying the operation costs of the District." It is plaintiffs' contention that federal impact aid funds must be included in calculating total aid in view of section 21(3), which provides as follows:

"State equalization allocations to a district shall be adjusted by subtracting therefrom money received under ... 20 USC 236-244, in the same proportion as the total local revenues covered under the state equalization program are to total local revenues for education in the district, except that not more than $80.00 per pupil in * * * 1982-83, and $160.00 per pupil in 1983-84 shall be subtracted ... Any deductions made under this act shall be consistent with the requirements of ... 20 USC 240 and its regulations."

Plaintiffs stress the fact that in calculating "net state aid calculation per district," pursuant to section 21(1), local revenue is subtracted from the gross allowance guarantee. Under section 21(3), federal impact aid is then deducted from the state aid guarantee. Next, according to plaintiffs, the state equalization allocations are reduced by the amount of the federal impact aid deduction.

It is plaintiffs' claim that the state, in failing to consider federal impact aid as local revenue in "the top half of the equation" (i.e., in determining the gross allowance guarantee), while at the same time reducing "state equalized valuation" by the amount of federal impact aid, "shifts the tax burden of educating federally connected students onto the plaintiff school districts." Plaintiffs maintain, in effect, that the amount of federal impact aid deducted from "the lower half of the formula" (i.e., from the state aid guaranty), can be given a value in mills (e.g., one voted mill brings in $67,268). In order to truly equalize the State's formula, contend plaintiffs, a millage which would raise funds equivalent to the amount of federal impact aid deducted from total state aid would have to be levied and included in the top half of the formula (i.e., in determining "gross allowance," before subtracting local revenue). Plaintiffs challenge the State's impact aid deductions for the years 1980-1981 and 1981-1982, and proposed deduction for the years 1982-1983 and 1983-1984.

Plaintiffs claim that the State formula unduly shifts a tax burden to them.1 In addition, plaintiffs maintain that the State's treatment of federal impact aid violates their equal protection and due process rights guaranteed by the Fourteenth Amendment. The State defendants deny that the State Act violates plaintiffs' constitutional rights. Moreov...

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4 cases
  • Kubik v. Brown
    • United States
    • U.S. District Court — Western District of Michigan
    • July 29, 1997
    ...of the Equal Protection Clause is to assure that similarly situated individuals will be treated alike. Gwinn Area Comm. Sch. v. Michigan, 574 F.Supp. 736, 749 (W.D.Mich.1983), aff'd in part, rev'd in part, 741 F.2d 840 (6th Cir.1984). In order to establish an equal protection violation, Pla......
  • Barnett v. Dist. of Col. Dept. of Emp. Serv.
    • United States
    • D.C. Court of Appeals
    • May 8, 1985
    ...727 F.2d 957, 980 (11th Cir.), cert. granted, ___ U.S. ___, 105 S.Ct. 563, 83 L.Ed.2d 504 (1984); Gwinn Area Community Schools v. Michigan, 574 F.Supp. 736, 745 (W.D.Mich. 1983), aff'd in part, revel on other grounds in part, 741 F.2d 840 (6th Cir. 1984); Lukens Steel Co. v. Donovan, 511 F.......
  • Gwinn Area Community Schools v. State of Mich.
    • United States
    • U.S. Court of Appeals — Sixth Circuit
    • August 10, 1984
    ...from state equalization allocations. B. The district court filed an opinion with its judgment. See Gwinn Area Community Schools v. State of Michigan, 574 F.Supp. 736 (W.D.Mich.1983). The district court summarized the plaintiffs' position as being that the formula used by the state "unduly s......
  • Vandergriff v. City of Chattanooga
    • United States
    • U.S. District Court — Eastern District of Tennessee
    • March 31, 1998
    ...(finding municipal taxpayers have standing to enjoin unconstitutional acts that affect public finances); Gwinn Area Community Schools v. Michigan, 574 F.Supp. 736, 743 (W.D.Mich.1983) (allowing plaintiffs to assert equal protection and due process claims and holding municipal taxpayer has s......

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