Lake View Sch. Dist. No. 25 v. Huckabee

Decision Date21 November 2002
Docket NumberNo. 01-836.,01-836.
Citation351 Ark. 31,91 S.W.3d 472
PartiesLAKE VIEW SCHOOL DISTRICT NO. 25 OF. PHILLIPS COUNTY, Arkansas, et al., Appellants, v. Governor Mike HUCKABEE; Senator Mike Beebe, President Pro Tempore of the Senate; Representative Shane Broadway, Speaker of the House; State Auditor Gus Wingfield; State Treasurer Jimmie Lou Fisher; Director of the Arkansas Department of Education Raymond Simon; Arkansas State Board of Education Members Luke Gordy, William Fisher, Jonell Caldwell, Anita Yates, Lewis Thompson, Claiborne Deming, Richard Smith, Betty Pickett, Robert Hackler, and Shelby Hillman; and Director of the Arkansas Department of Finance and Administration Richard Barclay, Appellees; and Rogers School District No. 30 and Bentonville School District No. 6 of Benton County, and Little Rock School District of Pulaski County, Intervenors/Appellees.
CourtArkansas Supreme Court

E. Dion Wilson, Helena; Don Trimble; and Lewellen & Associates, for appellant class; Jack, Lyon & Jones, P.A., by: Eugene G. Sayre, special attorney for appellant class.

Mark Pryor, Att'y Gen., by: Dennis R. Hansen, Deputy Att'y Gen.; Brian G. Brooks, Sr. Ass't Att'y Gen.; and Timothy G. Gauger, Ass't Att'y Gen., Little Rock, for State appellees.

Matthews, Campbell, Rhoads, McClure, Thompson & Fryauf, P.A., by: David R. Matthews, Little Rock, for intervenors-appellees Rogers and Bentonville Public School Districts.

Friday, Eldredge & Clark, by: Christopher Heller and John C. Fendley, Jr., Little Rock, for intervenor-appellee Little Rock School District.

Mitchell, Blackstock, Barnes, Wagoner, Ivers & Sneddon, by: Clayton R. Blackstock and Mark Burnette, Little Rock, for amicus curiae Arkansas Education Association.

Kaplan, Brewer, Maxey & Haralson, PA, by: Regina Haralson, Little Rock, for amicus curiae Arkansas Public Policy Panel and Rural School and Community Trust.

Dudley & Compton, by: Cathleen V. Compton, Little Rock, for amicus curiae Arkansas Policy Foundation.

Lavey & Burnett, by: John L. Burnett, Little Rock, for amicus curiae Arkansas Advocates for Children and Families.

Barrett & Deacon, A Professional Association, by: D.P. Marshall Jr., Leigh M. Chiles, and Brian A. Vandiver, Little Rock, for amicus curiae Arkansas State Chamber of Commerce, Inc., and Associated Industries of Arkansas, Inc.

ROBERT L. BROWN, Justice.

This is an appeal from the final order of the Pulaski County Chancery Court entered May 25, 2001, which concluded that the current school-funding system is unconstitutional under the Education Article (Article 14, § 1) and the Equality provisions (Article 2, §§ 2, 3, and 18) of the Arkansas Constitution.1 The trial court also awarded counsel for Lake View School District No. 25 and the resulting class total attorneys' fees in the amount of $9,338,035. We affirm the trial court's order regarding the unconstitutionality of the public school-funding system but reverse its finding relative to excess debt service as a credit against each school district's uniform rate of 25 mills. We affirm the grant of attorneys' fees but modify the amount to an award of $3,088,050, plus costs in the amount of 8309,000.

This case has been in litigation for more than ten years. On August 19, 1992, Lake View School District No. 25, school district officials, and certain individuals residing in Phillips County (hereinafter Lake View) sued the Governor of the State, the State Treasurer, the Speaker of the House of Representatives, the President of the Senate, Officers of the State Department of Education, and the State Board of Education (hereinafter referred to collectively as the State).2 The complaint prayed for (1) a declaration that the school-funding system was unconstitutional under both the United States Constitution and the Arkansas Constitution, and (2) an injunction against implementing the unconstitutional system.

On November 9, 1994, then-chancery judge Annabelle Clinton Imber found that the school-funding system did not violate the United States Constitution, but that it did violate the Education Article (Article 14, § 1) and the Equality provisions (Article 2, §§ 2, 3, and 18) of the Arkansas Constitution. In December 1994, Judge Imber modified her November order slightly with two additional orders. For purposes of this opinion, the three orders will be referred to as the 1994 order. The chancery judge stayed the effect of her order for two years to enable the Arkansas General Assembly to enact a constitutional school-funding system in accordance with her opinion. In 1995, the chancery judge denied Lake View counsel attorneys' fees. On March 11, 1996, this court dismissed an appeal by the State contesting the 1994 order based on the fact that the order was not final, since the two-year stay was still in effect. See Tucker v. Lake View School Dist. No. 25, 323 Ark. 693, 917 S.W.2d 530 (1996) (Lake View I). In Lake View I, we expressly referred to the fact that Lake View's rights in the matter had not been concluded and that further hearings before the trial court were necessary before the trial court's order could be placed into execution. At the expiration of the two-year stay near the end of calendar year 1996, neither Lake View nor the State appealed from the trial court's 1994 order.

During its General Session in 1995, the Arkansas General Assembly enacted several acts for the purpose of establishing a new school-funding system. Specifically, Acts 916 and 917 were enacted, as well as Act 1194, which appropriated over $1.3 billion in school funding for the first year of the next biennium and more than $1.4 billion for the second year of the biennium.3

On August 22, 1996, following Lake View's third and fourth amended complaints, the trial court certified the Lake View class, as requested by Lake View, which included all school districts in the state, students and parents of students in all school districts, school board members of all school districts, and school district taxpayers who support the system. On November 5, 1996, the people of Arkansas approved by majority vote Amendment 74 to the Arkansas Constitution which fixed a uniform rate of 25 mills for each school district as the ad valorem property tax rate for the maintenance and operation of the public schools and permitted increases in the uniform millage rate as "variances" to enhance public education.

At its next General Session, the General Assembly enacted new legislation providing for public school financing, including Act 1307 of 1997, codified in part at Ark. Code Ann. §§ 6-20-302 et seq. (Repl. 1999). Act 1307 repealed portions of Act 917 of 1995 but, in addition, made legislative findings relating to educational adequacy, defined a "uniform rate of tax" under Amendment 74, defined terms used in the school-funding formula, and provided incentives for school districts to encourage millage assessments to enhance public education. The General Assembly also enacted Act 1108 of 1997, now codified at Ark.Code Ann. §§ 6-15-1001 through 1011 (Rep1.1999), which set educational goals, and Act 1361 of 1997, which appropriated funds totaling over $1.5 billion for each year of the next biennium for grants and aid to the state's school districts.

In 1998, there was an effort by Lake View and the State to settle the lawsuit. The trial court, however, declined to approve the settlement.4 On August 17, 1998, the trial court dismissed Lake View's fourth amended complaint on the grounds that with Amendment 74 and the 1995 and 1996 legislative acts, a new standard for public school funding had been implemented. Legislative acts are presumed to be constitutional, the trial court observed, and, thus, the fourth amended complaint and show-cause petition for why the State should not be held in contempt of the 1994 order were moot. No attorneys' fees were granted to Lake View counsel.

The 1998 Dismissal Order was appealed to this court, and we reversed. See Lake View Sch. Dist. No. 25 v. Huckabee, 340 Ark. 481, 10 S.W.3d 892 (2000) (Lake View II). In Lake View II, we remanded the matter for a compliance trial to be held regarding the constitutionality of the post-1994 legislative acts and for a determination of attorneys' fees. See id.5

In its 1999 General Session, the General Assembly appropriated funds for public education totaling more than $1.6 billion for the first year of the biennium and more than $1.7 billion for the second year. See Act 1392 of 1999. The General Assembly also enacted Act 999 of 1999, amending Ark.Code Ann. §§ 6-15-401 through 407, 6-15-419 through 422, and 6-15-1003 (Rep1.1999), and establishing the Arkansas Comprehensive Testing Assessment and Accountability Program (ACTAAP) to assess and evaluate academic progress and performance in the public schools with an emphasis on reading and writing, literacy, and mathematics from the earliest grades.

Prior to the compliance trial in 2000, a total of 144 school districts sought to intervene and align themselves with the State's position that the post-1994 legislation had cured the constitutional deficiencies. The trial court denied the motions. In September and October of 2000, the trial court conducted the compliance trial over nineteen days. Thirty-six witnesses testified, including some for a second time. One hundred and eighty-seven exhibits were introduced and considered. The resulting appellate record was ninety-nine volumes and totaled 20,878 pages. On September 19, 2000, Lake View filed a revised petition for an award of attorneys fees in the amount of $32.5 million and for litigation costs of at least $200,000. On September 22, 2000, the Rogers and Bentonville School Districts filed a cross-complaint against the State in which they contended that the school-funding system was constitutionally inadequate.

Judge Kilgore entered his final order on May 25, 2001, as already referenced, in...

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