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Speaker Mike O’Neal on Kansas school finance case ruling

Mike O'Neal, Kansas Chamber of Commerce

Mike O’Neal, Kansas Chamber of Commerce

From Kansas Policy Institute.

Reaction to Kansas Supreme Court Ruling on Gannon School Finance Case

By Mike O’Neal, former Speaker of the Kansas House of Representatives; now President and Chief Executive Officer at Kansas Chamber of Commerce.

I’ve now had the opportunity to read the 110 page Gannon decision, released today. At the outset, I appreciate the fact that the court released its decision before the conclusion of the 2014 legislative session. Also, as an attorney, I appreciate the degree of scholarly legal analysis applied to the various issues and arguments.

The key aspect of the decision is the reversal of the local court panel’s method of determining the funding adequacy issue. Here the Court took a step back and viewed the issue of school funding from the standpoint of the bigger picture, rather than from the aspect of a single purported cost study, as was the case in Montoy. This time around the Court admits that the overall test of adequacy was “diluted by our primary focus on cost estimates – a focus that evolved in the Montoy litigation because of how the issues were presented to us by the district court and due to the remedial nature of some of our decisions.” The court specifically rejects, in Gannon, a legislature’s alleged failure to consider actual costs as the litmus test for adjudging compliance with the mandates of Article 6 of the Kansas Constitution.

The Court has now honored prior Kansas Supreme Court precedent established in U.S.D. No. 229 v. State (1994) where the Court said “the issue is whether SDFQPA satisfies the constitution by providing suitable financing, not whether level of finance is optimal or the best policy.” [Emphasis added] The Court has taken the opportunity in Gannon to “clarify” the test for funding adequacy and has ruled that the test is: “The adequacy test is met when the public education financing system provided by the legislature for grades K-12 – through structure and implementation – is reasonably calculated to have all Kansas public education students meet or exceed the standards set out in Rose and presently codified in K.S.A. 2013 Supp. 72-1127.” Because the lower court didn’t use that test, the case is now remanded back to the lower court to determine the issue under the newly established test.

Significantly, when making the determination, ALL funding sources will now be included, including, according to the Court, grant funds, federal funds, KPERs state contributions, etc. This is huge and has always been the flaw in the Montoy case where the state was getting no credit for the funding it was providing that wasn’t strictly related to the formula. The state was not even getting credit for its “provision” of the 20 mil property tax requirement.

Now, the focus shifts from money available through the formula to how much overall resources has the state made provision for that is available to the districts to perform their core function. Actual resources available for the core function of instruction will now get the attention it deserves, because the new test of adequacy is related to statutory standards for instruction and learning. The high percentage of expenditures on administrative costs will now be and should be under the microscope. Even the Montoy court singled out administrative costs for scrutiny.

The Court, after an analysis of the judiciary’s role in school finance litigation, gave deference to the legislature in selecting the “myriad” of ways available to provide a constitutional provision for the finance of the educational interests of the state and specifically rejected the lower court’s order directing appropriation of more funds and enjoining the legislature from changing the relevant statute. These are, per the Court, legislative functions.

On the equity issues, the Court makes good points in its decision that funding decisions on capital outlay and LOB have had a dis-equalizing effect even if these decisions have not affected student outcomes. The Court again acknowledged that the legislature has a number of options to remedy these two areas and, fortunately, the decision comes at a time when the Legislature still has the time to address them this session. No specific amount of funding is required and options exist that would not require additional funds.

In summary, the Court has avoided a constitutional crisis and has done so in a thoughtful way. While establishing a new test for school funding adequacy, the Court has respected precedent prior to Montoy, limiting the test in Montoy to the unique circumstances of that case only. The legislature has something concrete to work with and there now exists, subject to how the lower court panel handles the remand, the hope that this needless cycle of litigation can finally come to an end.