ROOSEVELT ELEMENTARY SCHOOL v. State
| Decision Date | 14 August 2003 |
| Docket Number | No. 1 CA-CV 02-0590, No. 1 CA-CV 03-0118., No. 1 CA-CV 02-0475 |
| Citation | 205 Ariz. 584,74 P.3d 258 |
| Parties | ROOSEVELT ELEMENTARY SCHOOL DISTRICT NO. 66; Crane Elementary School District No. 131; Globe Unified School District No. 1; Cartwright Elementary School District No. 831, Plaintiffs-Appellees, v. The STATE of Arizona, Defendant-Appellant. Somerton Elementary School District; Mary C. O'Brien Elementary School District; Mayer Unified School District; Globe Unified School District No. 1; Dysart Unified School District; Crane Elementary School District No. 131, Plaintiffs-Appellees, v. The State of Arizona, Defendant-Appellant. |
| Court | Arizona Court of Appeals |
Arizona Center for Law in the Public Interest By Timothy M. Hogan, Phoenix, Attorneys for Plaintiffs-Appellees.
Terry Goddard, Arizona Attorney General By Mary O'Grady, Solicitor General, Lynne C. Adams, Assistant Attorney General, and David M. Lujan, Assistant Attorney General, Phoenix, Attorneys for Defendant-Appellant.
¶ 1 These appeals are the latest stage in an ongoing controversy regarding the Arizona Legislature's funding of the State's public schools. Eight school districts claim that Article 11, Section 1, of the Arizona Constitution1 has been violated because the Arizona Legislature has failed to fund the Building Renewal Fund, a component of the Students FIRST legislation, according to the statutory formula for fiscal years 1999-2000, 2001-2002 and 2002-2003. Ariz.Rev.Stat. ("A.R.S.") § 15-2031 (Supp.2002). The superior court agreed with the districts. For reasons that follow, we reverse its judgment and remand this case for further proceedings.
¶ 2 In Roosevelt Elementary School District No. 66 v. Bishop, 179 Ariz. 233, 240-43, 877 P.2d 806, 813-16 (1994), the Arizona Supreme Court concluded that the State bears responsibility for funding public schools and that the Arizona Constitution was violated by a property-tax-based public-school-financing statutory scheme. It found that the property-based taxation plan had resulted in such significant financial disparities among school districts as to violate Arizona's constitutional guarantee of the maintenance of a general and uniform public school system. Id. at 241-43, 877 P.2d at 814-16 ( ).
¶ 3 The Legislature amended the funding plan rejected in Roosevelt, but the supreme court held that the statutory amendments failed to adhere to its mandate. Hull v. Albrecht, 190 Ariz. 520, 525, 950 P.2d 1141, 1146 (1997)("Albrecht I"). The Legislature adopted the Assistance to Build Classrooms ("ABC") Fund, but the court concluded that this legislation also did not satisfy constitutional requirements because it continued to result in substantial capital-facility disparities among school districts, improperly delegated to the districts the State's responsibility to maintain adequate facilities and failed to provide minimum adequacy standards for capital facilities. Id. at 523-24, 950 P.2d at 1144-45.
¶ 4 The Legislature then passed the Students FIRST (Fair and Immediate Resources for Students Today) Act of 1998, a school capital-finance program funded by dedicated revenue from the State's transaction privilege tax. Hull v. Albrecht, 192 Ariz. 34, 960 P.2d 634 (1998) ("Albrecht II"). The supreme court approved Students FIRST to the extent that it created minimum adequacy standards for capital facilities and ensured through state funding that all school districts would be able to comply with those standards. Id. at 37 ¶¶ 11-12, 960 P.2d at 637. However, the court disapproved that portion of the scheme allowing a district to "opt out" of state funding and pay for its capital needs solely through local financing because that provision contravened a system of general and uniform public-school financing. Id. at 38-39 ¶¶ 18-19, 660 P.2d at 638-39. Because the opt-out section was not severable, the court declared the Students FIRST legislation to be unconstitutional. Id. at 39-40 ¶¶ 24-25, 660 P.2d at 639-40.
¶ 5 The Legislature then amended Students FIRST. It established three key funding mechanisms: the New School Facilities Fund, A.R.S. § 15-2041 (Supp.2002), the Deficiencies Correction Fund ("DCF"), A.R.S. § 15-2021 (Supp.2002), and the Building Renewal Fund ("BRF"), A.R.S. § 15-2031 (Supp.2002). Building adequacy standards also were created. A.R.S. § 15-2011 (Supp. 2002).
¶ 6 The New School Facilities Fund was designed, as its name suggests, to provide funds for new facilities as are warranted by growth in student enrollment. A.R.S. § 15-2041(B). The statutory School Facilities Board ("SFB") distributes funding to eligible school districts based on the number of students, projected square footage and the cost per square foot of building a facility meeting minimum adequacy standards. A.R.S. § 15-2041(D).
¶ 7 The DCF is designed to bring existing school buildings to minimum adequate standards by June 30, 2003. A.R.S. § 15-2021(E). School districts may receive such funds to correct quality and square-footage deficiencies. A.R.S. § 15-2021(B). The fund terminates as of July 1, 2004, for projects that were submitted by the districts and approved by the SFB by June 30, 2003. 2002 Ariz. Sess. Laws, ch. 330, § 43.
¶ 8 Whereas the DCF is designed to bring school facilities to minimum adequate standards, the BRF provides funds on a semi-annual basis to maintain existing school facilities at minimum adequacy levels consistent with the State's standards. A.R.S. § 15-2031. Funds are appropriated for the BRF based on a "building renewal formula," which accounts for a building's age and size, and the type of renovations that have been performed on the building. A.R.S. § 15-2031(B),(D),(G). The execution of this formula is supported by a database containing information submitted by the school districts and verified by the SFB. A.R.S. § 15-2031(B),(D). The database includes "only those buildings that are owned by school districts that are required to meet academic standards." A.R.S. § 15-2031(D). BRF money must first be used for any buildings in the database, but, if those facilities have been made adequate, the districts may use BRF money for "any other buildings owned by the school district," albeit only for certain defined purposes: "[m]ajor renovations and repairs of a building," "[u]pgrading systems and areas that will maintain or extend the useful life of the building," "[i]nfrastructure costs" and the "[r]elocation and placement of portable and modular buildings." A.R.S. § 15-2031(B). ¶ 9 For the 1998-1999 fiscal year, the first year of application, the Legislature appropriated $75 million to the BRF. For succeeding years, the Legislature had established a schedule according to which the school districts would submit certain data to the SFB by September 1. A.R.S. § 15-2031(D). The SFB then would apply the formula to the data, report the distribution amount to the Legislature's Joint Committee on Capital Review on December 1 and advise the state treasurer on January 1 as to the amount of money to be transferred from the State's general fund to the BRF for distribution to school districts in two equal payments in November and May of the following year. A.R.S. § 15-2002(A)(10) (2002). Thus the funding is fixed based on September 1 data, although the database is continuously revised.
¶ 10 Although the SFB began to collect the data as directed, for 1999-2000, the SFB, rather than applying the statutory formula, simply increased by ten percent the $75 million appropriation for the first year and instructed the state treasurer to credit $82.5 million to the BRF. Application of the data to the formula would have required $109.l million to be transferred.
¶ 11 Four school districts—Roosevelt Elementary School District No. 66, Crane Elementary School District No. 131, Globe Unified School District No. 1 and Cartwright Elementary School District No. 831—sued "to enforce [the State's] funding obligations established by the Students FIRST legislation."2 On the premise that the "only regular and annual sources of capital funding for school districts under Students FIRST are the [BRF] and soft capital" money,3 the districts alleged that the State had failed to perform its "mandatory, nondiscretionary duty" to fully fund Students FIRST, particularly the BRF. They therefore asked that the superior court both order the Legislature to "appropriate the funds necessary to fully fund" the BRF for 1998-1999, 1999-2000 and future years and order the SFB to instruct the state treasurer in future years to credit the BRF "in the amount necessary to fully fund" the BRF according to the statutory formula.4
¶ 12 The superior court, ruling on cross-motions for summary judgment, found no violation in the funds allocated for 1998-1999. It ruled that "the appropriation of a specific sum by the legislature for fiscal year 1998 demonstrates that there was no expectation that the formula for the [BRF] was intended to be used by the school facilities board for the first fiscal year."
¶ 13 The superior court found that the failure to use the formula for the following year had violated the Students FIRST law but ruled:
The Court cannot conclude by the mere fact that the formula yielded a substantially higher number than the estimate used that there is a constitutional violation because of the failure to fully fund the building renewal formula for one year. No evidence has been presented to the Court concerning what impact, if any, the shortage caused. The Court cannot conclude that the $25 million deficiency in the [BRF] in 1999 means that there is not a general and uniform school financing system that includes minimum adequacy standards for capital facilities and that...
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