Withers v. State

Decision Date20 June 1995
Citation133 Or.App. 377,891 P.2d 675
Parties, 98 Ed. Law Rep. 1050 Zachary Daniel WITHERS, Kiel Alan Peck and Seth Jeremy Ring, Appellants, v. STATE of Oregon, Respondent. 94CV0074ST; CA A85596.
CourtOregon Court of Appeals

William F. Gary, Eugene, argued the cause for appellants. With him on the briefs were Glenn Klein, Judith Giers and Harrang Long Gary Rudnick P.C.

Michael D. Reynolds, Asst. Atty. Gen., argued the cause for respondent. With him on the brief were Theodore R. Kulongoski, Atty. Gen., and Virginia L. Linder, Sol. Gen.

John W. Osburn, Portland, filed a brief amicus curiae for Portland School Dist. No. 1J.

Before RIGGS, P.J., and LANDAU and LEESON, JJ.

LANDAU, Judge.

Plaintiffs seek a declaration that the statutes that prescribe the manner in which public education is funded in this state violate the state and federal constitutions. The trial court entered judgment declaring that the challenged statutes do not violate either the state or the federal constitution. Plaintiffs appeal, and we affirm.

To understand the nature of plaintiffs' claims and our disposition of them, it is necessary to describe briefly the manner in which public education has been and is currently funded in this state. Before 1991, state law provided for public education funding through a combination of local property tax revenues, state general fund revenues and other miscellaneous revenues. By far the largest share of the funding came from local property tax revenues. Because each district assessed its property taxes at different rates, and because the value of real property within each district varied as well, the amount of property tax revenues generated for public education funding varied significantly from district to district. Further disparities were possible if voters defeated tax levy proposals.

In 1987, Oregon voters approved a constitutional amendment, known as the "safety net," which provides that, when local funding is inadequate to meet current operating expenses, school districts are authorized, without local voter approval, to levy property taxes in an amount not more than what was levied for operating purposes in the preceding year. Or Const, Art XI, § 11a. Three years later, the voters approved another constitutional amendment, known as "Measure 5," which imposes progressively more stringent limitations on the rates at which local districts may tax real property. Or Const, Art XI, § 11b(1). Measure 5 also provides that the state legislature must, for a period of five years, "replace from the State's general fund any revenue lost by the public school system because of the limitations." Or Const, Art XI, § 11b(5).

During the first legislative session following adoption of Measure 5, the legislature enacted a two-stage funding law to satisfy its obligation to replace revenues lost because of the new property tax rate limitations. First, for fiscal year 1991-92, the legislature appropriated the necessary general fund revenues and provided that they be distributed in the same manner that general fund revenues had previously been distributed to the local school districts. Or.Laws 1991, ch 162, § 8; Or.Laws 1991, ch 780, § 29. Second, for fiscal year 1992-93, the legislature created a "state school fund" and appropriated for that fund enough general fund revenues to again cover the reductions in property tax revenues occasioned by Measure 5. Or.Laws 1991, ch. 780, § 3. The legislature adopted a formula for distributing those funds to the local school districts. Or.Laws 1991, ch 780, § 4. The formula itself is complex and need not be described in detail here. Suffice it to say that, under the formula, school districts are to be awarded sufficient state general fund revenues so that, when those funds are combined with remaining property tax revenues, each district receives a total amount of financial support that is roughly equal on a per student basis.

Because many districts historically were funded at levels substantially higher or lower than the new equalized level, the legislature enacted a transition mechanism. It imposed a limit on the extent to which a school district's total funding level could increase or decrease because of implementation of the formula for distributing state general fund revenues; districts whose funding levels previously were higher than what the formula would produce could suffer no reduction from prior levels, while districts with historically lower total funding levels could enjoy an increase of no more than 25 percent of the prior year's budget. Or.Laws 1991, ch. 780, § 4a.

During the 1993 legislative session, the legislature retained the state school fund distribution formula largely unchanged and, once again, appropriated general fund revenues to replace property tax revenues lost under Measure 5. The legislature also amended its transition mechanism for implementation of the formula. Under the amended law, for fiscal years 1993-94 and 1994-95, no district may receive total funding amounting to less than 90 percent of what it received the previous fiscal year. In addition, for those fiscal years, no district may receive an increase in funding of more than 25 percent over what it had received the previous fiscal year. Or.Laws 1993, ch. 61, §§ 1(2), 2. Those districts that remained under the roughly equalized level of total funding were then entitled to an additional "equity" grant. Or.Laws 1993, ch. 61, § 1(3). The transitional mechanism adopted by the legislature expires at the end of fiscal year 1994-95, after which time--barring further legislative action--all districts are to receive state general fund revenues according to the statutory distribution formula. Or.Laws 1993, ch. 61, §§ 1, 2.

With that background, we turn to the facts of the case. Because this case was appealed from a judgment on the pleadings, we accept as true all facts alleged in the complaint. Beason v. Harcleroad, 105 Or.App. 376, 380-84, 805 P.2d 700 (1991).

Plaintiffs are three junior high school students who attend school in the Redmond School District. They allege that the statutory formula for distributing state school fund revenues is "fair and equitable." Their complaint is, in essence, that the state has unconstitutionally failed to implement that formula. According to plaintiffs, because of the transition mechanism in the current law, which limits increases in total funding levels to 25 percent of prior funding levels, Redmond School District is receiving less money from the state school fund than it would have received under the formula without the limitation. They further allege that, because of that limitation in state funding, Redmond School District has been unable to offer them programs and classes that it would have been able to offer without the limitation, and that other districts not subject to the limitation are currently offering those same programs. According to plaintiffs, the result of the current limitation on increases in total funding levels is that they are being denied educational opportunities that are available in other districts not subject to the limitation. That denial of educational opportunities, plaintiffs conclude, violates Article VIII, section 3, and Article I, section 20, of the Oregon Constitution and the Equal Protection Clause of the Fourteenth Amendment to the federal constitution.

Defendant answered and then moved for judgment on the pleadings, arguing that the transitional limitations on the extent to which the statutory funding distribution formula is implemented, and any resulting disparities in total funding, do not violate either the state or the federal constitutions. The trial court granted defendant's motion and entered judgment declaring that the current funding system does not violate either the state or the federal constitution. On appeal, plaintiffs assign error to the trial court's declaration.

We review the entry of judgment on the pleadings as a matter of law. Wyers v. Dressler, 42 Or.App. 799, 804, 601 P.2d 1268 (1979), rev. den. 288 Or. 527 (1980). Entry of judgment on the pleadings is proper if the allegations in the pleadings affirmatively show that plaintiffs cannot prevail as a matter of law. Beason v. Harcleroad, supra, 105 Or.App. at 379, 805 P.2d 700.

Plaintiffs first argue that the trial court erred in declaring that the current statutory system of public education funding does not violate Article VIII, section 3, of the state constitution. That section of the constitution provides:

"The Legislative Assembly shall provide by law for the establishment of a uniform, and general system of Common schools." Or Const, Art VIII, § 3.

According to plaintiffs, current funding laws result in disparities in total funding levels from district to district, which, in turn, result in disparities in educational opportunities from district to district. Those disparities, plaintiffs contend, result in "a public school system that is not uniform."

Defendant argues that plaintiffs' argument is defeated by the Oregon Supreme Court's decisions in Olsen v. State ex rel Johnson, 276 Or. 9, 554 P.2d 139 (1976), and Coalition for Equit. School Fund. v. State of Oregon, 311 Or. 300, 811 P.2d 116 (1991). We agree with defendant that Olsen controls the disposition of plaintiffs' Article VIII, section 3, claim.

In Olsen, the plaintiffs argued that the system of public education funding then in effect, which relied heavily on local property tax revenues, resulted in individual districts receiving widely varying total amounts of funding. The plaintiffs argued that the disparities in funding available produced disparities in educational opportunities from district to district, which violated the constitutional mandate to provide for the establishment of a "uniform, and general system of Common schools." The plaintiffs argued that the requirement that the...

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