Legal Update
■ Chris Thomas, General Counsel/Director of Legal and Policy Services
Arizona School Boards Association | www.azsba.org
Legal Update
• School funding litigation
• Vouchers
• Recent legal questions of interest
Arizona School Boards Association | www.azsba.org
School funding litigation – Cave Creek USD
v. Ducey
• Coalition of educational organizations led by
ASBA challenging FY2010-11 FY budget in
which the Legislature failed to fund inflation in
the manner required by Prop. 301 (an inflation
factor applied to base level plus other
components of revenue control limit); $55 million
difference in two approaches of calculating
mandate.
Arizona School Boards Association | www.azsba.org
School funding litigation – Cave Creek USD
v. Ducey
• State’s position: Appropriations are inherently a
legislative prerogative and the people cannot
compel the Legislature to spend money from
General Fund which must go through the
appropriations process which is purview of
Legislature and courts cannot second-guess this
political process; also, Prop. 301 was neither an
initiative nor a referendum
Arizona School Boards Association | www.azsba.org
School funding litigation – Cave Creek USD
v. Ducey
• Plaintiff’s position: The people are sovereign.
The people, through the initiative/referendum
process can direct the Legislature to spend
money on issues that they believe in and the
Legislature are bound to follow;
• Prop. 301 was a referendum, not an initiative.
• Failure to fund inflation violation of Prop. 105
Voter Protection Act. Asking Court for
declaratory judgment that budget without
inflation factor was unlawful – not asking for
injunctive relief.
Arizona School Boards Association | www.azsba.org
School funding litigation – Cave Creek USD
v. Ducey
• Plaintiffs lost at trial court (Judge Ken Mangum);
appealed to Arizona Court of Appeals Division
One
• Unanimous Decision at AZ Court of Appeals for
Plaintiffs
• Statute requires Legislature to provide for annual
inflation adjustments in each component of revenue
control limit, including base level
• “Or” does mean “and”
• Prop. 301 was a referendum
Arizona School Boards Association | www.azsba.org
School funding litigation – Cave Creek USD
v. Ducey
• An interpretation by the Legislature allowing for
fewer increases would violate the Voter Protection
Act of the Arizona Constitution
• “The principal purpose of the VPA is to preclude the
legislature from overriding the intent of the people… With
the adoption of the VPA, voter-approved measures are
now superior to enactments of the legislature…”
• “Because we conclude that the VPA requires the
legislature to follow the electorate’s decision to approve
(inflation funding), we reject the argument that the people
do not have the power to bind the legislature.”
Arizona School Boards Association | www.azsba.org
School funding litigation – Cave Creek USD
v. Ducey
• Where do we go from here?
• State has decided to appeal using that to justify not
giving inflation again this year
• No chance of getting funds back from 2010-11, 201112 and 2012-13 where inflation wasn’t funded,
HOWEVER…our position is that should we prevail
the basis of the funding for inflation should be if those
increase HAD BEEN given
Arizona School Boards Association | www.azsba.org
School funding litigation – Craven and
Hobday lawsuits
• Litigation brought by charter schools alleging
overall funding disparity between charter
schools and school district schools violates
Arizona Constitution General and Uniform
Clause (Craven)
• Litigation brought by taxpayer alleging funding
disparity in allowing school districts to exceed
approved state funding through budget overrides
(Hobday)
Arizona School Boards Association | www.azsba.org
School funding litigation – Craven and
Hobday lawsuits
• ASBA intervenor and cross-claimant in case
• From Roosevelt v. Bishop: “(T)he system the
legislature chooses to fund the public schools must
not itself be the cause of substantial disparities.”
• Intervenors – the funding disparity in Roosevelt dealt with
a disparity in funding among the same kind of educational
institutions, i.e., school districts. No AZ court has said that
the General and Uniform Clause requires any degree of
uniformity in the funding of different kinds of educational
institutions.
Arizona School Boards Association | www.azsba.org
School funding litigation – Craven and
Hobday lawsuits
• Case trial court level – Maricopa County
Superior Court Judge J. Richard Gama
• Several procedural rulings – most significant one
in favor of state; that differences in funding only
have to have a rational basis for the
distinction(instead of higher standard strict
scrutiny);
• Oral argument on cross motions for summary
judgment occurred Friday, March 22
Arizona School Boards Association | www.azsba.org
Vouchers – Niehaus v. Huppenthal
• Legality of education savings or empowerment
accounts (vouchers)
• 2011 legislation creating education empowerment
accounts for students on IEP or Section 504 plan
• allows parents to pay for tuition in private school or
rehabilitation services or tutoring;
• must agree not to enroll in public school; account is set up
with 90% of base level support for student in
empowerment account;
• disbursements made from account to provider
• Schools maintain choice of denying students; do not have
to follow state accountability system
• Students leave behind protections of federal law (IDEA,
504)
Arizona School Boards Association | www.azsba.org
Vouchers – Niehaus v. Huppenthal
• Program has since been expanded (HB2626 in
2012 session)
• Attends a school or school district that has been assigned
a letter grade of D or F by the Arizona Department of
Education (ADE) based on the school or district’s
achievement profile.
• Previously received an Arizona Scholarship for Pupils with
Disabilities.
• Is the child or legal ward of a member of the United States
Armed Forces.
• Has been identified as a gifted pupil.
• By one estimate, one in five Arizona students is now
eligible for an ESA
Arizona School Boards Association | www.azsba.org
Vouchers – Niehaus v. Huppenthal
• Arizona Constitution, Art. IX, Sec. 10: “No tax shall
be laid or appropriation of public money made in aid
of any church, or private or sectarian school, or any
public service corporation.”
• Cain v. Horne (2009): “For all intents and purposes, the
voucher programs do precisely what the Aid Clause
prohibits. These programs transfer state funds directly
from the state treasury to private schools. That the checks
or warrants first pass through the hands of parents is
immaterial; once a pupil has been accepted into a qualified
school under either program, the parents or guardians
have no choice; they must endorse the check or warrant to
the qualified school.”
Arizona School Boards Association | www.azsba.org
Vouchers – Niehaus v. Huppenthal
• ASBA is plaintiff in case, along with Sharon Niehaus,
Continental ESD Board Member and Special
Education parent, Arizona Education Association,
Arizona Association of School Business Officials;
NSBA has been approved as amicus in case
• John Huppenthal, State (AG) are defendants;
Goldwater Institute and Institute for Justice has
joined as intervenor
• Plaintiffs lost in Superior Court; Case went to AZ
Court of Appeals on de novo review; Case argued
on February 13, 2013
Arizona School Boards Association | www.azsba.org
Vouchers – Niehaus v. Huppenthal
• State/Goldwater: Money is aid to parents and
parents have many options, including private
schools
• Plaintiffs: Under Aid Clause if ANY money goes
to private schools, it’s unconstitutional; also it is
unconstitutional under religion clause and to
require recipients to waive their constitutional
right to a public education
• Decision could take months
Arizona School Boards Association | www.azsba.org
Legal Potpourri from the “Mailbox”
• Charters and procurement
• Charters and public records
• Affordable Care Act Non-Discrimination of
Health Plans and School District taxes
Arizona School Boards Association | www.azsba.org
Questions?
THANK YOU!
Arizona School Boards Association | www.azsba.org