OCTOBER TERM, A.D. 2000
February
23, 2001
STATE OF
WYOMING, et al.,
Appellants
(Defendants),
v.
CAMPBELL
COUNTY SCHOOL
DISTRICT,
et al.,
Appellees
(Plaintiffs).
CAMPBELL
COUNTY SCHOOL DISTRICT,
STATE OF
WYOMING, et al.,
Appellants
(Plaintiffs/Intervening
Plaintiffs),
v.
STATE OF
WYOMING, et al.,
Appellees
(Defendants).
BIG HORN
COUNTY SCHOOL DISTRICT
NO. ONE,
STATE OF WYOMING, et al.,
Appellants(Intervening
Defendants),
v.
CAMPBELL
COUNTY SCHOOL DISTRICT,
STATE OF
WYOMING, et al.,
Appellees(Plaintiffs).
STATE OF
WYOMING, et al.,
Appellants(Defendants),
v.
CAMPBELL
COUNTY SCHOOL DISTRICT,
STATE OF
WYOMING, et al.,
Appellees(Plaintiffs).
Appeals
from the District Court of Laramie County
The
Honorable Nicholas G. Kalokathis, Judge
Representing
State of Wyoming, et al.:
Rowena
L. Heckert, Deputy Attorney General; Raymond B. Hunkins, Special Assistant
Attorney General, of Jones, Jones, Vines & Hunkins, Wheatland, Wyoming; and
Jack B. Speight, Robert T. McCue, and Dominique D. Y. Cone of Hathaway, Speight
& Kunz, LLC, Cheyenne, Wyoming
Representing
Laramie County School District No. One:
Paul J.
Hickey and Richard D. Bush of Hickey, Mackey, Evans and Walker, Cheyenne,
Wyoming
Representing
Natrona County School District No.
One:
Stuart
R. Day and Kevin D. Huber of Williams, Porter, Day & Neville, P.C., Casper,
Wyoming
Representing
Campbell County School District, Sweetwater County School District No. One,
Sweetwater County School District No. Two, and Uinta County School District No.
One:
Ford T.
Bussart and Marvin L. Tyler of Bussart, West, Piaia & Tyler, Rock Springs,
Wyoming
Representing
Teton County School District No. One:
Sara E.
Van Genderen and R. Michael Mullikin of Mullikin, Larson & Swift LLC,
Jackson, Wyoming
Representing
Big Horn County School District No. One:
Timothy
J. Kirven of Kirven and Kirven, P.C., Buffalo, Wyoming; Catherine MacPherson of
MacPherson Law Offices, LLC, Rawlins, Wyoming; and Gerald R. Mason of Mason
& Graham, P.C., Pinedale, Wyoming
Representing
Wyoming Education Association:
Patrick
E. Hacker and Gregory P. Hacker of Patrick E. Hacker, P.C., Cheyenne, Wyoming
Before
LEHMAN, C.J.; GOLDEN and KITE, JJ.; and DAN SPANGLER, D.J.
(RET.)
KITE, Justice.
[1] The school districts and the Wyoming Education Association (WEA) in these cases challenge the constitutionality of the Wyoming statutes which establish the method for financing the operation and construction of public schools. This court reluctantly concludes that, while great effort has been made by many and some improvement has been achieved, the constitutional mandate for a fair, complete, and equal education “appropriate for the times” in Wyoming has not been fully met. Although these cases were not formally consolidated, we are issuing one opinion because the legal analyses and conclusions apply similarly to the issues raised in all the cases. A single opinion will provide clarity and consistency in this court’s direction to the legislative and executive branches of our state’s government as those branches continue to work toward a constitutionally acceptable school financing system for Wyoming’s youth.
[2] As will be more
fully developed in the course of this opinion, we hold:
·
Kindergarten Error – The legislature, on or before July 1, 2002, shall provide a
one-time supplement to fully fund each school district’s 1998-99 kindergarten
component cost in the total aggregate amount of the $13,930,000 funding
error.
·
Capital Construction – The legislature must fund the
facilities deemed required by the state for the delivery of the “full basket” to
Wyoming students in all locations throughout the state through either a
statewide tax or other revenue raising mechanisms equally imposed on all
taxpayers.
·
Capital Construction – All facilities must be safe and
efficient.
Safe and efficient facilities are those that attain a score of 90 or
above for building condition, an educational suitability score and technological
readiness score of 80 or above, and a score of 4 for building
accessibility.
The total cost of compliance is $563,099,986. The legislature
must provide a plan by July 1, 2002, to remedy these deficiencies within 6
years.
“Immediate need” facilities and those facilities that fall below the
square footage requirements must be remedied within two years which computes to
$164,415,836.
Facilities that are deemed “inadequate” must be remedied within four
years which computes to $231,309,380. These amounts are measured in 1998 dollars
which will need to be adjusted for inflation at such time as the funding is
distributed.
ISSUES
[3] The issues raised by
all the parties are summarized as follows:
1. Is the cost-based block grant model a
constitutionally adequate tool?
2. Were the inputs and adjustments
cost-based?
3. Do the statutes governing capital
construction provide a constitutional means to achieve capital construction
funding?
FACTS
[4] The battle over the
school finance system in Wyoming has been waged since the l970s and continues
today. Our
collective inability to develop a solution to this legal, social, and political
problem in a constitutionally satisfactory manner stems from the complexity of
the issues, the importance of the education of our children to all our citizens,
and the historical dominance of local control over public education.1 Over the years, public education has been
funded primarily by local property taxes with growing state general fund
appropriations and some federal funding. By the l970s, the discrepancy in the level of
funding across the state was striking.2 Sweetwater County
Planning Committee for Organization of School Districts v. Hinkle, 491 P.2d 1234, 1237 (Wyo.
1971). We
recognized these inequities thirty years ago in Hinkle, which involved two school districts fighting over inclusion of the
Bairoil school district in their
districts in order to enhance their tax bases. Noting that such
inequities were unconstitutional, this court stated:
If ad valorem taxes for school purposes were equalized
throughout the state, as required by Art. 1, § 28, Wyoming Constitution, and by
the equal protection clause of the Fourteenth Amendment to the United States
Constitution, cases such as the one being dealt with would not arise.
491 P.2d at 1236-37 (footnote omitted).
[5] As long ago as Hinkle, this court reluctantly made suggestions to the
legislature of ways in which the constitutional problems could be addressed by a
statewide financing system. Almost ten years passed without
improvement.
By l980, the situation was actually worse, and this court declared the
entire school finance system unconstitutional in Washakie County School District Number One v.
Herschler, 606 P.2d 310 (Wyo.
1980). That
decision concurred with Hinkle in holding that
disparities were dramatic and a system based principally upon local property
taxes, whereby property poor districts have less total revenue per student than
property rich districts, fails to afford equal protection in violation of the
state constitution.
Washakie further determined that education
was a fundamental right under the Wyoming Constitution and wealth based
classifications with regard to this right were subject to the strict scrutiny
test, which placed the burden on the state to prove a compelling state interest
is served by the classification that cannot be satisfied by any other convenient
legal structure.
The court expressly held, “whatever system is adopted by the legislature,
it must not create a level of spending which is a function of wealth other than
the wealth of the state as a whole.” Washakie, 606
P.2d at 336.
[6] Although Washakie was focused on operational financing, the
holding was equally applicable to capital construction.
We see no reason to give particular attention to the
question of finances for the physical facilities with which to carry on the
process of education.
It is a part of the total educational package and tarred with the same
brush of disparate tax resources. The only constitutional limitation with
respect to school buildings is found in § 5, Art. XVI, Wyoming Constitution,
wherein it is provided that “No school district shall in any manner create any
indebtedness exceeding ten per cent (10%) on the assessed value of the taxable
property therein for the purpose of acquiring land, erection, enlarging and
equipping of school buildings.” There is no constitutional requirement that
school buildings must be built by creation of debt. There are other
areas of consideration, for example, a statewide reserve fund for building
construction.
The point is that statewide availability from total state resources for
building construction or contribution to school buildings on a parity for all
school districts is required just as for other elements of the educational
process. The
legislature has worked in that direction. See §§ 21-15-101, et seq., W.S.1977,
providing for school district capital construction entitlements.
606 P.2d at 337.
[7] In 1983, the
legislature took action in response to Washakie and
created a system which provided, in part, for the recapture from the districts
with higher than average tax revenue and redistribution of some portion of that
excess to districts with lower than average revenues.3 That legislation was intended to be
transitional while the legislature studied the cost of education in an attempt
to achieve equality among the districts, recognizing their special needs. Campbell County School District v. State, 907 P.2d 1238, 1247 (Wyo.
1995).
However, the 1983 system became permanent, and no cost study was ever
undertaken. Id.
[8] Twelve years later,
failing to achieve a
legislative solution to the continued inequities in funding, the school
districts again came to this court. The result was Campbell, 907 P.2d
1238, in which this court held, in part: 1) discrepancies in the funding and
distribution formulas were not based on differences in the cost of education
and, therefore, violated the equal protection and education provisions of the
Wyoming Constitution; 2) the strict scrutiny standard applied to a review of all
components of the school financing system; and 3) lack of financial resources is
not an acceptable reason for failure to provide a constitutionally sound
education system.
[9] With respect to
capital construction financing, the court again made no distinction concerning
the constitutional mandate. The court noted its directive in Washakie, which provided “statewide availability from
total state resources for building construction . . . on a parity for
all school districts,” had been “virtually ignored.” Campbell, 907 P.2d at 1275. The court further
held that “[s]afe and efficient physical facilities . . . are a
necessary element of the total educational process. State funds must be
readily available for those needs.” Id. The finance system
for capital facilities construction was included in Campbell’s finding of unconstitutionality.
[10] The court rejected the claim that a judicial
determination of the nature and extent of the constitutional right to a quality
education violates the separation of powers doctrine and concluded its proper
role is to interpret the constitution “in order to determine the duties those
provisions impose upon the legislature.” 907 P.2d at 1265. Accordingly, having
determined the 1983 statutory scheme to be unconstitutional, this court directed
the legislature to
first design the best educational system by identifying the
“proper” educational package each Wyoming student is entitled to have whether
she lives in Laramie or in Sundance. The cost of that educational package must
then be determined and the legislature must then take the necessary action to
fund that package.
Because education is one of the state’s most important functions, lack of
financial resources will not be an acceptable reason for failure to provide the
best educational system. All other financial considerations must yield
until education is funded.
907 P.2d at 1279. The court provided a deadline of July 1,
l997, by which the legislature should accomplish its directive. 907 P.2d at
1280.
I. Operational Financing
[11] The legislature began immediately to
respond to the Campbell decision.4 It retained the services of Management
Analysis & Planning Associates, L.L.C. (MAP), a well recognized and
credentialed consulting firm with expertise in public school finance, to assist
in developing a school operation financing system which would meet the
constitutional standard established by this court. MAP’s task was to
develop a revenue distribution model which would assure adequate resources were
distributed to provide a proper education for every Wyoming child based on the
cost of education.
It chose a block grant model to preserve as much local control as
possible. The
concept was that the model would produce the cost per average daily membership
(ADM) and that cost would then be multiplied by an individual district’s ADM to
determine that district’s allocation of funds. The first step was to identify the
educational mission Wyoming had chosen, which came to be called the “basket of
goods and services,” that must be available to all Wyoming school children and
which the legislature codified as a list of core knowledge and skill areas. Wyo. Stat. Ann.
§ 21-9-101(b) (LEXIS 1999). The second step was to identify the
instructional components necessary to deliver the prescribed goods and
services. In
the third step, MAP was to determine the cost of the various components
required, and the final step was the development of any adjustments which would
be necessary for particular districts or students.
[12] To determine the components of the
delivery system, MAP relied upon professional literature, advice from
professional associations, effective practices in other states, the professional
judgment of groups of expert Wyoming educators randomly selected from various
sized schools and school districts, and its own professional judgment. From all this
information, MAP developed prototypical model schools capable of delivering the
“basket” of educational goods and services required by the legislature. These model schools
were to be the tools necessary to calculate the per pupil cost of educating
Wyoming students.
[13] MAP then set out to accomplish the most
difficult part of its task – determining the cost of providing the various
components of the delivery system. It attempted to determine what providing the
“basket of goods and services” should cost a school
district in Wyoming. Over 80 percent of the school district costs are for
personnel, primarily classroom teachers. To determine what it should cost to
provide those classroom teachers, MAP looked at the counties where the greatest
competition existed for professional jobs, Albany and Laramie. Teacher salaries
in those counties were slightly lower than the statewide average. MAP chose the
higher statewide average of $20,573 as the starting teacher salary for the
model.
Statewide average increases for advanced education and greater experience
were then added to the beginning salary for a total prototype salary of
$31,758. The
average salary figures used by MAP were based upon the 1996-975 school year.
[14] The MAP study was presented to the
legislature in 1997 with four computer simulations of various funding scenarios
including Example 3 (MAP 3) which was the result of consultation with the
Wyoming experts concerning class size and the required number of teachers. MAP 3 was not
funded by the legislature, and to do so would have cost an additional
$75,000,000.6 The budget actually adopted by the
legislature resulted in fewer teachers and larger classrooms for middle and high
schools than provided for in the MAP 3 model.
[15] Following the 1997 legislative session,
various school districts and the Wyoming Education Association (WEA) filed suit
challenging the constitutionality of the legislature’s actions. The trial court
held the MAP model was based on a valid cost of education study and the state
carried its burden to prove the level of funding for elementary schools was
adequate to deliver the required educational goods and services to those
schools.
However, the court expressed concerns that numerous technical adjustments
contained in the model were not cost-based. In addition, the court concluded the state
had failed to carry its burden of proof that funding for the middle and high
schools was adequate to deliver the required “basket.” Consequently, the court
found the system, in part, unconstitutional. The court, in recognition of the
legislature’s continuing work, reserved ruling on several issues including
capital construction, which was not included in the MAP effort, pending the 1998
special and budget legislative session. The deadline for the completion of the
capital construction portion of the financing system was extended to July 1,
1999.
[16] Additional legislation was enacted
during the 1998 special and budget legislative session which addressed the
budget for middle and high schools, the small school adjustment, and other
technical adjustments. A second trial commenced, which was in essence a
continuation of the first, with most of the same parties involved. A coalition
of small school districts, satisfied with the legislature’s actions, had reached
a settlement with the state.
[17] Following the trial court’s initial 1997
finding that the funding for the middle and high schools failed to meet the
constitutional standard for providing the necessary funding for the full
“basket” as determined by the legislature, two developments occurred. First, the
legislature increased funding for middle schools from $5,770/ADM to $6,174/ADM
and for high schools from $6,050/ADM to $6,405/ADM. See Wyo. Stat. Ann. § 21-13-309(m)(ii) (LEXIS
Supp. 2000); 1997 Wyo. Spec. Sess. Laws ch. 3, § 303; 1998 Wyo. Sess. Laws ch.
2, § 701; 1999 Wyo. Sess. Laws ch. 110, § 102. This resulted in slightly more teachers and
smaller class sizes than the 1997 legislation. However, the class size remained larger, and
the number of teachers remained smaller, than MAP 3.
[18] Second, the legislature conducted the
Wyoming Education Funding Adequacy Study in March 1998 in an effort to
demonstrate the funding was adequate. A panel of professional educators from around
the region was selected, specifically excluding any Wyoming educators. The educators were
divided into teams and generally asked to review the resources contained in MAP 3, the 1997
legislation funding (HEA 2), and the 1998 legislation funding (SEA 2) to
determine if the basket could be successfully delivered to every student. The
teams were told to make numerous factual assumptions including the assumption
that salaries were adequate to attract and retain qualified faculty. All the teams
concluded that each of the resource levels provided adequate funds to deliver
“the basket.” Importantly, however, they uniformly manipulated the
models to add funds in some categories at the expense of others and decreased
class sizes by adding additional teachers to the models. The same exercise
was conducted in 1999 to consider the increased funding provided by the
legislature that year, with the same result.
[19] As additional evidence of the adequacy
of funding, the state argued the districts that were litigating were also fully
accredited under the existing financing. There was conflicting testimony by those
districts whether they individually believed they were fully providing the
“basket of goods and services” with existing financing.
[20] After the second trial, the trial court
concluded the constitution and the ruling in Campbell did “not demand perfection, but only that the
level of funding be reasonably calculated to deliver an adequate education to
students regardless of location.” After considering all the evidence, the court
found in general that “the State has met its burden of proving that the revised
school funding system is adequate to provide the basket of educational goods and
services to Wyoming’s students.” With regard to the technical issues and
adjustments, the trial court approved of some and held others
unconstitutional.
Those remaining before this court on appeal include:
1.
Kindergarten Error
[21] Both the MAP model and the funding
legislation for the 1998-99 school year contained an error in the ADM
calculation for kindergarten students. Kindergarten students were counted as full
ADMs rather than one-half ADMs, which had the effect of reduced funding. That error was
corrected in the 1999 budget. Wyo. Stat. Ann. § 21-13-309(m)(i), (p), (s)
(LEXIS Supp. 2000).
The school districts claim they were entitled to reimbursement for the
amount they should have received during the 1998-99 school year had kindergarten
students been properly included in the calculation. The trial court
held that, absent proof the shortcoming impacted the school districts’ ability
to deliver the “basket,” their claim was denied.
2.
External Cost Adjustment7
[22] The MAP models used cost data based on
the 1996-97 school year. The school districts contend the model was
outdated from the beginning, and the state contends other inclusions in the
budget, which were not required by the cost-based model, offset any
shortcoming.8
[23] Since the model is based on data from
past years, the trial court recognized inflationary cost increases will, at some
point, cause funding levels to become unconstitutionally inadequate. The legislature
addressed this problem in Wyo. Stat. Ann. § 21-13-309(r) (LEXIS Supp. 2000),
which provides:
(r) The joint appropriations interim committee shall submit
a recommendation to the legislature and governor, not later than November 1 of
each year, regarding whether an external cost adjustment should be made, and if
so, the amount of the adjustment.
Neither the legislature nor the governor is required to act
on such a recommendation. The joint appropriations interim committee recommended
that the school finance formula for school year 2000-2001 be adjusted 1.3
percent for new inflation. The adjustment was adopted pursuant to Wyo.
Stat. Ann. § 21-13-309(o)(i)(A) (LEXIS Supp. 2000), but the provision
specifically excluded any inflation adjustment for the years preceding the
2000-2001 school year. See §
21-13-309(o)(i)(A)(II). The trial court recognized that at some point
the failure to adjust for inflation would cause schools to be unable to deliver
the full “basket,” but concluded that point had not yet been reached.
3.
Small School Adjustment
[24] All parties agreed some type of small
school adjustment is warranted because small schools face higher fixed costs per
ADM than larger schools and cannot take advantage of economies of scale assumed
in the model.
In the 1997 process of developing the prototypes, MAP recommended a
graduated adjustment because the marginal costs decline with the increase in
students. For example, as students are added to a base of 30 for elementary
schools, the cost of providing an adequate education declined from approximately
$9,000 per ADM to approximately $6,000. These adjustments are made for elementary
schools (K-8) of 200 or less and high schools (9-12) of 400 or less. In these small
schools, additional adjustments are provided to fully reimburse the actual costs
of student activities, food services, and utilities. The trial court
concluded the evidence did not support the state’s position that these
adjustments were based upon actual cost differences, the legislature had
consistently ignored its own experts on this point, and the small school
adjustment was unconstitutional. Although the trial court agreed a small
school adjustment is necessary to assure equality in education despite school
size, it held such adjustments must reflect actual additional costs.
4.
Small School District Adjustment
[25] Neither the original MAP report nor the
1997 legislation provided for a small school district adjustment, and the MAP
expert testified such an adjustment was not justified by the data. However, prior to
the 1999 legislative session, the small school districts proposed adjustments
(known as the “small school settlement”) in exchange for their withdrawal from
the litigation.
After modification by MAP experts, the proposal, ultimately adopted by
the legislature, provided adjustments for small school districts which were
defined as those with 1,350 ADM or less. Wyo. Stat. Ann. § 21-13-328(a) (LEXIS
1999).
Qualifying districts receive $50,000 for each attendance center in
addition to the one in which the district office is located. Wyo. Stat. Ann. §
21-13-328(b) (LEXIS 1999). For districts with less than 900 ADM, an
additional amount is provided for administration and additional funds are
provided for maintenance and operations costs for districts with fewer than
1,100 ADM.
Wyo. Stat. Ann. § 21-13-328(c), (d) (LEXIS 1999). The trial court
determined that the state did not establish these adjustments were
cost-based.
5.
Funding for Special Needs Students
[26] The 1999 legislation made adjustments
allowing additional funds based on a concentration of certain special needs
students in a district. The challengers claim that these adjustments
are not cost-based and consequently result in either underfunding or no funding
at all the actual costs of educating these students.
a. Limited English Speaking Students – Wyo. Stat. Ann. §
21-13-325 (LEXIS 1999)
[27] If a district has a concentration of
limited English speaking students equal to or in excess of 5 percent of its
total ADM, it receives 15 percent more funding than the model provides for that
grade level for each identified student. No evidence was provided to indicate what
additional costs are actually incurred due to higher concentrations of limited
English speaking students.
b.
Economically Disadvantaged Students – Wyo. Stat. Ann. § 21-13-322 (LEXIS
1999)
[28] If a district has economically
disadvantaged students (measured by those enrolling in the federally subsidized
lunch program) in excess of 150 percent of the statewide average, it receives
$500 per economically disadvantaged student. The challengers contend the enrollment is not
an accurate measurement of economically disadvantaged students, particularly at
the middle and high school levels, the 150% trigger is arbitrary, and the
additional $500 per student funding was not cost-based.
c. Gifted and Talented Students
[29] No specific adjustment was made for
gifted and talented students. MAP contended the model adequately provided
funds for those students by assuming that 3 percent of the student population is
gifted and providing an additional $9 per ADM.
[30] The trial court found, while none of
these adjustments was based on actual cost data, they were the product of
professional judgment and, as such, were adequate. The court also
relied upon MAP’s contention that the small class size in its model would allow
the flexibility to deal with these special needs students as well as
behaviorally disordered students.
6.
Seniority Adjustment
[31] Wyo. Stat. Ann. § 21-13-323 (LEXIS
1999) provides an adjustment for teacher seniority based on the aggregate years
of experience the teachers in the district have for the prior school year
multiplied by the statewide average annual increase in salary for the designated
base year of 1996-97.
The school districts contend this adjustment does not reflect the actual
cost for the district, which is correct. However, the trial court concluded that every
district was treated the same and subjected to the same fiscal controls and the
seniority adjustment did not violate the constitutional restrictions.
[32] No adjustments are made for seniority
for classified and administrative staff. The trial court concluded these items should
be dealt with like all components which will experience inflation, recognizing
at some point unadjusted funding will prevent the districts from fulfilling the
constitutional mandate but that point had not yet been reached.
7.
Regional Cost Adjustment
[33] Pursuant to MAP’s recommendation, the
legislature provided a regional cost-of-living adjustment to be applied to the
model. Wyo.
Stat. Ann. § 21-13-309(o)(ii) (LEXIS Supp. 2000), provides as follows:
(ii) The amount, after the adjustment under paragraph
(o)(i) of this subsection has been made, shall be further adjusted for regional
cost of living differences. The adjustment for regional cost of living
differences shall be based upon the Wyoming cost-of-living index, with the
medical component omitted and with the housing component included but modified
by excluding the price for rental of shelter subcomponent, as computed by the
division of economic analysis, department of administration and information
under rules promulgated by it with respect to the methodology under which the
index shall be computed. The version of the index used shall be the
average of the six (6) consecutive semi-annual index reports completed by
January 1 prior to the school year for which it is to be used.
The statute is based on the WCLI which provides data on 140
commodities throughout the state weighted based on the percentage of individual
income spent on the item. Housing represents 40.9 percent, and the
shelter portion of the housing component is over 30 percent, of the total 100
percent. MAP
recommended removing the rental of shelter and medical portion of the
index. It
rationalized that, if housing were more expensive, districts would be located
where other amenities exist and a full housing adjustment would overcompensate
teachers. The medical costs were excluded from the index because monies to cover
health insurance costs were included in the salary/benefits component of the
model. The
trial court disagreed and concluded that regional cost-of-living adjustments
were appropriate but the modified index was inappropriate, did not accurately
reflect the actual disparity in the cost of hiring teachers in various locations
throughout the state, and was unconstitutional.
8.
Special Education and Transportation
[34] In 1999, the legislature provided an
adjustment of the cost of special education and transportation, which reimbursed
the districts for 100 percent of the amount actually expended during the
previous school year.
Wyo. Stat. Ann. § 21-13-321(b) (LEXIS 1999). However, if the
ratio of special education or transportation spending to total district spending
increases, the state reduces the funding by “the excess which is over one
hundred percent (100%) but less than one hundred ten percent (110%).” Section
21-13-321(b)(ii)(C).
That reduction is then refunded to the districts during the succeeding
year if the Department of Education (DOE) “finds those excess expenditures were
necessary to provide essential special education services for the school year in
which they occurred.”
Section 21-13-321(b)(ii)(D). The court concluded this approach was
acceptable even though it did not provide full reimbursement in the same year
and found “administrative oversight does not constitute a penalty. Nor does the delay
deprive the district of the ability to deliver the basket to special education
students.”
9. Other
Adjustments
[35] The school districts also complain
there were no adjustments for the actual cost of vocational and technical
education, extra-duty pay, additional education for certified personnel, and
routine maintenance.
Again, the trial court found these items were either considered in the
development of the model or were not significant enough to result in a
district’s inability to deliver the “basket of goods and services.”
[36] In conclusion, the trial court found
the small school adjustment, the small school district adjustment, and the
regional cost-of-living adjustment unconstitutional and the balance of the 1999
revised school finance system constitutional.
[37] The legislature finally enacted
legislation in the 1999 general session regarding the financing of capital
construction of school facilities. In the 1999 trial, two school districts9 and the WEA challenged the constitutionality of
the statutory system for financing capital construction. The trial court
granted judgment for the plaintiffs at the close of the state’s case and found
the system unconstitutional.
[38] The primary source of revenue for major
capital facilities renovation and construction is the sale of bonds paid for out
of mills levied against a school district’s assessed valuation. The Wyoming
Constitution prohibits a school district from bonding beyond 10 percent of the
assessed value of the school district. Wyo. Const. art. 16, § 5. Prior to Campbell, the statutes provided two mechanisms to
assist counties with low assessed valuations in financing needed school
facilities.
First, a mill levy supplement program allowed the “equalization” of mills
after two mills were levied. The result was that any additional mills were
equalized to the level of 100 percent of the statewide average per ADM. No one contends
that this provision enhanced the funds available to the poorer counties. The provision only
allowed districts to pay off their bonds more quickly and thereby eased the
effect of the constitutional limit. Second, the state had a grant fund to provide to needy
districts so long as they had reached 80 percent of their bonding capacity. However, those
funds were often diverted into the foundation program and were wholly
insufficient to address the needs.10 Despite those two
provisions, the court in Campbell found the system
unconstitutional.
[39] In 1999, the legislature responded to
Campbell by continuing the mill levy supplement
program and revising the grant program. Districts must now reach 90 percent of their
bonding capacity and demonstrate that the proposed capital construction projects
will remedy or replace facilities which have been determined to be not only
“inadequate” but also “in need of immediate capital construction.” Wyo. Stat. Ann. §
21-15-111(c), (e) (LEXIS 1999). Districts with sufficient local wealth can
construct capital facilities without meeting the definition of “inadequate” or
“immediate need.” The statute also required the DOE to adopt regulations setting
certain standards for capital facilities, conduct an assessment of capital
construction needs, and define “deficient facilities.” Wyo. Stat. Ann.
§ 21-15-107 (LEXIS 1999). If a facility is deemed “inadequate” and “in immediate need,” the DOE reports the same to
two legislative committees which must make recommendations to the governor and
the legislature who then may or may not act to appropriate funds. Section
21-15-107(h), (k).
The trial court held this system did not address the constitutional
infirmities struck down in Campbell.
Submission Subsequent to Oral Argument
[40] Subsequent to oral argument, the state
submitted a memo discussing Article 15, Section 17 of the Wyoming Constitution
as “additional authority” to address information it quotes from the Legislative
Service Office.
The challengers responded and claimed this was an attempt by the state to
present additional evidence rather than additional authority and requested this
court to ignore the memo. We agree with the challengers and decline to
consider the memo.
[41] “When a trial court in a bench trial
makes express findings of fact and conclusions of law, we review the factual
determinations under a clearly erroneous standard and the legal conclusions de novo.” Rennard v.
Vollmar, 977 P.2d 1277, 1279 (Wyo.
1999). A
finding is clearly erroneous when, although there is evidence to support it, the
reviewing court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed. Hopper v. All Pet
Animal Clinic, Inc., 861 P.2d
531, 538 (Wyo. 1993). Stated in the alternative: “[A] determination
that a finding is against the great weight of the evidence means a finding will
be set aside even if supported by substantial evidence.” Id.
[42] Because education is a fundamental
right and our citizens are entitled to equal protection under our state
constitution, all aspects of the school finance system are subject to strict
scrutiny, and statutes establishing the school financing system are not entitled
to any presumption of validity. The standard of review has been clear for
almost 20 years.
Among other valuable lessons, Washakie teaches that this court will review any
legislative school financing reform with strict scrutiny to determine whether
the evil of financial disparity, from whatever unjustifiable cause, has been
exorcized from the Wyoming educational system. Washakie, 606
P.2d at 335.
The triggering issue in Washakie was
wealth-based disparities; however, we now extend that decision beyond a
wealth-based disparity to other types of causes of disparities.
Because the right to an equal opportunity to a proper
public education is constitutionally recognized in Wyoming, any state action
interfering with that right must be closely examined before it can be said to
pass constitutional muster. Such state action will not be entitled to the
usual presumption of validity; rather, the state must establish its interference
with that right is forced by some compelling state interest and its interference
is the least onerous means of accomplishing that objective. Miller v. City of Laramie, 880 P.2d 594, 597 (Wyo.
1994).
The level of scrutiny to be applied was decided in 1980 in
Washakie. The evidence of this trial concerning the
interaction of the various finance components revealed the necessity that the
system as a whole be reviewed under one level of scrutiny.
Campbell, 907 P.2d at 1266-67.
[43] While the state concedes that strict
scrutiny is the standard to be applied to the general structure of the system of
fund allocation, it argues that the details of that system, or the inputs and
adjustments to the MAP model, need only meet the rational basis test requiring
the challengers to prove harm. We disagree. This court plainly recognized in
Campbell “the interaction of the various finance
components revealed the necessity that the system as a whole be reviewed under
one level of scrutiny.” 907 P.2d at 1267. The interdependence
of the various components is even more prominent under the revised system, which
relies upon a model literally built upon those components. The state suggests
an inconsistency exists within the trial court’s order finding the MAP
cost-based model constitutional while not a “perfect” system of measuring costs
and yet questioning individual adjustments as not cost-based and, therefore,
unconstitutional.
We do not observe any such inconsistency. The trial court’s conclusion was simply that
the model was capable of providing the “basket” of goods. That conclusion
certainly does not logically foreclose a simultaneous conclusion that individual
adjustments resulted in unacceptable disparities in funding not based upon
cost. The
existence of acceptable disparities based upon costs in a constitutional system
does not mean, as the state suggests, all disparities are then cost-based. While perhaps no
longer dependent on wealth differences alone, disparities under the MAP model
may be due to political decisions or a failure to adequately measure differences
in cost because of time constraints or gaps in the data, and those reasons are
no more acceptable than wealth differences.
[44] The state argues that Lincoln County School District No. One v. State, 985
P.2d 964 (Wyo. 1999), stands for the proposition that the rational basis test
should be used to determine if the details of the school finance system result
in a cost-based system. The issue in that case was whether the
statute allowing wealth-based discrepancies to continue during the transition to
the new financing system should be reviewed on a rational basis rather than
strict scrutiny standard. We held that transitional funding did not
interfere with educational rights because it allowed funding above costs to continue for a time. Here we are
considering whether or not a permanent system is funding the actual cost of
education. If
it fails to do so, the constitutional right to an equal and adequate education
is obviously compromised, and the strict scrutiny standard is appropriate.
[45] The legislation is not entitled to a
presumption of constitutionality and withstands the test of strict scrutiny only
if, when a disparity in funding is proven, it can prove that a compelling state
interest justifies the disparity and the methods chosen to protect that state
interest result in the least possible limitation upon the constitutional right
in question. Campbell, 907 P.2d at 1266.
The state bears the burden of proving funding disparities
are cost-justified or a compelling reason justifies disparity. Where the evidence
establishes funding and spending disparities unjustified by educational cost
differentials, the challengers are not burdened with proving disparity of
educational quality or educational opportunity; those disparities are
presumed.
907 P.2d at 1276. We hold this test
applies to the complete system for distribution of funds for operating public
schools as well as for construction of the necessary facilities in which to
operate them.
DISCUSSION
I.
Operation Financing
[46] Following this court’s decision in Campbell, the legislature retained the services of MAP
to assist the state in developing a school finance distribution model which
would purportedly assure adequate resources were distributed, with any
disparities in funding based solely on cost, to provide a proper education for
every child in Wyoming. To do so, MAP proposed, in its response to
the Request for Qualifications issued by the legislature, it would first be
necessary to determine the cost of the delivery of the goods and services
contemplated by the “basket” in each economic region of Wyoming by going
“shopping” for them.
MAP contemplated the “shopping” as follows:
“Shopping” in this context will involve determining salary
and other compensation rates for professionals with training and experience
comparable to teachers, counselors, administrators, etc., wage rates for
classifications of employee skills utilized by school districts (e.g.,
craftspersons, secretaries, and food service workers), and the costs of
consumable items and services used by schools (e.g., petroleum, instructional
materials, utilities, selected maintenance and repair items, food).
[47] However, MAP did not undertake that
effort.
Apparently concerned about the cost and time necessary to obtain the
information, MAP chose instead to determine the “costs” to be included in the
model based on statewide averages of past school district expenditures and
professional judgment. Those costs would then be adjusted to reflect
differences in student populations and cost of living throughout the state. This
approach raises three fundamental questions this court must resolve to uphold
the constitutionality of the system. First, can a system which attempts to
estimate the actual cost of education, rather than measure it, meet the standard
established by Campbell? Second, does MAP’s
approach accurately estimate the actual costs a school district should incur to
deliver the educational system deemed adequate by the legislature? A corollary of this
second issue is whether the disparities from district to district are based upon
differences in accurately estimated costs or mere arbitrary assumptions. If the answer to
the first two questions is in the affirmative, the final question arises: Did the legislation
actually adopted adequately fund those estimated costs?
[48] With regard to the first question, it
seems to us that actual measurement of the costs, “shopping” in the words of
MAP, would have been far preferable. Certainly, such an approach would have
avoided many of the complex questions and confusion presented in this litigation
and would have minimized the need for our scrutiny of the system. However, we cannot
say reliance on professionally developed estimates, based upon sound evidence
including average past expenditures, results in an unconstitutional system. In addition, even
the challengers do not argue the use of a model as a proxy for the cost of
education is, in and of itself, improper. Consequently, we conclude the cost-based
model approach chosen by the legislature is capable of supporting a
constitutional school finance system. Surprisingly, we note the model has resulted
in a similar magnitude of funding disparities as existed with the old
wealth-based system.
Prior to the new legislation, schools experienced an $8,133 per student
difference between the highest and lowest funded districts. Today, the same
districts (Sheridan County School District No. 3 which is the highest district
and Park County School District No. 6 which is the lowest district) experience
even a larger disparity of $10,016.11 Supposedly, this
disparity is now due to cost differences and not wealth differences. That conclusion can
only be tested by strict scrutiny of the reasons for those differences in per
student funding which is a task we are constitutionally obligated to
undertake.
[49] The second question is much more
difficult to answer.
The challengers argue a system built upon average past expenditures is
necessarily flawed because the existing system was declared unconstitutional
and, they argue, was already inadequately funding education. However, while Campbell concluded
the old system had resulted in unconstitutional disparities between districts,
absent was a holding that the system, as a whole, was underfunding
education.
Certainly, some districts were underfunded as a result of low assessed
property valuations.
At the same time, other districts were “wealthy.” The record in this
case does not compel the conclusion that statewide average costs would
necessarily fall below the cost of providing a constitutionally sound education.
[50] While the situation is not ideal, MAP
and the legislature had to start somewhere and trying to “shop” the actual costs
of a system not yet fully implemented has as many inherent problems in attaining
accuracy as does use of existing expenditures in a system currently delivering
an education not deemed, as a whole, adequate. In general, we conclude use of past statewide
average expenditures to estimate the cost of education was appropriate.
[51] This leads us to the third question as to the adequacy of
the legislation in funding the estimated costs.
In addition to holding the constitution requires an equal
educational opportunity for all Wyoming children, this court, in Campbell, held our constitution commands the
legislature “to provide and fund an education system which is of a quality
‘appropriate for the times’” and that command goes
well beyond simply allowing the legislature to dispense a
minimal level of elementary and secondary education and then fund it as
best it can amidst other competing priorities. Supporting an opportunity for a complete,
proper, quality education is the legislature’s paramount priority; competing
priorities not of constitutional magnitude are secondary, and the legislature
may not yield to them until constitutionally sufficient provision is made for
elementary and secondary education.
. . . The constitution requires it be the best we can do.
907 P.2d at 1279. This court made it clear it is the job of the
legislature to “design the best educational system by identifying the ‘proper’
educational package each Wyoming student is entitled to have.” Id. Almost all states’ highest appellate courts
have considered challenges to school finance systems, and eighteen have
concluded that the finance system was either unequal or inadequate, or both,
under their state constitutions. Arizona, Ohio, and New York revisited and
overturned decisions upholding school finance systems. Unlike the majority
of states which emphasized additional funding, equalized funding, or basic
education, Wyoming views its state constitution as mandating legislative action
to provide a thorough and uniform education of a quality that is both visionary
and unsurpassed.
To that end, this court required the legislature to consider education as
a paramount priority over all other considerations and has identified class
space, class size, teacher quality, and local innovation
as factors critical to its determination that the legislature is providing a
quality education.
Campbell, 907 P.2d
1238; Washakie, 606 P.2d
310; see also Joseph S. Patt,
School
Finance Battles: Survey Says? It’s All Just a Change in Attitudes, 34 Harv. C.R.-C.L. L.
Rev. 547, 548-49 (1999); Campaign for Fiscal Equity, 2001 WL
96215. Based
upon the expert testimony in Campbell, we identified
some aspects of a quality education, which included small classes and low
pupil/teacher ratios for both rural and urban schools and ample, appropriate
provisions for at-risk students and talented students. We are now faced with the
difficult and unwelcomed task of determining whether the funding adopted by the
legislature in 1999 meets the constitutional standard of the “best we can do.”
[53] After the trial court found in the
first trial the state had not carried its burden of proving the funding for the
middle and high schools met the constitutional standard, the state undertook two
different studies with panels of out-of-state experts to prove the funding,
although less than MAP would have provided, could be deemed adequate to deliver
the “basket.”
Eighteen
out-of-state experts were utilized to remove any bias and were told they
were undertaking a theoretical exercise without identifying the location of the
schools. They
were divided into four panels13 and
asked: “Granted a fixed level of
resources but with the freedom to use those resources as you see fit, can you
design and staff a program that you believe would successfully deliver the
basket to every student?” Each team received three different “fixed levels of
resources,” the resources contained in MAP 3, the 1997 legislation
funding (HEA 2), and the 1998 legislation funding (SEA 2). They were provided the legislative
list of the skills and knowledge areas constituting the “basket” but were
not provided Wyoming’s graduation standards, which are to be phased in over the
next five years.
Instead, they used varying curriculum standards from schools with which
the panel members had experience.14 The fourteen assumptions imposed
are critical to evaluating the relevancy of the conclusions because some were
not consistent with the Wyoming legislation. Those inaccurate assumptions included: l)
assume all special education costs were fully reimbursed when there is a year
delay in those reimbursements; 2) assume all transportation, utilities, and food
services were fully reimbursed when such reimbursement is also subject to a year
delay in certain circumstances or unless the small school adjustment applies; 3)
assume salaries are adequate to attract and retain qualified employees when that
is disputed if unadjusted for inflation; and 4) assume the district was free to
shift resources among categories in any way when none of the categories in the
prototype model is funded above cost.
[54] Each panel concluded the funding at
each of the three funding levels was adequate, but each panel also added
teachers to reduce the class size. Given the
theoretical nature of the exercise, the inaccuracy of some of the assumptions,
and the conclusion that more teachers and smaller class sizes were necessary,
the adequacy panels can hardly be considered unequivocal endorsements of the
adequacy of the 1999 funding system. We conclude the adequacy reviews are of
little probative value.
[55] This court has no desire, nor is it our
constitutional responsibility, to pass judgment on each line item of the funding
model. Those
are legislative choices for which the legislators are accountable to their
respective constituencies. However, the fundamental question of what is
an education “appropriate for the times” is a constitutional one that we must
answer. The
state cites no authority requiring this court’s constitutional inquiry to end
upon blessing of the model without examination of its inputs. Our discussion in
Campbell regarding the application of the doctrine
of separation of powers to this issue is equally relevant today.
Constitutional provisions imposing an affirmative mandatory duty upon the
legislature are judicially enforceable in protecting individual rights, such as
educational rights.
Although this court has said the judiciary will not encroach into the
legislative field of policy making, as the final authority on constitutional
questions the judiciary has the constitutional duty to declare unconstitutional
that which transgresses the state constitution. When the legislature’s transgression is a
failure to act, our duty to protect individual rights includes compelling
legislative action required by the constitution.
In school reform litigation, defenders of the funding scheme routinely
advance the argument that the judiciary’s determination of the nature and extent
of the constitutional right to a quality education violates the separation of
powers doctrine.
That argument was aptly answered by the Kentucky Supreme court:
The judiciary has the ultimate power, and the duty, to
apply, interpret, define, construe all words, phrases, sentences and sections of
the Kentucky Constitution as necessitated by the controversies before it. It is solely the function of the judiciary to so do. This duty must be
exercised even when such action serves as a check on the activities of another
branch of government or when the court’s view of the constitution is contrary to
that of other branches, or even that of the public.
Rose v. Council For Better Educ. Inc., 790 S.W.2d 186, 209 (Ky. 1989). Our proper role is
interpreting the meaning of the language of §§ 1 and 9 of Art. 7 in order to
determine the duties those provisions impose upon the legislature.
Campbell, 907 P.2d at 1264 (some citations & footnote
omitted).
[56] The state has argued strongly that
decisions concerning the level of funding for the school finance system are a
matter for the legislature upon which the court cannot encroach. The complexity of
the block grant model system chosen by the legislature forces this court to
scrutinize all aspects of the system because, if one assumption fails, many
others are jeopardized. For this reason we now consider whether the contested
components accurately reflect the cost a school district should incur to provide
that component.
A. Teacher
Salaries
[57] By far, the most expensive component of
any education system is personnel, primarily classroom teachers. The record
demonstrates those costs reflect 80 percent of the total. Consequently, the
estimate of this component cost deserves the closest scrutiny.15 If it cannot be
concluded that the estimate of teacher costs reflects the actual cost of the
teachers necessary to deliver the basket, the system cannot be constitutional.
There are two
aspects to estimating these costs, the number of teachers needed and the
appropriate salary to be paid to those teachers. The trial court found that the method of
determining the teacher salary component of the MAP model was acceptable and
described it as follows:
25. Because there is only one purchaser of teacher
services, MAP determined the price of hiring a new
teacher, typically with little or no experience, by studying the most
competitive market in the state for professionals with similar educational
qualifications. This market is in Albany and Laramie Counties.
26. MAP compared the beginning teacher salaries
offered by the three school districts in these two counties with the statewide
average or mean starting salary. The beginning salary in Albany and Laramie
Counties was slightly lower than the statewide average. MAP chose to use the
higher figure, the statewide mean starting salary of
$20,573.00, for the model.
27. To the average starting salary ($20,573.00),
MAP added the average increase due to advanced education ($1,796.00), and the
average increase due to greater experience ($9,389.00) for a total of $31,758.00
as the cost per teacher in the prototypical model.
28. The “mandatory benefits” for teachers, principally social security and Medicare
taxes, are added to this figure, as is the cost of health insurance. For teachers, these amount
to $6,034.00 and $3,641.00 respectively, as shown in the elementary, middle, and
high school prototypical models.
[58] The numbers used for the component were
based upon 1996-97 school district expenditures. At that time, Wyoming’s starting salary
compared favorably with other states in the region.16 Extensive evidence
in the record indicates recruiting and retaining teachers is becoming more
difficult not just in Wyoming but also nationally,17 and certain
communities in Wyoming may have more difficulty given the economic reality in
their area.
The use of a statewide average salary equalizes the previous disparity by
supplementing the salary component for those districts that had lower than
average salaries.
The districts with higher than average salaries would presumably have
paid higher salaries because of a higher cost of living, and, while the model
would initially reduce their salary component to the average, it would
ultimately adjust it upward based upon the regional cost-of-living adjustment.18 The allocation to
each district is then adjusted to account for increases in teacher seniority
above the statewide average used in the salary component. Districts whose
seniority increases over time receive additional funds. Likewise, districts
whose teachers’ seniority decreases will experience a reduction in funding. This adjustment,
while revenue neutral to the state, has the potential to put additional pressure
on individual districts which experience large numbers of teachers retiring in
the next few years.
Theoretically, as those teachers are replaced with more junior ones, the
total salary costs of those districts should decrease.
[59] The number of teachers needed to
deliver the “basket” was also determined as part of the salary component of the
model. The
number of students per class dictates to a large degree how many teachers will
be necessary.
Class size is the biggest driver of education costs. At the same time,
no other factor has been identified as more important to the quality of
education than class size.
The evidence demonstrates that class size has an effect on
student outcomes, and that smaller class size can boost student achievement,
particularly among at risk children. The advantages of small classes are
clear. A
teacher in a small class has more time to spend with each student. Fewer students mean
fewer administrative tasks for each teacher. Student discipline and student engagement in
the learning process improve in smaller classes.
Campaign for Fiscal Equity v. State, 2001 N.Y. Slip Op. 21051, 2001 WL 96215, at *35 (N.Y.
Sup. Jan. 9, 2001).
[60] MAP identified an experiment conducted
in Tennessee in the 1980s which systematically varied class size and which MAP
described as “one of the most powerful findings in all of instructional
research.” The
Tennessee Student Teacher Achievement Ratio (STAR) project was a landmark study
of the effect of class size on student achievement. 2001 WL 96215, at
*36.
The STAR project demonstrated that there is a significant
causal relationship between reducing class size and improving student
achievement.
The effects were positive and durable, particularly for students who
started in the smaller classes in kindergarten and stayed in them for 3-4
years. Such
students continued to perform at a higher level on average than those students
in the large class sizes.
Id.
In the study, one group of elementary classes had 15 students, and a
control group had 22 students and a teacher aide. Students in the small classes experienced
substantially higher achievement and continued to experience that higher
achievement several years after elementary school. MAP’s
recommendations included what it, in consultation with Wyoming educators,
believed were appropriate class sizes (MAP 3),19 and those
small class sizes were relied on as an important element of a quality education
throughout the development of MAP’s funding recommendations. In creating the
simulations for review by the legislature, MAP also developed a slightly
different class size/teacher number scenario (MAP 4), which its experts opined
was capable of delivering the basket.
[61] According to the MAP report, increasing
class size by only one student saved $12 million. Leaving the class size decision ultimately up
to the legislature, MAP stated, “the essence of the decision facing the
Legislature in this case is a determination of the most cost effective class
sizes Wyoming can now afford, considering its total resources and competing
priorities.”
[62] The challengers contend the legislation ultimately adopted
did not follow either the MAP 320 or MAP 4
approaches and utilized larger classes and fewer teachers in the distribution
formula. They
are correct. A
comparison of the two MAP prototypes (MAP 3 based on input from Wyoming
educators), the 1997 legislation after the governor’s veto, and the 1999
legislation follows:
Middle School
Number in Class
20
21
23
21
Number of Teachers
17.5
16.7
15.2
17.7
High School
Number in Class
17
19
22
21
Number
of Teachers 41.2
36.8
31.8
33.3
[63] The legislature did not fully embrace
either the MAP 3 or MAP 4 prototype. The elementary school model was funded
basically pursuant to the MAP 3 model. However, the high school model reduced
teachers from the MAP 4 model by three and a half and increased the class size
by two.
Considering the revenue deficits the state believed it was
facing in the years 1997-99, the legislature’s motivation to shave the
recommended class size and avoid the corresponding costs is understandable. However, if its
approach fails to provide a proper education as commanded by the constitution,
this court cannot condone the result. The difficulty both this court and the
legislature face is determining how small the class sizes should be to assure a
constitutionally adequate education.
[64] At the 1999 trial, Dr. James Guthrie, a
principal of MAP, testified that, since MAP began work in Wyoming, the per pupil
increase in funds through the development of the school finance formula had, by
the 1999 legislation, provided Wyoming educators with sufficient resources to
offer an “extraordinary [and] indeed [a] superior quality of schooling for the
students in this state.” Dr. Guthrie was asked if there was a proper
range for classroom sizes in middle schools and high schools and whether the
class sizes adopted by the 1999 legislation were appropriate. He responded that,
as opposed to the scientifically verified benefit of small elementary school
class sizes, no such research existed with regard to middle schools and high
schools.
However, it was his professional opinion that a class size of 21 for the
higher grade levels would clearly be within the acceptable range and would
enable a teacher to provide a proper education. The challengers provided no evidence to
demonstrate the class size of 21 would prohibit the delivery of a proper
education.
[65] At this time, there is a lack of
scientific data to support a specific class size range for middle schools and
high schools.
The evidence in this record indicates the class sizes adopted in the 1999
legislation were not unreasonable. That is not to say that any further deviation
from the MAP 3 or MAP 4 models would be tolerated. It only means that,
based on the information and evidence available today, the middle and high
school class sizes do not appear to be unreasonable. We anticipate the
statewide assessment processes being developed by the DOE, namely WyCAS, Terra
Nova, and the National Assessment of Educational Progress,21 will likely provide regular
insight into the adequacy of the class sizes and the system’s continued ability,
or lack thereof, to deliver the basket.
[66] A conclusion that the teacher salaries,
as computed by the MAP model and as driven by class size, are reasonable is
supported by the record. However, this conclusion must be
qualified. The
MAP experts contend the system must be reviewed on a regular basis to ensure
continued cost-based components which permit delivery of the basket.
Additionally, witnesses for both the state and the
challengers testified to the looming teacher shortage crisis caused by one-third
of teachers who will be retirement-eligible by the year 2004, significantly
fewer graduates seeking teaching positions, and the aggressive recruitment of
Wyoming teachers by other states offering considerably higher salaries and
benefits.
Already, Wyoming is documenting the failure to receive any applications
to fill teaching positions in art, music, health, math, counseling, speech
pathology, psychology, and administration. The legislature does not have the luxury of
waiting until the crisis fully materializes before taking the action necessary
to remain viably competitive regionally and nationally. During the 1999 trial, Dr. Guthrie testified that, in order
to keep the model current, every five to six years the legislature must
undertake a procedure to reexamine the model components to ensure their
sustained validity.
Therefore, we hold that, in order for teacher salaries, which comprise 80
percent of the total cost of education, and the school financing system as a
whole to maintain cost-based validity, the legislature shall conduct a review of
the components in 2001 and at least every five years. If, during the
course of such a review process, evidence becomes available which indicates
class sizes should be adjusted in order to provide Wyoming children with the
best education available, the legislature shall act accordingly.
[67] An additional qualification on the
sufficiency of teacher salaries is required. Dr. Guthrie also testified at the 1999 trial
that, in order for the model to remain cost-based, an external cost adjustment
for inflation or deflation, as warranted, must be applied on an annual or, at a
minimum, biennial basis. The external cost adjustment is to be
discussed at some length in the pages which follow, but, suffice it to say, if
teacher salaries are not adequately adjusted for inflation in keeping with our
holding on the external cost adjustment, they will no longer be constitutionally
cost-based.
For these reasons,
as qualified, we conclude the trial court’s determination that the state met its
burden of proving the revised system adequately provides for teacher salaries is
not clearly erroneous and affirm its decision.
B. Other
Salaries
[68] Salaries for administrators, including
superintendents and principals, are based on statewide averages. The average
salary bears no relationship to the size of the school
or district or to the relative responsibilities of the employees. The formula provides compensation for a superintendent in
the smallest district at the same rate as the superintendent in the largest district,
despite greatly different responsibilities. Unlike the teacher salary component,
the formula fails to provide any form of seniority
adjustment for administrators or increase due to
additional degrees or educational units, notwithstanding the fact that such adjustments are the
accepted practice of Wyoming school districts. The effect is
that the compensation for administrators’ salaries bears little relationship to
the actual costs incurred by any Wyoming school
district and results in funding disparities for which the state has shown no
compelling state interest.
[69] A similar approach is taken with
classified personnel such as aides, clerks, and operation and maintenance
personnel, with similar problems resulting in unacceptable disparities. We reverse the
trial court’s decision to the contrary as clearly erroneous and hold that
administrative and classified salaries should be adjusted in a fashion similar
to teacher salaries to account for differences in experience, responsibility,
and seniority.
We further hold these changes shall be implemented no later than July 1,
2002.
C. School
District Operations
[70] Costs of maintenance and operation,
which include utility costs, are incorporated in the model based upon 1996-97
statewide averages per pupil relying again upon past expenditures by Wyoming
districts. MAP recognized that a better estimate of this cost component could be
achieved through a system based on the age and condition of the district’s
buildings rather than enrollment and suggested that a combination of per pupil
costs and square footage would be the most accurate manner to approximate actual
costs.
However, MAP concluded that reliable information upon which to calculate
such an adjustment was not available.22 It recommended the
data be collected and in the interim an average per pupil number be utilized
because “it is unlikely
that the proposed formula will work an undue hardship on school districts for
the period of time required to gather the necessary information.” If there is one
truth we have learned throughout the history of the educational funding issue,
it is that we cannot predict how long it will take for the legislature to
correct disparities.
On its face, this component is not based upon the real and necessary
costs of maintenance and operation of the state’s schools. Many of these
costs, utilities in particular, are not subject to the direct control of the
districts and are unavoidable. Other programs should not suffer in order for
districts to cover these costs. We reverse the trial court’s decision and
hold this component must
be adjusted either by development of a formula which uses enrollment
measured by ADM, building square footage, and number of buildings in the
district or by reimbursement of actual costs subject to state oversight.23 This change shall
be implemented no later than July 1, 2002.
D.
Transportation and Special Education
[71] Pursuant to Wyo. Stat. Ann. §§
21-13-320(b) and 21-13-321(b) (LEXIS 1999), special education and transportation
costs are funded at 100 percent of a district’s previous year’s actual
expenditures.
However, the legislation provides that, if the ratio of spending on
either of these two categories to total district spending increases, the amount
of funding received for that category will be reduced by “the excess which is
over one hundred percent (100%) but less than one hundred ten percent
(110%).” Wyo.
Stat. Ann. §§ 21-13-320(e)(iii) (transportation), 21-13-321(b)(ii)(C) (special
education) (LEXIS 1999). The following year, the DOE shall increase
the amount the district receives by the amount reduced the previous year if the
excess expenditures are found to be necessary to provide special education
services or transportation operations for the school year in which they
occurred. Wyo.
Stat. Ann. §§ 21-13-320(e)(iv) (transportation), 21-13-321(b)(ii)(D) (special
education) (LEXIS 1999).
[72] The school districts contend the 10
percent withholding limitation represents an arbitrary limit on reimbursement of
actual costs incurred in providing essential educational services. However, districts
experiencing an increase in spending will receive funding for the increase once
they demonstrate to the DOE that these expenditures were necessary to provide
services during the school year. Id. There is no limit
upon the reimbursement of necessary transportation or special education
expenditures.
The legislation only requires that significant increases in expenditures
be justified.
Given the full reimbursement of legitimate expenses and the relatively
small percentage of the budget these items represent, this does not amount to an
infringement upon the right to an adequate education. We affirm the trial
court’s holding which stated that the special education and transportation
reimbursement “is not a constitutionally actionable penalty.”
E.
Adjustments for Characteristics of Student Populations
[73] As MAP explained:
Some number of students in every school district present
extraordinary educational challenges that frequently require services of a
nature or quantity that imply extra costs. . . .
The proposed Cost Based Block Grant Model has embedded
within it a strategy for meeting the challenges presented by students with
special characteristics.
Critical to the assessment of whether these adjustments for
students who present special challenges are cost-based is the underlying
principle that MAP built into the model of “small schools, small classes,
teaching specialists, and professional development resources for teachers.” If the classes and
schools remain small, MAP contends the adjustments are adequate and represent
the reasonable additional costs schools will incur to deal with these
students. It
is interesting to note that MAP makes no mention of any additional costs that
may be incurred by schools which are much larger than the prototypes. Most Wyoming
students attend schools that are much larger than those assumed in the
prototype.24
1.
Special Needs Students
[74] Certain types of students require
additional instruction which results in higher than average educational
costs.
Generally, special needs students are those considered to be “at risk”
students and gifted and talented students. At-risk students include economically
disadvantaged youth (EDY) and limited English speaking students (LES
students).25 MAP and the
legislature concluded additional funding was needed to allow Wyoming schools to
properly deal with students at-risk of failure. At-risk students require specially tailored
programs and more time spent on all aspects of academic endeavor in order to
improve their academic achievement. The primary need of schools with
concentrations of these students is increased adult attention in the school
setting. The
record contains no evidence of any effort to determine either the actual
expenditures of Wyoming schools or the cost schools should incur when dealing
with at-risk
students appropriately.
[75] In the 1997 order, the trial court
determined the number of students who have applied for and are qualified to
receive federally subsidized free and reduced priced lunches, used in
legislation as an indicator of EDY, was questionable and the trigger for the
additional funding was arbitrary.
Using such lunch counts, particularly at the secondary
levels, may under count the number of economically disadvantaged youth if, for
varying reasons, they do not take advantage of the federal program. The formula for
eligibility for such adjustment is an arbitrary 150% of the statewide average
per district.
No adjustment is provided for school
districts that have 149% of the statewide average
and complete adjustment is made for anyone with more than 150%.
[76] The trial court similarly found that
the adjustment for LES restricts reimbursement to an arbitrary cutoff
point. It
reserved ruling on these issues while the legislature reviewed this
problem.
However, in the 1999 order, the trial court upheld the EDY and LES
adjustments even though there was no change in those adjustments and no new
evidence to indicate the allocations were cost-based. The trial court was
apparently convinced that the MAP model made accommodations in other areas, such
as smaller class sizes, and therefore the EDY and LES adjustments were
constitutional.
We reverse, and our conclusion is supported by the trial court’s 1997
findings.
[77] In addressing EDY, the model provides
$500 for each student enrolled in the free and reduced lunch program in school
districts where the concentration of these students is equal to or greater than
150 percent of the statewide average. Schools with 149 percent of the statewide
average and schools with students at risk for reasons other than the need to
enroll in the free lunch program receive no additional funding. This formula
cannot, and does not, represent the real and appropriate cost of educating
EDY. The
testimony of Laramie County School District No. One in this case is painfully
similar to its testimony over five years earlier in Campbell. Then, the
school district received only half of the $1.2 million required to fund the
costs of its alternative high school, an undisputedly appropriate method of
dealing with at-risk students, leaving the rest to be deducted from other
programs.
Under the new system, Laramie County’s situation remains unchanged. Not only is the EDY
adjustment not cost-based, its completely arbitrary 150 percent trigger results
in dramatic differences in funding even among districts that border each other
and, consequently, are likely to have similar student characteristics. While use of the
free lunch enrollment may serve as a partial proxy by roughly identifying EDY,
it fails to capture students equally at-risk for other reasons. MAP rejected other
measures such as identifying low achieving students by arguing it would reward
failing schools.
While that argument may have superficial appeal, it ignores the reality
that a large concentration of low achieving students causes increased costs.26
[78] The amount of the supplement for EDY is
likewise arbitrary and admittedly not based on the cost of the full range of
at-risk programs.
Instead the $500 figure was based upon the approximate cost per student
of a program called “Success for All” which was aimed at improved reading at the
elementary level.27 While this program
may be one appropriate method for dealing with at-risk elementary school
children, relying on it exclusively ignores the needs of the full range of
at-risk students. The record contains no evidence concerning the cost of dealing
with economically disadvantaged middle or high school youth which, we can
assume, requires more than enhanced reading programs and may necessitate
programs and services such as alternative schools, after school programs, and
additional security.
[79] Similar issues are raised with the
formula for supplemental funding of the costs incurred in educating LES
students. When
certain concentrations of these students occur in a district, extra resources,
such as bilingual aides and teachers, are needed. Without any evidentiary support, MAP
recommended additional funding where such students exceed 20 students per grade
level or 25 percent of the schoolwide ADM. Then, based upon experience in Connecticut,
the funding was proposed and adopted at 1.15 times the number of identified
students, or approximately $900 per student. Given the lack of evidence that $900 reflects
the actual additional costs and the relatively small amount of funding likely to
be required to cover those costs, actual reimbursement of identifiable,
legitimate, state-approved costs, such as bilingual teachers, more appropriately
meets the standard established in Campbell.
[80] The state’s response to the obvious
problems with these formulas repeats MAP’s mantra that small schools and small
class sizes are already contained in the model and are the most recognized
method for dealing with at-risk students. The state further contends
that schools are free to use their block grants to add more teachers and create
smaller classes.
This argument wears fairly thin when it is always conditioned upon the
caveat that the model, and its class sizes, was only a recommendation to the
legislature which was free to, and did, adopt somewhat larger classes and fewer
teachers.
Further, even the state agrees no other components of the models were
overfunded, which leaves the schools without any real option but to take funds from other
programs. To do so would damage those same programs by reducing their funds
below cost.
[81] The problems in developing a formula to
accurately capture the true cost of adequately dealing with at-risk students
seem insurmountable.
If so, the legislature must assure that schools are fully reimbursed for
the funds necessary to educate at-risk students with the most effective and
current methods possible. No one can argue the urgent need our society
faces to minimize the failure of students and the increased social costs that
unavoidably follow.
We hold the adjustments for funding EDY and LES students result in
disparities in funding which are not justified by any compelling state interest
and which do not reflect the cost of adequately educating these students. The state is
directed to fund the actual and necessary costs of EDY and LES students, subject
to state oversight.
Although we do not foreclose the possibility of the state in the future
developing an accurate formula with which to distribute adequate funds in lieu
of direct reimbursement, for the above stated reasons, accomplishing that task
will not be easy or swift. Until that time, we cannot allow the needs of
at-risk students to be ignored or other students to be denied a complete
education because a school’s funds must be diverted to address those needs.28 We do not foreclose
the possibility that some portion of the actual costs may be covered by the $500
EDY supplement and the 15 percent LES supplement and do not prohibit the use of
those formulas for partial funding. These changes shall be implemented on or before July 1,
2002.
[82] Finally, the challengers argue the
funding for gifted and talented students is arbitrary and attenuated from actual
costs. MAP
recommended, and the legislation provides, additional funding so that gifted and
talented students’ potential may be realized. The state provides an additional $9 per total
ADM to fund gifted and talented programs. This amount is based upon the “assumption
that three percent of the entire student population is comprised of gifted
students.”29 Over time,
society’s view and the views of educational researchers concerning intelligence
and giftedness have changed. There is no objective definition of
“gifted.”
Rather, a broad measure of intelligence has been recognized. Where there used to
be a “unitary construct in which gifted students were believed simply to have
more of what everyone else had,” there is now a “more refined definition[]
. . . where giftedness is seen as multi-dimensional.”30 The significance of
this shift in the definition of giftedness is that “[t]here is an emerging
consensus in the field that efforts should move from a focus on nurturing the
talents of a few identified students to programs that aid to seek out and
develop talents in as many students as possible.” Students who are educated using methods
focusing on the talent development of as many students as possible have been
shown to perform as well as or better than students who have been taught in more
dated and conventional gifted and talented programs.
[83] MAP recommended Wyoming revise its
program due to the modern view of giftedness, and MAP recommended a “modest
increase” in statewide funding for gifted and talented students. Ultimately, the
legislature provided more than double the amount recommended by MAP.
[84] The gifted and talented program, which
existed prior to the new legislation, provided that districts could identify up
to 3 percent of their students as gifted and receive up to $150 per student or a
prorated amount assuming the state’s $350,000 limit had been exceeded. The new statute
results in approximately $450,000 being appropriated for gifted students, but it
is distributed on an ADM basis and results in approximately $9 per ADM. There is a net
increase in funding distributed on an equitable basis. While this court
may have reached a different result concerning how much money is enough to allow
gifted students to develop their maximum potential, that judgment is the
prerogative of the legislature. No evidence exists in the record to support a
finding that this approach does not meet the standards of the constitution.
2.
Vocational Education
[85] No adjustment is made for the
admittedly higher costs of educating vocational students. The state contends
those costs are contained within the assumptions in the model for numbers of
teachers and costs of equipment and supplies. However, those amounts were based
on statewide average expenditures, which necessarily resulted in penalizing
schools with extensive vocational programs. Moreover, the trial court determined in its 1997 order:
“There are higher costs associated with the provision of vocational and
technical training in Wyoming schools, and there is no provision in the
prototypical models for funding those higher costs.” However, without
any change in the model to adjust for vocational and technical training, the
trial court upheld the absence of a vocational adjustment in its 1999
order. We
reverse the trial court’s 1999 holding as being clearly erroneous and base our
conclusion on the record evidence from both the 1997 and 1999 trials which is
consistent with the trial court’s 1997 findings.
[86] The elimination of disparities required
by Campbell did not anticipate the reduction in
existing programs.
Vocational and technical training is included in the legislature’s
“basket of educational goods and services.” MAP has admitted “[i]t is generally accepted
in the education community that vocational education is more expensive to
provide than other forms of instruction.” What has traditionally made vocational
education more costly than academic education are relatively smaller classes and
the need for more costly equipment and supplies. We hold that, in order to provide vocational
and technical training, the actual costs of providing vocational teachers and
equipment must be examined, included as a line item in the MAP model, and funded
accordingly.
These changes shall be implemented on or before July 1, 2002.
3.
External Cost Adjustment/Inflation Adjustment
[87] The cost figures in the most current
legislation do not account for inflation since 1996-97. Both MAP and the
trial court recognize the obvious. There will undoubtedly come a time when inflationary cost
increases render the funding levels inadequate to deliver the basket. The legislature
addressed this problem in § 21-13-309(r), which provides:
(r) The joint appropriations interim committee
shall submit a recommendation to the legislature and governor, not later than
November 1 of each year, regarding whether an external cost adjustment should be
made, and if so, the amount of the adjustment.
Of course, neither the legislature nor the governor is
obligated to act on such a recommendation, if made.
[88] In this regard, the only inflationary
adjustment since at least 1996-97 has been the adoption of § 21-13-309(o)(i)(A),
which provides 1.3 percent for new inflation effective for the 2000-2001 school
year, but specifically excludes any inflation adjustment for the years preceding
the 2000-2001 school year. See §
21-13-309(o)(i)(A)(II). The tough question for both the legislature
and this court is when and how should inflation adjustments be made in order to
ensure the finance system is consistently cost-based. Wyoming teacher
salaries now rank 42nd in the nation. Salaries actually being paid by districts are
now 6 percent to 40 percent greater than the salaries within the statutory
prototype. By
pure force of logic, it is evident the 1996-97 salaries which were found to
adequately reflect the cost of teachers at that time have not been held constant
by the funding contained in the statute and are now significantly below costs.31 While we agree that
the lack of an internal, automatic cost adjustment in the statute may not in and
of itself render the system unconstitutional, without such adjustments,
legislative inaction appears inevitable, and, ultimately, funding of education
will be below cost in contravention of the constitution.32
[89] As previously noted, MAP advised the
legislature that teacher salaries must be inflation-adjusted on an annual or, at a minimum, biennial basis and that the
model components must be thoroughly reviewed every five to six years to ensure
continued cost-based validity. Therefore, we hold that the legislature shall
conduct a review of all the components every five years to ensure that funding accurately reflects the actual costs
school districts are paying because of current market or economic
conditions.
Because the numbers contained within the model and codified in the
statute are based on actual 1996-97 costs, an inflation adjustment is
overdue. Four
years have passed, and only a 1.3 percent adjustment has occurred which does not
reflect the actual inflation during those four years. Based on the
state’s own evidence in this record and common sense, we cannot condone that
result.
[90] This court does not relish the idea of
reviewing this matter on a continuing basis in perpetuity and is quite sure the
legislature does not desire that result either. As long as the state continues to rely upon a
cost of education model based upon historic actual costs to determine the
appropriate funding for schools, regular and timely inflation adjustments are
essential to funding the real cost of education. We adopt the opinion of the state’s experts33 and hold that
the model and statute must be adjusted for inflation/deflation every two years
at a minimum.
Given the acceptance of all parties of validity of the WCLI, adjustments
made consistent with that index will be presumed to be adequate. If other methods of
adjustment are chosen by the legislature, they must be structured to assure
quality of education remains adequate. It will be of great assistance to this court
and all interested parties if the adjustment is adopted as a separate component
of the model which would avoid the potential confusion, as occurred in this
case,
whether
adjustments to the model for other reasons should be considered as
inflation adjustments. The model and statute must be adjusted for
inflation no later than July 1, 2002, and each biennium thereafter so long as a
cost of education model using historic costs is relied upon for the basis of
education funding.
The amount of the adjustment required will depend, obviously, on the
timing of the adjustment.
[91] Because teacher quality is critical to
providing a constitutional education and all parties recognize the looming
national problem of a teacher shortage, the legislature is also directed to
monitor the supply of qualified teachers and take appropriate action should
national conditions continue to worsen to the detriment of Wyoming schools. It is unacceptable
for essential teaching positions to remain unfilled or to be consistently filled
by unqualified applicants.
4. Adjustments for
School Characteristics
[92] MAP and the legislature also recognized
the model needed adjustments to accommodate differences in schools due to size
and location which impact their costs of education. The question we
must resolve is whether the adjustments are based on actual differences in cost
or whether they represent unconstitutional disparities in funding.
a)
Small School
Adjustment
[93] Recognizing that small schools had
certain fixed costs spread over fewer ADMs, all parties acknowledged the model
probably failed to fund smaller schools at their actual cost of operation. A small school
adjustment was provided consistent with the MAP study.34 The statute
provides that a small school’s allocation shall be adjusted as specified in “the
cost of education study, dated April 1997, and the spreadsheet provided by the
consultant performing the study related thereto, both of which are on file in
the legislative service office.”35 Wyo. Stat. Ann. §
21-13-309(s) (LEXIS Supp. 2000) These incremental adjustments were apparently
based upon MAP’s calculation of the difference between the ADM unit value
generated by the original MAP model and the “small school” ADM unit value. The
small school ADM unit value was determined by MAP, without any detail provided
in its report, multiplied by the small school’s ADM up to the 200 and 400 ADM
threshold at which point the original model takes over. Theoretically, this
adjustment, if the “small school” ADM unit value accurately reflects the small
school’s costs, would result in small schools being fairly reimbursed. In the interim
between 1997 and 1999, MAP visited small schools throughout Wyoming and
recommended changes to the legislature. At the same time, the small schools sought a
settlement of the litigation, and the legislation ultimately adopted reflected
that settlement.
[94] The revised statute provides for an
additional adjustment to the foundation allocation for small schools which
results in 100 percent reimbursement for utilities, food services, and school
activities.
Wyo. Stat. Ann. § 21-13-319(b)(i)-(iii) (LEXIS 1999). The state and the
small schools contend this second adjustment is necessary because these are
fixed costs over which the schools have little control.36 However, there is
no explanation why those costs are not included in the first adjustment which
supposedly reflects small school costs per ADM.37
[95] We agree with the trial court’s
conclusion that two problems arise with these adjustments. First, there is no
cost-based reason for the 200 and 400 ADM threshold at which the adjustments
apply. For
schools below the threshold, their actual costs were compared with the costs
assumed in the model, and, when a deficit was demonstrated, MAP and the
legislature concluded those schools’ costs were underfunded. No such comparison
was made for schools above the threshold, resulting in disparities in funding
not based upon costs.38 Schools with 201
ADM receive neither adjustment when schools with 199 do. Yet, the economies
of scale arguably continue above those thresholds. The trial court
found:
While Plaintiffs agree in principle with the concept of a
small school adjustment, they contend that the adjustment as enacted in the
legislation is not based on empirical data reflecting actual cost
disparities.
Plaintiffs’ expert levied the following criticisms at the adjustment:
The MAP analysis fails the cost-based and rational standard
on at least four counts: (1) it ignores scale economies for cost components
other than instruction and instructional support salaries and benefits; (2) it
sets an arbitrary limit on the maximum school size for which scale economies
apply (i.e., the MAP model implies that scale economies stop at 200 for
elementary and middle schools and 400 for high schools); (3) it does not fully
rely on actual data from Wyoming schools to estimate the relationship between
per unit costs and school size but rather uses an arbitrary scheme; and (4)
ignores the possibility of scale economies due to district size.
Plaintiffs’ criticisms are well taken. This court has been
unable to locate any evidence which supports the legislature’s determination to
selectively enhance funding for certain components or to cut off such
enhancements at the maximum school sizes. The legislation funds all necessarily small
schools as though their costs did not decline inversely as a function of school
size. . . . Moreover, the legislation assumes that a school of 201 ADM benefits
from economies of scale but that a school of 199 ADM suffers from diseconomies
of scale.
There is evidence that a small school adjustment which utilizes a
gradually declining enhancement would accurately compensate for the real
differences in the cost of education in small schools, but the state has
consistently ignored its own experts on this point. Although it is
readily apparent that a small school adjustment is necessary to protect the
state’s compelling interest in equality among the various schools, the state has
failed to show that the adjustments reflect the actual costs of operating small
schools.
[96] The trial court apparently did not
consider the spreadsheet admitted into evidence which does provide a gradual decrease in the
first adjustment as ADM increases. However, because of the finding that the 200
and 400 ADM limits, and other provisions of the adjustment, are arbitrary and
not cost-based, the court’s conclusion would not likely have been different had
the spreadsheet been considered by the trial court. We affirm the trial
court’s decision and hold the small school adjustment triggering mechanism is
not based upon evidence of cost differences and is, therefore,
unconstitutional.
[97] Further, the second adjustment which
provides additional supplemental funding in the form of full reimbursement of
utilities, school activity costs, and food service costs insulates small schools
from inflationary pressures while depriving large schools of the same
protection. This adjustment also results in a “double dipping” by small schools
for utility costs which were already considered in the operation and maintenance
component of the model. The state fails to show any compelling state
interest for this disparate treatment and instead argues the court should not be
concerned about this relatively small budgetary item.
[98] Certainly, a good portion of these
costs are largely beyond the control of all districts, and, because statewide
averages were relied upon to develop the model, these costs are underfunded for
some districts.
Rising costs in these areas, especially those currently being experienced
for utilities, places inappropriate pressure on the schools to “rob Peter to pay
Paul.” They
cannot choose to forego paying their utility bills. Instead, other
programs will suffer when those costs rise above the averages assumed in the
model. We have
already held that maintenance and operations costs, including utilities, should
be fully funded at least until and unless the state develops a formula that more
accurately captures actual costs other than the per pupil average used. Of course, such
reimbursement could be conditioned on such incentive programs to control costs
as are contemplated in the small school adjustment. In the area of
school activities, no explanation is contained in the record of why small
schools should not be subject to the average activity costs the same as large
schools except that their costs vary widely. However, that same variance exists for large
schools.39 Absent a compelling
justification for such disparate treatment, that portion of the adjustment is
unconstitutional.
Food service is presumed by MAP to be self-sustaining. However, it is
obvious such may not be the case in some schools. Again, the evidence is absent from the record
to support a conclusion concerning which schools are underfunded for food
services. We
hold the actual costs of student activities and food services for all schools,
both small and large, must be examined and compared to the MAP model. If the amount
allocated per ADM fails to cover actual costs, the difference must be funded.
These changes shall be implemented on or before July 1, 2002.
b) Small School District
Adjustment
[99] The trial court likewise found the
small school district adjustment lacked justification. The statutes
provide for districts with 1,350 ADM or less to receive an additional $50,000
for each remote attendance center, districts with 1,100 ADM to also receive
additional funds for maintenance and operations, and districts with 900 ADM or
less to receive yet additional funds for administration. Section
21-13-328(a)-(c).
The trial court found:
Neither the original MAP proposal nor the 1997 legislation
provided for a small school district adjustment. During the 1997 trial, Dr. James Guthrie,
speaking to the idea of a small district adjustment for MAP said,
We could not find any compelling justification for keeping
it. Earlier we
had been advised by – at public hearings [that] small districts experienced
diseconomies of scales at the districts and we wanted to genuinely explore the
consequences of that embedded in a small school district reimbursement
formula. But
the more data that we collected, the more observations that we made, the more
conversations that we had, the less justification that we could see for [a]
small school district reimbursement formula and, thus, dropped it.
MAP’s opinion regarding the necessity of a small district
adjustment did not change over time. In a February 17, 1998, letter, MAP’s Dr.
James Smith stated:
Most of the sources of diseconomies will have been
addressed when MAP’s recommendations regarding small school adjustments for
transportation, special education, utilities, student activities, and food
service are adopted.
While MAP concedes that there may be a theoretical case for a small
district formula, the data [sic] available at this time does not support any
further adjustment for these districts in Wyoming. Thus, based on the
best available evidence, MAP recommends that no small district adjustment be
adopted. We do
recommend that this issue be revisited in the future in light of valid and
reliable information.
Therefore, we recommend that the Department of Education collect and
analyze, over time, data aimed specifically at determining central
administrative costs associated with operating small school districts.
[100]
The challengers contend the small school district adjustment is based
upon incomplete and unreliable data and assumptions. The trial court
found those claims were valid given the fact the state’s expert recommended
against such an adjustment. No persuasive data supported either the ADM
cutoff or the $50,000 amount.40 Even if the data
relied upon were accurate as claimed by the small school districts, no attempt
was made to review data from the larger districts to determine if the cutoff
made sense. Certainly, large districts also have remote attendance centers. Yet
the statewide averages for administration costs were considered adequate for
them. Again,
disparate treatment of schools based upon arbitrary standards cannot be
justified. We affirm the trial court’s decision and hold the small school
district adjustment unconstitutional. If the legislature is convinced small school
districts are not properly funded, any adjustment must be based upon documented
shortfalls under the MAP model that are not equally suffered by larger
districts.
c)
Regional
Cost Adjustment
[101]
Given the geographic and economic diversity of the State of Wyoming, wide
ranges in the cost of living exist. The MAP model which is based upon statewide
average expenditures unavoidably resulted in estimated costs below those
actually experienced in some areas of the state. That result was constitutionally
unacceptable, and all parties recognized some form of a cost-of-living
adjustment was essential to the validity of the new funding system. While MAP never
“went shopping” as originally intended, it was understood the cost for
individual school districts to purchase the necessary components of the
education delivery system would be higher in some areas of the state than the
average expenditures.
Consequently, MAP recommended the foundation allocation produced by the
model be adjusted based upon the WCLI.41 As noted by MAP,
“[b]ecause this index has been developed for the purpose of administering the
state’s property tax system, it cannot be subject to any suspicion that its use
for purposes of education equalization is biased.” The broad
categories of items measured and their weighted relative importance to the
consumer are:
housing (40.9 percent), transportation (17 percent), food (15.8 percent),
recreation and personal care (13.2 percent), medical (7.1 percent), and apparel
(5.9 percent).
[102]
MAP recommended, and the legislature agreed, to exclude the medical
component of the index, modify the housing component to exclude the rental of
shelter subcomponent, and apply the remainder. Section 21-13-309(o)(ii). The medical portion
was eliminated because the cost of personnel as contained in the model includes
the cost for medical insurance. Although MAP recognized there were some
medical costs in addition to insurance, it concluded there were insufficient
time and resources to explore reweighting those costs for inclusion. Further, medical
costs represented only 7.1 percent of the total. MAP also recommended excluding the rental of
shelter component from the index because, it reasoned, differences in those
costs would be due to the relative desirability of various locations in the
state. If schools were able
to pay teachers more because of those higher costs, the result would be
overcompensation in desirable locations because the teachers would enjoy both
the “amenity” of living in those locations and higher pay.
[103]
As discussed above, the MAP model selected by the legislature allocates
funds to each district based upon statewide averages of the historic
expenditures of those districts. If we can assume districts were not paying
more for teachers than needed to attract and retain them,42 the
differences in teacher salaries across the state must necessarily be due to
differences in cost of living or other unique characteristics of a particular
location that required higher salaries in order to attract and retain
teachers. If a
high cost-of-living district necessarily paying higher salaries is allocated
funds based on average salaries, that allocation is not cost-based. Application of the
cost-of-living adjustment was an effort to more accurately represent the actual
cost of hiring personnel in a particular location.43 To exclude the
rental of shelter subcomponent of the WCLI is to presume a school district does
not have to offer a salary that allows teachers to afford to live in that
district. It
is only reasonable to presume that teachers, like the rest of us, will behave
over time in an economically rational manner and seek employment where they can
afford to live.
Consequently, to accurately reflect the cost of providing education, the
funding system must enable schools to pay higher salaries if required to by the
local economic conditions. Housing costs, like the cost of other
commodities, are driven by supply and demand. High demand, creating higher prices, may be
caused by the quality of life a location provides or economic growth fueled by
external forces such as the energy booms with which we in Wyoming are so
familiar. A
school funding system, 80 percent of which represents personnel costs, which
ignores that economic reality cannot be cost-based.44
[104]
We question the logic of the state’s position that a district’s
subjective “amenity value” can be accurately quantified and conclude it should
not be considered an element of compensation. The record does not contain any evidence
which would support an attempt to quantify cost differences based on a
subjective amenity value. Many would consider communities like Lander,
Sundance, or Cody to have tremendous amenity value yet the cost of living in
those communities is below the state average. High housing costs in communities impacted by
energy development may have little to do with amenities but instead reflect high
demand. The
focus must be upon what it reasonably costs a district to attract and maintain
quality teachers.
Therefore, we reject the use of an amenity value.
[105]
The trial court held removal of the housing and medical components from
the WCLI “undermined its validity,” and the state failed to prove the amenity
value of a location corresponded to the housing component of the index. The court
recognized that whatever method was chosen by the legislature to reflect
regional differences need not be perfect but must be a “reasonably comprehensive
measure of those differences.” We affirm the trial court and hold
§ 21-13-309(o)(ii) unconstitutional and order statewide average salaries
must be adjusted for the full cost-of-living differences using either the entire
WCLI or another reasonable formula which includes a full housing component,
including the rental of shelter costs, and a medical component to cover costs not
included in the benefits portion of the salary component. This change shall
be implemented on or before July 1, 2002.
d) Kindergarten
Error
[106]
The trial court found:
Both the MAP prototype and the school funding legislation for the 1998-99
school year contained an error in the ADM calculation for kindergarten
students.
Kindergarteners were counted at a full rather than ½ ADM, even though
they only attend school for half of the school day. “While it seems
counterintuitive, the ½ K correction actually increases funding per prototypical
ADM count because the numerator (expenditures) remains the same while the
divisor becomes smaller, thus reflecting the actual funding of ½ K ADM.” The 1999 revision
to the school finance system corrected the ½ K error by dividing the ADM for
each district’s kindergarten students by 2. W.S.A. § 21-13-309(m)(i), (p), and (s).
The school districts claim they are entitled to payment of
those funds which they would have been entitled to if the legislation had
properly accounted for kindergarten students during the 1998-99 school
year. Every
district was underfunded in varying amounts, for a statewide total of
$13,930,000.
In denying this claim, the trial court found the school districts had
failed to show harm.
This is an incorrect application of the strict scrutiny test burden of
proof, and that burden was in fact the state’s to show a compelling state
interest.
[107]
The state does not dispute the error or the underfunding but essentially
claims it is “water under the bridge” since that funding was for previous years
and awarding it now would result in overfunding. However, if no elements of the model are
overfunded, as Joseph H. Simpson, Deputy State Superintendent of Schools,
testified and as we believe is the circumstance, the money to supplement for the
kindergarten error had to come from some other school district fund whether it
was accumulated reserves or other components.
[108]
The school districts’ claim is not in the nature of a tort action,
precluded as essentially the state suing itself. Carbon County School
District No. 2 v. Wyoming State Hospital, 680 P.2d 773, 775 (Wyo.
1984). No
damages per se are being sought, merely those funds necessary to fully fund the
school districts and permit them to provide kindergartners with their
fundamental right to an education. Stated another way, the school districts seek
the funds which were necessary for the state to fulfill its obligation to
educate, as administered by the school districts. We have, heretofore, in this opinion provided solely
prospective remedies for the identified model adjustment deficiencies. However, the
kindergarten error is not like these other claims, it is not based on a
theoretical or legal dispute. It is an admitted mistake in calculation and
recordation at a legislative level. The claim is more in the nature of a request
for determination of correlative rights between state entities. Campbell County School District v. Catchpole, 6 P.3d
1275, 1287 (Wyo. 2000).
[109]
The state has the obligation to appropriate the necessary monies to fund
the educational basket. It does so through a model which has no
overfunded components. It acknowledged an error in the kindergarten
component computation which caused it to underfund school districts in
1998-99 for this component. The school districts, as the local agents of
the state charged with administration of the funds to supply the basket to
children, had to somehow absorb the state’s admitted failure to properly fund
the kindergarten component. Logically, these funds came from either
reserves or other components and thereby potentially endangered delivery of
other aspects of the basket. Shrugging off this failure of the state as
“water under the bridge” is wholly ineffectual and unacceptable.
[110]
We reverse the trial court’s denial of the claim and order the
legislature, on or before July 1, 2002, to make a one-time apportioned
supplement to fully fund each school district’s 1998-99 kindergarten component
cost, in the total aggregate amount of the $13,930,000 funding error.
II.
Capital Construction
[111]
The capital construction finance system remains unchanged in its
essential elements and continues to be tarred with the “same brush of disparate
tax resources.”
As a result, we affirm the trial court’s decision and hold the current
capital construction system to be unconstitutional.
[112]
Briefly, the state’s position is that the Wyoming legislature has
complied with what it interprets is required for the capital construction
finance system: no deficient facilities. Apparently relying on the state grant and
loan program, the state asserts that each and every school district in the State
of Wyoming has available for building construction or remediation the total
resources of the state to the extent needed to replace deficient
facilities.
According to the state, the capital construction financing reforms
provide for the equal treatment of all the state’s school districts, and
wealth-based classifications do not exist. Therefore, the state argues the trial court’s
determination should be overruled and the capital construction financing system
should be held constitutional.
[113]
In response, the school districts claim a comparison of the former
capital construction financing scheme to the current scheme demonstrates that
the state has made no substantive changes and has failed to eliminate local
wealth-based disparities. The school districts contend the evidence
presented in the record reveals that the unfunded capital construction needs of
school districts continue to mount, and the record supports the trial court’s
findings and conclusions.
A.
Funding
[114]
The state contends that the Campbell
disposition of capital construction was result-oriented and provided no guidance
to the legislature as to the means of accomplishing the result. The state claims
the legislature looked to local bonding as the solution because Hinkle plainly stated that “each school district,
acting separately, will have to provide financing for capital construction needs
through bond issues” and there can be no wealth-based disparity caused by bond
financing.
Accordingly, the state insists that this court has preapproved local
bonded indebtedness as the sole method by which to finance capital construction
without subsequent overruling in Washakie and Campbell. Hinkle is not
authority for this contention, and this assertion is incorrect. As this court has
stated during thirty years of jurisprudence in Hinkle, Washakie, and Campbell, Wyoming schools are the responsibility of the
state as a whole and must be financed by the state as a whole.
[115]
Since Hinkle, we have offered a number of
suggestions explaining how the legislature could achieve constitutional school
financing. Hinkle was a very simple case centering around Bairoil,
a rich school district. 491 P.2d at 1236. Bairoil had been
aligned with Rawlins because of its close proximity; however, a Sweetwater
County school district, in an effort to enhance its assessed valuation,
attempted to unify with the Bairoil school district. Under facts vividly
illustrating the harm of wealth-based disparities, Hinkle pointed out that relying upon local wealth to
finance a state school system was unconstitutional. 491 P.2d at
1237. With
much detail, Hinkle described the needed legislation
required to resolve the unconstitutional wealth-based disparities. 491 P.2d at
1238. The
state is correct that Hinkle did not disapprove of
bonds issued locally; however, Hinkle cannot be read
so simplistically as to believe that it limited capital construction funding to
local school district bonding. At an early stage, Hinkle recognized the inherent inequities of school
financing primarily dependent upon local wealth and declared it
unconstitutional.
Almost ten years later, this court again rejected these inherent
inequities in Washakie.
[116]
As Washakie noted, local real
and personal property taxes had remained the primary source of revenue for
school districts.
606 P.2d at 323. Washakie held that unconstitutional inequalities in the
educational opportunities available to Wyoming students were created when school
districts’ funding levels primarily depended upon local wealth. Noting that the
state constitution only limited bonded indebtedness,
Washakie stated that there is no constitutional
requirement that school buildings must be built by creation of debt. It offered for consideration the
option of a statewide reserve fund for building construction. 606 P.2d at
337.
[117]
Twelve years later, the situation remained unchanged, and Campbell reiterated this court’s constitutional
objections to the capital construction financing. At that time, an independent,
state-commissioned study (MGT study) reported the schools’ need for new
construction, renovation, and repair totaled $275 million, and the legislature
had designated a mere $5 million as capital funding. Campbell, 907 P.2d at 1274.
[118]
Campbell noted that, under the financing
statutes then in place, the primary source of revenue for major capital
facilities renovation and construction remained the sale of bonds paid for out
of mills levied against a school district’s assessed valuation. The constitution
prohibits a school district from bonding beyond 10 percent of the assessed value
of the school district. Wyo. Const. art. 16, § 5. Due to low assessed
valuation, five Wyoming school districts exceeded 100 percent of legal bonded
indebtedness, and less wealthy districts could not rely on bonds to finance
needed capital construction because total bonding capacity was far less than
needed funds.
At that point, bonding was futile.
[119]
Campbell determined that post-Washakie legislative changes, in actual operation, had
not removed the inequities from this vital part of the total educational
package. The
requirement of “statewide availability from total state resources for building
construction or contribution to school buildings on a parity for all school
districts” had been virtually ignored. Washakie, 606
P.2d at 337.
Capital construction financing was unavailable for many. Campbell, 907 P.2d at 1275.
[120]
Campbell reiterated that safe and efficient
physical facilities with which to carry on the process of education are a
necessary element of the total educational process and state funds must be
readily available for those needs. Id. Since 1971, this
court has rejected wealth-based disparities, and, since 1980, this court has
stated that deficient physical facilities deprive students of an equal
educational opportunity and any financing system that allows such deficient
facilities to exist is unconstitutional. Despite this, the state presents a capital
construction financing scheme that is fundamentally unchanged,
unconstitutionally wealth-based, and inadequate. Once again, we plainly state that any capital
construction financing system based primarily upon a school district’s assessed
valuation necessarily means that the financing system is primarily dependent
upon local wealth.
The disparities in local wealth will produce unconstitutional disparities
in educational opportunity if the school districts’ funding options are a
function of assessed valuation. Washakie’s many
recommendations had one aspect in common: change the financing basis from local wealth
to the “wealth of the state as a whole,” as permitted by the state constitution,
and collect revenues and redistribute them in a manner that ensures a
constitutional education is delivered in a safe and efficient facility. 606 P.2d at
336.
[121]
Since Campbell, the legislature has again
studied capital construction needs, and, as must have been expected, needs have
risen dramatically and now stand at over $565,000,000 along with over
$303,000,000 in deferred maintenance. More importantly, by the state’s own
assessment as well as the school districts’, the percentage of inadequate
facilities has risen and threatens the educational opportunity and quality of
yet another generation of school children.
[122]
The legislature failed to enact any changes in capital construction
financing legislation until 1999. That legislation required the DOE to
establish standards for adequacy for new construction and an assessment program
for existing facilities. Following assessment, school districts must
be notified when a building appears on the list and must report proposed
remedies back to the DOE. The DOE and its advisory committees notify
the legislature when school districts either cannot or will not remedy the
inadequacy because it has exceeded bonding capacity or voters refuse to pass
bonds for funding.
School districts can finance capital construction for deficient
facilities in immediate need through either bond issuance that may earn them a
state mill levy supplement for debt service45 or through a
lengthy, laborious application process for a state grant.46 A state grant is
available only if a district is at least at 90 percent of bonded
indebtedness.
The grant proposal is submitted to the governor and legislature for
consideration by the legislature with no assurance of approval. The state argues that, because the statutes require the DOE
to define and identify inadequate facilities and to make recommendations to the
legislature to eliminate those inadequacies, the statute makes the wealth of the
state available to all schools. This argument fails for two reasons. First, districts
which have not bonded to 90 percent, which is beyond their control, cannot
qualify despite proven need. Second, the statute lacks any plan or mandate
to assure legislative approval and ultimate funding. The record is
devoid of evidence that the legislature has funded or intends to fund the
undisputed deficiencies any time soon. Despite notice in 1998 in the MGT study that
needs exceeded $565 million, the DOE recommended only $54.6 million between 1998
and 2001 and only $30 million has actually been appropriated by the
legislature.
[123]
We perceive the state’s failure to reform the capital construction
financing system consistent with this court’s direction in Washakie and Campbell is
caused by the political difficulties created by such reforms. This situation,
perhaps as much as any other in our state’s history, underscores the need for
and wisdom of three separate and independent branches of government. It is the duty of
the judiciary to assure the mandates of our state constitution are followed even
if it is politically unattractive. We repeat our long held conviction that any
system that places the primary financial burden of providing constitutionally
adequate facilities on the school districts through local mill levy taxation and
local bonds is wealth-based and inherently inequitable. We again affirm
that the state bears the burden of funding and providing constitutionally
adequate facilities to school districts that provide an equal opportunity for a
quality education.47 To date, the
Wyoming legislature has limited school funding taxation to property taxes
although nothing prohibits it from imposing other taxation or revenue raising
mechanisms.
That decision, however, is the prerogative of the legislature.
[124]
Having made the decision to fund schools by property taxation, however,
the legislature is required by the state constitution to uniformly tax and
assess property.
Wyo. Const. art. 1, § 28; art. 15, § 11. Additionally, the taxation and revenue
provisions of the Wyoming Constitution limit taxation levies, bonded
indebtedness, and recapture amounts. Wyo. Const. art. 15, §§ 4, 5, 17; art. 16, §§
1, 3, 5.
Presumably because of these requirements and limitations, the present
school financing statutes require a 12 mill statewide levy, a 6 mill county
levy, and a 25 mill school district levy be imposed for funding of school
finance operations.
The levies are uniformly imposed by school district, meaning that each
school district imposes a minimum of 43 mills. The legislature, however, does not impose any
kind of statewide mill levy for capital construction financing. Since Washakie, the constitution was amended to authorize the
legislature to “recapture” 75 percent of revenues generated by the local 25 mill
school levy which exceeded an amount determined by formula.48 The capital
construction statutes contained in Wyo. Stat. Ann. §§ 21-15-105 to -112 (LEXIS
1999) do not direct that any recapture funds fund the state capital construction
account established in § 21-15-111, and the operations finance statute, Wyo.
Stat. Ann. § 21-13-102(b) (LEXIS Supp. 2000), appears to devote the local 25
mill school levy to school operations finance.
[125]
Instead, the present statutory scheme funds capital construction by
placing the financial burden primarily on school districts through bonded
indebtedness.
School districts have not imposed bonded indebtedness levies
uniformly. In
1998, fifteen school districts imposed no mill levies for bonding and interest,
and thirty-three imposed levies ranging from 1.2 to 17.48. Additional mill
levies are imposed which cause nonuniformity for the total number of school
district mills levied. Those totals range from a low of 43 total
mills levied to a high of 62.98 mills levied. We have recognized since Hinkle that this nonuniformity is directly caused by
disparities in local wealth and is therefore unconstitutional. In addition,
imposing the burden on the local school districts to tax locally to provide
“local enhancement” denies the poorer districts the
opportunity to fund “local enhancement,” as authorized by Campbell. Campbell did not
define the term but suggested that local innovations could become the standard
required for the state as a whole. Specifically, Campbell stated:
The constitution requires the legislature to create and
maintain a system providing an equal opportunity to a quality education. That system must be
a function of state wealth. Once the legislature achieves the
constitutional mandate of a cost-based, state-financed proper education, then
assuming the legislature has a compelling reason for providing a mechanism by
which local districts may tax themselves in order to enhance their programs in
an equitable manner, that appears to be constitutionally permissible. However, we inject
two notes of caution.
First, in Skeen, the two dissenting state
supreme court justices did not believe strict scrutiny permits a local
enhancement mechanism. Skeen[ v.
Minnesota], 505 N.W.2d [299,] 322 [(Minn. 1993)] (Page, Gardebring, JJ,
dissenting).
Second, local enhancement may also result in substantive innovations
which should be available to all school districts as part of a proper
education. The
definition of a proper education is not static and necessarily will change. Should that change
occur as a result of local innovation, all students are entitled to the benefit
of that change as part of a cost-based, state-financed proper education.
907 P.2d at 1274 (footnote omitted). Campbell discussed this concept after deciding the term
“local control” could mean only a “local role” in implementing a legislatively
defined proper education. Because school districts felt strongly that
state control might result in “dumbing down” the education provided to students,
Campbell defined the state’s standard as the “best we can do” and then provided for “local
enhancement” to ensure that deciding what a “proper” education was would remain
dynamic and continue to evolve.
[126]
Regarding capital construction, Campbell
clearly allows a school district to build facilities considered innovative or
world-class with money raised locally or by property taxes not subject to
recapture under the constitutional provision and
then leaves it to the legislature to ensure that type of local enhancement does
not ultimately create a disparity in equal educational opportunity. Campbell’s discussion about
a “local role” contemplated that, by requiring the legislature to define and
fund the “proper education,” the role of a local school district would
necessarily change from primarily deciding how to pay for the “proper education”
with inadequate funds to the new and necessary role of raising funding for
“local enhancement” in order to assure innovation.
[127]
The Wyoming Constitution does not prohibit the state from imposing a
statewide mill levy taxation level for capital construction, nor does it limit
the number of mills that can be levied for such a fund. Wyo. Const. art.
15, §§ 4, 15.49 It merely requires
that it be uniform.
Wyo. Const. art. 1, § 28; art. 15, § 11. Nothing in the state constitution prevents
the legislature from raising the entire amount needed of more than $565 million
for capital construction by enacting statutes imposing a new category of
statewide mill levy for capital construction at whatever level is required to
raise the desired amount of money, and, if it so desires, the legislature can
act within any time frame including raising all funding in a single year.
[128]
Seizing on one sentence in Campbell, the
state argues that the legislature’s only constitutional obligation is to adopt a
system that prevents “deficient” facilities. Although elimination of facilities deemed
deficient according to state standards would go a long way toward meeting the
constitutional mandate, equality of opportunity ultimately requires a rough
measure of equality of facilities over time. Having allowed the disparities and
deficiencies to develop over half a century, the legislature cannot
realistically be expected to cure them quickly, and prioritizing its efforts to
concentrate on truly deficient facilities is appropriate. However, all the
affected parties should not lose sight of the constitutional mandate of equal
opportunity, and any system ultimately adopted must be capable of providing
essentially equal facilities to all Wyoming’s school children over the long
term.
[129]
We hold the legislature must fund the facilities deemed required by the
state for the delivery of the “full basket” to Wyoming students in all locations
throughout the state
through either a statewide tax or through other revenue raising
mechanisms equally imposed on all taxpayers. Individual districts may fund
additional facilities deemed appropriate enhancements to the delivery of
education in their respective districts with locally raised revenues. The state must
assure that over time appropriate local enhancements are adopted as state
required facilities as the standards for an adequate education evolve. In addition, local
enhancements which are not appropriate as statewide standards must not result in
disparities in educational opportunities that deny students an equal education
“appropriate for the times” as required by the state constitution.
2.
Inadequacies
[130]
The legislature has financed two independent studies since 1995 that
identified capital construction needs. Following Campbell’s order that constitutionally adequate funding
be provided to remedy these needs, the legislature should have understood that
it was obligated to enact a resource allocation plan to rebuild Wyoming’s
schools over some reasonable period of time. It is insufficient to simply categorize and
prioritize unmet needs by DOE regulations and then place the financial burden
primarily on the school districts. The legislature is required to shoulder that
burden and fund those needs with statewide revenues.
[131]
As the trial court found, the current grant and loan program does not
address “inadequate” facilities nor does it ensure that even “emergency” or
“immediate needs” funding will be provided at all or in a timely manner. In other words, the
financing scheme has little relation to providing sufficient funds for what it
actually costs to provide constitutionally adequate facilities. In fact,
§ 21-15-107(c) requires the state superintendent to annually identify
school districts which are inadequate and in
immediate need.
As Richard H. Miller testified, in order for a project to qualify for aid
under § 21-15-107(e), the facility must be both inadequate and in immediate
need. This
effectively excludes all buildings which are deemed “inadequate” but do not
qualify as in “immediate need” from receiving state funds and, thus, fails to
place the wealth of the state at stake to remedy admittedly inadequate
facilities.
[132]
Pursuant to the DOE rules, a study by MGT scored all buildings in each
school district based upon various categories of capital construction
needs. Neither
the challengers nor the state complains that either the complex methodology used
to assess the facilities or the resulting assessment was flawed or
inaccurate.
The evidence was uncontroverted, and review of the assessment indicates
it sufficiently identified those educational facilities which were
deficient.
[133]
The DOE emergency rules in effect at the time of trial defined
“inadequate” facilities in part as having a score of 69 or below (based upon a
scale of 1-100) and “immediate need” facilities in part when scored “poor” or
lower which is defined as 49 or below. To illustrate the existing deficiencies, a
review of the scores for safety/building code systems compliance resulted in a
score of a 46.26 out of 100. Furthermore, a review of scores for
educational suitability50 identified 40
school buildings that scored a 49 or below, requiring $18,736,693 to remedy the
deficiencies.51 In addition, 138
buildings were identified with a score of 69 or below, requiring $52,666,525 to
remedy the deficiencies. The statewide average for technological
readiness52 was
determined to be 31.65 out of 100 despite the statutory requirement that schools
provide programs in applied technology and computer applications. Section
21-9-101(b).
Uinta County School District No. 4 received a technological readiness
score of a 2.4, and Park County School District No. 16 and Converse County
School District No. 2 each received a score of 10. To remedy those
facilities that are in immediate need in technological readiness would require
$26,475,754, and $31,982,542 would be required to remedy all facilities which
are deemed inadequate. A total of $84,649,067 is required to remedy the
facilities which have been found by the state to be inadequate and in immediate
need of repair in both categories of technological readiness and educational
suitability.
Additionally, the study identified $67,251,450 as necessary funding to
assure each school district will meet the required square footage standards
established by the DOE.53
[134]
We agree with the particular methodology used in the MGT study and
conclude that legislative adherence to the standards established by the DOE
rules, which rely on that methodology, is required to assure “[s]afe and
efficient physical facilities with which to carry on the process of
education.” Campbell, 907 P.2d at 1275. The following
tables illustrate the statewide overview of the needed repairs and renovations
by category:
EXHIBIT 9
NEEDED REPAIRS BY SEVERITY OF BUILDING CONDITION
STATEWIDE-ALL BUILDINGS
Categories
Subtotal Cumulative
Total
Replacement of Unsatisfactory Buildings (below 30)
$ 4,190,457 $ 4,190,457
Buildings in Poor Condition (30-39)
$
6,115,318
$ 10,305,775
Buildings in Poor to Fair Condition (40-49)
$
41,646,164
$ 51,951,939
Buildings in Fair Condition (50-59)
$
84,259,994
$136,211,933
Buildings in Fair to Good Condition (60-69)
$107,612,766 $243,824,699
Buildings in Good Condition (70+)
$121,055,140
$364,879,839
EXHIBIT 10
SUITABILITY COSTS BY CONDITION CATEGORY
Categories
Subtotal Cumulative
Total
Replacement of Unsatisfactory Buildings (below 30)
$ 5,335,590
$ 5,335,590
Buildings in Poor Condition (30-39)
$
3,411,313
$ 8,746,903
Buildings in Poor to Fair Condition (40-49)
$
9,989,790
$ 18,736,693
Buildings in Fair Condition (50-59)
$16,600,625
$ 35,337,318
Buildings in Fair to Good Condition (60-69)
$17,329,208
$ 52,666,525
Buildings in Good Condition (70+)
$46,080,850
$ 98,747,375
EXHIBIT 11
TECHNOLOGY COSTS BY TECHNOLOGY CATEGORY
Categories
Subtotal Cumulative
Total
Replacement of Unsatisfactory Buildings (below 30)
$16,605,706
$ 16,605,706
Buildings in Poor Condition (30-39)
$
5,410,211
$ 22,105,918
Buildings in Poor to Fair Condition (40-49)
$
4,459,837
$ 26,475,754
Buildings in Fair Condition (50-59)
$ 2,709,095 $ 29,184,849
Buildings in Fair to Good Condition (60-69)
$
2,797,693
$ 31,982,542
Buildings in Good Condition (70+)
$
2,251,010 $ 34,233,552
EXHIBIT 12
DISTRICTS AND GRADE GROUPINGS
WHERE GROSS SQUARE FEET PER PUPIL
IS BELOW STATE STANDARDS
County/District |
Type |
Existing
GSF |
GSF Per Standard |
Percent of Standard |
Amt. Where Below 75% of Standard |
Amt. Where Below 100% of Standard |
Albany 1 |
Middle |
155,649 |
191,800 |
81% |
|
$ 2,711,325 |
Converse 1 |
Elementary |
101,162 |
104,020 |
97% |
|
$ 214,350 |
Fremont 1 |
Middle |
56,000 |
64,575 |
87% |
|
$ 643,125 |
Fremont 25 |
Elementary Middle High |
121,802 86,104 194,102 |
163,940 128,975 214,620 |
74% 67% 90% |
$ 3,160,350 $ 3,215,325 |
$ 3,160,350 $ 3,215,325 $ 1,538,850 |
Goshen 1 |
Elementary |
89,800 |
93,380 |
96% |
|
$ 268,500 |
Laramie 1 |
Elementary Middle High |
856,753 470,396 514,227 |
1,049,300 574,350 598,290 |
82% 82% 86% |
|
$14,441,025 $ 7,796,550 $ 6,304,725 |
Lincoln 2 |
Elementary Middle High |
164,742 67,869 104,210 |
168,140 69,650 172,410 |
98% 97% 60% |
$ 5,115,000 |
$ 254,850 $ 133,575 $ 5,115,000 |
Natrona 1 |
Elementary Middle |
814,518 491,950 |
938,420 514,850 |
87% 96% |
|
$ 9,292,650 $ 1,717,500 |
Park 1 |
Elementary |
97,321 |
119,700 |
81% |
|
$ 1,678,425 |
Sublette 1 |
Middle |
22,365 |
26,775 |
84% |
|
$ 330,750 |
Sweetwater 2 |
High |
198,739 |
249,690 |
80% |
|
$ 3,821,325 |
Teton 1 |
Elementary Middle High |
113,154 81,196 105,340 |
127,400 92,400 127,890 |
89% 88% 82% |
|
$ 1,068,450 $ 840,300 $ 1,691,250 |
Washakie 1 |
Elementary |
97,790 |
111,300 |
88% |
|
$ 1,013,250 |
Totals |
|
5,005,189 |
5,901,875 |
85% |
$11,490,67554 |
$67,251,450 |
The following was taken from the statutorily required
report pertaining to the School Capital Construction Program submitted to the
legislature in November of 2000 by the state superintendent:55
NOVEMBER 2000
SCHOOLS IN IMMEDIATE NEED OF CAPITAL CONSTRUCTION
DISTRICT |
TOWN |
SITE NAME |
CONDITION |
Big Horn 4 |
Basin |
Hyatteville Elementary |
44.45 |
Campbell 1 |
Gillette |
Paintbrush, portable 1 |
49.00 |
Campbell 1 |
Gillette |
Twin Spruce Jr. High, portable 3 |
48.00 |
Campbell 1 |
Gillette |
Twin Spruce Jr. High, Parish |
47.88 |
Campbell 1 |
Gillette |
N.E. Vo-Tech main building |
41.82 |
Carbon 2 |
Saratoga |
Hanna Elementary |
45.43 |
Crook 1 |
Hullett |
Hullett K-12, main building |
44.95 |
Crook 1 |
Sundance |
Sundance Jr/Sr Little Red School House |
46.15 |
Crook 1 |
Sundance |
High School IV |
37.21 |
Fremont 1 |
Hudson |
Hudson Elementary |
n/a |
Fremont 1 |
Lander |
Lander H.S. |
n/a |
Fremont 38 |
Arapahoe |
Dist-owned metal building |
49.34 |
Goshen 1 |
Ft. Laramie |
Ft. Laramie middle school |
40.43 |
Goshen 1 |
Torrington |
S.E. Jr/Sr Old gym |
30.00 |
Goshen 1 |
Torrington |
S.E. Jr/Sr Red Brick School |
23.91 |
Goshen 1 |
Torrington |
Torrington HS Auto Mechanic Bldg. |
43.01 |
Johnson 1 |
Buffalo |
Buffalo HS |
48.34 |
Johnson 1 |
Kaycee |
Kaycee, 7-12 |
31.49 |
Laramie 1 |
Cheyenne |
Clark Building |
43.48 |
Laramie 1 |
Cheyenne |
Churchill Elementary |
45.74 |
Laramie 1 |
Cheyenne |
Churchill Elem. portable |
33.33 |
Natrona 1 |
Casper |
CY Junior High, portable #2 |
29.17 |
Natrona 1 |
Casper |
CY Junior High, portable #3 |
31.58 |
Natrona 1 |
Casper |
Natrona HS portable #2 |
20.00 |
Natrona 1 |
Casper |
Kelly Walsh HS portable #2 |
37.50 |
Natrona 1 |
Casper |
Grant School portable |
33.33 |
Natrona 1 |
Casper |
Garfield School |
33.53 |
Natrona 1 |
Casper |
Verda James Elementary |
44.26 |
Natrona 1 |
Casper |
East Junior High |
47.72 |
Park 1 |
Powell |
Powell HS pool/auditorium |
41.25 |
Park 1 |
Powell |
Powell HS main building |
45.93 |
Sheridan 1 |
Ranchester |
Slack, main building |
42.22 |
Sheridan 1 |
Ranchester |
Slack, kindergarten |
48.86 |
Sheridan 2 |
Sheridan |
Woodland Park elem. main building |
40.83 |
Sheridan 3 |
Arvada |
Arvada Elem. main building |
46.08 |
Sweetwater 1 |
Rock Springs |
Rock Springs East Jr. High |
48.96 |
Washakie 1 |
Worland |
Worland Middle School |
47.63 |
Washakie 2 |
Ten Sleep |
Ten Sleep Elementary/Middle/High |
45.00 |
Weston 1* |
Osage |
Kitty Moats, K-8 |
45.19 |
* The school district marked with an asterisk
was included in the DOE’s 2001 capital construction budget request.
[135]
The deficiencies, which have been illustrated by the DOE’s study, cannot
stand. The
state cannot rely on an inadequately funded grant program, available only to a
small percentage of districts with “immediate needs” which have bonded to 90
percent of their capacity, to correct this unacceptable, unconstitutional
condition of our state’s schools.56 According to Mr.
Miller’s testimony and the state’s Exhibit I-1, the legislature in 1998-99
appropriated $4.2 million in state grants. The legislature appropriated $30,787,404 to
be expended during the two years beginning July 1, 2000, and ending June 30,
2002, for capital construction. $20,940,612 of that amount was appropriated
for a state capital construction grant to Weston County School District No. 1
for a new elementary and high school. $8,826,692 was appropriated for a state
capital construction grant to Weston County School District No. 7 for a new high
school. One
million dollars was appropriated for 2002 state capital construction assistance
as a “place holder” until the state superintendent’s recommendation was received
in November of 2000.
2000 Wyo. Sess. Laws ch. 76, § 205. The DOE’s 2001 capital construction budget
request totals $33,074,783, which funds the needs of only two districts.57 It is unclear how
the state superintendent selected the schools that were fortunate enough to
receive a recommendation and decided against seeking funding for the other
multitude of schools that the DOE deemed inadequate.58 It would be fair to
assume her assessment of what amount would be politically acceptable necessarily
would have been a consideration as well as the required deduction from the
needed amount the districts could raise if they bonded to 90 percent of their
bonding capacity.
This can hardly be considered putting the wealth of the state at
risk.
[136]
In providing a remedy in similar cases involving the constitutionality of
public school finance systems, courts have taken a number of approaches
including detailing requirements and setting up timetables for compliance,59 appointing a
special master,60 or providing
an initial opportunity to present a plan that assures immediate attention to
achieve constitutional compliance.61 In Campaign for Fiscal
Equity,
2001 WL 96215, at *35, the court ordered the defendants to put in place
school financing reforms designed to redress constitutional and regulatory
violations. The court provided a specific date to implement those reforms. In addition, the
parties were ordered to appear before the court on a specific date to describe
the progress of their reforms. The court also retained jurisdiction over the
matter for as long as necessary to ensure the constitutional and
statutory/regulatory violations were corrected. In addition, the United States Supreme Court
affirmed the broad equitable power of lower courts to remedy continuing
constitutional violations, especially where there have been repeated
opportunities to resolve the problems. Hutto v. Finney,
437 U.S. 678, 687-88, 98 S. Ct. 2565, 57 L. Ed. 2d 522 (1978). We find this
authority persuasive, and, although we are extremely reluctant to direct
specific action by the legislature, it is clear from the inaction on capital
construction over the last several decades, despite explicit rulings by this
court, that a stronger message is needed.
[137]
We order all facilities must ultimately be made safe and efficient. The goal for
providing facilities which are safe and efficient is to attain a score of 90 or
above for building condition, an educational suitability score and technological
readiness score of 80 or above, and a score of 4 for building
accessibility.
These scores will assure each facility achieves a rating of “good.” The total cost
identified in the MGT study to comply with this test is $563,099,986 in 1998
dollars. We
recognize that realistically these capital construction costs ought to be phased
in over time.
As a result, we hold that the legislature must provide a plan by July 1,
2002, to remedy these deficiencies within 6 years. In the interim,
those facilities which are identified as in immediate need must be given the
highest priority.
In addition, we will presume that any facility which falls below the
established square footage requirements is in immediate need and must also be
given the highest priority. We order immediate need facilities and those
facilities that fall below the square footage requirements must be remedied
within two years which computes to $164,415,836 in 1998 dollars which will need
to be adjusted for inflation at such time as the grants are made. Facilities
that are deemed inadequate must be remedied within four years which computes to
an additional $231,309,380.62
CONCLUSION
[138]
We recognize and respect the substantial time and effort expended by the
legislature over the years in an effort to reform our state’s public school
finance system.
We also note that much of this effort took place in an environment of tax
revenue shortfalls.
However, as Campbell made so very clear, the
constitution provides that education funding is a fundamental right of our
citizens and “lack of financial resources will not be an acceptable reason for
failure to provide the best educational system.” 907 P.2d at 1279. We have reached the
point where we can no longer allow the youth of Wyoming to be denied their
constitutional right to an education “appropriate for our times.”
[139]
This case clearly demonstrates the quality of education is profoundly
impacted by class size. As noted above, the evidence contained in the
record supports the legislature’s ultimate decision which provides class sizes
that are not unreasonable at this time, although they clearly are not the most
favorable of those proposed and considered. We conclude the state carried its burden to
establish the school finance system is capable of fulfilling Wyoming children’s
fundamental constitutional right to an education “appropriate for the
times.” But
this holding is qualified as the adequacy of the finance system is wholly
dependent on the state taking action to accomplish the modifications of the
operational finance system as outlined in this opinion as soon as possible but,
in any event, no later than July 1, 2002.
[140]
Nothing in this decision shall be construed in such a manner as to
interfere with, impair, or adversely affect existing bond obligations of the
various school districts throughout the state. Recognizing the time required to remedy the
constitutional deficiencies in the statutes, we authorize school districts to
continue to exercise their statutory authority to raise revenues to address
capital construction needs in the interim.
[141]
Affirmed in part, reversed in part, and remanded for further proceedings
consistent with this opinion. The trial court shall retain jurisdiction
over this matter until the legislature has shown compliance with this court’s
order on or before July 1, 2002.
FOOTNOTES
1What
the United States Supreme Court said nearly fifty years ago remains true
today:
Today, education is perhaps the most
important function of state and local governments. Compulsory school
attendance laws and the great expenditures for education both demonstrate our
recognition of the importance of education to our democratic society. It is required in
the performance of our most basic public responsibilities, even service in the
armed forces.
It is the very foundation of good citizenship. Today it is a
principal instrument in awakening the child to cultural values, in preparing him
for later professional training, and in helping him to adjust normally to his
environment.
In these days, it is doubtful that any child may reasonably be expected
to succeed in life if he is denied the opportunity of an education. Such an
opportunity, where the state has undertaken to provide it, is a right which must
be made available to all on equal terms.
Brown
v. Board of Education of Topeka, 347 U.S.
483, 493, 74 S. Ct. 686, 98 L. Ed. 873 (1954).
2“Taking
judicial notice of official reports of the state department of education, which
we are privileged to do, we are made aware that this inequality ranges from a
situation where in the Bairoil district a levy of one mill will bring in $351
per pupil, while in the Star Valley district (Lincoln County) a levy of one mill
will bring in $4.70 per pupil.” Sweetwater County
Planning Committee for Organization of School Districts v. Hinkle, 491 P.2d 1234, 1237 (Wyo.
1971).
3A
complete summary of the legislative changes post-Washakie is contained in Campbell County School District v. State, 907 P.2d 1238 (Wyo.
1995).
4A
detailed summary of the legislature’s actions is contained in the trial court’s
Findings of Fact, Conclusions of Law, and Order dated December 31, 1997.
5There
is a disputed fact in the evidence as to whether the average salary figures used
by MAP were based upon the actual school expenditures for 1995-96 or
1996-97. The
trial court found the 1996-97 actual expenditures were utilized to determine the
component costs.
We defer to this finding. Brown v. State,
944 P.2d 1168, 1170 (Wyo.
1997).
6The
total budget figure of $76,368,331 represents permanent plan funding without the
cap of 115 percent and hold harmless floor of 90 percent as contemplated by the
MAP 3 model transition plan funding. If applied as proposed by MAP, the cap would
have prevented any district from receiving more than 115 percent of its previous
year funding, and the 90 percent hold harmless floor would have prevented any
district from receiving less than 90 percent of its previous year funding. The transition plan
total budget figure, with the cap and floor applied, would have been
$60,763,354.
The transition period would be complete, and caps and hold harmless floor
provisions would no longer be effective, in year 2000-2001.
7External cost adjustment
is an adjustment made for inflation. In the course of this opinion, references to
these two concepts will be used interchangeably.
8The
state has argued that the additional funding of $60 million accounted for
inflation.
However, it also claims the increased funding resulted in smaller classes
and more teachers than originally provided in the 1997 legislation. The state cannot
have it both ways.
Since all the parties and the trial court credited the state with the
smaller class size, we will do the same and consider the additional funding as
accomplishing that result.
9Laramie
County School District No. One and Natrona County School District No. One.
10At the
time of Campbell, the state had reported needs of $275 million
in capital construction and only $5 million had been designated by the state at
that time for capital construction. Campbell, 907
P.2d at 1254.
11Under the old funding system for 1995-96, Sheridan County
School District No. 3 received $13,031 per student while Park County School
District No. 6 received $4,898 per student. Under the current system for 1999-2000,
Sheridan County School District No. 3 receives $16,219 per student while Park
County School District No. 6 receives $6,203 per student.
12Graduation standards are phased in over the next five years
presumably because schools have not been providing students with the education
necessary to meet these standards and need time to adjust their programs
accordingly.
13Three panels (red, white, and blue panels) reviewed three
funding levels for large middle schools of 300 students and high schools of 600
students. The
fourth panel (green panel) reviewed the legislative funding as existed for small
schools.
14The
“white team” used course materials from Crete, Nebraska, and Montana panel
members assumed the curriculum would be similar to their own when, in fact, many
differences exist.
15In Campaign for Fiscal Equity v. State, 2001 N.Y. Slip Op.
21051, 2001 WL 96215, at *22 (N.Y. Sup. Jan. 9, 2001), the court recognized
testimony that there was a clear statistically significant association between
the performance of students and the salaries paid to teachers within a school
district.
16Using
1995-96 data, Wyoming, ranked 38th nationally
and was second in the region only to Colorado and ahead of Nebraska, Idaho,
Utah, and Montana. However, using 1997-98 data, Wyoming, in addition to
Colorado, slipped behind its neighbors Utah, Idaho, and Nebraska in classroom
salaries and ranked 42nd nationally.
17In Campaign for Fiscal
Equity, 2001 WL 96215, at *23, the Supreme Court of New York noted that New
York expected a need to fill 41,000 to 54,000 teacher slots in the next four
years.
18The
validity of the regional cost-of-living adjustment is in question and addressed
more fully below.
19MAP
continually referred to an acceptable class size “range” within which the
legislature could choose. However, the MAP 3 class sizes were the only
ones endorsed by Wyoming educators.
20MAP 3
provided for class sizes of 16 for elementary schools.
21National Assessment of Educational Progress - an assessment
which specifically permits comparison to students nationwide.
22This
conclusion is difficult to understand because DOE’s “Statewide School Facilities
Assessment” report, concluded in December 1997, thoroughly examined and
cataloged all school facilities in the state, including square footage and
condition.
23The
state’s suggestion that a reimbursement approach would encourage schools to be
wasteful and retain unnecessary buildings is without support in the record. However, if the
legislature believes state oversight is necessary to avoid that possibility, it
has the authority to accomplish that oversight.
24The MAP
report states that “[m]ore than 80 percent of Wyoming’s elementary students
attend schools that have 200 students or more. Indeed, more than 20 percent of students
attend elementary schools that are larger than 400 students. Similar patterns
emerge for both middle and high schools.”
25LES is also referred to as ESL which means English as a
second language.
26In Campaign for Fiscal Equity, 2001 WL 96215, at *61, the
court evaluated the funding of New York’s at-risk children and stated: “[T]hese
formulas and weightings do not accurately account for the costs of education
caused by large numbers of at risk students in a single district.”
27The
only other evidence concerning an actual cost of providing programs for EDY was
Kentucky’s funding at 15 percent greater than its foundation program which would
have generated $800-$900 per disadvantaged student in Wyoming which MAP,
apparently concerned about the cost, advised Wyoming to phase in over time.
28We
agree with the trial court that the legislation need not provide categorical
funding for “behaviorally disordered” or “compensatory education.” Rather these needs
are subsumed with other categories. Compensatory education is based on the notion
that we can compensate for poverty through education. Compensatory
education arose in connection with federal programs, from which Wyoming is a
beneficiary.
According to Dr. Guthrie, the EDY component of the MAP model is intended
to cover compensatory education.
29The 3
percent assumption is based upon a broader measure of intelligence and talent
than other recognized measures which assume only 2 percent of students are
gifted.
30This language was set forth in the Wyoming Education Finance Issues Report, Programs for
Students with Special Needs (Disadvantaged, Limited English Proficient,
Gifted) issued by MAP on May 18, 1998.
31Since 1995, both state and national annual
inflation rates have been documented as follows:
WCLI (Wyoming Cost of
Living Index)
CPI-U (Consumer Price Index/West)
2/99 – 2/00
4.3
June 99-June 00
3.7
4/98 – 4/99
3.1
Dec. 98-Dec. 99
2.7
4/97 – 4/98
2.2
Dec. 97-Dec. 98
1.6
4/96 – 4/97
2.9
Dec. 96-Dec. 97
1.7
4/95 – 4/96
4.8
Dec. 95-Dec. 96
3.3
State of
Wyoming, Department of Administration and Information, Division of Economic
Analysis, 1997, 1998, 1999, 2000, and U.S. Department of Labor, Bureau of Labor
Statistics.
Annual inflation rates document the erosion of purchasing power. The WCLI
and CPI represent actual inflationary increases between the dates as
recorded. For
example, the 4/95 – 4/96 WCLI increase of 4.8 indicates a 4.8 percent
inflationary increase from the fourth quarter of 1995 to the fourth quarter of
1996.
32As
previously noted in note 8, supra, the state points
out that education funding was increased from 1997 to 1999 by $60 million. However, the class
size funded in 1997 was also larger than any MAP recommendation, and that class
size was reduced in 1999 causing a substantial increase in cost. It is clear that
the $60 million enhancement did not address inflationary cost increases.
33Lawrence O. Picus, Ph.D., testified at the 1999 trial that
an external cost adjustment should ideally be applied every year but, when
inflation is running as low as in the past years, an adjustment every other year
might also be acceptable. Professor Shelby Gerking, a University of
Wyoming economist hired as a consultant by LSO to develop an external cost
adjustment, testified in the same manner.
34The
necessary small school definition is defined so as to only allow one small
school in a quarter mile radius area. Wyo. Stat. Ann. § 21-13-318(a)(ii) (LEXIS
1999). That
quarter mile radius area is similar to the municipal divisor struck down in Campbell. It is structured to phase out over a
three-year period. Nevertheless, we agree with the trial court that this
provision violates the equal protection provisions of our constitution.
35The
court observes this is a novel manner in which to draft important
legislation.
This imprecise approach, adopting a critical formula by reference to a
vaguely described document located in an agency office, certainly raises
questions as to the accessibility to the public.
36No
explanation is given why school activities are “fixed costs.”
37Wyo.
Stat. Ann. § 21-13-327 (LEXIS 1999) phases in the 100 percent reimbursement of
utilities, food services, and activities over a three-year period for small
schools established after July 1, 1998.
38These
adjustments have the potential of perpetuating the previous small school bias in
the old system noted by MAP.
39We can foresee an argument that some school districts spend
excessively on school activities due to local preferences. Again, the state
has authority to set standards for school activities and decline to fund those
activities which do not meet the standards. If school districts determine additional
activities are desirable, although not authorized by state standards, those
activities may be funded by a local funding enhancement.
40Compounding the arbitrariness of the remote attendance
center adjustment,
such schools are defined by zip codes leaving remote centers located within the
same zip code with the misfortune of being excluded from the funding even
though, according to the state, they incur unfunded costs.
41The
WCLI is computed by the Department of Administration and Information on a
semi-annual basis for each county of the state and uses weighting factors to
determine the relative importance of the various items in a consumer market
basket as developed by the Bureau of Labor Statistics in its construction of the
national Consumer Price Index.
42MAP
concurs in this assumption and offers as evidence the fact that some districts
were accumulating surpluses indicating they had more money to use for salaries
and chose not to do so.
43In Campaign for Fiscal
Equity,
2001 WL 96215, at *60, the court recognized that “[s]chool districts face
significant variation in costs to deliver educational services, which in turn
affects their ability to pay for various educational inputs.” The court noted
longstanding recommendations had been made by various blue ribbon panels to
include regional cost estimates in the state aid formulas and the State
Education Department had concluded that “[t]he failure to explicitly recognize
geographic cost differences within the major operating aid formulas has led to
formula allocations which are inequitable.”
44The state argued Teton County, the district
challenging the cost-of-living adjustment, did not prove it was suffering under
the existing adjustment which excluded housing. The trial court made no findings on that
point and concluded the adjustment was invalid for other reasons. Although
substantial evidence was introduced concerning the harm to Teton County’s
schools which we find both persuasive and not surprising, the burden of proof
was on the state to prove the system’s disparities were cost-based, not upon the
schools to prove harm. We note that, pursuant to Wyo. Stat. Ann. §
9-2-109(e) (LEXIS 1999), the compensation commission recommended a housing
allowance for state employees working in Teton County of $678.75 effective July
1, 2000, to offset the higher cost of housing in Teton County, apparently
recognizing the cost of hiring state employees in that location was higher than
others. In
contrast, the legislature’s regional cost adjustment for Teton County teacher
salaries only results in approximately $355 per teacher under the prototypical
model, approximately one half of what is allocated for state employees.
45The trial court explained the mill levy supplement
program:
The mill levy supplement requires districts to levy two
unequalized mills before they are eligible to receive the supplement. When districts
qualify for the supplement, the third mill is then equalized to the level of
150% of the statewide average per adm. The mill levy supplement program does not
alter the constitutional debt limitation, but rather serves to speed repayment
of a district’s current bonded indebtedness. Thus, the mill levy supplement does not
resolve the problem of insufficient bonding capacity in districts with
comparatively low assessed valuations. Districts with needs beyond their bonding
capacity must, therefore, resort to an alternative funding source.
In Campbell, we determined that the amount of money raised
by local optional mills, in place at the time, was totally dependent upon the
local wealth of individual school districts and the presence of such wealth bore
no relationship to the expense of educating students in any particular
community. The
mill levy supplement program is fraught with the same wealth-based
disparities.
As we stated in Campbell, 907 P.2d at 1269: “Property taxes, levied against assessed
property valuation, generate different amounts of revenue for each school
district since the assessed property valuation of each school district
varies.” The
remarkable inequities that have arisen from the current capital construction
finance system are illustrated in the Statistical Report
Series No. 1 – 1998 School District Property Valuations, Mill Levies and Bonded
Debt, a report prepared by the DOE. The report reveals the disparate assessed
valuations of each school district. In Wyoming, there is a disparity in the
assessed county valuation of $1,495,260,165 in Campbell County to $33,275,890 in
Niobrara County.
In context, this means that a mill levied in Campbell County would yield
approximately $1.5 million a year while a mill levied in Niobrara County would
yield approximately $33,000. At trial, Dr. Picus and Richard H. Miller
each testified as to the effects of such disparity which is that, with voter
approval, if there is enough local wealth, a school district could build a
world-class school.
On the other hand, a school without such wealth and bonding capacity
would not be able to build a similar school.
46The trial court accurately explained the grant
program:
The grant application process involves submission of a
request to the Wyoming Department of Education, review by an advisory committee,
review by the State Superintendent and, if approved, submission to the Governor
and Legislature for consideration. See W.S.A. §
21-15-111. At
any step along the way, funding for the proposed project may be reduced or
eliminated.
The grant program requires districts to bond at 90% of their assessed
valuation and demonstrate that proposed capital construction projects will
remediate or replace facilities which have been determined to be not only
“inadequate” but also “in immediate need of capital construction.” See W.S.A. § 21-15-111 (c) and (e).
. . . .
The grant program makes significant progress toward the
goal of eliminating wealth disparity, but it falls short for several
reasons. First
wealthy districts are free to use local wealth to meet any need the voters may
approve without being subjected to the substantial set of limitations imposed
upon the other districts. Second, unlike the wealthy districts, the
others must nearly exhaust their bonding capacity before they can even apply for
a grant. See W.S.A. § 21-15-111(e). Districts with
comparatively low assessed valuations do not have equal access to the State’s
wealth.
47In Campaign for Fiscal
Equity,
2001 WL 96215, at *56, the defendants in the case argued the state had
increased its contribution to the City of New York’s public schools in recent
years while the city’s local effort had declined since 1986. The court’s
response was that “the State Constitution reposes responsibility to provide a
sound basic education with the State, and if the State’s subdivisions act to
impede the delivery of a sound basic education it is the State’s responsibility
under the constitution to remove such impediments.” As the New York
Court of Appeals had earlier explained: “[T]he Education Article imposes a duty
on the Legislature to ensure the availability of a sound
basic education to all the children of the State.” Campaign for Fiscal
Equity, Inc. v. State, 655 N.E.2d 661, 665 (N.Y. 1995). The New York
Supreme Court continued: “The State’s power over education is plenary.” 2001 WL 96215, at
*56. We find
this logic to be convincing.
48Article
15, Section 17 of the Wyoming Constitution (emphasis added) provides:
There shall be levied each year in each county of the state a tax of not
to exceed six mills on the dollar of the assessed valuation of the property in
each county for the support and maintenance of the public schools. This tax shall be
collected by the county treasurer and disbursed among the school districts
within the county as the legislature shall provide. The legislature may
authorize boards of trustees of school districts to levy a special tax on the
property of the district. The legislature may also provide for the distribution among
one or more school districts of not more than three-fourths of any revenue from
the special school district property tax in excess of a state average
yield, which shall be calculated each year, per average daily
membership.
49Article
15, Section 4 provides:
For state revenue, there shall be levied annually a tax not to exceed
four mills on the dollar of the assessed valuation of the property in the state
except for the support of state educational and charitable institutions, the
payment of the state debt and the interest thereon.
Article 15, Section 15 provides:
For the support of the public schools in the state there may be levied
each year a state tax not exceeding twelve mills on the dollar of the assessed
valuation of the property in the state.
50Educational suitability identifies the degree to which a
facility is suitable for the education program being offered.
51We must
make it clear that the deficiencies noted in the record are based on the MGT
study which has not been updated in three years. The figures and deficiencies we note are
merely illustrations.
Undoubtedly, the figures and deficiencies have not remained the same.
52Technological readiness assesses the required
infrastructure to support informational technology and the associated equipment,
usually computers.
53The
standard for school and classroom size for existing sites is as follows: elementary schools
– minimum of 140 gross square feet per pupil; middle/junior high schools –
minimum of 175 gross square feet per pupil; senior high schools – minimum of 210
gross square feet per pupil. Department of Education Rules for Site
Selection and School Construction for Wyoming Public School Buildings ch. XVII
(General Provisions), § 7 (Standards for School Classroom Size) (1/15/01).
54“This amount is needed for districts that have
less than 75 percent of the state standards. At less than 75 percent of current standards,
these districts did not meet the old state standards.” MGT of America,
Inc., Wyoming Department of Education Statewide School
Facilities Assessment at xiii (1/26/98).
55It is
within this court’s prerogative to take judicial notice of the official reports
of state agencies.
Dellapenta, 838 P.2d at 1159 (citing Washakie, 606 P.2d at 322 n.16; Hinkle, 491 P.2d at 1237).
56We do
recognize that designing and planning school construction takes time and many of
these schools may be in different stages of that process.
57The
budget request includes funding for Weston County School District No. 1 and
Weston County School District No. 7. We reiterate that it is within this court’s
prerogative to take judicial notice of the official reports of state
agencies. Dellapenta, 838 P.2d at 1159 (citing Washakie, 606 P.2d at 322
n.16; Hinkle, 491 P.2d at 1237).
58We also note that districts must first meet 90
percent of their bonding capacity which may or may not occur.
59See Jones v. Wittenberg, 440 F. Supp. 60 (N.D. Ohio
1977).
60See Palmigiano v. Garrahy,
443 F. Supp. 956, 986-89 (D. R.I. 1977).
61See Holt v. Sarver, 309 F.
Supp. 362, 385 (E.D. Ark. 1970), aff’d, 442 F.2d
304 (8th Cir. 1971).
62We recognize the need for state oversight to
ensure funding requests are appropriate. However, we strongly caution against using
state oversight as a mechanism to reduce funding or to impede the ability to
satisfy needs sufficiently established by the MGT study. The state may not
second-guess what facilities have already been held deficient by this court and
the trial court based upon the state’s own uncontroverted evidence.