Hadley v. North Arkansas Community Technical College

• Decision Date: 19 April 1996
• Docket Number: No. 94-3703,94-3703
• Citation: 76 F.3d 1437
• Parties: 107 Ed. Law Rep. 75 Les HADLEY, Plaintiff-Appellee, v. NORTH ARKANSAS COMMUNITY TECHNICAL COLLEGE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1437

76 F.3d 1437

107 Ed. Law Rep. 75

Les HADLEY, Plaintiff-Appellee, v. NORTH ARKANSAS COMMUNITY TECHNICAL COLLEGE, Defendant-Appellant.

No. 94-3703.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 11, 1995.

Decided Feb. 14, 1996.

Order Denying Rehearing and Suggestion for Rehearing En Banc

April 19, 1996.

Patricia L. Van Ausdall, Asst. Atty. Gen., Little Rock, AR, argued for appellant.

Barbara E. Lingle, Rogers, AR, argued for appellee.

Before LOKEN and LAY, Circuit Judges, and NANGLE, ^* District Judge.

LOKEN, Circuit Judge.

Les Hadley filed this civil rights action under 42 U.S.C. § 1983 alleging that his former employer, North Arkansas Community Technical College ("NACTC"), violated his due process rights by summarily terminating him as a vocational instructor. NACTC moved for summary judgment, claiming that it is an arm of the State entitled to Eleventh Amendment immunity from this federal court damage action. The district court ¹ denied the motion, and we remanded for further consideration in light of Sherman v. Curators of Univ. of Mo., 16 F.3d 860 (8th Cir.1994), and Greenwood v. Ross, 778 F.2d 448 (8th Cir.1985). The court then concluded in a thorough opinion that NACTC is entitled to Eleventh Amendment immunity and dismissed Hadley's claim. Hadley appeals. We affirm.

I.

The Eleventh Amendment immunizes an unconsenting State from damage actions brought in federal court, except when Congress has abrogated that immunity for a particular federal cause of action. See generally Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). Section 1983 does not override Eleventh Amendment immunity. See Will v. Michigan Dept. of State Police, 491 U.S. 58, 63, 109 S.Ct. 2304, 2308, 105 L.Ed.2d 45 (1989), construing Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979). Therefore, if NACTC is entitled to the State of Arkansas's Eleventh Amendment immunity, the district court properly dismissed Hadley's claim.

A state agency or official may invoke the State's Eleventh Amendment immunity if immunity will "protect the state treasury from liability that would have had essentially the same practical consequences as a judgment against the State itself." Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 123 n. 34, 104 S.Ct. 900, 920, 79 L.Ed.2d 67 (1984), quoting Lake Country Estates, Inc. v. Tahoe Reg. Planning Agency, 440 U.S. 391, 401, 99 S.Ct. 1171, 1177, 59 L.Ed.2d 401 (1979); see Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 463-64, 65 S.Ct. 347, 350, 89 L.Ed. 389 (1945). On the other hand, Eleventh Amendment immunity does not extend to independent political subdivisions created by the State, such as counties and cities. See Lincoln County v. Luning, 133 U.S. 529, 10 S.Ct. 363, 33 L.Ed. 766 (1890). The issue is whether NACTC "is to be treated as an arm of the State ... or is instead to be treated as a municipal corporation or other political subdivision to which the Eleventh Amendment does not extend." Mt. Healthy City Bd. of Educ. v. Doyle, 429 U.S. 274, 280, 97 S.Ct. 568, 572, 50 L.Ed.2d 471 (1977) (holding that Ohio local school districts are like political subdivisions and therefore not immune). State universities and colleges almost always enjoy Eleventh Amendment immunity. ² On the other hand, community and technical colleges often have deep roots in a local community. When those roots include local political and financial involvement, the resulting Eleventh Amendment immunity questions tend to be difficult and very fact specific. ³

Eleventh Amendment immunity reflects respect for state sovereignty and a desire to protect the state treasury. A narrow majority of the Supreme Court recently held that exposure of the state treasury is a more important factor than whether the State controls the entity in question. Hess v. Port Auth. Trans-Hudson Corp., --- U.S. ----, 115 S.Ct. 394, 130 L.Ed.2d 245 (1994). We see nothing inconsistent with the majority's reasoning in Hess and the approach we have developed for deciding whether a particular institution of higher learning is entitled to Eleventh Amendment immunity. In addition, Hess involved a bi-State compact entity, and the majority cautioned that "there is good reason not to amalgamate Compact Clause entities with agencies of 'one of the United States' for Eleventh Amendment purposes." Id. at ----, 115 S.Ct. at 402. Therefore, we adhere to the test that we instructed the district court to apply on remand, which requires that we

examine the particular entity in question and its powers and characteristics as created by state law to determine whether the suit is in reality a suit against the state. Courts typically look at the degree of local autonomy and control and most importantly whether the funds to pay any award will be derived from the state treasury.

Greenwood v. Ross, 778 F.2d 448, 453 (8th Cir.1985), quoting Laje v. R.E. Thomason Gen. Hosp., 665 F.2d 724, 727 (5th Cir.1982) (citations omitted in original).

II.

Like the district court, we begin by examining "the nature of the entity created by state law." Mt. Healthy, 429 U.S. at 280, 97 S.Ct. at 572; see Seibert v. University of Okl. Health Sciences Ctr., 867 F.2d 591, 594-95 (10th Cir.1989). Amendment 52 to the Arkansas Constitution authorizes the General Assembly to establish community college districts. The General Assembly has authorized the State Board of Higher Education to formulate criteria for establishing community colleges, and to certify proposed community college districts. See Ark.Code Ann. §§ 6-61-505 to -510. A district is created if a majority of the voters in the proposed district vote in favor of establishing the community college. § 6-61-513. Under a 1991 statute, technical colleges may "become part of the Arkansas technical and community college system under the coordination of the State Board of Higher Education." § 6-53-301(a) (Supp.1993). That law prompted the 1992 merger of North Arkansas Community College and Twin Lakes Technical College into NACTC.

By statute, the State must provide community colleges "[f]unds for the general operation of an adequate comprehensive educational program." Ark.Code Ann. § 6-61-601(a). To this end:

The amount of state revenues to be recommended for the general operation of each community college shall be the difference between the recommended budget and the total of income for general operation, including student fees and any other income except local taxes. The recommended budget for general operation shall be sufficient to provide an adequate comprehensive educational program ... as determined by the [State Board of Higher Education].

§ 6-61-601(c)(2). For purposes of state appropriation and expenditure procedures, the term "State agency" includes "state-supported institutions of higher learning ... functioning under appropriation made by the General Assembly." § 19-4-801(1)(A). For the 1993-94 fiscal year, 58.2% of NACTC's total budget was provided by state funds appropriated by the General Assembly. Moreover, the state treasury is structured to include an NACTC Fund that is dedicated to the "maintenance, operation, and improvement" of NACTC. § 19-5-303(m) (Supp.1993).

To this point, it seems clear that NACTC is, both financially and institutionally, an arm of the State, and that any damage award to Hadley would inevitably be paid from the state treasury. Those are the factors that led us to conclude in Dover Elevator, 64 F.3d at 446-47, that Arkansas State University is entitled to Eleventh Amendment immunity. But Arkansas community colleges also have elements of local funding and control that require further analysis.

The Arkansas Constitution permits community colleges to be partially funded at the local level:

The General Assembly shall prescribe the method of financing such community college and technical institutes, and may authorize the levy of a tax upon the taxable property in such districts for the acquisition, construction, reconstruction, repair, expansion, operation, and maintenance of facilities therefor.

Amendment 52, § 1. The General Assembly has made local financial participation mandatory:

(a) Each community college district shall be responsible for all capital outlay expenses ⁴ ... except that the state may share the responsibility for capital outlay expenses for any community college which has an enrollment of at least one thousand (1,000) full-time equivalent students....

(b) Capital outlay expenses shall be paid from gifts, grants, profits from auxiliary enterprises, tuition, fees, local millages, and other local funds and may be paid from state funds appropriated for such purposes.

§ 6-61-603 (Supp.1993). Therefore, when the voters of Boone County, Arkansas, voted in 1973 to establish NACTC's community college district, they authorized the levy of a tax not to exceed five mills on taxable property in the district "for the purchase of land and for the construction and furnishing of buildings and facilities for such college." That authority was extended indefinitely in a special election in 1977. However, while local tax revenues have financed NACTC buildings and improvements, those funds are subject to most state accounting and budgetary procedures, § 19-4-803(b)(2); NACTC is a "State agency" for purposes of the Arkansas State Building Services Act, § 22-2-102(5); and the campus is State owned.

In fiscal 1993-1994, NACTC received $317,366 in local tax revenues, some three percent of its total budget. Those funds were dedicated to new acquisitions or the issuance of bonds to finance new acquisitions. See § 19-4-803(b)(2) (college must use funds from a millage levy "for the purposes stated on the ballot at the time of the election authorizing the millage"); Ark. Const. Art. 16, § 11 ("no moneys arising from a tax levied for one purpose shall be used for any other purpose"). Although the General Assembly has authorized community college...