Arizona School Finance: a Primer on Strategy and Enforcement

• Publication year: 2021
• Citation: Vol. 83

83 Nebraska L. Rev. 869. Arizona School Finance: A Primer on Strategy and Enforcement

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Timothy M. Hogan*

Arizona School Finance: A Primer on Strategy and Enforcement

TABLE OF CONTENTS

I. Introduction ...................................................... 869
II. Background ....................................................... 870
A. The Arizona Center for Law in the Public Interest ............. 870
B. School District Participation ................................. 870
C. Litigation Strategy ........................................... 871
1. Dealing with Adverse Precedent ............................. 871
2. Parties and Resources ...................................... 871
III. The Litigation .................................................. 872
A. The Trial Court ............................................... 872
B. The Arizona Supreme Court ..................................... 873
IV. Enforcement of the Supreme Court Decision ........................ 873
A. Initial Legislative Response .................................. 874
B. The Legislature Gets More Sophisticated ....................... 876
C. The Opt-Out System ............................................ 877
V. The Politics of Education Finance ................................. 879
VI. The State of School Finance in Arizona Today ..................... 880
VII. Conclusion ...................................................... 881

I. INTRODUCTION

In 1991, the Arizona Center for Law in the Public Interest, a nonprofit public interest law firm, filed a lawsuit alleging that Arizona's school finance system violated the state constitution. Although the attorneys working on the case were experienced and attempted to anticipate problems, it turns out that we had little idea of what lay in store for us. Thirteen years and four appellate decisions later, we are still litigating school finance issues that we thought would have been resolved long ago. Nevertheless, the benefits for Arizona's public schools

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that were produced by this litigation have been enormous and even exceeded our original expectations.

II. BACKGROUND

A. The Arizona Center for Law in the Public Interest

The Arizona Center for Law in the Public Interest ("Center") was established in 1974 as a nonprofit public interest law firm. It is a small organization with two to four lawyers, depending on the success of its fundraising efforts at any given time. The Center litigates issues of statewide importance, including environmental issues, civil rights, campaign finance, and government accountability.(fn1) In 1991, the Center decided to include education finance among its litigation projects.

B. School District Participation

At about the same time that the Center became interested in education finance issues, a number of school districts in low-propertywealth areas of Arizona approached the Center about their inability to build new schools or renovate existing facilities. At that time, Arizona's maintenance and operation system for school funding was roughly equalized. However, capital financing was left entirely to the ability and inclination of school districts and their voters to assess property taxes to support the issuance of general obligation bonds.

The capital finance system had produced enormous disparities among school districts with regard to their school facilities, which depended on the size of their property tax base and the inclination of their voters to approve tax increases. Schools in districts with low tax bases were older, smaller, and, in some cases, unsafe for students. Some schools lacked libraries, science labs, computer rooms, art programs, gymnasiums, and auditoriums. But in higher wealth districts, there were schools with indoor swimming pools, a domed stadium, television studios, and extensive computer systems.(fn2)

The school districts that approached the Center about litigating the constitutionality of the system were largely rural school districts

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with small tax bases. With small tax bases, large tax increases were necessary to support the districts' capital expenditures. As a result, tax rates in low-wealth school districts were many times higher than tax rates in higher wealth school districts. But high tax rates on a small tax base still didn't generate sufficient funds to build and renovate schools that were suitable for students.

C. Litigation Strategy

1. Dealing with Adverse Precedent

In 1973, in Shofstall v. Arizona,(fn3) the Arizona Supreme Court rejected a school finance challenge based upon the Arizona constitutional requirement that the legislature "shall provide for the establishment and maintainence of a general and uniform public school system."(fn4) In a unanimous decision, the court determined that the school finance system was general and uniform, because the laws circumscribing that system applied equally to all school districts. Oddly enough, the court determined that education was a fundamental right under the Arizona Constitution, but it failed to apply strict scrutiny to its analysis of the school finance system.(fn5)

By 1991, the entire composition of the Arizona Supreme Court had changed. Unlike the previous challenge in 1973, which generally focused on maintenance and operations funding, we determined that a more targeted challenge, limited to the capital finance system, was appropriate for a variety of reasons. First, it would be far easier to demonstrate that the capital finance system produced disparities among school districts with regard to their school buildings, facilities and equipment. Second, it did not make sense to assert a broad-based challenge to the school finance system, because it had been roughly equalized after the Shofstall decision and such a challenge would require an enormous investment of resources that the Center lacked. In the face of the adverse decision from 1973, we determined that a limited challenge requiring fewer resources, but one that would clearly demonstrate the stark differences in school facilities was the optimal strategy.

2. Parties and Resources

At the very beginning, perhaps a half-dozen school districts had approached the Center about litigating capital finance issues. We made an effort to recruit additional school districts for both financial and political reasons. Arizona has approximately 228 school districts, ranging from less than fifty students in the smallest district to 70,000

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students in the largest.(fn6) We wanted to be able to represent to the court that the litigation was supported by a substantial number of school districts. Additionally, even though we hoped that the litigation would be relatively inexpensive, we wanted to insure that we had sufficient financial resources to pay for what might turn out to be substantial costs. The more school districts we could recruit to support the litigation, the less of a financial burden it would be for each school district.

By the time we filed the lawsuit in 1991, we had enlisted the support of over forty school districts, each of which executed intergovernmental agreements to support the litigation. Additionally, the school districts agreed to assess themselves on a per-student basis to generate the funds that we anticipated would be necessary to finance the litigation.

III. THE...