Knob Noster Ed. v. Knob Noster R-Viii Sch.

• Decision Date: 08 April 2003
• Docket Number: No. WD 61093.,WD 61093.
• Citation: 101 S.W.3d 356
• Parties: KNOB NOSTER EDUCATION, et al., Appellant, v. KNOB NOSTER R-VIII SCHOOL DISTRICT, Respondent.
• Court: Missouri Court of Appeals

101 S.W.3d 356

KNOB NOSTER EDUCATION, et al., Appellant, v. KNOB NOSTER R-VIII SCHOOL DISTRICT, Respondent.

No. WD 61093.

Missouri Court of Appeals, Western District.

April 8, 2003.

Loretta K. Haggard, St. Louis, MO, for appellant.

Steven L. Wright, Columbia, MO, for respondent.

Before JOSEPH M. ELLIS, Chief Judge, VICTOR C. HOWARD, Judge and LISA WHITE HARDWICK, Judge.

JOSEPH M. ELLIS, Chief Judge.

Section 165.016.1¹ requires Missouri public school districts to spend a certain percentage of their operating costs on teacher compensation, retirement and tuition. School districts that fail to comply with the statute are generally required to pay a penalty to certain staff members, assuming they are not granted an exemption or revision of the penalty amount pursuant to the statute. § 165.016.6.

The Knob Noster R-VIII School District ("the District") violated section 165.016.1 for the 1996-97 school year. As a result, twenty members of the Knob Noster Education Association ("the Association"), which represents about forty-nine teachers in the district, brought an action for declaratory judgment claiming entitlement to a penalty.² Thereafter, the Association and the District filed cross-motions for summary judgment. The trial court heard oral argument on the motions on December 7, 2001, at which time the parties agreed that all relevant facts were stipulated and to submit the case on the merits.

On December 20, 2001, the trial court entered its judgment finding that the District owed a penalty of $66,710.82, but that the District paid the penalty by giving certificated staff members a salary increase that was not required by law and that exceeded the penalty amount. The Association brings this appeal, claiming that the trial court erred in determining that the District paid the penalty.

In 1996, the Missouri Legislature enacted section 165.016. Subsections one and two set forth funding formulas requiring Missouri public school districts to spend a certain percentage of operating costs for tuition, teacher retirement and compensation for certificated staff. § 165.016.1; § 165.016.2.³ The required percentage is based on a comparison between the amount spent on tuition, teacher retirement and certificated staff compensation for the current school year compared with the amount spent during the "base school year." § 165.016.1. The base year percentage is the average spent on tuition, teacher retirement and compensation for the 1991-92 and 1992-93 school years. Id.

For the 1996-97 school year, a district was required to spend on tuition, teacher retirement and certificated staff compensation a percentage of current operating costs that was not less than two percentage points less than the base school year certificated salary percentage. § 165.016.1. The Knob Noster District's base year percentage was 76.54 %. In 1996-97, the District spent only 71.99 % of its operating costs on tuition, retirement and salaries, which was more than two percentage points less than the base year percentage. As a result, the Department of Secondary and Elementary Education ("DESE") sent the District a notice of noncompliance for the 1996-97 school year on March 25, 1998.

When a district violates the statute, it is generally required to pay a penalty to building-level administrative staff and nonadministrative certificated staff during the year following the notice of the violation. § 165.016.6. However, a district may seek to avoid or reduce its penalty by asking the state board of education for a one-time revision to its base-year percentage. § 165.016.4. Pursuant to the statute, the District asked the state board to reduce its base-year percentage to 74.15 by using figures from the 1989-90 and 1990-91 school years. The Association objected to the change. On April 15, 1999, the state board agreed to revise the District's base year percentage to the compromise amount of 75.34.

In a further effort to bring itself into compliance, the District made two separate requests for adjustments to its certificated salary percentage for 1996-97. The District asked DESE to include Medicare expenditures, which would increase its percentage to 72.59. The District also made a request to exclude grants, which would further increase its percentage for 1996-97 to 72.86. DESE granted both requests.

Notwithstanding the revisions granted by DESE and the state board, the parties agreed that the District was still out of compliance for the 1996-97 school year. The Association claimed the correct penalty was $66,710.82, arguing that while the statute probably allowed for the inclusion of Medicare, it did not permit the District to exclude grants. The District claimed that it could exclude grants and that the penalty was therefore $41,889.

While the District conceded that it was not in compliance with the statute for the 1996-97 school year, it claimed in its cross-motion for summary judgment that it had been advised by DESE that it did not owe a penalty because of an amendment to the statute that was passed in 1998. The amendment, which is codified in subsection three, provides an alternative method by which a school district can demonstrate compliance with the statute. Subsection three created a new formula, the "fiscal instructional ratio of efficiency" or FIRE. 165.016.3.⁴ The amendment allows a district to show compliance with the statute by maintaining or increasing its FIRE as compared to its FIRE for the 1997-98 base year. § 165.016.3(2). If a district complies with the FIRE provision, it need not abide by the certificated staff formula. § 165.016.3(2).

As noted previously, section 165.016.6, the penalty provision of the statute, requires that a school district must pay an additional amount in the year following the notice of violation. It provides that a school district "shall compensate the building-level administrative staff and nonadministrative certificated staff ... an additional amount which is equal to one hundred ten percent of the amount necessary to bring the district into compliance. ..." § 165.016.6. The statute further declares that "[i]n any year in which a penalty is paid, the district shall pay the penalty specified in this subsection in addition to the amount required under this section for the current school year." Id.

The District claimed that, pursuant to the amended statute, it increased its FIRE for the 1998-99 school year — the year in which the penalty was due — by $101,558. Accordingly, the District argued that it satisfied the penalty by increasing its FIRE formula for the year in which the penalty was due by more than the penalty amount and that it was entitled to have its motion for summary judgment granted. Counsel for the Association acknowledged that the District had given teachers a salary increase for the 1998-99 school year that exceeded $67,000.

On December 20, 2001, the trial court entered its judgment, which contained the following findings and conclusions:

1. Defendant Knob Noster School District violated the requirements of § 165.016.1, RSMo., for the 1996-97 school year by failing to expend the required percent of its operating costs for tuition, teacher retirement and compensation of certified staff.

2. The Base Year Revision granted to Defendant on April 15, 1999, applied retroactively so as to forgive a portion of the penalty for non-compliance during 1996-97....

3. The Missouri Department of Elementary and Secondary Education ("DESE") did not have the authority to exclude grants from its calculation of the Knob Noster School District's salary compliance figures for 1996-97. However, DESE did have the authority to include Medicare contributions within the definition of compensation for certificated staff, for purposes of calculating the District's salary compliance figures for 1996-97.

4. Based on the foregoing findings and the Base Year Revision granted by the State Board of Education, Defendant Knob Noster School District was obligated to pay a penalty of $66,710.82 to its certificated staff during 1998-99, because it failed to comply with § 165.016, RSMo., during 1996-97.

5. Defendant Knob Noster School District paid the $66,710.82 penalty it was required to pay in 1998-99, by giving its certificated staff a salary increase which it was not required to provide, and which exceeded the penalty amount. Therefore, the District paid the penalty amount "in addition to the amount required under this section [§ 165.016, RSMo.] for the current school year." § 165.016.6 RSMo.

On January 18, 2002, the Association filed a motion to amend order and judgment, or, in the alternative, motion for new trial. On February 19, 2002, the Association filed its reply, claiming that its motion was based on the same legal theory presented at trial. On February 19, 2001, following a hearing, the trial court denied the Association's motion. This appeal follows.

"This court will affirm the decision of the circuit court in declaratory judgment action unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Russell v. Mo. State Employees' Ret. Sys., 4 S.W.3d 554, 556 (Mo.App. W.D.1999). However, the interpretation of a statute is a question of law and, therefore, our review is de novo. Pavlica v. Director of Revenue, 71 S.W.3d 186, 189 (Mo.App. W.D.2002); In re Interest of T.A.S., 62 S.W.3d 650, 658 (Mo.App. W.D.2001).

In its first point, the Association claims the trial court erred in determining that the District paid the penalty because it incorrectly applied section 165.016.6, the penalty provision of the statute, which provides:

Any school district which is determined by the department to be in violation of the requirements of subsection 1 or 2 of this section, or both, shall compensate the building-level administrative staff and nonadministrative certificated staff during the...