Olsen v. State

• Decision Date: 03 September 1976
• Parties: Shauna OLSEN, a minor, et al., Appellants, v. STATE of Oregon, Respondents.
• Court: Oregon Supreme Court

Page 139

554 P.2d 139

276 Or. 9

Shauna OLSEN, a minor, et al., Appellants, v. STATE of Oregon, Respondents.

Supreme Court of Oregon.

Argued and Submitted April 5, 1976.

Decided Sept. 3. 1976.

Leslie M. Swanson, Jr., Eugene, and John E. McDermott, Los Angeles, Cal., argued the cause for appellants. With them on the briefs were John B. Arnold, Johnson, Johnson & Harrang, Richard E. Miller, Miller, Moulton & Andrews, Jeffrey W. Brenner, Mark D. Brook, Charles O. Porter, Eugene, and David C. Long, Washington, D.C.

W. Michael Gillette, Sol. Gen., Salem, argued the cause for respondents. With him on the brief were Lee Johnson, Atty. Gen., Peter S. Herman, Senior Counsel, and Ira W. Jones, Senior Asst. Atty. Gen., Salem.

[276 Or. 10-A] Mark C. McClanahan, Donald A. Burns and J. Barrett Marks, of Miller, Anderson, Nash, Yerke & Wiener, Portland, filed a brief amicus curiae on behalf of Portland School District.

Before McALLISTER, P.J., and DENECKE, HOLMAN, TONGUE, HOWELL and BRYSON, JJ.

DENECKE, Chief Justice.

The plaintiffs contend that the system of Oregon public school financing is contrary to Art. I, § 20, of the Oregon Constitution, Oregon's Equal Protection Clause. Plaintiffs also contend that the system is contrary to Art. VIII, § 3, of the Oregon Constitution which provides that the Legislature shall provide a 'uniform and general system' of schools. The trial court found against the plaintiffs and they appeal.

The essence of plaintiffs' argument is that under the Oregon system the amount of money available for education depends upon the value of the property in the individual school districts and this varies greatly. They further contend that this variation in wealth results in unequal educational opportunities for the children of the state.

I Oregon School Financing System

The Oregon system of school financing is generally similar to that in other states. The percentages of revenue from the various levels of government varies, however, from state to state. The government levels providing funds for education are the local school district, the county, the state, and the federal government. The latest figures in evidence were for 1972--1973. That year Oregon spent 603 million dollars on public elementary and secondary education. The state supplied 16 per cent, local government supplied 78 per cent, and the federal government 4 per cent. The local source of revenue is largely the property tax and the state source is primarily the income tax.

Basically, Oregon has three kinds of school districts: unified, providing education from grade one through twelve; elementary, providing education from grade one through grade six or eight; and high school, providing education from grade seven or nine through twelve. In comparable districts the difference in true cash value per pupil between districts is substantial. For example, in unified districts, those educating grades one through twelve, the wealthiest district had a true cash value per pupil of $203,000, while the poorest had a true cash value per pupil of.$19,000. Likewise, the expenditure per district varies substantially. For example, in unified districts, the expenditures varied from $1,795 spent per pupil to $674 spent per pupil.

The amount of tax a property owner pays per $1,000 value of property likewise varies between districts. Comparing some selected districts, the rate varied from $20 per thousand to $9 per thousand. The rate per thousand was generally higher in those districts having less value per pupil. However, this was not necessarily so; some districts having more wealth per pupil taxed themselves for education at a higher rate per thousand than districts with less wealth per pupil. The ratio between wealth and tax rate also substantially varies; that is, districts with, for example, three times as much wealth per pupil have a tax rate greater than, about the same as, or, in the extreme instance, one-half as large as other districts with less wealth per pupil.

Why the present school districts of Oregon have their present geographical boundaries is not clear. Deady, General Laws of Oregon (1842--1872), ch. 4, § 25, subsection 1, p. 506, provided that the county school superintendent should lay out his county into convenient school districts and keep records showing the boundaries. Subsection 3 provided the county superintendent could not change the boundaries unless a majority of those in the affected districts agreed.

Now, the Intermediate Education District (IED) Board is the district boundary board. ORS 330.080. The board, on its own motion or the petition of three residents, is authorized to merge districts or alter boundaries:

'* * *.

'(2) * * * (I)f it finds that the proposed change:

'(a) Will have no substantial adverse effect upon the ability of the districts affected to provide the educational program required by law.

'(b) Will result in improvement of the educational facilities available to the children in the area affected by the proposed change or will result in substantial operating economies in the districts affected.

'(c) Is not made solely for tax advantages to the property owners in the district or area affected by the proposed change.' ORS 330.090. ¹

If 5 per cent or at least 500 voters in an area remonstrate against the proposed change, the proposed change must be submitted to the voters in the affected area. If a majority opposes the change, it cannot be effected.

Oregon has had a history of a great number of school districts,--elementary, union high school, and rural. In 1939 there were over 2,100 school districts. In 1939 the legislature empowered the counties to 'determine what boundaries stand in the way of providing satisfactorily for the support and operation of the schools and the education of the children.' Oregon Laws 1939, ch. 468, § 4, p. 918. The counties were then to provide a plan for reorganization of the districts.

Pursuant to this authorization, plans were prepared which provided for the elimination of 243 districts. The legislative authorization also provided that the voters of the affected districts could reject the proposed plan if they so voted. The voters rejected all 243 proposed eliminations. A Study of Public Elementary and Secondary Education in Oregon (The Holy Report 1950). Subsequently, however, there has been a marked reduction in the number of school districts and it appears from the evidence that there are now about 400 school districts in Oregon.

As stated, in 1972--1973 the state supplied 16 per cent of the funds for public school education. In 1972--1973 that was 111 million dollars. Most of these funds are distributed as Basic School Support. Most of this support is distributed on the following basis: flat grants; that is, so much money per pupil to each district. In 1972--1973 flat grants were in the amount of 79 million dollars. About 15 million was used for equalization. The remaining sums were used for paying for district transportation and miscellaneous purposes. These equalization funds are distributed in inverse order of the taxable wealth in the district.

Before discussing these funds further it is necessary to explain the state fixed 'minimum acceptable level of school support.' This is the minimum amount per pupil the state yearly determines must be spent for educational purposes. For example, in 1971--1972 the state determined that every district had to spend, from all sources, $593 per pupil to maintain a satisfactory level of educational opportunity.

Every year the state also sets the minimum tax rate which districts must levy in order to be eligible to receive equalization funds. For example, in 1971--1972 the state required districts to levy up to $13.24 per $1,000 value. This is not completely accurate as a district with high values per pupil does not have to set the levy at this rate in order to contribute the amount the states sets as the 'minimum acceptable level of school support.'

Equalization funds are distributed by the state as follows, using 1971--1972 as an example: $593 per pupil was set as the minimum to be expended by each district. To raise this amount each district was given a flat grant of $148 per pupil. Each district was required to tax the property in its district up to the rate of $13.24 per $1,000. If a levy at this rate did not raise the balance to achieve $593 per pupil, the state paid the district from the equalization funds sufficient sums to enable the district to meet the $593 minimum.

Another device created to equalize the moneys available for the school districts is the IED. ORS ch. 334. These are generally formed along county lines. One of the prime purposes of an IED was to equalize the funds available to the various districts within the IED and yet have the districts retain optimum local control. ORS 334.005. Equalization by this procedure has not succeeded. Voters in the IEDs have voted down taxing levies for equalization. The common belief is that the voters in the wealthier districts would not tax themselves to aid the poorer districts.

Several Oregon counties receive substantial sums from the federal government because of timber lands known as Oregon and California Lands (O & C), located in these counties. Twenty-five per cent of these funds are transferred to the county school funds in these counties. ORS 294.060. These funds are not taken into account in determining which districts are entitled to equalization funds and the amount of equalization required. ORS 328.005(2).

Another complicating factor in the Oregon school financing system is the timber severance tax. Timber in eastern Oregon is not subject to an ad valorem tax. On harvesting, owners of eastern Oregon timber pay a severance tax. In western Oregon timber is assessed an ad valorem tax; only upon 30 per cent of the value of the timber, however. On harvesting, the owners pay a severance tax on 70 per cent of the value of the harvest value of the...