SUBSCRIBER EXCLUSIVE

Future school funding again debated in court

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PHOENIX — Attorneys for the state want a judge to throw out a 5-year-old lawsuit charging lawmakers aren’t living up to their constitutional and court-ordered obligation to adequately fund new schools and repair existing ones.

Hanging in the balance is whether lawmakers will be ordered once again to fix the system as they were several times since 1994 — and potentially have to come up with billions of new dollars.

At a hearing Wednesday, the lawyers for the state told Maricopa County Superior Court Judge Daniel Martin there have been “drastic system changes” in funding since the lawsuit filed in 2017 by school districts and education advocates first challenged the system of who gets money. They pointed to infusions of cash and alterations to the policies that govern when a district is entitled to state dollars for a new school.

Brett Johnson, the lead attorney for the state, said Martin he should leave the question of how schools are funded to the elected legislators. He said lawmakers have already made changes and they need “flexibility” to make future “policy adjustments.”

“Plaintiffs ask this court for a political policy opinion on whether the legislature might devise a ‘better’ system to fund the capital expenditures of K-12 public schools,” Johnson wrote in his pleadings. And he said the challengers, including not just school districts but also the Arizona School Boards Association and the Arizona Education Association, are asking Martin to intercede because “they have not succeeded in achieving all of their policy objectives through the traditional legislative process.”

But lawyers for the schools say the problems are real — and that the Arizona Constitution requires lawmakers to fix them.

“The undisputed evidence shows that the state does not provide sufficient capital funding to ensure that no district falls below the state’s facility standards,” Danny Adelman, who represents the challengers, told the judge. So he wants Martin to immediately direct lawmakers to craft a system that is constitutional — what the Arizona Supreme Court first ordered in 1994.

Under the system in place at that time, school districts raised and borrowed money for new construction and repairs solely through local property taxes.

That year the justices concluded the method of funding schools violated state constitutional requirements for a “general and uniform” school system. They said it created illegal disparities between rich districts and poor ones.

“Some districts have schoolhouses that are unsafe, unhealthy and in violation of building, fire and safety codes,” wrote Justice Frederick Martone for the high court. “There are schools without libraries, science laboratories, computer rooms, art programs, gymnasiums and auditoriums.”

At the same time, Martone said, “there are schools with indoor swimming pools, a domed stadium, science laboratories, television studios, well-stocked libraries, satellite dishes and expensive computer systems.”

Several interim solutions proposed by the Republican-controlled legislature were rejected by the court.

Lawmakers eventually created the School Facilities Board which was supposed to pick up every district’s construction needs.

Only thing is, lawmakers never came up with a new source of revenue to fund the potential $300 million annual price tag, instead absorbing the cost into the general fund.

That, however, worked only when the economy was good and revenues were increasing. When the Great Recession hit and state tax collections tanked, one of the casualties was money for the board.

The funding formula was replaced by a grant process. But challengers, in filing suit in 2017, said that meant districts that needed schools or major repairs but couldn’t wait for a grant once again had to turn to their local voters for bond approval, the very system the Supreme Court previously found illegal.

There have been adjustments since, including one instituted by Gov. Doug Ducey that says districts no longer need to wait until schools actually are overcrowded to get funding to start building new ones.

But Adelman said the state is still not providing all the funds necessary to construct new schools and provide a regular flow of dollars for maintenance and major repairs, like saving up for a new roof.

And that, the challengers say, means schools “must wait for their systems to fail” before getting financial help — or rely on local tax dollars, a system that is no better than what the justices voided 28 years ago.

Attorney Colin Ahler, who also represents the state, said that’s not what the record shows. Anyway, he said, the law requires only that schools get enough to fund “minimum guidelines,” not meet some higher standard.

But Adelman said the state isn’t even doing that.

“Districts without are being left behind (with) failing HVACs, failing facilities, water infiltration, dilapidated foundations, sinkholes for years, portables in Quartzsite that were virtually condemned for years, undrinkable water,” he said.

“Only districts with sufficient local wealth (and supportive voters) can consistently maintain their facilities without falling below standards,” Adelman wrote in a separate filing. “And districts without local wealth are left behind.”

None of this would be an issue if the state picked up the cost of new schools. Adelman told Martin the Supreme Court in its 1994 ruling “made clear that the financing of public education in Arizona is the responsibility of the state, not school districts.”

“The state cannot attempt to pawn off its constitutional obligations on the districts,” he wrote.

And Adelman said there’s another reason the state cannot shift the burden to local taxpayers: All districts are not created equal.

Some have large amounts of commercial and industrial property that contributes more to the tax base than residential property. But it is those residential properties that have the students.
Joshua Bendor, another attorney for challengers, cited the Peoria Unified School District, which they said has relative low property wealth compared with the number of students it educates.

“To raise a given amount per pupil through bonds, Peoria must impose a tax rate almost five times greater than the rate Scottsdale Unified School District would need to impose to raise that same amount of money per pupil, and almost 15 times greater than the rate the Sedona-Oak Creek Unified School District would need to impose,” Bendor said.

“The state has the burden of explaining why it is reasonable for some taxpayers to pay tax rates that are 15 times more than their fellow citizens in other school districts to meet the school’s basic capital needs.”

That disparity, he said, is precisely the issue the Supreme Court addressed in 1994.

And Bendor said there is nothing in the record showing there is a meaningful relationship between a district’s property wealth and its capital needs.

But William Richards, who represents Republican legislative leaders, told Martin what’s missing from the arguments by the schools is any proof of harm from the funding formula.

“The plaintiffs have not made any showing at all that a single district actually failed to provide the educational services and curriculum delivery required by the state minimum academic standards to a single actual student,” he said. Absent that proof, Richards said, the schools have no basis for their claim that the state is failing to meet its constitutional funding requirements.

And everything beyond that, he said, is irrelevant.

“The legislature is not required to fund all the capital facilities each district chooses to acquire,” Richards said. “Nor is it required to ensure that every district has exactly the same facilities and capital resources.”

The judge did not say when he will rule.

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