Kansas court orders state to immediately pay $49.6 million to local school districts

? A three-judge district court panel ruled Friday that the state’s new block grant system of funding schools is unconstitutional, and it ordered the state to immediately pay nearly $49.6 million to local school districts to restore money that was cut from the current year’s budget when lawmakers passed a new school funding system in March.

The state also will have to add that much each of the next two years, the court said.

The court also struck down key provisions of the new law that change the way certain kinds of “equalization” aid for general operations and maintenance is distributed to local districts, and it did so in a way that appears to put the old formulas back in place, despite the fact that those old formulas were specifically repealed by the Legislature.

But the court did not order a specific remedy on the much larger, and costlier, issue about the overall adequacy of the state’s $4 billion public education budget. Although the panel reaffirmed its earlier decisions that overall funding is unconstitutionally low ­– possibly by as much as $500 million a year or more — it delayed ordering a remedy pending an automatic appeal to the Kansas Supreme Court.

The decision was released just moments after the Kansas Legislature adjourned, “sine die,” marking the formal end of the 2015 session. It also came just four days before the end of the fiscal year in which the state expects to have only an $87 million ending balance.

“I think they just spent $50 million of it,” said John Robb, one of the attorneys for the plaintiffs in the case.

But the court did say that if the state fails to make the payment before July 1, “then the Kansas State Board of Education is enjoined to distribute a like sum as soon as possible on or after July 1” from money appropriated in next year’s budget.

Kansas Attorney General Derek Schmidt issued a short statement saying he was reviewing the decision, along with several other state and federal court rulings his office has been on the losing end of. Robb said he expects Schmidt to file an appeal and ask for an immediate stay of the order.

Officials at the Lawrence school district were not immediately available for comment Friday.

Republican Gov. Sam Brownback and GOP leaders in the Legislature, however, blasted the decision.

“The three-judge panel has once again violated its Constitutional authority with this ruling,” Brownback said in a statement. “It has now taken upon itself the powers specifically and clearly assigned to the legislative and executive branches of government. In doing so, it has replaced the judgment of Kansas voters with the judgment of unelected activist judges.”

Senate President Susan Wagle, R-Wichita, was equally critical.

“It appears Washington, D.C., isn’t the only place courts have decided to draft their own laws and ignore the will of the people,” she said. “Topeka judges aren’t legislators, and it’s time they stopped auditioning for the role in their rulings. I’m hopeful our Supreme Court justices will show more restraint.”

House Democratic Leader Tom Burroughs, of Kansas City, meanwhile, praised the court’s ruling.

“Like most Kansans, I am extremely concerned about the future of education in our state,” he said. “Now that the court has ruled the block grant funding unconstitutional, the state should return to the pre-existing school finance formula. The school finance formula has been tested in court and found to be constitutionally sound. All that remains is for the Legislature to adequately and equally fund education. Our children deserve that, and our future as a state depends upon it.”

The $49.6 million represents the amount of equalization aid that lawmakers cut from the budget when they repealed the old, per-pupil funding formula and replaced it with a new “block grant” formula that not only changed funding for the current fiscal year, but also locks that new funding level in place for each of the next two years.

Friday’s decision was just the latest chapter in a long-running school finance lawsuit that began in 2010 after the state started cutting education funding in the wake of the Great Recession.

In January 2013, the three-judge panel ruled the state had reneged on commitments it made to settle a previous school finance suit, saying the cuts that had been made rendered overall school funding both inadequate and inequitable.

At that time, the court ordered the Legislature to increase base aid to schools by about $450 million and to increase “equalization” aid to less wealthy districts by about $110 million.

On appeal, the Kansas Supreme Court upheld the equity portion of the order, but it remanded the adequacy question back to the three-judge panel to be decided using a different legal standard.

That ruling was based on Article 6, Section 6 of the Kansas Constitution, which says, “The Legislature shall make suitable provision for finance of the educational interests of the state.”

Since 1992, there have been three main components of school funding:

• “Base” state aid, which is supposed to fund the basic operational costs of running a school district on a daily basis.

• Local option budgets, which represented additional money, beyond base aid, that local districts could adopt to pay for additional or enhanced programs and services.

• And capital outlay budgets, which districts use for big-ticket purchases such as new equipment, building construction and maintenance, or other major expenses.

Until this year, base state aid was determined each year by the Legislature, based on a uniform per-pupil funding formula, although certain categories of pupils such as low-income or non-English speaking students were “weighted” more heavily to reflect the higher costs of teaching them. Funding for base aid comes from a combination of the statewide 20-mill property tax levy and the state general fund.

LOB and capital outlay budgets are funded mainly from local property taxes, although the state subsidizes those budgets through “equalization” aid for districts with less property tax wealth so that all districts can raise comparable amounts of money through comparable property tax levies.

This year, however, as the school finance case was still in court, lawmakers repealed those formulas, and all three forms of funding were merged together into a block grant that essentially reflected how much districts were getting this year.

In the process, though, they also changed the way the equalization aid was calculated.

Gov. Sam Brownback and Republican leaders who supported the change touted it as an overall increase in funding. But that claim was based largely on the mandatory increases in state contributions to the Kansas Public Employees Retirement System, which manages retirement pensions for school employees as well as other state and local government workers.

In its opinion Friday, the three-judge panel said changing the funding formula to a block grant system did nothing to solve the issue of overall adequacy of school funding. And it said changes in the way equalization aid was calculated only made the equity problems worse.

The panel also specifically rejected the idea that increases in KPERS contributions should count as increases in education funding.

“KPERS contribution funds have either never been considered by experts or other competent professionals in evaluating the adequacy of K-12 school funding or, if so considered … such KPERs contributions were reflected as an add-on increase to the per pupil costs, not as an in-lieu of, or in substitute for, other needed funds,” the court said.