Kansas Supreme Court questions lawmakers’ school finance changes: ‘At what point does this process have to stop?’

Kansas Supreme Court Justice Marla Luckert, center, asks a question to the state as they make their arguments in front of the Kansas Supreme Court, Tuesday May 10, 2016, in Topeka, Kan. The court was hearing arguments Tuesday on whether the technical changes approved by lawmakers earlier this year are fair enough to poor districts that the justices can abandon a threat to shut down public schools. (Chris Neal/The Topeka Capital-Journal via AP)

TOPEKA — An attorney for the state of Kansas told the state Supreme Court Tuesday that lawmakers made a good faith effort to make public school funding more equitable, and he urged the court not to follow through on its threat to close public schools on July 1.

“The first principle is that the schools should be open in August,” Kansas Solicitor General Stephen McAllister told the court. “No one, except apparently the plaintiffs now, wants to close the schools. There’s no reason for the court to strike the entire funding system.”

But the attorney for the plaintiffs in the long-running school finance case Gannon v. Kansas, said that lawmakers played little more than a shell game, shuffling money between different silos of education funds, and that, if anything, they made the funding system in Kansas more unfair than it was before.

Attorney Alan Rupe urged the court to simply lift the stay on a lower court’s order to repeal the new formula and order that the previous formula that lawmakers repealed in 2015 be put back into effect, an order that would cost at least another $30 million at a time when the state’s budget is already out of balance.

Alan Rupe, left, attorney for the plaintiffs in the ongoing school finance lawsuit, answers questions from Justice Dan Biles during oral arguments Tuesday on the issue of whether the state has provided equitable funding for public schools.

“There may be some need for the Legislature to access some additional resources,” Rupe said. “You certainly have the power in this remedy phase, as part of your constitutional powers, to restrict other spending in state government until or unless the schools receive other funds.”

“That may seem harsh,” Rupe said. “The schools are like the courts, like voting, like jury trials. There is a constitutional requirement that those services continue to operate.”

The seven justices — including two who don’t normally sit with the court — are expected to decide the equity portion of the case within a matter of weeks.

That’s when the state’s nearly 490,000 public school students, along with their parents, teachers and elected representatives, will learn whether the court intends to follow through with its threat to close the state’s school system until lawmakers come up with a constitutional method of funding them.

McAllister, who is also a Kansas University law professor, argued that what the plaintiffs requested would be a gross violation of the doctrine of separation of powers.

“We will no longer have a separation of powers if that is the remedy here,” he said. “That just can’t be an answer.”

Instead, McAllister said the court should uphold the law as constitutional. But if it finds some part of the law unconstitutional, such as changes in the way local option budgets, or LOBs, are equalized, it could strike down the LOB provisions alone and leave the rest of the funding formula in place.

A local option budget is a way for local school districts to supplement funding from the state with local tax dollars.

But Justice Dan Biles noted that state funding for LOBs accounts for about $1.1 billion out of the entire $4 billion education budget, and he questioned whether lawmakers really would have passed a funding plan without that money.

Biles, who did most of the questioning during oral arguments, indicated that he was running out of patience.

He noted that the Gannon case has been before a three-judge district court panel three times, and twice before the Supreme Court, and that the state has lost its case at every turn.

“At what point does this process have to stop?” he asked. “How many years do we operate unconstitutionally before we say the music stops and we have to stop dancing?”

But McAllister repeated his argument that the Legislature acted “in good faith, during a tough budget year,” and that many states, not just Kansas, have had difficulty achieving equitable funding during volatile economic times.

There are two main issues involved in the case. The first, which the court heard Tuesday, is whether state funds are distributed equitably among the 286 unified school districts.

In February, the court said they were not, noting that lower-wealth districts had to levy higher property taxes at the local level than richer districts in order to provide comparable educational programs. It gave lawmakers until July 1 to cure that problem.

But the larger issue at stake is whether overall funding for public schools is sufficient to make sure students can meet minimum academic achievement standards that the court has set out, standards known as the Rose capacities.

A lower court has ruled twice that overall funding is not sufficient, suggesting the state may need to add as much as $500 million a year in additional funding. The Supreme Court is expected to hear arguments in that portion of the case later this spring or early summer.

Currently, though, the court is weighing the fairness of how the state distributes so-called “equalization aid,” which subsidizes two pots of money that districts have at their disposal: local option budgets, which is extra money districts can raise above and beyond their state-determined general fund budgets; and capital outlay, which districts use for big-ticket purchases such as furniture, equipment, building repair, and in some cases new construction

In response to the court’s initial finding in February, lawmakers passed a bill readjusting the formulas used to calculate that aid, taking away money from districts with relatively high property wealth like Lawrence and shifting some of that to poorer districts.

The state argues that those moves made funding in those two categories constitutionally equitable.

But lawmakers also inserted a “hold harmless” provision to make sure no district actually lost funding overall. And so whatever amount the wealthier districts lost in the shift — $1.7 million, in the case of Lawrence — was given back to them as additional money in their basic general fund block grants.

In addition, the bill also gives those wealthier districts that lose money for the LOBs and capital outlay funds to replace that money through local property tax dollars.

“I would suggest to you that it’s possible that it’s now worse because wealthier districts can use this to get additional LOB money, because they can easily refill that tank,” Rupe said.