Case Title: Gannon v. Kansas

Citation: 

Docket Number: 

State: kansas

Court: Kansas Supreme Court

Date: 2016-05-27T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF KANSAS 
 
No. 113,267 
 
LUKE GANNON, BY HIS NEXT FRIENDS AND GUARDIANS, et al., 
Appellees, 
 
V. 
 
STATE OF KANSAS, Appellant. 
 
 
SYLLABUS BY THE COURT 
 
1. 
 
The Kansas Constitution receives its force from the express will of the people and 
serves as the supreme and paramount law of the state. 
 
2. 
 
Through Article 6 of their constitution, the people of Kansas expressly assigned 
duties to the legislature that both empower and obligate it to make suitable provision for 
finance of the educational interests of the state. 
 
3. 
The supreme court has the power and duty to review legislative enactments and to 
ensure the legislature's compliance with its duty under Article 6 of the Kansas 
Constitution. 
 
2 
 
4. 
To determine compliance with the equity requirement in Article 6, Kansas courts 
consider whether school districts have reasonably equal access to substantially similar 
educational opportunity through similar tax effort. 
 
5. 
A party asserting compliance with a court decision ordering remedial action bears 
the burden of establishing such compliance. Although untested legislation normally 
enjoys a presumption of constitutionality, the presumption no longer applies when the 
legislative action is in response to a court order. 
 
6. 
Based on the record before this court, the State has carried its burden to show it 
has cured the unconstitutional inequities in capital outlay that were affirmed to exist in 
Gannon v. State, 303 Kan. 682, 368 P.3d 1024 (2016). 
 
7. 
Based on the record before this court, the State has not carried its burden to show 
it has cured the unconstitutional inequities in the local option budget and supplemental 
general state aid that were affirmed to exist in Gannon v. State, 303 Kan. 682, 368 P.3d 
1024 (2016). 
 
8. 
The test for severability in Kansas is well established:  Whether the court may 
sever an unconstitutional provision from a statute and leave the remainder in force and 
effect depends on the intent of the legislature. If from examination of a statute it can be 
said that (1) the act would have been passed without the objectionable portion and (2) if 
the statute would operate effectively to carry out the intention of the legislature with such 
portion stricken, the remainder of the valid law will stand. This court will assume 
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severability if the unconstitutional part can be severed without doing violence to 
legislative intent. 
 
9. 
The presence of a severability clause is direct evidence of legislative intent. A 
severability clause within an act creates a presumption of severability but is not 
dispositive. 
 
10. 
Based on the record before us, this court cannot conclude that the legislature 
would have passed the Classroom Learning Assuring Student Success Act without the 
inclusion of the unconstitutional provisions. 
 
11. 
Based on the record before us, this court cannot conclude severance of the 
unconstitutional provisions would allow the remainder of the Classroom Learning 
Assuring Student Success Act to operate effectively to carry out the intention of the 
legislature. 
 
Appeal from Shawnee District Court; FRANKLIN R. THEIS, ROBERT J. FLEMING, and JACK L. 
BURR, judges. Opinion filed May 27, 2016. Senate Substitute for House Bill 2655 is not in compliance 
with the February 11, 2016, opinion of this court and fails to remedy the constitutional infirmities in the 
Classroom Learning Assuring Student Success Act (CLASS), K.S.A. 2015 Supp. 72-6463 et seq., 
identified in that opinion.  
 
Stephen R. McAllister, solicitor general, argued the cause, and Jeffrey A. Chanay, chief deputy 
attorney general, M.J. Willoughby, assistant attorney general, Dwight R. Carswell, assistant solicitor 
general, Bryan C. Clark, assistant solicitor general, and Derek Schmidt, attorney general, were with him 
on the brief for appellant State of Kansas; Arthur S. Chalmers, Gaye B. Tibbets, Jerry D. Hawkins, and 
Rachel E. Lomas, of Hite, Fanning & Honeyman, LLP, of Wichita, were with him on the brief for 
appellant State of Kansas. 
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Alan L. Rupe, of Lewis Brisbois Bisgaard & Smith LLP, of Wichita, argued the cause, and 
Jessica L. Skladzien and Mark A. Kanaga, of the same firm, and John S. Robb, of Somers, Robb & Robb, 
of Newton, were with him on the brief for appellees. 
 
Per Curiam:   
This case requires us to determine whether the State has met its 
burden to show that recent legislation brings the State's K-12 public school funding 
system into compliance with Article 6 of the Kansas Constitution. We hold it has not. 
 
 
On February 11, 2016, we affirmed the holding of the three-judge district court 
panel that found changes made to the State's K-12 funding system through enactment of 
the Classroom Learning Assuring Student Success Act of 2015 (CLASS) violated the 
equity component of Article 6, § 6(b) of the Kansas Constitution. Gannon v. State, 303 
Kan. 682, 746, 368 P.3d 1024 (2016) (Gannon II). Specifically, we determined the 
operation of capital outlay state aid and local option budget (LOB) supplemental general 
state aid, as formulated under CLASS, still allowed inequitable distribution of funding 
among school districts that we had held unconstitutional in Gannon v. State, 298 Kan. 
1107, 319 P.3d 1196 (2014) (Gannon I). 303 Kan. at 729-33. 
 
 
After affirming the panel's decision, we stayed our mandate "to give the legislature 
a second, and substantial, opportunity to craft a constitutionally suitable solution and 
minimize the threat of disruptions in funding for education." Gannon II, 303 Kan. at 741. 
In April 2016, lawmakers responded by passing Senate Substitute for House Bill No. 
2655 (H.B. 2655). See L. 2016, ch. 45. 
 
 
H.B. 2655 restores the prior formula for capital outlay state aid we identified as a 
permissible cure for the inequities found in that funding mechanism. Gannon II, 303 Kan. 
at 710-11. But the new law, for the first time, also applies the same capital outlay aid 
formula to LOB supplemental general state aid. L. 2016, ch. 45, sec. 3. As conceded by 
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the State, application of the capital outlay aid formula to LOB funding results in 
significant reductions in overall supplemental general state aid to the vast majority of 
school districts. 
 
Because of this result, the new law includes a "hold harmless" provision creating a 
new "equalization aid" entitlement for the 2016-17 school year. L. 2016, ch. 45, sec. 1(a). 
Specifically, the law authorizes such equalization aid—to those districts receiving 
reduced funding under the new bill—in an amount equal to their loss. L. 2016, ch. 45, 
sec. 5. The new law also moves from the State Finance Council to the Kansas State Board 
of Education (State Board) an "extraordinary need fund" of approximately $15 million 
and permits the State Board's disbursement of those funds to further decrease disparity 
among the districts. L. 2016, ch. 45, secs. 1(e), 9. 
 
 
We ordered both parties to brief whether the legislative action—H.B. 2655—
remedied the inequities that Gannon II affirmed to exist in CLASS. Additionally, the 
parties were directed to discuss the proper judicial remedy if we ruled the new law failed 
to comply with our Gannon II decision. 
 
 
In this remedial stage, the State asserts:  (1) H.B. 2655 cures the inequities found 
in the capital outlay state aid by restoring and fully funding the capital outlay aid formula 
we previously held constitutional; (2) H.B. 2655 cures the inequities found in the LOB 
funding by applying the same capital outlay aid formula to supplemental general state 
aid. It additionally argues any remaining inequities in the LOB funding system are cured 
through operation of the hold harmless provision and extraordinary need fund; and (3) If 
H.B. 2655 fails to cure the inequities we found in CLASS, the proper remedy is severing 
the offending provisions and allowing the remainder of CLASS to operate throughout the 
2016-17 school year. 
 
6 
 
 
Plaintiffs do not contest the State's first argument. They do, however, assert that 
H.B. 2655 worsens, rather than cures, the inequities in LOB funding affirmed to exist in 
Gannon II. They further argue that we should not sever any offending provisions but hold 
the entirety of H.B. 2655 unconstitutional, lift our stay of the panel's extensive remedial 
orders, and grant them attorney fees. 
 
 
After careful consideration of the legislative record and arguments from both 
sides, we hold the following: 
 
1. 
H.B. 2655 cures the capital outlay inequities affirmed to exist in Gannon II. 
2. 
H.B. 2655, which includes the hold harmless and extraordinary need 
provisions, fails to cure the LOB inequities affirmed to exist in Gannon II. 
3. 
The unconstitutional LOB funding mechanism is not severable from 
CLASS, the general statutory scheme for K-12 public school finance, thus 
making CLASS unconstitutional. 
4. 
The panel's remedial orders remain stayed, and jurisdiction of this case is 
retained by this court. 
5. 
The plaintiffs are not entitled to attorney fees. 
 
 
Each of these holdings will be explained below. 
 
FACTS 
 
 
The procedural and factual history of this case was extensively outlined in both 
Gannon I and Gannon II. See Gannon I, 298 Kan. at 1112-18; Gannon II, 303 Kan. at 
686-98. Accordingly, we limit this section only to those facts necessary to our holding. 
 
 
The School District Finance and Quality Performance Act (SDFQPA), K.S.A. 72-
6405 et seq., was the comprehensive statutory plan for K-12 public school finance in 
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Kansas at the outset of the underlying lawsuit filed in 2010. See Gannon II, 303 Kan. at 
686. The basic source of funding within the SDFQPA was provided by the State through 
"general state aid" entitlements funded by a required 20-mill levy for each district. K.S.A. 
2014 Supp. 72-6431. Each district's general state aid was calculated by multiplying a 
dollar amount known as "base state aid per pupil" (BSAPP) by the district's population of 
enrolled students. K.S.A. 2014 Supp. 72-6410. Full-time enrollment was weighted by 
factors recognized to increase the cost of education per pupil, e.g., number of special 
needs students. K.S.A. 2014 Supp. 72-6407; K.S.A. 2014 Supp. 72-6410. 
 
 
In addition to this basic payment, the legislature allowed districts "local effort" 
revenue-raising authority to fund capital outlay expenditures and an LOB. K.S.A. 2014 
Supp. 72-8801; K.S.A. 2014 Supp. 72-6433. In general, both were funded through 
optional additional mill levies on property in the district. See Gannon II, 303 Kan. at 687-
88. The legislature capped the additional levies for capital outlay expenses at 8 mills per 
district, while the revenues produced by the additional LOB mill levy could not exceed 
an amount equal to a set percentage—currently 33%, historically as low as 25%—of a 
district's general state aid. K.S.A. 2014 Supp. 72-8801; K.S.A. 2014 Supp. 72-6433. 
Districts could use capital outlay funds only for limited purposes, e.g., improvements 
such as building construction and maintenance, equipment purchases, and other 
authorized investments. K.S.A. 2014 Supp. 72-8804. On the other hand, LOB funds had 
few restrictions and districts could use them to supplement their general state aid. K.S.A. 
2014 Supp. 72-6433. 
 
 
Because of the dissimilarities among the overall property values of the 286 school 
districts, these local revenue-raising programs created inequities in the amount of funds 
districts could generate and the tax effort required to do so. A district with high property 
value, for example, implementing the maximum 8-mill levy, generated more capital 
outlay funds than a property-poor district doing the same. Similarly, a property-wealthy 
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district fully funding a 15% LOB could do so with less tax effort, i.e., a lower mill levy, 
than a district with lower property values. See Gannon I, 298 Kan. at 1175-88. 
 
 
To remove these disparities, the legislature implemented programs through 
SDFQPA intended to equalize property-poor districts' local revenue-raising authority. 
The State Board calculated an assessed valuation per pupil (AVPP) for each district in the 
State by dividing the total assessed property value of a district by its schools' enrollment 
population. The State Board ranked all the districts by their AVPP—from low to high. 
K.S.A. 2014 Supp. 72-8814; K.S.A. 2014 Supp. 72-6434. This AVPP schedule was then 
utilized in two distinct formulas to calculate what was commonly called "equalization 
aid" for the capital outlay and LOB funding. See Gannon I, 298 Kan. at 1180, 1185. 
 
 
For capital outlay, a "state aid percentage factor" for each district was established 
at 25%. This factor increased 1% for every $1,000 a district fell below the median AVPP 
with a cap of 100%, and decreased 1% for every $1,000 it rose above the median. The 
resulting percentage factor was then multiplied by the district's total capital outlay mill 
levy revenue, and the product was provided to the district as capital outlay state aid. 
K.S.A. 2014 Supp. 72-8814; Gannon I, 298 Kan. at 1176. 
 
For the LOB, the State Board multiplied the amount of a district's LOB-generated 
revenue by a ratio—obtained from dividing the district's AVPP by the one located at the 
81.2 percentile of the AVPP schedule and then subtracting the quotient from 1. The 
resulting product was provided to the district as supplemental general state aid. K.S.A. 
2014 Supp. 72-6434; Gannon II, 303 Kan. at 720. 
 
 
In 2010, the State began withholding capital outlay state aid. See 298 Kan. at 
1177. In addition, supplemental general state aid was reduced from the amount required 
by its formula, which resulted in prorated payments. See 298 Kan. at 1183. Districts not 
qualifying for aid, or eligible only for a nominal amount, were unaffected by these 
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reductions and were able to keep generating their same level of local revenue without 
added tax effort, i.e., without increased mill levies. See 298 Kan. at 1181, 1187-88. 
 
 
In 2010 plaintiffs sued the State in Shawnee County District court, alleging K-12 
public school funding in Kansas was unconstitutionally inadequate. The plaintiffs 
additionally claimed the system was unconstitutionally inequitable because reduction or 
elimination of state aid under the capital outlay and LOB funding mechanisms 
disproportionately affected the local revenue-raising ability of districts with a low AVPP, 
while districts with a higher AVPP saw little or no change in such ability. After a 16-day 
bench trial, the three-judge panel agreed with the plaintiffs and held the changes to the 
school finance system violated Article 6, § 6(b) of the Kansas Constitution. See Kan. 
Const., art. 6, § 6(b) ("The legislature shall make suitable provision for finance of the 
educational interests of the state."). 
 
 
On appeal, we confirmed Article 6, § 6(b) contains adequacy and equity 
components and outlined standards for both. Gannon I, 298 Kan. 1107. For adequacy, we 
adopted the seven-prong standard initially formulated by the Supreme Court of Kentucky 
in Rose v. Council for Better Educ., Inc., 790 S.W.2d 186, 212 (Ky. 1989), 298 Kan. at 
1170, and later essentially codified in K.S.A. 72-1127(c). See 298 Kan. at 1165-67. For 
equity, we determined "[s]chool districts must have reasonably equal access to 
substantially similar educational opportunity through similar tax effort." 298 Kan. at 
1174. 
 
 
We affirmed the panel's ruling that found elimination of the capital outlay state aid 
and proration of supplemental general state aid created unfair, wealth-based—and 
unconstitutional—disparities among the districts. The case was remanded for the panel to 
reconsider the adequacy portion of its ruling under Rose, while the equity portion was 
returned for remedial action. 298 Kan. at 1111. 
10 
 
 
 
As guidance to the panel, we specified the State could cure the equity issue by 
fully funding the existing formulas for capital outlay state aid and supplemental general 
state aid. If the State chose to cure the issue with less than full funding, or by adopting 
other equalization techniques, the panel was instructed to evaluate the curative action 
under the test set out in our opinion. 298 Kan. at 1198-99. 
 
 
After the case returned to the panel, the 2015 legislature ultimately repealed the 
SDFQPA and replaced it with a new comprehensive public school funding system known 
as CLASS. K.S.A. 2015 Supp. 72-6463 et seq. The new law made substantial changes to 
the formulas used to calculate both capital outlay state aid and supplemental general state 
aid. Gannon II, 303 Kan. at 685. 
 
 
For capital outlay state aid, the initial percentage factor began at 75% and 
decreased 1% for every $1,000 a district rose above the State Board's lowest calculated 
AVPP. After application of this new formula, all eligible districts' capital outlay state aid 
was reduced, and 28 districts lost eligibility altogether. See 303 Kan. at 712-15. 
 
 
For supplemental general state aid, the legislature directed the State Board to 
organize aid-qualifying districts on its AVPP schedule into five equal quintiles from low 
AVPP to high. In other words, each quintile represented a 20% AVPP span. The 
SDFQPA formula for determining supplemental general state aid was then utilized. If the 
school district fell in the lowest quintile, it would receive 97%—not 100%—of the 
calculated aid. If it was in the second lowest quintile it would receive 95%, continuing to 
the third lowest receiving 92%, the fourth lowest receiving 82%, and the highest 
receiving 72%. In simplest terms, the legislature reduced the LOB aid (supplemental 
general state aid) of the poorest 20% of school districts by 3%, the next 20% by 5%, and 
so on until the wealthiest aid-receiving districts were reduced by 28%. See L. 2015, ch. 4, 
sec. 38; 303 Kan. at 721. 
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CLASS also disbursed base funding for school years 2015-16 and 2016-17 
through a new "block grant" formula. The funding matched the amount equal to a 
district's total general state aid plus the capital outlay state aid and supplemental general 
state aid it previously received in school year 2014-15. K.S.A. 2015 Supp. 72-6465. 
Essentially, the equalizing funds of the capital outlay and LOB funding systems were 
frozen at 2014-15 levels as calculated under the new formulas and then rolled into a 2-
year block grant payment to the districts for school years 2015-16 and 2016-17. See 303 
Kan. at 694. 
 
 
The panel held that the changes made by CLASS continued to allow 
unconstitutional funding inequities to exist among the districts. Specifically, the reduced 
LOB supplemental general state aid required the less-property-wealthy districts to 
increase their local mill levies to cover the loss of such aid. In comparison, the wealthier 
non-aid-qualifying districts experienced no change in their local levy to stay at the same 
revenue level. Similarly, the negative effects of the new capital outlay state aid formula 
were limited to aid-qualifying districts, while non-aid-qualifying districts remained 
unharmed. In addition to these holdings on equity, the panel also held CLASS 
unconstitutionally inadequate. See Gannon II, 303 Kan. at 696. 
 
 
On appeal in Gannon II, we bifurcated the equity and adequacy portions of the 
panel's rulings and first examined equity. 303 Kan. at 689. We held the State failed to 
cure the inequities affirmed to exist in Gannon I for both capital outlay and LOB funding. 
303 Kan. at 720, 726. Specifically, we found the reduction in aid for both programs 
negatively affected the property-poor districts, while leaving property-rich districts 
unscathed. See 303 Kan. at 719, 726. In addition, because CLASS froze aid payments at 
2014-15 levels but continued to allow districts to increase their capital outlay levies and 
LOB budgets, districts without a need for aid continued to have greater ability to raise 
additional local revenue than their less property-wealthy counterparts. See 303 Kan. at 
12 
 
729-32. We agreed with the panel that these changes worsened rather than cured K-12 
funding inequities affirmed to exist in Gannon I. See 303 Kan. at 718-33. 
 
 
Instead of remanding the case to the panel for it to begin implementing its broad 
remedial orders, we stayed the issuance of our mandate and retained jurisdiction over the 
appeal to give the legislature time to respond to our decision and enact a cure for the 
inequities found to exist in CLASS. 303 Kan. at 746. We advised the State that "[o]ne 
obvious way [it] could comply with Article 6 would be to revive the relevant portions of 
the previous school funding system and fully fund them within the current block grant 
system." 303 Kan. at 743. We further counseled that if the State chose a different route, 
"any other funding system it enacts must be demonstrated to be capable of meeting the 
equity requirements of Article 6." 303 Kan. at 743. 
 
We cautioned: 
 
"In short, if by the close of fiscal year 2016, ending June 30, the State is unable 
to satisfactorily demonstrate to this court that the legislature has complied with the will of 
the people as expressed in Article 6 of their constitution through additional remedial 
legislation or otherwise, then a lifting of the stay of today's mandate will mean no 
constitutionally valid school finance system exists through which funds for fiscal year 
2017 can lawfully be raised, distributed, or spent. 
 
. . . .  
 
"Without a constitutionally equitable school finance system, the schools in 
Kansas will be unable to operate beyond June 30." 303 Kan. at 743-44. 
 
 
The legislature passed H.B. 2655 in April 2016 in response to our decision and the 
bill was signed by the governor. Among other things, it makes major changes to the aid 
13 
 
programs at issue in Gannon II. Those changes and their effects are discussed in detail 
below. 
 
ANALYSIS 
 
Issue 1:  H.B. 2655 does not comply with the equity requirement of Article 6. 
 
 
In response to our decision in Gannon II, the State filed a "Notice of Legislative 
Cure" on April 7, 2016. Submitted with this notice was the legislative record, including 
documents and information made available to lawmakers during their deliberative 
process. In a similar situation 10 years ago, we recognized the submitted documents had 
"not been subjected to the fact-finding processes of litigation through which the parties 
were permitted to examine [their] validity and accuracy." Montoy v. State, 282 Kan. 9, 
21, 138 P.3d 755 (2006) (Montoy IV). But we considered such information as "part of the 
legislative history" and used it in determining legislative intent, relevant to whether the 
cure complied with Article 6. 282 Kan. at 21-22; see Montoy v. State, 279 Kan. 817, 825, 
112 P.3d 923 (2005) (Montoy III) ("[T]his court's retained jurisdiction allows a review to 
determine if there has been compliance with our opinion."); see also Gannon II, 303 Kan. 
at 743 ("[T]he State would help its case by showing its work in how it determined that 
any . . . proposed solution complies with Gannon I."). We will consider the submitted 
documents for these purposes. 
 
Burden of Proof 
 
 
"'[A] party asserting compliance with a court decision ordering remedial action 
bears the burden of establishing that compliance . . . .'" Gannon II, 303 Kan. at 709 
(quoting Montoy III, 279 Kan. at 826). Although untested legislation normally enjoys a 
presumption of constitutionality, the presumption no longer applies when the legislative 
14 
 
action is in response to a court order. 303 Kan. at 708-09. Accordingly, "[t]he State has 
the express burden to show compliance." 303 Kan. at 709. 
 
Discussion 
 
 
Equity Standard 
 
 
In Gannon I we clarified the equity standard of Article 6, § 6(b) by stating:  
"School districts must have reasonably equal access to substantially similar educational 
opportunity through similar tax effort." 298 Kan. at 1175. We have never required precise 
standards for equity compliance or applied a zero tolerance test. But we have "rejected 
legislation that increased or exacerbated inequities among districts . . . ." Gannon v. State, 
303 Kan. 682, 709, 368 P.3d 1024 (2016) (Gannon II); see Gannon v. State, 298 Kan. 
1107, 1110, 319 P.3d 1196 (2014) (Gannon I). 
 
In our analysis, we do not dictate to the legislature how it should constitutionally 
fund K-12 public school education; we only review its efforts to ensure they do not run 
afoul of the Kansas Constitution. See Gannon II, 303 Kan. at 734-35 ("We . . . reaffirm[] 
the legislature's power and duty to create a school funding system. . . . [W]e have also 
consistently affirmed our own power and duty to review legislative enactments for 
constitutional compliance . . . ."). 
 
Our review of legislation includes an acknowledgment that a system of school 
finance allowing local revenue-raising authority, such as assessing LOB mill levies on 
property within a school district, will almost certainly create wealth-based disparities 
among the districts. This reality, as confirmed in the numerous school finance cases 
litigated in our courts, has been the result of policy decisions made by the legislature. See 
Gannon I, 298 Kan. at 1173-74 ("'legislat[ure's] increase in the LOB cap exacerbates the 
wealth-based disparities between districts'") (quoting Montoy III, 279 Kan. at 840). 
15 
 
 
Indeed, in recent years the legislature has shifted its emphasis from funding 
BSAPP with the 20-mill levy on all districts—as mandated by K.S.A. 72-6431—to a 
greater reliance on district-elective LOB's. The LOB cap held steady at 25% from 1992 
until 2005-06, but from then until CLASS' passage in 2015, the LOB cap increased to 
33%. Since 2005-06, BSAPP has effectively been reduced from $4,257 to $3,838. See, 
e.g., K.S.A. 2005 Supp. 72-6410; K.S.A. 2014 Supp. 72-6410; see also Gannon II, 303 
Kan. at 691-92, 720, 731-33 (BSAPP decreased as the LOB cap increased). As Mark 
Tallman, Associate Executive Director for the Kansas Association of School Boards, 
described to the 2016 legislature, "[O]ne of the challenges we see is that the more local 
funding you allow, the greater your challenge is to equalize it because there is such a 
range of local sources." 
 
Accordingly, if local funding is to continue, this disparate effect has to be limited 
so it complies with Article 6. See Gannon I, 298 Kan. at 1174 (quoting Montoy III, 279 
Kan. at 840). In sum, the State may not allow children to receive disparate levels of 
educational opportunity on the basis of wealth, especially the property wealth of the 
district where they happen to live. See Gannon I, 298 Kan. at 1174 ("Education in Kansas 
is not restricted to that upper stratum of society able to afford it."). 
 
With these principles in mind we address the State's arguments. 
 
H.B. 2655 cures the capital outlay inequities affirmed to exist in Gannon II. 
 
Section four of H.B. 2655 revives and fully implements the prior SDFQPA capital 
outlay state aid formula which we essentially had held constitutional for that purpose in 
Gannon I:  "If . . . the legislature fully funds the capital outlay provision as contemplated 
in K.S.A. 2013 Supp. 72-8814, the panel need not take any additional action on this 
issue." 298 Kan. at 1198; see Gannon II, 303 Kan. at 743. Specifically, the new law, L. 
16 
 
2016, ch. 45, sec. 4, again uses a 25% factor that increases 1% with every $1,000 below 
the median a school district falls on the State Board AVPP schedule and decreases 1% for 
every $1,000 rising above the median with a cap of 100%. 
 
Capital outlay state aid is also removed from the general state aid block grant. 
L. 2016, ch. 45, sec. 7(b). This removal allows aid to be calculated by the total mill levy 
actually set by a school district, instead of being frozen at the levy level imposed before 
the enactment of CLASS. See L. 2016, ch. 45, secs. 4, 7. As was demonstrated by the 
record and confirmed by the State in oral arguments, this change allows aid-qualifying 
districts that raise their mill levies to receive corresponding additional capital outlay state 
aid. 
 
The aid is funded by the legislature appropriating $50.7 million to the "capital 
outlay state aid fund." L. 2016, ch. 45, sec. 1(b). The legislative record reflects this 
amount was estimated by the State Board—subject to later adjustments—as sufficient for 
full funding of capital outlay aid for school year 2016-17. 
 
The State Board is tasked with calculating the total aid required for all districts and 
certifying that amount in the form of a demand transfer against the state general fund.  
L. 2016, ch. 45, sec. 4(c). A backup for this capital outlay aid is created in section 1(b) 
that allows an increase in the amount appropriated equal to the $15.1 million set aside for 
the extraordinary need fund. L. 2016, ch. 45, sec. 1(b), (e). In other words, if the State 
Board discovers the amount of capital outlay state aid needed is more than the $50.7 
million appropriated, it may create additional demand transfers shifting funds from 
extraordinary need to capital outlay state aid. L. 2016, ch. 45, sec. 1(e). 
 
 
According to data compiled by the Kansas Legislative Research Department 
(KLRD) and supplied to lawmakers, reverting from CLASS to the previous SDFQPA 
formula increases capital outlay state aid in the 2016-17 school year by approximately 
17 
 
$23.5 million statewide. The overwhelming majority of aid-qualifying districts will see 
substantial increases in such aid for the upcoming year, and the restored SDFQPA 
formula significantly decreases disparity between aid-qualifying and non-aid-qualifying 
districts. 
 
Based on our review of the language of the legislative materials submitted for 
consideration, the State has met its burden to establish that it successfully responded to 
our constitutional equity concerns in capital outlay aid. By reviving and fully funding the 
prior formula we had approved in Gannon I—and confirmed in Gannon II—H.B. 2655 
complies with our Gannon II decision in this area. See Gannon II, 303 Kan. at 709 (State 
has express burden to show compliance during the remedy stage). 
 
H.B. 2655 fails to cure the LOB inequities affirmed to exist in Gannon II. 
 
 
In Gannon II, we considered the changes made to the LOB aid formula by CLASS 
and determined they increased and exacerbated inequity between the poorer and 
wealthier districts. Specifically, we affirmed the panel's conclusion that implementation 
of the quintile formula for calculating supplemental general state aid reduced the abilities 
of aid-qualifying districts to fund their LOB while leaving wealthier districts' mill levy 
capabilities unscathed. Accordingly, we determined the distribution of LOB aid under 
CLASS was inequitable and required the State to respond with a cure. 303 Kan. at 730-
33, 741. We held out reversion to the pre-CLASS aid formula from the SDFQPA as a 
way the legislature could fix the inequitable distribution. 303 Kan. at 743. 
 
But instead of reverting to the formula as it existed prior to CLASS, the legislature 
adopted the SDFQPA capital outlay state aid formula and applied it to LOB supplemental 
general state aid. L. 2016, ch. 45, sec. 3. The State readily admits using that formula to 
calculate supplemental general state aid significantly reduces not only the overall LOB 
aid—compared to the amounts calculated under both the LOB aid formulas in the 
18 
 
SDFQPA and in CLASS—but also the number of school districts qualifying for it. But it 
points to the new "hold harmless" fund as well as to CLASS' 1-year-old "extraordinary 
need" fund and argues these provisions sufficiently mitigate any increase in disparity 
among the districts. 
 
Based on our review of the legislative record and consideration of the parties' 
arguments, we hold the State has failed to meet its burden on this issue. Gannon II, 303 
Kan. at 709. Simply put, use of the former capital outlay aid formula for the LOB funding 
system increases and exacerbates the disparity among districts. As more fully explained 
below, the legislature's use of the hold harmless provision and extraordinary need fund in 
H.B. 2655 admittedly mitigates this increase in inequity. But at most they bring aid-
qualifying districts back up to LOB distribution levels found inequitable in Gannon II. In 
addition, the new law does not require hold harmless funds to replace lost supplemental 
general state aid in a district's LOB fund. Rather, hold harmless money is deposited into a 
district's general fund. L. 2016, ch. 45, sec. 5(c). This action obviously leaves aid-
qualifying districts with a financial gap between the total funds that would have been 
generated through their LOB and the depleted funds actually in their LOB account. Aid-
qualifying districts will now have the option of filling this gap—up to their authorized 
LOB percentage levels—through new mill levies that are not equalized by the State. 
 
These activities will likely result in wealthier aid-qualifying districts raising 
additional local revenue with less tax effort than poorer aid-qualifying districts. The 
overall result of the new LOB funding mechanism under H.B. 2655 is therefore an 
exacerbation of inequity among the districts and a failure to satisfactorily respond to our 
Gannon II decision. 
 
After the legislature applied the SDFQPA capital outlay state aid formula to LOB 
supplemental general state aid, it appropriated $367.5 million. L. 2016, ch. 45, sec. 1(a). 
The Kansas State Department of Education (KSDE) estimated this was the amount 
19 
 
needed to fully fund the projected supplemental general state aid for school year 2016-17 
under the capital outlay formula. But if the demands on the LOB aid fund exceed the 
appropriations, the State Board may transfer monies from the extraordinary need fund's 
$15.1 million until its exhaustion—just as its monies can be transferred to the capital 
outlay aid fund should it be exhausted. L. 2016, ch. 45, sec. 1(e). And like the capital 
outlay state aid system, supplemental general state aid is now independent of the block 
grant. L. 2016, ch. 45, sec. 7(b). 
 
Applying the capital outlay aid formula to supplemental general state aid 
decreases the overall aid going to qualifying districts—not only per the calculations under 
the SDFQPA's LOB formula but also under the CLASS "quintile" system held 
unconstitutional in Gannon II. Specifically, the KSDE data in the legislative record 
shows that the amount of supplemental general state aid for 2016-17 reduces the aid 
provided in the 2015-16 school year under CLASS by $82,908,792. 
 
Under both prior formulas—SDFQPA and CLASS—the point to which districts 
were equalized on the State Board schedule was set at the 81.2 percentile. Gannon II, 303 
Kan. at 720-21. Under the capital outlay aid formula, however, the equalization point 
becomes significantly lower and set to the median AVPP on the State Board's AVPP 
schedule. This application has the effect of substantially decreasing the number of aid-
qualifying school districts and reducing the amount of equalization aid to those that 
remain eligible. According to State Board data in the legislative record, for the 2016-17 
school year 197 districts will experience reduced supplemental general state aid and 35 
districts will lose aid altogether. As specific examples, plaintiff Wichita School District 
will experience more than $6 million in decreased supplemental general state aid, and 
plaintiff Kansas City, Kansas School District will incur a loss of more than $2.5 million. 
While the property-poor districts suffer this loss, the wealthier districts with no need for 
supplemental general state aid experience no change in their ability to fund their LOB. 
 
20 
 
 
Nevertheless, the State argues that because we have previously found the prior 
capital outlay formula constitutionally permissible under Article 6 when applied to 
capital outlay state aid, we should also find it constitutionally permissible when applied 
to LOB supplemental general state aid. While this argument is superficially attractive, a 
deeper and comprehensive review discloses it fails to account for fundamental 
differences between the programs—differences the State's counsel acknowledged during 
oral arguments and that we have previously found relevant in considering equity 
compliance. See Montoy IV, 282 Kan. at 17. 
 
 
By law, school districts may only use capital outlay funds for capital 
improvements such as building costs, equipment purchases, and other authorized 
investments. K.S.A. 2014 Supp. 72-8804. And the amount of money raised by a district 
for these limited purposes is further restricted to what the district can generate within the 
legislatively prescribed 8-mill cap. K.S.A. 2014 Supp. 72-8801. 
 
LOB funds, however, differ in both magnitude and flexibility. The revenues 
generated by a district's maximum LOB, i.e., 33% of its state financial aid entitlement, 
are significantly greater than what an 8-mill capital outlay levy can generate. Moreover, 
LOB funds may supplement general state aid by being used for a district's basic 
educational expenses. K.S.A. 2014 Supp. 72-6433. 
 
For example, during the 2014-15 school year, the Wichita School District had a 
30% LOB (below the 33% cap) generating a total of $111 million through its additional 
local effort mill levy, of which $59 million was supplemental general state aid. The 
district also had an 8-mill capital outlay levy generating a total of $28 million, of which 
$7.6 million was capital outlay state aid. Wichita's $111 million in LOB-generated funds 
were available for general use. But the $28 million in funds raised by its maximum 8-mill 
levy were restricted to the narrow class of expenses authorized under the capital outlay 
program. See K.S.A. 2014 Supp. 72-6433; K.S.A. 72-8804. In sum, LOB enhances a 
21 
 
district's ability to perform its basic function, while capital outlay, although necessary, is 
indirect and generates considerably smaller revenue. 
 
This phenomenon was confirmed by several witnesses testifying before the 
legislature during consideration of the legislative cure, including Deputy Commissioner 
Dale Dennis of the KSDE: 
 
"[S]ometimes we have a tendency to want to compare capital outlay with LOB, but 
capital outlay there is a difference. You have a cap. You can't go more than eight mills. 
So, if there's—it's equalization, why, it's got to be within that eight mills, where the LOB 
about the average tax rate there is in the 19, 20 mill range. So, it's much larger and the 
dollars involved are much greater . . . ." (Emphasis added.) 
 
 
Mark Tallman indicated the same: 
 
"The local option budget and capital outlay are, as you've heard, . . . local choices. Now, 
many districts would say no one is operating without I think at least 20 percent LOB or 
more. They would argue that a lot of local option budget really . . . isn't an option any 
more. There are districts that have no capital outlay. . . . I would say LOB is different 
because we've really, we believe, folded LOB into general operations. We don't—I don't 
think any district would really say the local option budget is now just used for extras. 
And, so, in that sense, what we—what we really have is every district has to levy 20 mills 
[required under K.S.A. 2014 Supp. 72-6431], and, then, every district has to levy some 
other mill rate to fund that 25 to 30 percent of their budget." (Emphasis added.) 
 
As we previously observed, beginning in the 2005-06 school year, the legislature 
has steadily increased the LOB cap. And beginning in the 2009-10 school year, it has 
overall decreased the BSAPP from its 2005-06 levels. See, e.g., K.S.A. 2005 Supp. 72-
6410; Gannon II, 303 Kan. at 691-92, 720, 731-33. As a result of these legislative 
decisions to become increasingly dependent on local revenues for funding schools, 
districts now are required to rely more heavily on their LOB funds to perform their basic 
22 
 
functions. Indeed, the legislative record reveals that LOB funds now pay for nearly one-
fourth of the districts' basic operating expenses. 
 
 
We must conclude that applying the former capital outlay formula—to calculate 
supplemental general state aid—creates intolerable, and simply unfair, wealth-based 
disparities among the districts. While these disparities are acceptable when computing aid 
in the smaller and less flexible capital outlay arena, the degree of inequity among the 
districts is too great when considering that the LOB has developed into such a major 
source of basic, and versatile, educational funding. 
 
 
Hold Harmless Provision 
 
 
Because of the reduction of LOB aid (supplemental general state aid) under H.B. 
2655 for the 2016-17 school year, the majority of districts will experience lower total 
funding amounts than the total amounts promised in the 2-year block grant of CLASS. To 
make up this loss, H.B. 2655 contains a "hold harmless" provision ensuring the changes 
do not result in a funding decrease from 2016-17 CLASS distributions. L. 2016, ch. 45, 
sec. 6. This mere restoration of funds is accomplished by a new payment to districts 
curiously labeled "school district equalization state aid." L. 2016, ch. 45, sec. 1(a).  
 
 
The general trend among the districts for 2016-17 under the new law, with some 
exceptions, is for them to receive an increase in capital outlay state aid (based on 
reimplementation of the former formula) but a bigger decrease in supplemental general 
state aid after application of the former capital outlay state formula to the LOB funding 
mechanism. School districts experiencing a net reduction in overall funding based on 
these two changes are entitled to receive the hold harmless payment in an amount equal 
to their loss. L. 2016, ch. 45, sec. 5. Jason Long, the revisor who drafted the bill, 
explained this provision while answering questions during a legislative committee 
hearing on March 22, 2016: 
23 
 
 
"Rep. Kleeb:  . . . I wanted to, Jason, have you go into Section 4 just a little bit and talk 
about this hold harmless aspect. In particular, so, we are holding districts that have this 
change due to this formula, we're holding them even with the financing, is that my 
understanding? 
 
"Mr. Long:  Yes. To the extent that because of the change in how the supplemental 
general state aid is being calculated under this bill, to the extent that their total 
supplemental general state aid and capital outlay state aid amount is less next year [2016-
17] than what they received through the block grant this year [2015-16], Section 4 makes 
up that difference and provides that difference to the school district so that they would 
receive the same amount as they received this year [2015-16]." (Emphasis added.) 
 
As an example of how the new payment would work, the KSDE showed that 
under the new law the Neodesha School District would receive an increase of $46,331 in 
capital outlay state aid but a $250,286 decrease in supplemental general state aid. The net 
loss of $203,955 would be covered by a hold harmless payment in that amount. 
 
Consequently, the new hold harmless provision ensures aid-qualifying districts are 
brought back to their previously calculated 2016-17 school year CLASS distribution 
amounts. Lost funds under the newly substituted formula are simply repaid by hold 
harmless monies. 
 
 
Despite there being no real change in the distribution of aid from 2015-16, the 
State points to a projected decrease in mill rate disparity among districts for the upcoming 
year as proof of compliance with our Gannon II decision. To support this conclusion, it 
primarily relies on two 1-page charts compiled by the Kansas Legislative Research 
Department and provided to lawmakers during their consideration of H.B. 2655. The 
charts divide the districts into five groups based upon AVPP wealth and show the 
difference in mills required in each to generate a 25% LOB. In the 2014-15 school year, 
24 
 
the mill disparity between the poorest and the wealthiest 20% after implementation of 
CLASS and its "quintile" LOB formula was 4.225. In the 2015-16 school year, the 
second year of applying the same formula, the disparity increased to 5.456. But for 2016-
17, under H.B. 2655 the disparity is projected to decrease to 3.148. 
 
 
The State failed in its brief, however, to demonstrate that this reduction in mill 
levy disparity was anything more than a result of normal fluctuations in the AVPP of 
districts. Such fluctuations are well known to the State and, in Gannon II, it cited the 
fluctuations as a basis for its inability to properly fund LOB supplemental general state 
aid. See 303 Kan. at 723-26. And, during recent oral arguments, the State admitted it was 
unable to demonstrate that the operation of H.B. 2655 is what would cause the projected 
reduction in mill rate disparity. 
 
The legislative record also leads us to reject the State's argument. As mentioned, 
after the enactment and implementation of CLASS, the disparity between the poorest and 
the wealthiest 20% of districts setting a 25% LOB was 4.225 mills in 2014-15. And in the 
second year of CLASS, which froze funding distributions for all districts at prior levels, 
the disparity actually increased 1.231 mills to 5.456 in 2015-16. 
 
As the plaintiffs point out, this mill increase was accompanied by a $16,684 
increase in the difference between the wealthiest and poorest districts' groups' AVPP. But 
this difference in AVPP was reduced in the upcoming school year—2016-17—by 
$30,301, and the accompanying mill rate disparity decreased by 2.308 mills to 3.148. So 
they argue the decrease is more coincidence than anything else. 
 
Eddie Penner, the staff member of Kansas Legislative Research Department who 
provided the information the State is relying on for its argument, confirmed the plaintiffs' 
observations that the mill levy differences can be caused by normal fluctuations in 
AVPP—and not changes in the amount of state aid: 
25 
 
 
"[T]he cost between [years 20]14-15 and [20]15-16, the difference there or even that 
increase because, as you recall, the amount of supplemental general state aid for those 
two years was the exact same based upon the block grant. And so that disparity is a result 
of—that increase in disparity from 14-15 to 15-16, is essentially a result of the weighted 
assess evaluation and enrollment in schools [AVPP] have changed and nothing else. 
Because it isn't the result at all of the amount of state aid that was provided to those 
districts." (Emphasis added.) 
 
Penner continued: 
 
"So it just so happened that between 14-15 and 15-16, the wealthiest 20 percent of school 
districts in the state got, relatively speaking, a little wealthier and the poorest 20 percent 
of school districts in the state got, relatively speaking, a little poorer than they were the 
prior year and that caused that disparity to extend." 
 
Moreover, the charts merely reflect averages which hide greater disparities 
contained inside. We observe that even within the five different groups of districts, data 
in the record from Mr. Penner shows that large mill disparities exist. For example, within 
the wealthiest district group, generating a "Non-State Portion of 25% Adopted LOB" for 
the Burlington School District (AVPP of $484,593) requires a 2014-15 mill levy of 
4.359. And for the Brewster School District (AVPP $131,824), the same "Non-State 
Portion of 25% Adopted LOB" requires a mill levy for that identical time period of 
21.802. 
 
The same problem exists within the poorest district group. Generating a "Non-
State Portion of 25% Adopted LOB" for the Valley Heights School District (AVPP of 
$46,243) requires a 2014-15 mill levy of 22.204. And for the Eudora School District, 
(AVPP $36,281), the same "Non-State Portion of 25% Adopted LOB" requires a mill 
levy for that identical time period of 14.101. 
 
26 
 
Based on the State's oral arguments and the record before us, the State has not 
persuaded us that the two single-page charts' decrease in mill levy disparity is attributable 
to anything enacted in H.B. 2655. Gannon v. State, 303 Kan. 682, 709, 368 P.3d 1024 
(2016) (Gannon II) (State has express burden to show compliance during the remedy 
stage.). 
 
 
In Gannon II we held the distribution of LOB funds under CLASS was 
unconstitutionally inequitable. 303 Kan. at 729. And the State admits that application of 
the SDFQPA capital outlay formula to supplemental general state aid drives LOB 
funding to aid-qualifying districts even further below those unconstitutional distribution 
amounts. The hold harmless provision, at most, merely returns those districts to CLASS 
2016-17 distribution amounts. Accordingly, the hold harmless provision is not sufficient 
to cure the increased disparity created by using the former capital outlay formula to 
calculate supplemental general state aid. 
 
 
Moreover, while the hold harmless provision for 2016-17 at most does give back 
what the new LOB formula takes away for that year, it replaces it in a way that actually 
increases disparity among aid-qualifying districts' ability to access additional LOB 
revenue. For aid-qualifying districts, supplemental general state aid makes up a 
significant portion of the district's LOB funds, so with the decrease in such aid under 
H.B. 2655, all aid-qualifying districts will experience some gap between the total funds 
that would have been realized through their LOB and the monies actually received to 
fund it. 
 
While the hold harmless provision is meant to make up for this loss, the bill's 
terms dictate that the money not go into a district's LOB fund. Rather, it is deposited into 
a district's general fund. L. 2016, ch. 45, sec. 5(3)(c). This action maintains the gap 
between the total funds that would have been generated by the LOB—up to the district's 
authorized percentage level—and the money actually received in the LOB account. So a 
27 
 
choice is created for aid-qualifying districts:  They either can fill the gap with the hold 
harmless money or leave the hold harmless money in their general fund and fill the gap 
by raising even more—but not equalized—revenue through increased LOB mill levies 
until their cap is reached. 
 
 
This choice was explained to legislators by Deputy Commissioner Dale Dennis as 
he answered their questions during their consideration of the bill: 
 
"Rep. Hutton:  [T]he last time we had this discussion it was apparent that the bulk of 
what was going back to some school districts was going to be really returning to 
taxpayers as property tax reduction. How does this approach jive up with—will this result 
in all this going still to property tax reductions or will this actually result in more money 
to the school districts? 
 
"Mr. Dennis:  No, it will not—this, the effect of this will not reduce property tax overall. 
The expenditures will stay about the same. . . . Now, the reason why I say property tax 
could go up, if the LOB goes—they're losing—they lose state aid in their LOB, they 
make that up in the hold harmless clause. The hold harmless money or equalization 
money goes to the general fund and that can go to . . . the general fund to be spent in 
classrooms. Now, the board's question then is the money they lost in the state aid, do they 
want to raise the mill levy or cut the budget. (Emphasis added.) 
 
"[Rep.] Ryckman:  And what money would they lose in state aid? 
 
"Mr. Dennis:  The money they would lose in LOB state aid would be . . . made up in hold 
harmless, but the board would have some option. The hold harmless money goes to the 
general fund and the LOB state aid loss is felt in the LOB fund. Now, there's a way you 
can do this. The school district could choose to take the hold harmless money and 
indirectly put it in the LOB and not raise the mill levy, but you're more likely to see a 
little increase in mill levy because the LOB state aid is going down as such. They got the 
same amount of money, but local boards will decide that and, Representative Hutton, 
they'll be all over the place. Some will choose to raise the mill levy . . . . Local decision 
there." (Emphasis added.) 
28 
 
 
In short, wealthier aid-qualifying districts that imposed additional mill levies to fill 
this gap will require less tax effort than poorer aid-qualifying districts, and those districts 
choosing to increase local levies will receive no additional corresponding supplemental 
general state aid for their effort—a combination that exacerbates existing inequities, if 
not creating additional ones. Cf. Gannon I, 298 Kan. at 1188 (raising LOB cap two 
percentage points without corresponding increase in supplemental general state aid 
exacerbated wealth-based disparities among districts because any additional funds would 
have to come entirely from each district's property tax base) (citing Montoy III, 279 Kan. 
at 834). These inequities may affect many of the 232 aid-qualifying districts—out of 286 
total districts in the state—that lost some LOB aid under H.B. 2655. 
 
 
So while the hold harmless provision creates the same distribution of funding seen 
under CLASS, we conclude its application actually allows increases in the inequity from 
the previous 2016-17 CLASS LOB funding distribution. 
 
 
The State next points to the political necessity of the hold harmless provision and 
its benefit in ensuring district budget certainty in the 2016-17 school year as reasons we 
should accept H.B. 2655. Neither of these purposes have a bearing on Article 6 equity 
compliance in this context. See generally Gannon I, 298 Kan. at 1135-37. 
 
Budget certainty for schools is an admirable goal. But CLASS itself was in part 
constructed with the objective of multi-year budget certainty for districts, and we still 
found the magnitude of the inequities in its provisions ran afoul of Article 6. See Gannon 
II, 303 Kan. at 732-33. An unconstitutional school funding system is not rendered 
constitutional merely because a district treated inequitably can budget with some 
certitude for its inequitable treatment. 
 
29 
 
The political necessities of the legislature are similarly irrelevant to our review. 
The constitution of the people of Kansas does not change its requirements based on 
legislators' support, or nonsupport, of proposed legislation. See 303 Kan. at 735 (citing 
Atkinson v. Woodmansee, 68 Kan. 71, 75, 74 P. 640 [1903]). Rather, the Kansas 
Constitution "is the supreme and paramount law, receiving its force from the express will 
of the people." 303 Kan. at 735 (quoting Moore v. Shanahan, 207 Kan. 645, 651, 486 
P.2d 506 [1971]). Just as the legislature has the power and duty to create a school funding 
system that complies with Article 6, it is this court's power and duty to determine whether 
an act of the legislature is invalid under that constitution, i.e., if the legislature has met its 
duty. See Gannon II, 303 Kan. at 734-35. A law's political expediency or level of support 
will not shield it from such review. 
 
After considering all of the arguments, we conclude the State has failed to meet its 
burden on this issue in the remedial phase of this case. Gannon II, 303 Kan. at 709. 
Specifically, the hold harmless provision fails to sufficiently mitigate the increased 
inequities created by applying the capital outlay aid formula to the LOB funding system. 
At best, H.B. 2655 does no more than take away funds from the districts, then give the 
funds back, simply to restore the same level of inequity we ruled unconstitutional in 
Gannon II, 303 Kan. at 720. Additionally, it worsens disparity in accessing LOB funds 
among aid-qualifying districts. 
 
The Extraordinary Need Fund 
 
 
In 2015 the legislature passed CLASS, which created a fund for "extraordinary 
need state aid" and placed it under the control of the State Finance Council. K.S.A. 2015 
Supp. 72-6476. The fund's purpose was to allow those districts experiencing 
extraordinary increases in enrollment, extraordinary decreases in their assessed valuation, 
and "any other unforeseen acts or circumstances which substantially impact the . . . 
general fund budget for the current school year" to apply to the Council for increased aid. 
30 
 
K.S.A. 2015 Supp. 72-6476(b). The aid was apparently created, in part, to attempt to cure 
inequities created when CLASS' block grants essentially froze all districts' funding at 
2014-15 levels for 2015-16 and 2016-17, regardless of increased enrollments or drops in 
AVPP. See Gannon II, 303 Kan. at 694. 
 
The three-judge panel described the positioning of the fund with the Council as 
"oddly placed." It continued: "The Kansas State Board of Education, at least in the first 
instance, has the constitutional duty of the oversight of USDs" and complained that "the 
needs evaluation procedure includes no part for that Board." 
 
H.B. 2655 responds to this concern by moving the fund under the supervision of 
the State Board. In addition to the prior grounds for fund disbursement, the new law also 
allows the State Board to consider "whether the applicant school district has reasonably 
equal access to substantially similar educational opportunity through similar tax effort." 
L. 2016, ch. 45, sec. 9(b)(4). The State argues this provision also mitigates any 
shortcomings in the application of the capital outlay aid formula to the LOB funding 
mechanism. Specifically, it points out the State Board can reduce any continuing 
disparity by distributing extraordinary need funds to aid-qualifying districts. 
 
We begin by observing that H.B. 2655 reduces the extraordinary need fund 
balance from $17.5 to $15.1 million. L. 2016, ch. 45, sec. 1(d). And while maintaining its 
original purpose, i.e., providing relief for districts experiencing extraordinary increases in 
enrollment, extraordinary reductions in AVPP, and any other unexpected circumstances 
increasing the cost of performing their basic functions (L. 2016, ch. 45, sec. 9), the new 
law also expands the grounds for the fund's use by making it a backup for both the capital 
outlay and LOB aid provisions. L. 2016, ch. 45, sec. 1(e). The State argues that although 
the reduced fund balance is now also subject to even more bases for demands, it can 
sufficiently reduce the disparities in LOB funding we recognized in Gannon II. 
 
31 
 
As noted earlier, through operation of the hold harmless provision, H.B. 2655 
provides districts with the same distribution of funding for 2016-17 as they received 
under CLASS for 2015-16; few exceptions are found in the data provided by the State. 
Because in Gannon II we held this distribution to be unconstitutionally inequitable, 
almost all aid-qualifying districts would have a valid demand on the extraordinary need 
fund for more monies under the law's new language. L. 2016, ch. 45, sec. 9(b) ("[T]he 
state board shall consider . . . whether the applicant school district has reasonably equal 
access to substantially similar education opportunity through similar tax effort."). See 
Gannon I, 298 Kan. at 1175. 
 
We are simply not convinced by the State that these inequities can be cured even 
when exhausting the extraordinary need fund, particularly when monetary demands can 
already be made against it based upon districts' extraordinary increases in enrollment and 
decreases in AVPP. Gannon II, 303 Kan. at 709. We acknowledge that the State has 
provided this court with 700 pages of documents, in response to our suggestion in 
Gannon II, 303 Kan. at 743 ("[T]he State would help its case by showing its work in how 
it determined that any . . . proposed solution complies with Gannon I."). But this advice 
includes more than just providing documents. It requires the State to show justification 
for legislative decisions, i.e., demonstrating to this court why the result of H.B. 2655 is 
equitable. See, e.g., U.S.D. No. 229 v. State, Case No. 92 CV 1099 (Shawnee County 
District Court December 16, 1993) (unpublished opinion) (based on historical data 
presented by parties as justification for legislative action, as well as information from 
other states and statistical analysis commonly applicable to school finance issues, court 
concluded the LOB [including supplemental state aid] did not violate equal protection). 
 
We hold the extraordinary need fund is an insufficient remedy for the residual 
inequities in the LOB funding mechanism. See Gannon II, 303 Kan. at 696 (extraordinary 
need fund found insufficient by panel to cure CLASS inequities). 
 
32 
 
Summary 
 
 
In its present form, the SDFQPA capital outlay formula satisfies the equity 
provisions of Article 6 when applied to capital outlay and when fully funded. See 
Gannon II, 303 Kan. at 743. But the application of the SDFQPA capital outlay state aid 
formula to LOB supplemental general state aid not only fails to cure, but also worsens the 
inequities affirmed to exist in Gannon II. In short, disparities among the districts remain 
inequitable and unconstitutional. 
 
Applying this same formula to two distinct programs reveals substantial 
differences. The LOB funding is much larger and provides a substantial amount of 
resources covering basic educational expenses akin to the purposes of BSAPP. The 
magnitude of disparity that can be tolerated in that system is therefore lower than what 
can be accepted in the more indirect and more restrictive capital outlay system. For as 
Mr. Tallman described to the legislature on March 21, 2016, "[W]hat we really have is 
every district has to levy 20 mills [required under K.S.A. 72-6431], and, then, every 
district has to levy some other mill rate to fund that 25 to 30 percent of their budget." 
(Emphasis added.) 
 
 
While the hold harmless provision does somewhat mitigate the decrease in 
supplemental general state aid, it does so in a way that at best only brings districts to the 
same distribution held inequitable under Gannon II—while actually increasing disparity 
between the aid-qualifying districts. As described, the eventual decrease in supplemental 
general state aid allows aid-qualifying districts the option of accepting the hold harmless 
money and then backfilling the gap in their LOB, an easier task for wealthier districts 
because less mill levy increase is required than for poorer districts. Moreover, those 
districts will not be entitled to additional state aid for their new taxing effort because such 
equalization aid essentially was already included in the hold harmless monies. So the net 
33 
 
effect of the hold harmless provision is to worsen the LOB disparity in CLASS that we 
held unconstitutional in Gannon II. 
 
 
The State has not shown that the hold harmless provision and the diluted 
extraordinary need provision will cure the increased disparities going forward. The State 
has the burden of proof in this remedial phase and, after review of H.B. 2655 and the 
legislative record, we hold it has not carried its burden. Gannon II, 303 Kan. at 709. 
 
 
We take no issue with the stated goals of budget certainty and recognize the 
political realities of the legislative branch. But we must review lawmakers' efforts for 
conformity with the Kansas Constitution, which demands that school districts have 
reasonably equal access to substantially similar educational opportunity through similar 
tax effort. Gannon I, 298 Kan. at 1175. We conclude the LOB funding mechanism under 
H.B. 2655 is an "unsuccessful attempt[] to equitably, i.e., fairly, allocate resources among 
the school districts." Gannon II, 303 Kan. at 744. 
 
Issue 2:  Plaintiffs are not entitled to attorney fees. 
 
 
Plaintiffs have requested attorney fees at every stage of this case. The panel denied 
their initial request, and we affirmed that decision in Gannon I. 298 Kan. at 1195-96. In 
Gannon II, the plaintiffs renewed their request on appeal. We denied the request in part 
because it was not raised with the panel on remand, and, insofar as the request was for 
appellate attorney fees, it was procedurally insufficient because no motion was filed 
under Supreme Court Rule 7.07(b) (2015 Kan. Ct. R. Annot. 72). Gannon II, 303 Kan. at 
733. 
 
 
Nothing has changed since our February 11 opinion in this matter. The plaintiffs 
note they have a request for attorney fees pending in the panel which they filed shortly 
after the panel's decision we reviewed in Gannon II. Because the renewed motion for 
34 
 
attorney fees for the litigation phase of this case has not been ruled on, it is not before us 
on appeal. See K.S.A. 60-2101; see also Snodgrass v. State Farm Mut. Auto. Ins. Co., 
246 Kan. 371, 377-78, 789 P.2d 211 (1990) (decisions on attorney fees are not part of the 
merits and may be adjudicated separately). Additionally, the plaintiffs have not filed a 
motion for appellate attorney fees in this court. For the above reasons, we deny the 
plaintiffs' request for attorney fees on present showing. 
 
Constitutionality and Severability 
 
 
We have declared the supplemental general state aid provision of H.B. 2655 to be 
unconstitutional. The hold harmless and extraordinary need provisions do not cure the 
infirmities. Invalidating a provision because it is unconstitutional is not "rewriting" the 
statute. Rather, it is merely enforcing the constitution. See National Federation of 
Independent Business v. Sebelius, 567 U.S. __, 132 S. Ct. 2566, 2607, 183 L. Ed. 2d 450 
(2012). See also Central Branch Union Pac. R. Co. v. Atchison, T. & S.F.R. Co., 28 Kan. 
453, 460-61 (1882) (court is exercising its constitutional duty when it ascertains that one 
part of legislation conflicts with the constitution and must fail). 
 
The question then becomes:  What effect does our holding have on the remaining 
provisions of H.B. 2655 and CLASS? See Sedlak v. Dick, 256 Kan. 779, 803, 887 P.2d 
1119 (1995) ("Since we have held the above provisions of K.S.A. 44-555b to be 
unconstitutional, we must determine what effect our holding has on the remaining 
provisions of the statute and the Act."). 
 
The State urges us to sever any unconstitutional provision and let the remainder of 
CLASS stand. It points out that while CLASS contained a nonseverability clause—
K.S.A. 2015 Supp. 72-6481(a) —section 12 of H.B. 2655 specifically repeals that clause. 
And section 2(c)(3) of this new law replaces it with a severability clause:  "[T]he 
provisions of this act should be considered as severable." 
35 
 
 
The plaintiffs respond that the LOB funding mechanism, including the hold 
harmless and extraordinary need provisions, is not severable from CLASS, so the entire 
Act is unconstitutional. They also ask us to lift our stay of the panel's extensive remedial 
orders, which included, in part, reinstating certain provisions of the SDFQPA and 
mandating some additional funding. See Gannon II, 303 Kan. at 697-98. 
 
To begin our severance analysis, we acknowledge the caution provided from 
several justices of the United States Supreme Court: 
 
"An automatic or too cursory severance of statutory provisions risks 'rewrit[ing] a 
statute and giv[ing] it an effect altogether different from that sought by the measure 
viewed as a whole.' Railroad Retirement Bd. v. Alton R. Co., 295 U.S. 330, 362, 55 S. Ct. 
758, 79 L. Ed. 1468 (1935). The Judiciary, if it orders uncritical severance, then assumes 
the legislative function; for it imposes on the Nation, by the Court's decree, its own new 
statutory regime, consisting of policies, risks, and duties that Congress did not enact. That 
can be a more extreme exercise of the judicial power than striking the whole statute and 
allowing Congress to address the conditions that pertained when the statute was 
considered at the outset." (Emphasis added.) National Federation of Independent 
Business v. Sebelius, 132 S. Ct. at 2668 (Scalia, J., dissenting). 
 
 
To avoid an automatic or too cursory severance, we apply our nearly 60-year-old 
two-part Kansas test that was recently confirmed as follows: 
 
"'Whether the court may sever an unconstitutional provision from a statute and 
leave the remainder in force and effect depends on the intent of the legislature. If from 
examination of a statute it can be said that [1] the act would have been passed without the 
objectionable portion and [2] if the statute would operate effectively to carry out the 
intention of the legislature with such portion stricken, the remainder of the valid law will 
stand. Whether the legislature had provided for a severability clause is of no importance. 
This court will assume severability if the unconstitutional part can be severed without 
36 
 
doing violence to legislative intent.'" (Emphasis added.) Brennan v. Kansas Insurance 
Guaranty Ass'n, 293 Kan. 446, 463, 264 P.3d 102 (2011) (quoting Felten Truck Line v. 
State Board of Tax Appeals, 183 Kan. 287, 300, 327 P.2d 836 ([1958]). 
 
Our test has some resemblance to the two-part approach utilized by the United 
States Supreme Court—both parts of which also must be satisfied in order to sever. "The 
standard for determining the severability of an unconstitutional provision is well 
established:  "'[1] Unless it is evident that the Legislature would not have enacted those 
provisions which are within its power, independently of that which is not, the invalid part 
may be dropped [2] if what is left is fully operative as a law."'" Alaska Airlines, Inc. v. 
Brock, 480 U.S. 678, 684, 107 S. Ct. 1476, 94 L. Ed. 2d 661 (1987). But the statutory 
remainder also must "function in a manner consistent with the intent of Congress." 480 
U.S. at 685. See Sebelius, 132 S. Ct. at 2608, 2676 (The remainder will "still function in a 
way 'consistent with Congress' basic objectives in enacting the statute.'"). 
 
The severability clause 
 
Brennan quoted Felten to state that "'[w]hether the legislature had provided for a 
severability clause is of no importance.'" (Emphasis added.) 293 Kan. at 463. But this 
statement requires some explanation, given the earlier Brennan-Felten quotation:  
"'Whether the court may sever an unconstitutional provision from a statute and leave the 
remainder in force and effect depends on the intent of the legislature.'" (Emphasis added.) 
293 Kan. at 463. As explained below, the statement regarding the severability clause 
should more accurately provide:  "At the later stage of the analysis, whether the 
legislature had provided for a severability clause is of no importance." 
 
Certainly, the presence of a severability clause is direct evidence of legislative 
intent—which Brennan indicates is our touchstone. State ex rel. Morrison v. Sebelius, 
285 Kan. 875, 913, 179 P.3d 366 (2008). As the State admitted at oral argument, 
37 
 
however, the clause's presence is not dispositive of the severability issue; it simply 
creates a presumption of severability. See State v. Next Door Cinema Corp., 225 Kan. 
112, 118-119, 587 P.2d 326 (1978) (The effect of a severability clause "is to create . . . 
presumption of separability."). See Alaska Airlines, Inc., 480 U.S. at 686 ("[S]uch a 
clause creates a presumption that Congress did not intend the validity of the statute in 
question to depend on the validity of the constitutionally offensive provision."). In other 
words, for determining legislative intent, the severability clause "is an aid merely; not an 
inexorable command." Dorchy v. State of Kansas, 264 U.S. 286, 290, 44 S. Ct. 323, 68 L. 
Ed. 686 (1924). 
 
Accordingly, despite the presence of a severability clause, at least as early as 1947 
this court has declared an entire act void—i.e., been unable to sever the unconstitutional 
provision from its companions. State ex rel. v. Hines, 163 Kan. 300, 322, 182 P.2d 865 
(1947); see Sedlak v. Dick, 256 Kan. at 803-04; Thompson v. KFB Ins. Co., 252 Kan. 
1010, 1023, 850 P.2d 773 (1993); Boyer v. Ferguson, 192 Kan. 607, 389 P.2d 775 
(1964). The United States Supreme Court has made similar holdings. See, e.g., Sloan v. 
Lemon, 413 U.S. 825, 834, 93 S. Ct. 2982, 37 L. Ed. 2d 939 (1973); Williams v. Standard 
Oil Co. of Louisiana, 278 U.S. 235, 245, 49 S. Ct. 115, 73 L. Ed. 287 (1929), overruled 
in part on other grounds by Olsen v. Nebraska, 313 U.S. 236, 61 S. Ct. 862, 85 L. Ed. 
1305 (1941); Hill v. Wallace, 259 U.S. 44, 70, 42 S. Ct. 453, 66 L. Ed. 822 (1922). 
 
With this background, we continue our severability analysis. We observe that the 
supplemental general state aid provisions were designed by the legislature to specifically 
address inequities it acknowledged existed in the system—in particular, those created by 
the LOB funding device. See Gannon I, 298 Kan. at 1185 (legislative creation and 
distribution of supplemental general state aid "would be meaningless if inequalities were 
not inherent within the LOB funding scheme"). 
 
38 
 
The severance of the unconstitutional provisions designed to cure these inequities 
obviously leaves those inequities still in place. See Gannon I, 298 Kan. at 1185 ("And as 
with the withholding of capital outlay equalization payments, once the general 
supplemental state aid was reduced, it logically follows that the inequity that equalization 
aid was designed to cure remains present. The State points to nothing in the record 
demonstrating that the inequity was eliminated or lessened on its own or by other 
means."); see also Gannon II, 303 Kan. at 717 (quoting Gannon I, 289 Kan. at 1179) 
("'Once payments have stopped, it logically follows that the inequity the equalization aid 
was originally designed to cure remains present.'"). 
 
It just as logically follows that if the statutory attempts to cure, e.g., the hold 
harmless and extraordinary need fund, are insufficient to eliminate the 
unconstitutionality, then the deletion of these and all other cures necessarily maintains the 
state of unconstitutionality. And so we hold. Accordingly, we cannot accept the State's 
request that we simply sever the unconstitutional LOB aid (supplemental general state 
aid) provision and leave the remainder of H.B. 2655 intact. 
 
Simply put, severance actually worsens the inequitable situation. To put this 
exacerbation in financial perspective, a KSDE spreadsheet shows that severance of this 
aid provision would mean a loss of approximately $367 million for the 2016-17 school 
year to those 197 school districts which are scheduled to receive such aid. According to 
Deputy Education Commissioner Dennis, all of the State's educational funds for districts 
in school year 2016-17 total " a little over $4 [billion]." So taken as a whole, the loss 
represents a 9% funding reduction to aid-qualifying districts. 
 
This holding brings us to the State's alternative argument:  sever additional 
provisions as necessary and save the remainder of CLASS. The next logical step for 
severance after the supplemental general state aid provision is the inequity-producing 
39 
 
LOB provision itself. After all, why not sever the provision that has created the inequity 
and consequently created the need for the supplemental general state aid? 
 
The principal problem with this severance alternative requested by the State is that 
according to KSDE spreadsheets, the LOB "local effort" funding mechanism generates 
approximately $693 million per year for those school districts with LOB's. Combining 
this loss with the supplemental general state aid loss of $367 million per year means 
slightly more than $1 billion per year—roughly 25% of all the educational funds for 
districts from the State—would be gone. 
 
At oral arguments the State acknowledged the magnitude of this funding loss. But 
its counsel nevertheless contended that loss of $1 billion through severance is better than 
the loss of the $4 billion that would result if severance were not allowed and the entire 
funding act (CLASS) were held unconstitutional. He argued that this severance at least 
would allow the school districts to operate from July 1 until some unknown point during 
school year 2016-17 when the remaining $3 billion was exhausted. By then, he reasoned, 
the legislature would supply a constitutional financial fix allowing schools to continue 
unimpeded operation through the balance of the school year. 
 
We again acknowledge that "[a]n automatic or too cursory severance of statutory 
provisions risks 'rewrit[ing] a statute and giv[ing] it an effect altogether different from 
that sought by the measure viewed as a whole.'" National Federation of Independent 
Business v. Sebelius, 132 S. Ct. at 2669 (Scalia, J., dissenting). So analysis of this part of 
the State's severance argument requires careful application of our test for severance. 
 
As we specifically apply the two factors expressed in Brennan, we first ask 
whether the legislature would have passed CLASS without the unconstitutional LOB and 
supplemental general state aid provisions—which supply approximately $1 billion or 
40 
 
25% of all state funds for K-12 public school education. We are not persuaded for several 
reasons. 
 
First, as of the 2016 legislative session, the State already had been in continuous 
litigation since 2010 over its alleged violation of the adequacy provisions of Article 6 of 
the Kansas Constitution. See Gannon I, 298 Kan. at 1115 (Gannon suit filed November 
2010). 
 
Second, on June 26, 2015, the three-judge panel ruled the State's then-current 
funding was constitutionally inadequate and ordered remedies—including the State's 
payment of amounts that, when calculated, would be millions of dollars. As of the 2016 
legislative session this panel holding had not been ruled upon by this court—per our 
order of June 30, 2015, which stayed the panel's order pending our decision on equity. 
Gannon II, 303 Kan. at 698. 
 
Third, in Gannon II we cautioned the legislature that any funding system it 
enacted in response to our decision "must be demonstrated to be capable of meeting the 
equity requirements of Article 6—while not running afoul of the adequacy requirement." 
Gannon II, 303 Kan. at 743. 
 
Fourth, the legislature's inclusion of the hold harmless provision demonstrates that 
many of its members apparently were concerned about any amount of reduced funding to 
school districts caused by H.B. 2655. Indeed, nine of the senators voting "yes" indicated 
that the hold harmless concept represented a significant part of their decision-making 
process. According to Senator Denning: 
 
"Madam President: I vote yes on Sen Sub for H.B. 2655 because of the evidence presented. . . . 
Moreover, it includes a 'hold harmless' provision that means no school district loses funds. All 
the school districts that testified . . . acknowledged that the hold harmless provision is necessary 
41 
 
in light of the legislature's obligation to respond to the Court's remedial order while the school 
districts' budgeting processes are occurring. The Department of Education witnesses confirmed 
this view, too." (Emphasis added.) 
 
Denning's "Explanation of Vote" was concurred with by Senate President Wagle, and 
Senators Arpke, Fitzgerald, Lynn, Masterson, Melcher, Smith, and Wolf. 
 
And as a former Speaker of the House explained to legislators, the hold harmless 
provision also guards against a claim of constitutionally inadequate funding: 
 
"No district losing funds, that's the hold harmless provision. . . . No one is going to lose 
under this. The Court did have one phrase in its opinion that suggested that you ought to, 
even though this in the equity phase, you should not lose sight of adequacy. And—with 
hold harmless, you guard against a claim that, well, you have taken money from me that 
I was expecting that I already had in my budget and so I'm no longer adequate. Hold 
harmless provisions take care of that." (Emphasis added.) 
 
Finally, we take judicial notice of the recent budget bill the legislature submitted 
to the governor in May 2016. While authorizing allotments (reductions) to state 
government funds appropriated by the legislature, the bill essentially exempted K-12 
school funding reduction from allotment authority for FY 2017. 2016 House Substitute 
for Senate Bill No. 249, section 45 provides: 
 
"The provisions of section 98(a)(2) of 2016 House Substitute for Senate Bill No. 161 
[allowing reduction through allotments] shall not apply to any item of appropriation 
which provides funding to any state agency for school districts educating students in 
kindergarten or any of the grades one through 12." (Emphasis added.) 
 
We therefore deem it quite unlikely the legislature would have passed legislation 
intentionally cutting the K-12 public school education budget—which the panel found 
was already underfunded, i.e., inadequate—by another $1 billion, or 25%. See State ex 
42 
 
rel. v. Wyandotte County Comm'rs, 140 Kan. 744, 754, 39 P.2d 286 (1934) (court 
"convinced that the legislature would not have given its sanction to this enactment" 
without the unconstitutional provision so statute as a whole cannot stand); see also 
Champlin Refining Co. v. Corporation Com'n of State of Okl., 286 U.S. 210, 234, 52 S. 
Ct. 559, 76 L. Ed. 1062 (1932) (after application of severability clause, remaining 
provisions stand "[u]nless it is evident" legislature would not have enacted just those 
provisions). 
 
Nonseverability here is appropriate not only because of a failure of the first part of 
Brennan's test but also because of an even more evident failure of the second. That part 
provides:  "'[I]f the statute would operate effectively to carry out the intention of the 
legislature with such portion stricken, the remainder of the valid law will stand. . . . This 
court will assume severability if the unconstitutional part can be severed without doing 
violence to legislative intent.'" 293 Kan. at 463. See Sebelius, 132 S. Ct. at 2608 (the 
remainder will "still function in a way 'consistent with Congress' basic objectives in 
enacting the statute.'"); Alaska Airlines, 480 U.S. at 685 (the remainder also must 
"function in a manner consistent with the intent of Congress"). 
 
We begin this analysis of the second part of the Brennan test by examining the 
express "'intention of the legislature'" in passing H.B. 2655. 293 Kan. at 463. According 
to its preamble, "[t]he legislature is committed to avoiding any disruption to public 
education and desires to meet its obligation." And section 2(b) provides:  "The legislature 
has been advised that funding disruptions and uncertainty are counter-productive to 
public education and that the funding certainty of the classroom learning assuring student 
success act [CLASS] is critical to the effective operation of school districts . . . ." 
(Emphasis added.) H.B. 2655, sec. 2(b). 
 
Similarly, section 6(b) states:  "The legislature hereby declares that the intent of 
this act is to . . . provide more flexibility and increased local control for school district 
43 
 
boards of education and administrators in order to (1) Enhance predictability and 
certainty in school district funding sources and amounts . . . (3) maximize opportunities 
for more funds to go to the classroom." (Emphasis added.) 
 
Finally, section 6(c) provides:  "The legislature further declares that the guiding 
principles for the development of subsequent legislation for the finance of elementary and 
secondary public education should consist of . . . (1) Ensuring that students' educational 
needs are funded; (2) providing more funding to classroom instruction." (Emphasis 
added.) 
 
These express legislative statements repeatedly make clear that with the LOB and 
supplemental general state aid provisions severed, CLASS cannot operate effectively to 
carry out the intention of the legislature. Among other things, severance and the 
immediate loss of $1 billion of school funding would seriously undermine the 
legislature's "desire[] to meet its obligation" under Article 6 of the constitution. And this 
loss of 25% of all educational funds until such time as the legislature might restore them 
contradicts the legislative intent to (1) "avoid[] any disruption to public education"; to 
(2) "enhance predictability and [provide] certainty" in planning school district budgets; 
and to (3) "maximize opportunities for more funds to go to the classroom." 
 
The legislature's intent has been expressed not only in H.B. 2655's language and 
legislative history, but also in the State's brief. "When simply reverting to all of the old 
formulas failed to gain support, the [2016] Legislature considered other approaches, all 
with the predominant goal in mind of creating a constitutionally equitable system of 
school finance." (Emphasis added.) 
 
These points lead us to conclude that severance of these two provisions would do 
"'violence to legislative intent.'" Brennan, 293 Kan. at 463. The school district 
reorganization case of Hines, 163 Kan. 300, is of particular guidance. There, the plaintiff 
44 
 
claimed the legislature had unconstitutionally delegated its legislative power to local 
committees which would reorganize school districts throughout the state. The court began 
its analysis with several important observations similar to ours in the instant case. 
 
"Before giving consideration to the specific questions presented, some general 
observations should be made. The court is cognizant of the complicated consequences 
which rest upon the result of the litigation. The court realizes that probably nothing is 
more essential to the welfare of the state than the continued maintenance of adequate 
schools . . . . The court . . . [understands] the complex problems which have confronted 
the legislature in its efforts to enact satisfactory legislation controlling the controversial 
questions which arise upon consideration of school reorganizations. As a consequence 
this case presents an instance wherein the rule relative to the duty of a court to hold that 
statutes are valid, whenever it is reasonably possible to do so, has profound significance." 
(Emphasis added.) 163 Kan. at 301. 
 
With these observations in mind, the court nevertheless found several statutory 
provisions unconstitutional. And despite the presence of a severability clause, the court 
held that these unconstitutional provisions could not be severed, and it declared all 
provisions void. 163 Kan. at 321-22. In support the Hines court cited State v. Smiley, 65 
Kan. 240, 247, 69 P. 199 (1902): 
 
"[I]f the void and valid parts of the statute are so connected with each other in the general 
scheme of the act that they cannot be separated without violence to the evident intent of 
the legislature, the whole must fail. These rules are of everyday enforcement in the 
courts." (Emphasis added.) 
 
As Smiley expressed, severance is rejected when the provisions are connected in 
the general scheme of the act, i.e., when severance would change its scope. See State ex 
rel., v. Consumers Warehouse Market, 185 Kan. 363, 372, 343 P.2d 234 (1959) ("The 
invalid portion of the statute is not a separate and independent provision of the Act, but 
45 
 
rather is such an integral and inseparable part of the whole scheme and purpose of the law 
that it may not be severed therefrom and thus leave the remainder in full force and effect. 
In other words, to eliminate the objectionable exemption would change the scope of the 
Act."). 
 
As the concept of nonseverability of unconstitutional provisions has been 
considered by Kansas courts for more than 100 years, obviously its cousin—the threshold 
concept of statutory invalidity—has been as well. See Gannon II, 303 Kan. at 743-44. 
There we observed that an unconstitutional act is invalid because "'"it is not a law . . . it 
is, in legal contemplation, as inoperative as though it had never been passed."'" 303 Kan. 
at 744 (quoting Wyandotte Co. v. K.C., F.S. & M. Rld. Co., 5 Kan. App. 43, 44, 47 P. 326 
[1896]). And as we cautioned there, without a constitutionally equitable school finance 
system, the schools in Kansas will be unable to operate. 
 
As we explained in more detail in Gannon II, the inability of Kansas schools to 
operate would not be because this court would have ordered them closed. Rather, it 
would be because this court would have performed its sworn duty to the people of Kansas 
under their constitution to review the legislature's enactments and to ensure the 
legislature's compliance with its own duty under Article 6. See Gannon II, 303 Kan. 682, 
Syl. ¶ 9. Simply put, the state legislature's unconstitutional enactment is void; it has not 
performed its duty. Gannon II, 303 Kan. at 743-44; see Auditor of State v. A.T. & S.F. 
Railroad Co., 6 Kan. 500, 506, 1870 WL 507(1870) (quoting Marbury v. Madison, 5 
U.S. [1 Cranch] 137 [1803]) ("'It is emphatically the province and duty of the judicial 
department to say what the law is.'"). 
 
We acknowledge the legislature's intent, as recently expressed in its preamble to 
H.B. 2655:  "The legislature is committed to avoiding any disruption to public education 
and desires to meet its obligation." So, we continue to stay the issuance of our mandate—
and the stay of the panel's broad remedial orders—until June 30, 2016. This will give the 
46 
 
legislature yet another opportunity to treat Kansas students fairly and "to craft a 
constitutionally suitable solution and minimize the threat of disruptions in funding for 
education." 303 Kan. at 741. 
 
BEIER and STEGALL, JJ., not participating. 
 
MICHAEL J. MALONE, Senior Judge, and DAVID L. STUTZMAN, District Judge, 
assigned.1 
 
* * * 
 
JOHNSON, J., concurring in part, dissenting in part:  I agree with the majority's 
determination that the legislature's latest changes to the local option budget supplemental 
general state aid program (hereafter referred to as LOB) did not cure the inequities which 
this court confirmed were unconstitutional in March of 2014 and reaffirmed as 
unconstitutional in February 2016.  
 
But I continue to believe that this court should join with the district court panel to 
affirmatively remedy the unconstitutionality, rather than continuing to merely offer the 
functional equivalent of declaratory judgments. See Gannon v. State, 303 Kan. 682, 746, 
368 P.3d 1024 (2016) (Johnson, J., concurring in part, dissenting in part) (opining that 
this court should lift the stay on the district court's remedial orders). If this court had not 
issued a stay on the district court's remedial orders on June 30, 2015, the public 
educational system in Kansas would have avoided yet another year of unconstitutional 
inequity. In my view, maintaining the integrity of our state constitution and providing 
                                              
1REPORTER'S NOTE:  Senior Judge Malone was appointed to hear case No. 113,267 
vice Justice Stegall under the authority of the Supreme Court by K.S.A. 20-2616, and 
District Judge Stutzman was appointed to hear the same case vice Justice Beier under the 
authority vested in the Supreme Court by art. 3, § 6(f) of the Kansas Constitution.  
 
47 
 
equitable educational opportunities for our children are too important for this court to be 
constrained by any concern that the legislature will be offended that we told it how to do 
its job. After all, this court has its own job to do, as well. 
 
Specifically, I would lift the stay on those district court remedial orders that 
require the legislature to fully fund the LOB as it existed before the institution of this 
lawsuit. Although the majority leaves open the possibility of lifting the stay on the district 
court's remedial orders on July 1, 2016, I would do it now. The legislature has had more 
than enough opportunities to resolve this unconstitutionality on its own terms. 
 
I acknowledge the State's complaint that such an order would violate the 
separation of powers by encroaching upon the legislative branch's constitutional authority 
to appropriate money, pursuant to Article 2 of the Kansas Constitution. But the 
legislature has repeatedly failed or refused to exercise its Article 2 constitutional 
authority to fulfill its Article 6 constitutional responsibility with respect to the educational 
interests of this state. By allowing the legislature to close the schools and shut off all 
monies to all the public schools through the simple tack of taking no action to fix the 
unconstitutional inequities, this court would be enabling the legislature's dereliction of 
constitutional duty. Moreover, I fear that some might view the closure of all public 
schools as a victory.  
 
As a practical matter, a remedial order to fully fund the original LOB program, 
i.e., requiring the legislature to use the "safe harbor" this court proffered 2 years ago, 
would be far less draconian than the State's suggestion that we sever the entire LOB 
program, thereby denying the schools approximately $1 billion, or about 25% of the total 
educational budget. And, after all, as the State's attorney repeatedly asserted at oral 
arguments:  "It's only for 1 year."