School Funding Cases in Arizona

in Arizona Litigation

Historical Background

School Facilities Funding

In 1991, represented by the Arizona Center for Law in the Public Interest (ACLPI), over 40 low-wealth school districts filed an “equity” suit, claiming that the capital funding portion of the state education finance system violated the uniformity requirements of the state constitution’s education clause. In 1994, the Arizona Supreme Court agreed, in Roosevelt Elementary School District No. 66 v. Bishop. The court relied on the state’s requirements for course-work and its student competency standards to conclude that the financing scheme did not enable all districts to provide the facilities and equipment necessary to give their students the opportunity to meet those state standards.

In 1998, to meet the court’s requirements for a constitutional system, the legislature and governor moved responsibility for funding school construction and other capital items away from local districts to the state and phased out those local property taxes used to support capital expenditures. The new law created a School Facilities Board to administer the system and included technology, transportation, facilities, and equipment. The Board oversees three separate Funds for:

New Schools
Building Renewal, and
Deficiency Correction.

Plaintiffs returned to court to challenge the state’s alleged under-funding of the Building Renewal Fund, which is the only source of funds for major repairs and improvements for low-wealth districts. In 2002, the lower court ordered the legislature to restore $90 million to the fund, but on appeal the state supreme court held that plaintiffs must show that the under funding resulted in facilities that are below standards.

Flores ELL Case

In Flores v. Arizona, which has been litigated in federal court since 1992, plaintiffs claim that the state is failing to adequately fund programs for English language learners (ELLs). In 2000, the district court found that state funding of ELL programs was “arbitrary and capricious” and ordered that the level of state funding for ELL programs bear a rational relationship to the cost of those programs. The parties reached agreement on a Stipulation in 2002, and the court ordered a costing-out study. In January 2004, plaintiffs filed a Motion for Contempt due to the alleged failure of the state to comply.

In January 2005, after numerous delays by the state, the Flores court ordered additional ELL funding. Failure to comply led to a December 2005 order and daily fines that mounted to $21 million before the state enacted additional funding in early March 2006. Moreover, the court enjoined the state from requiring ELL students to pass the state exit exam in order to get a diploma.

In August 2006, the Ninth Circuit Court of Appeals, in Flores v. Rzeslawski, vacated the 2005 district court judgment and remanded the case so the district court could hold “an evidentiary hearing and ma[k]e findings of fact regarding whether changed circumstances required modification of the [January 2000] court order or otherwise ha[ve] a bearing on the appropriate remedy.”

In March 2007 Judge Raner Collins of the U.S. District Court for the District of Arizona ruled that Arizona is still illegally under-funding programs directed towards English learners, that it is in violation of multiple federal laws, and that $600 million of federal education funding that Arizona receives may be in jeopardy.

The ruling invalidated HB 2064, the funding formula passed by the Arizona legislature in response to the court’s earlier decision. HB 2064, which would raise the amount of funding directed for ELL programs from $365 to $444 per pupil, Judge Collins ruled, is insufficient to meet the needs of ELL students. The formula, he noted, provides significantly less than was recommended by a court-ordered cost study completed in 2005.

According to the federal Equal Educational Opportunities Act (EEOA), under which the court struck down HB 2064, states are required to ensure that all students, regardless of native language, have the opportunity for “equal participation” in public education. The insufficient funding, Judge Collins, ruled, violates this federal law.

Judge Collins also ruled HB 2064 illegal for other reasons. First, it mandates that schools can only receive the additional funding for a student for two years. The record in the case showed that many ELL students take longer – often four or five years – to become proficient in English. In addition, the bill stipulates that districts are required to use a portion of their Title I, Title II, and Title III federal funds to pay for ELL services before they get state aid. All of these federal funds are given under the condition that they will “supplement not supplant” state monies; accordingly, this requirement is illegal and jeopardizes the $600 million in federal funding that Arizona receives, the court ruled.

Judge Collins ordered the State to comply with the 2000 order by the end of the 2007 legislative session, but the legislature failed to do so. On October 11, 2007, Judge Collins issued a contempt order, giving the legislature until March 4, 2008 to bring ELL funding into compliance. If the legislature misses the deadline, Judge Collins will impose sanctions. Meanwhile, the State appealed Judge Collins’ order to the Ninth Circuit Court of Appeals.

On February 22, 2008, the Ninth Circuit affirmed the district court judgment in favor of plaintiffs. The court found that the No Child Left Behind Act (NCLB) did not relieve states of the obligation to adhere to the mandates of the EEOA. According to the court, this means that even if Arizona could show that its schools are making “adequate yearly progress” toward improving overall academic achievement, individual students still have the right to bring civil rights claims under the EEOA. Describing the distinction between the two federal laws at issue, the court wrote, “The EEOA’s concerns…lie fundamentally with the current rights of individual students, while NCLB seeks gradually to improve their schools.” The court went on to explain the ramifications of a decision in favor of the State: “[Its] view, if adopted, would effectively repeal the EEOA by replacing its equality-based framework with the gradual remedial framework of NCLB.” Based on the foregoing, the court held that “it is not inequitable to continue to require compliance” with the district court order.

In September 2008, the defendants petitioned the U.S. Supreme Court to review the 9th U.S. Circuit Court of Appeals’ holding that the state was not meeting its legal obligation to English-language learners.

On November 3, 2008, the District Court began further hearings on compliance issues.

On June 25, 2009, in a 5-4 decision, the United States Supreme Court sent back for further hearings an Arizona English language learner funding case that has been pending in the federal courts for the past nine years. In Horne v. Flores, the high court majority reversed a decision of U.S. Court of Appeals for the Ninth Circuit that had upheld a district court order finding the state in contempt for failing to follow the court’s previous orders to “establish a funding system that rationally related funding available to the actual costs of all elements of ELL instruction.” The dissenters would have upheld the lower court orders without any further hearings.

Crane Elementary School “At-risk Students” Case

In April 2007, the Arizona Supreme Court refused to hear plaintiffs’ appeal from an intermediate Court of Appeals’ ruling that granted the state’s motion for summary judgment, in Crane Elementary v. State. The Crane Elementary plaintiffs had alleged that the state’s education finance system violated the state constitution because it did not provide the opportunity for an adequate education to the state’s “at-risk” students.

The intermediate appellate court disagreed with the trial court’s opinion that the case presented a non-justiciable issue but, nonetheless, a majority of the court granted summary judgment to the defendants on the merits. The appellate majority held that the state had no responsibility to address the barriers to learning faced by Arizona’s “at-risk” students and denied plaintiffs the chance to show otherwise in a trial.

Espinoza v. Arizona

A class of low income, racial and ethnic minority students and English Language Learners filed a complaint in 2006 which challenged, on equal protection grounds, the state’s requirements that students must pass the Arizona Instrument to Measure Standards ( “AIMS”) test in order to graduate from an Arizona high school. Plaintiffs claim that education is a fundamental interest under the State Constitution and there is no compelling state interest in this high stakes testing requirement. The Plaintiffs also claim that severe inequities in the state’s educational finance system deprive the members of the plaintiff class of an opportunity to receive a quality education that would prepare them to pass the exams.

In September 2008, the Court dismissed Espinoza v. Arizona stating that there was insufficient evidence and that the plaintiffs had presented no causal connection between the pass/fail statistics on the AIMS test and specific districts.

Cave Creek Unified School District v. Martin

In June 2010, five school districts, the Arizona Education Association, the Arizona School Boards Association and several voters filed a special action in the state Supreme Court challenging the constitutionality of the Legislature’s fiscal year 2011 budget, which did not include inflationary adjustments to foundation school funding levels. Petitioners in Cave Creek Unified School District v. Martin argue that the budget fails to fulfill the requirements of Proposition 301, a 2000 ballot initiative that requires the Legislature to annually increase funding by the rate of inflation (or 2%, if it is lower), and consequently, constitutes a violation of Article IV, Part I §I(6), the voter protection clause of the state constitution. That provision bars the Legislature from repealing laws passed through referenda, or amending said laws “unless [it] furthers the purposes of such measure and at least three-fourths of the members of each house of the legislature”, or diverting funds set aside for these initiatives.” The Supreme Court will decide to accept or reject the special action on September 21.

In a unanimous decision on January 15, 2013, the Arizona Court of Appeals ordered the legislature to uphold a ballot initiative requiring the state to increase education aid annually to keep pace with inflation. Decision 1-15-13. The plaintiffs have indicated that they are not asking the state to make up for the estimated $250 million it deprived schools over the past three years, but only to honor the voter initiative’s inflation increase requirements in the upcoming legislative session and in the ones thereafter. Seeking to overturn the lower court’s decision, the state filed a petition with the Arizona Supreme Court in March. The Court has not yet decided whether to review the case.

The Arizona Supreme Court at the end of May granted review in the Cave Creek Unified School District v. Ducey case. Maricopa County Superior Court Judge Katherine Cooper issued an order requiring the Arizona State Legislature to immediately increase current funding, roughly $80 million in additional aid, for all schools districts to levels consistent with inflation.

In December 11, 2014, the legislature filed a motion to stay that order in the Court of Appeals. The Legislature claims that in the absence of its requested relief, the state will have a budget shortfall of $520 million for the current fiscal year, and could face a budget shortfall in the billions of dollars in fiscal year 2015-2016.  Plaintiffs have filed a motion opposing the State’s motion to stay.  The state’s motion is currently awaiting a ruling from the Court of Appeals.

In October 2015, Governor Doug Ducey and the state Legislature agreed to spend an additional $3.5 billion on education over the next decade.  About 60 percent of this money would come from increased withdrawals from the state’s permanent land trust fund, and the rest from the general fund. This plan must now be approved by the state’s voters in a special election on May 17, 2016

A dispute has erupted, however, between Arizona State Treasurer Jeff DeWit and the lawmakers over the language that will appear  in the pamphlets provided to voters that outlines the proposition they will be voting on. DeWit is threatening to go to the State Supreme Court to change the wording. Former Congressman John Shadegg says that DeWit is wrong on this point. He said a 1999 amendment to that 1912 law that he sponsored is broad enough to allow Arizona voters, by approving the required amendment to the state Constitution, to decide how they want to spend the trust.

CRAVEN v. HUPPENTHAL

In July 2015, The Arizona Supreme Court declined to review a lower court’s ruling that the statutory funding scheme for charter schools violates that state’s constitution. The case, Craven v. Huppenthal, was filed by a group of charter school parents who complained that the state provides less funding to charter schools than it does to traditional public schools.  The parents argued that the scheme violated the state’s Equal Protection and General and Uniform clauses.

A trial court had ruled against the parents on summary judgment.  The court applied a rational basis of review – the most lenient – to the legislature’s funding scheme.

Costing-Out

In 2001, the Arizona Department of Education issued a “cost study” that merely compiled the estimated spending on ELL programs in a representative sample of school districts. The study was informative, but inconclusive. The legislature initiated another ELL cost study, released in February 2005, which indicated that at least several hundred dollars more per ELL student is needed. That same month, Allan Odden, Lawrence Picus, and Associates also released “Lead With Five: Five Investments to Improve Arizona Public Education” in which they determined the cost of an adequate education in the state and recommended five major improvements for its school system.

Useful Resources

Molly A. Hunter, Building on Judicial Intervention: The Redesign of School Facilities Funding in Arizona (Campaign for Fiscal Equity, Inc. September 2003).

For information regarding other states with facilities/capital funding cases, see Alaska, Colorado, Idaho, Louisiana, and New Mexico.

Last Updated: December 2016

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