Case Name: The State ex rel. Ohio Congress of Parents & Teachers et al., Appellants and Cross-Appellees, v. State Board of Education et al., Appellees and Cross-Appellants
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 2006-10-25
Citations: 111 Ohio St. 3d 568
Docket Number: No. 2004-1668
Parties: The State ex rel. Ohio Congress of Parents & Teachers et al., Appellants and Cross-Appellees, v. State Board of Education et al., Appellees and Cross-Appellants.
Judges: Moyer, C.J., Lundberg Stratton and O’Connor, JJ., concur.
Reporter: Ohio State Reports, Third Service
Volume: 111
Pages: 568–608

Head Matter:
The State ex rel. Ohio Congress of Parents & Teachers et al., Appellants and Cross-Appellees, v. State Board of Education et al., Appellees and Cross-Appellants.
[Cite as State ex rel. Ohio Congress of Parents & Teachers v. State Bd. of Edn., Ill Ohio St.3d 568, 2006-Ohio-5512.]
(No. 2004-1668
Submitted November 29, 2005
Decided October 25, 2006.)

Opinion:
Lanzinger, J.
{¶ 1} In this action, while recognizing that the challengers retain their ability to litigate alleged statutory violations against particular schools, we hold that community schools, also known as "charter schools," in and of themselves, are not unconstitutional. The appellants and cross-appellees are the Ohio Federation of Teachers, the Ohio Congress of Parents and Teachers, the Ohio School Boards Association, other education associations and teachers' unions, certain parents, taxpayers, school district boards of education, and residents of various school districts ("appellants"). Their lawsuit challenges the constitutionality of laws for the establishment and operation of Ohio's community schools enacted by the General Assembly by Am.Sub.H.B. No. 215 in 1997 and codified at R.C. Chapter 3314.
{¶ 2} The appellees and cross-appellants include the State Board of Education, Ohio's Superintendent of Public Instruction, the Ohio Department of Education, various Ohio community schools, Ohio community-school operators, and White Hat Management, L.L.C., a company that manages 28 community schools in the state ("appellees").
{¶ 3} The parties filed jurisdictional memoranda asking us to accept this case as a discretionary appeal to determine the constitutionality of R.C. Chapter 3314. We accepted the appeal and the cross-appeals solely to determine the constitutional issues. Appellants' charges regarding the establishment and operation of community schools are still pending at the trial court.
{¶ 4} After first providing an overview of the enabling legislation and the history of this case, this opinion will analyze the constitutional claims arising under the Ohio Constitution, specifically (1) Section 2, Article VI, the Thorough and Efficient Clause, (2) Section 3, Article VI, governing city school districts, (3) Section 5, Article XII, limiting proceeds of taxes to their stated purposes, and (4) Sections 4 and 5, Article VIII, restricting the lending of the state's credit and the state's assumption of debt.
I. Overview of the Community-Schools Act, R.C. Chapter 3314
{¶ 5} Ohio adopted charter-school legislation when the Ohio General Assembly enacted R.C. Chapter 3314 in 1997. Am.Sub.H.B. No. 215, 147 Ohio Laws, Part I, 909, 1187. As legislatively created, community schools are independently governed public schools that are funded from state revenues pursuant to R.C. Chapter 3314.
{¶ 6} In enacting R.C. Chapter 3314, the General Assembly declared that its purposes included "providing parents a choice of academic environments for their children and providing the education community with the opportunity to establish limited experimental educational programs in a deregulated setting." Am.Sub. H.B. No. 215, Section 50.52, Subsection 2(B), 147 Ohio Laws, Part I, 2043. Community schools are permitted to target and tailor programs for small student populations such as learning-disabled students or dropouts from traditional schools. R.C. 3314.06(B), 3314.03(A)(2), and 3314.04.
{¶ 7} The General Assembly explained that "[a] community school created under this chapter is a public school, independent of any school district, and is part of the state's program of education." R.C. 3314.01(B). Community schools are state-funded, R.C. 3314.08(D), but each is privately run, R.C. 3314.01 and 3314.02(B) and (C)(1). Each community school must be formed as either a nonprofit corporation or a public-benefit corporation. R.C. 3314.03(A)(1). Community schools cannot charge tuition, R.C. 3314.08(1), and must be nonsectarian, R.C. 3314.03(A)(ll)(c), with enrollment policies that comply with R.C. 3314.06. While community schools are exempt from certain state laws and regulations, R.C. 3314.04, they must comply with many of the same statewide academic standards, R.C. 3314.03(A)(11). Community schools contract with sponsors, which are responsible for monitoring their performance and compliance with applicable standards and requirements. R.C. 3314.03(A)(4). In turn, sponsors are monitored and overseen by the Ohio Department of Education ("ODE"). R.C. 3314.015.
{¶ 8} Formerly, sponsors were required to be public entities (i.e., local boards of education, the ODE, educational service centers, or trustees of universities or their designees). Former R.C. 3314.02(A)(1) and (C)(1), 1999 Am.Sub.H.B. No. 282, 148 Ohio Laws, Part I, 2022-2023. Since April 8, 2003, certain other approved, nonprofit, education-oriented entities may also be sponsors. R.C. 3314.02(C)(1)(f), 2002 Sub.H.B. No. 364, 149 Ohio Laws, Part V, 10,208 and 10,210. Under R.C. 3314.015(A), the ODE must approve sponsors, monitor the effectiveness of their oversight of their schools, and issue reports on the effectiveness of the schools' academic programs, operations, and legal compliance and on their financial condition. Sponsors must seek ODE approval, according to criteria, procedures, and deadlines established by ODE. R.C. 3314.015(B). If a sponsor becomes unwilling or unable to complete its duties, ODE may revoke approval to act as a sponsor and assume direct sponsorship of the community school in question for up to two years. R.C. 3314.015(C).
{¶ 9} Each community school is governed by a contract between the governing authority of the school and its sponsor. R.C. 3314.03. The initial contract term may last no more than five years. R.C. 3314.03(A)(13). If the school does not meet its contract objectives, the sponsor may choose not to renew the contract. Alternatively, the sponsor may terminate the contract for good cause before the end of the contract's term. R.C. 3314.07.
{¶ 10} Ohio is not alone in adopting charter-school legislation. As of 1992 a majority of states allow for the creation of charter schools, typically allowing those schools to use a per-pupil funding stream from government sources (either state or local) to pay for the schools. With the increasing prevalence of charter schools has come increased statutory oversight and regulation, especially for licensing, regulatory inspections, and academic testing. 50 State Statutory Survey, "Charter School Licensing Requirements, Inspections, and Testing" (2006). R.C. Chapter 3314 has been amended frequently since it was enacted, and the law governing community schools continues to evolve.
II. Procedural History of Case
{¶ 11} The appellants filed suit on May 14, 2001, requesting declaratory and injunctive relief and writs of mandamus, raising several constitutional challenges to various aspects of R.C. Chapter 3314. The appellants filed a third amended complaint asserting ten different claims, including several as bases for the trial court to issue a declaratory judgment stating that R.C. Chapter 3314 is unconstitutional on its face and as applied.
{¶ 12} At a status conference on November 9, 2001, the trial judge bifurcated the litigation to reduce the potential burden on the parties. In the first phase, they were to focus solely on legal issues that could be decided without discovery — these issues relate to the constitutional challenges to Ohio's community-school program. In the second phase, which is still pending, the trial court will examine the factual claims that address compliance with statutes and with sponsorship contracts. As already noted, the first phase is the subject of the parties' discretionary appeal and cross-appeals, which we accepted solely to decide the constitutional challenges.
{¶ 13} On May 20, 2002, several motions were filed: (1) the appellants filed motions for summary judgment on counts four, five, seven, eight, nine, and ten, (2) the state appellees filed a motion to dismiss the third amended complaint and for summary judgment, (3) the community-school appellees filed a motion for judgment on the pleadings on counts three, four, five, six, seven, and eight, and (4) White Hat filed a motion for judgment on the pleadings. The trial court identified counts four, five, six, and seven of the third amended complaint as the legal claims to be resolved based on the pleadings and motions filed by the parties.
{¶ 14} In its decision, the trial court first considered count four of the third amended complaint. This count is a facial challenge to R.C. Chapter 3314, alleging that the statute violates both Section 3, Article VI and Section 5, Article XII of the Ohio Constitution, sections that deal with the powers of city school boards and restrictions on the use of tax revenue. Count four contains two underlying claims. First, the appellants allege that Section 3, Article VI has been violated because R.C. Chapter 3314 has "usurped this constitutional right of local educational self-determination by allowing the creation of privately owned 'community schools' not authorized or governed by locally elected school boards." The trial court disagreed and held that the General Assembly has the power to create and modify school districts as it believes necessary, without the approval of the school districts. Second, the appellants claim that the method of funding community schools violates Section 5, Article XII of the Constitution by in effect diverting local tax dollars to community schools. The trial court disagreed again and found that the appellants "cannot show a diversion of local tax levies to community schools in violation of Section 5, Article XII of the Ohio Constitution."
{¶ 15} Counts five and six are challenges to R.C. Chapter 3314 on its face and as applied. In these counts, the appellants allege that community schools violate Section 2, Article VI of the Ohio Constitution, the Thorough and Efficient Clause. The appellants argue that community schools are not part of the thorough and efficient system of common schools, because they have been allowed to operate with different standards. They also claim that the manner in which community schools are funded takes money away from traditional school districts, making them less thorough and efficient. The trial court found these claims barred by res judicata because DeRolph v. State (2002), 97 Ohio St.3d 434, 2002-Ohio-6750, 780 N.E.2d 529, had determined already that the public school system, of which community schools are part, is not constitutionally thorough and efficient.
{¶ 16} Count seven alleges that R.C. 3314.08(J), 3318.50, and 3318.52 violate Sections 4 and 5, Article VIII, which restrict the lending of the state's credit and the state's assumption of debt. The statutory provisions at issue under this count allow community schools to borrow money in anticipation of state payments and to receive state-guaranteed loans for buildings and other facilities. Because community schools are organized for a public purpose (educating children), the trial court found that R.C. 3314.08(J), 3318.50, and 3318.52 permit community schools to borrow money and the state to guarantee loans without constitutional violation.
{¶ 17} The trial court granted the state appellees' motion to dismiss, the community-school appellees' motion for judgment on the pleadings, and White Hat's motion for judgment on the pleadings on counts four through seven. The trial court denied appellants' motion for partial summary judgment.
{¶ 18} The Court of Appeals for Franklin County agreed with the trial court on count four that the General Assembly's exercise of its broad power to create, change, or modify the state's school districts does not impinge on Section 3, Article VI. However, the court disagreed with the decision to dismiss the portion of count four that implicates Section 5, Article XII, the constitutional provision that requires that local levy funds go to their intended purpose. The court of appeals found that the appellants' claim that the method of funding community schools diverts state funds from local school districts raises issues of fact. Accordingly, the court remanded this claim, as well as counts five, six, and seven. Both sides filed jurisdictional memoranda asking this court to address the legal merits of all of appellants' constitutional claims. We accepted all propositions of law (except the proposition addressing the res judicata effects of DeRolph).
III. Legal Analysis
A. Summary of Constitutional Claims
{¶ 19} The complaint in this case asserted that numerous constitutional provisions were implicated in this case, so we will first summarize the constitutional provisions and the relevant standards of proof before analyzing each claim in turn. We are asked to determine whether R.C. Chapter 3314 violates Section 2, Article VI, which contains the Thorough and Efficient Clause; Section 3, Article VI, which governs the organization of city school districts; Section 5, Article XII, which limits tax proceeds to their stated purposes; and Sections 4 and 5, Article VIII, which restricts the state's lending of credit and assumption of debt.
B. Standard of Proof
{¶ 20} Initially, we must acknowledge that legislative enactments are entitled to a strong presumption of constitutionality. N. Ohio Patrolmen's Benevolent Assn. v. Parma (1980), 61 Ohio St.2d 375, 377, 15 O.O.3d 450, 402 N.E.2d 519. When the constitutionality of legislation is attacked, we must interpret the applicable constitutional provisions and acknowledge that "a court has nothing to do with the policy or wisdom of a statute. That is the exclusive concern of the legislative branch of the government. When the validity of a statute is challenged on constitutional grounds, the sole function of the court is to determine whether it transcends the limits of legislative power." State ex rel. Bishop v. Mt. Orab Village School Dist. Bd. of Edn. (1942), 139 Ohio St. 427, 438, 22 O.O. 494, 40 N.E.2d 913. A statute should not be declared unconstitutional "unless it 'appear[s] beyond a reasonable doubt that the legislation and constitutional provision are clearly incompatible.' " Kelleys Island Caddy Shack, Inc. v. Zaino, 96 Ohio St.3d 375, 2002-Ohio-4930, 775 N.E.2d 489, ¶ 10, quoting State ex rel. Dickman v. Defenbacher (1955), 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59, paragraph one of the syllabus. Furthermore, a statute "must be enforced unless it is in clear and irreconcilable conflict with some express provision of the constitution." Spivey v. Ohio (N.D.Ohio 1998), 999 F.Supp. 987, 999. Thus, in reviewing these constitutional claims, we must give due deference to the General Assembly. But this still means, of course, that we must conduct an independent review.
{¶ 21} The constitutional challenges to the statutes involve facial challenges as well as challenges to the application of R.C. Chapter 3314. The two types of challenges require different standards of proof. To prevail on a facial constitutional challenge, the challenger must prove the constitutional defect, using the highest standard of proof, which is also used in criminal cases, proof beyond a reasonable doubt. State ex rel. Dickman v. Defenbacher, 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59, paragraph one of the syllabus. To prevail on a constitutional challenge to the statute as applied, the challenger must present clear and convincing evidence of the statute's constitutional defect. Belden v. Union Cent. Life Ins. Co. (1944), 143 Ohio St. 329, 28 O.O. 295, 55 N.E.2d 629, paragraph six of the syllabus. " 'Clear and convincing evidence is that measure or degree of proof which is more than a mere "preponderance of evidence," but not to the extent of such certainty as is required "beyond a reasonable doubt" in criminal cases, and which will produce in the mind of the trier of facts a firm belief or conviction as to the facts sought to be established.' " Lansdowne v. Beacon Journal Publishing Co. (1987), 32 Ohio St.3d 176, 180-181, 512 N.E.2d 979, quoting Cross v. Ledford (1954), 161 Ohio St. 469, 53 O.O. 361, 120 N.E.2d 118, paragraph three of the syllabus.
{¶ 22} With this background in mind, we turn to the appellants' specific claims.
C. Counts Five and Six: The "common schools" argument
1. Introduction
{¶ 23} Because counts five and six both implicate the Thorough and Efficient Clause of the Ohio Constitution, we will discuss both counts in this section. The appellants claim that R.C. Chapter 3314, the Ohio Community-Schools Act, violates the Thorough and Efficient Clause of Section 2, Article VI of the Ohio Constitution. Section 2 provides:
{¶ 24} "The General Assembly shall make such provisions, by taxation, or otherwise, as, with the income arising from the school trust fund, will secure a thorough and efficient system of common schools throughout the state ."
{¶ 25} The appellants argue in count five that community schools violate the Thorough and Efficient Clause because they are not part of the system of common schools, being publicly funded but privately owned and not subject to uniform statewide standards. Count six provides the second part of their argument, asserting that because community schools are state-funded, they have diverted money from local school districts, thus depriving the districts of the ability to provide a thorough and efficient educational system. Both claims allege that the statutes, as applied, are unconstitutional. Thus, the appellants must present clear and convincing evidence of the statutes' constitutional defect. Belden v. Union Cent. Life Ins. Co., 143 Ohio St. 329, 28 O.O. 295, 55 N.E.2d 629.
{¶ 26} In response to the argument that community schools are unconstitutional because they are privately owned and subject to different standards, the appellees contend that the General Assembly is authorized by the Thorough and Efficient Clause to create community schools as part of Ohio's system of common schools. The appellees maintain that community schools do not have to be owned or operated by the public to be part of the common-school system. Community schools have been declared to be "public schools, independent of any school district, and part of the state's program of education." R.C. 3314.01(B). Furthermore, the appellees assert that because the term "common schools" is not defined in the Constitution, and because there is no constitutional requirement that all public schools must be governmentally owned and operated, the General Assembly should be allowed to determine the requirements of "common schools."
2. Count Five: Different standards for schools under private ownership
{¶ 27} Throughout time, new educational movements have faced opponents and detractors. But just as the common-school movement of the 1800s increasingly gained supporters throughout the United States, so too has the charter-school movement.
{¶ 28} The Thorough and Efficient Clause was adopted at the 1851 Constitutional Convention, largely in response to the common-school movement. Before Section 2, Article VI was adopted, Ohio had officially encouraged, but had not required, education. Section 3, Article VIII, Ohio Constitution of 1802. Originally, "[sjchools received no public aid except through revenues from lands set aside by Congress for the purpose in the Northwest Territory. Early Ohio schools were private, organized by individual schoolmasters, a group of neighbors, a church, or a charitable society. Some were free, but many charged tuition in addition to receiving a share of the school lands revenue ." Editor's Comment to Section 2, Article VI, in Baldwin's Ohio Revised Code Annotated (2004). The common-school movement, originating in Massachusetts through the work of Horace Mann, held the basic ideology that all citizens should have "a common foundation of literacy, morality, and patriotism, regardless of their origins, through free public schools supported by taxes, with compulsory school attendance and supervision at the state level." Id. Common schools were highly controversial at first, but gained wide acceptance after 1841. By 1851, the common-school movement had wide support in Ohio, leading to the adoption of the Thorough and Efficient Clause. Id.
{¶ 29} As early as 1923, this court had the opportunity to interpret this clause and to set forth a standard for evaluating a thorough and efficient system of common schools. Miller v. Korns (1923), 107 Ohio St. 287, 140 N.E. 773. We recognized that the purpose of providing a thorough and efficient system was statewide in nature and "[w]ith this very state purpose in view, regarding the problem as a state-wide problem, the sovereign people made it mandatory upon the General Assembly to secure not merely a system of common schools, but a system thorough and efficient throughout the state." Id. at 297-298, 140 N.E. 773. Furthermore, in DeRolph v. State, Chief Justice Moyer noted that "our Constitution commits the responsibility for ascribing meaning to the phrase 'thorough and efficient' to the General Assembly and not to this court." DeRolph v. State (1997), 78 Ohio St.3d 193, at 264, 677 N.E.2d 733, 747 (Moyer, C.J., dissenting). As the statewide body, the General Assembly has the legislative authority and latitude to set the standards and requirements for common schools, including different standards for community schools. In fulfilling its governmental role, it must still function according to its constitutional directive.
{¶ 30} In enacting community-school legislation, the General Assembly added to the traditional school system by providing for statewide schools that have more flexibility in their operation. Community schools were designed to give parents a choice and give educators "the opportunity to establish limited experimental educational programs in a deregulated setting." 1997 Am.Sub.H.B. No. 215, Section 50.52, Subsection 2(B), 147 Ohio Laws, Part I, 2043. Deregulation implies exemption, and while it is true that community schools are exempted from certain state standards, there are others to which the schools must also adhere. Community school students must pass the same graduation test that students in traditional public schools must pass. R.C. 3314.03(A)(ll)(f). Community schools must administer proficiency and achievement tests, R.C. 3314.03(A)(ll)(d), and diagnostic tests, R.C. 3314.03(A)(3), maintain adequate facilities and meet all health and safety standards, R.C. 3314.05, and comply with numerous Revised Code sections as if they were school districts, R.C. 3314.03(A)(ll)(d). (See Appendix A for additional requirements from which community schools are not exempt.) Community-school sponsors are monitored and supervised by the ODE, the same department that oversees traditional public schools. R.C. 3314.015. Although Justice Resnick's dissent focuses on the requirements that community schools are exempted from, upon closer examination, many of these exemptions are picayune in nature.
{¶ 31} The Ohio Community-Schools Act was drafted with the intent that parental choice and sponsor control would hold community schools accountable, in a fashion similar to traditional school management. In exchange for enhanced flexibility, community schools face heightened accountability to parents and sponsors. Either can threaten shutdown, sponsors by suspending operations pursuant to R.C. 3314.072, and parents by withdrawing their children. In fact, internet- or computer-based community schools lose their funding if they do not show expected gains for two years, and any community school will be permanently shut down if it fails to meet expected goals for three years. R.C. 3314.36. Traditional schools, on the other hand, may not be shut down no matter how poorly they perform (although they will face decreased funding). R.C. 3302.04(F). Because community schools may serve a targeted student population, their requirements may be more narrowly tailored. This idea is not totally new to Ohio's system of education. In the past, for example, the General Assembly has permitted different requirements for vocational education and special education and has allowed traditional schools to establish magnet schools and specialized schools in arts and science. The General Assembly's statutory scheme sets forth a framework, in keeping with its constitutional directive, for alternative accountability and academic standards for community schools.
{¶ 32} Contrary to Justice Resnick's statement in dissent, we do not approve of just "any schooling arrangement." ¶ 82. The Ohio Constitution requires establishment of a system of common schools. This requirement is grounded in the state's interest in ensuring that all children receive an adequate education that complies with the Thorough and Efficient Clause. To achieve the goal of improving and customizing public education programs, the General Assembly has augmented the state's public school system with public community schools. The expressed legislative intent is to provide a chance of educational success for students who may be better served in their educational needs in alternative settings. Requiring community schools to be operated just like traditional public schools would extinguish the experimental spirit behind R.C. Chapter 3314.
{¶ 33} While the wide discretion granted to the General Assembly is not without limits, Cincinnati City School Dist. Bd. of Edn. v. Walter (1979), 58 Ohio St.2d 368, 387, 12 O.O.3d 327, 390 N.E.2d 813, we hold that the General Assembly has not transgressed the limits of its legislative power so as to render R.C. Chapter 3314 unconstitutional under the Thorough and Efficient Clause. Over time, the General Assembly has increased the number of state requirements with which community schools must comply, and has also enacted additional, specific, and unique requirements such as control and oversight by sponsors, R.C. 3314.03, mandated forms of entity status, R.C. 3314.03(A)(1), and annual reporting requirements on fiscal, operational, and academic issues, R.C. 3314.03(A)(ll)(g) and 3314.03(D).
{¶ 34} The General Assembly is the branch of state government charged by the Ohio Constitution with making educational policy choices for the education of our state's children. Our personal choices are not relevant to this task. The appellants have not shown beyond a reasonable doubt that the statute is unconstitutional on its face; nor have they met their high burden of presenting clear and convincing evidence of the statute's unconstitutionality as applied. We hold that the General Assembly has the authority to set the standards and requirements for a system of common schools. In providing for community schools within that system, the state legislature has not exceeded its powers.
3. Count Six: Funding community schools and a thorough and efficient system
{¶ 35} Count six of the complaint alleges that the funding method used to support community schools diverts funds from city school districts, depriving them of the ability to provide a thorough and efficient system of common schools. Once again, as this claim is a constitutional challenge to R.C. Chapter 3314 as applied, the appellants must present clear and convincing evidence that R.C. Chapter 3314 is unconstitutional. State v. Renalist, Inc. (1978), 56 Ohio St.2d 276, 279, 10 O.O.3d 408, 383 N.E.2d 892.
{¶ 36} Appellants argue that the community schools have made urban districts more reliant on local property taxes because when a student leaves a district for a community school, the state reduces the state funding that the district receives for the student. Nothing in the Constitution, however, prohibits the General Assembly from reducing funding because a school district's enrollment decreases. If a child moves out of the district altogether, the state is permitted to reduce its funding to that child's district because state money follows the child. For example, if a child leaves a school district to attend private school, or to be schooled at home, the state is required to reduce its funding to that district. The same thing occurs when a child opts to attend a community school. R.C. 3314.08. Whenever a student leaves, for any reason, the school district's funding is decreased, and the district continues to receive state funding based on the students actually attending. Traditional schools still receive the full amount of state funds for the actual number of students enrolled.
{¶ 37} The state adjusts its level of funding to a school district based on enrollment, but the local share works differently, as a constant. The local share of funding remains the same no matter who attends the district school. If district enrollment decreases, the local share, being constant, constitutes a higher percentage of district funding. On the other hand, if district enrollment increases, the local share constitutes a lower percentage of district funding. In dissent, Justice Pfeifer argues that community schools unconstitutionally increase reliance on local funding for district schools, invoking DeRolph v. State. The dissent's citation of DeRolph is a red herring. DeRolph focused on R.C. Chapter 3317, the School Foundation Program, for the allocation of state basic aid. The School Foundation Program conditioned the receipt of state aid on the levy of local property tax revenues. R.C. 3317.01(A). What the DeRolph majority found so egregious was Ohio's public schools' heavy dependence upon local property taxes for their support. That simply is not the case here. Community schools do not rely on local property taxes, as they are funded entirely by the state, under an entirely different formula, set forth in a different statute. Community schools cannot levy or spend local taxes. Furthermore, Ohio's traditional school system is not made more reliant on local taxes because of community schools. The state treats community-school students in the same way it has treated any student who has ever left a school district. It reduces its per-pupil funding to the school district, just as it does when students leave for private schools, for other school districts, or for home schooling.
{¶ 38} The mere increase or decrease in the local share percentage does not violate the Thorough and Efficient Clause, because the district still receives state funding for the children actually attending the district traditional schools. Community schools never receive any local tax money. In fact, the Legislative Office of Education Oversight stated that "it should be clarified that community schools do not take locally-generated tax dollars away from districts (Emphasis sic.) LOEO, Community Schools in Ohio: Second-Year Implementation Report, Volume I: Policy Issues (Apr. 2001) 27. It explained that "[o]nce the local share is subtracted from the total base cost funding, the state is responsible for providing any amount thereafter." In other words, the state still fulfills its obligation to fund each student at a specific level according to the statutory formula.
{¶ 39} Section 2, Article VI expressly provides that the General Assembly shall make provisions to secure a thorough and efficient system of common schools. The General Assembly has the exclusive authority to spend tax revenues to further a statewide system of schools compatible with the Constitution. Exercis ing its discretion, the General Assembly made provisions for community schools when it directed that the state would be the sole source of funding for community schools for their base formula amounts. R.C. 3314.08. Community schools cannot levy local taxes or charge tuition. R.C. 3314.08(H) and (I). When a student leaves a traditional school to attend a community school, the state funds follow the student. Accordingly, we find that R.C. Chapter 3314, as applied, is constitutional. The appellants have not presented clear and convincing evidence that community schools are raiding local funds that school districts are otherwise entitled to receive.
{¶ 40} The next claim that we will examine contains two constitutional provisions: one dealing with the authority of city school boards, and the other with the levy of local taxes.
D. Count Four: Section 3, Article VI and Section 5, Article XII authority of city school boards and diversion of local tax money
{¶ 41} Count four of the third amended complaint is a facial challenge to the statutes, claiming that R.C. Chapter 3314 violates local citizens' rights under Section 3, Article VI because community schools within city school districts are not under the control of local voters or of school boards. Count four also contends that the statute offends Section 5, Article XII because local tax dollars are in effect diverted to community schools. To overcome the presumption of constitutionality, the appellants must prove that the statute is unconstitutional beyond a reasonable doubt, the highest standard of proof. State ex rel. Dickman v. Defenbacher, 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59, paragraph one of the syllabus.
1. Authority of city school boards
{¶ 42} Section 3, Article VI of the Ohio Constitution provides:
{¶ 43} "Provision shall be made by law for the organization, administration and control of the public school system of the state supported by public funds: provided, that each school district embraced wholly or in part within any city shall have the power by referendum vote to determine for itself the number of members and the organization of the district board of education, and provision shall be made by law for the exercise of this power by such school districts."
{¶ 44} Under R.C. 3314.01(B), a community school is a "public school, independent of any school district." The appellants argue that citizens of cities have the exclusive right to exercise authority over public education through the election of school boards and approval of local school tax levies, and because community schools are not authorized or governed by city school boards, this constitutional right of local educational self-determination is usurped.
{¶ 45} This court has held that the General Assembly has the power to create and modify school districts. In State ex rel Core v. Green (1953), 160 Ohio St. 175, 51 O.O. 442, 115 N.E.2d 157, the court stated, "The General Assembly has the power to provide for the creation of school districts, for changes and modifications thereof, and for the methods by which changes and modifications may be accomplished." Id. at paragraph two of the syllabus. An Ohio federal court recognized the General Assembly's authority to provide for the modification of school districts when it approved the creation of a new classification of school districts called "municipal school districts." Spivey v. Ohio, 999 F.Supp. at 997. In Spivey, the legislation under review gave the mayor of Cleveland authority to appoint members of the Cleveland City School District Board of Education, and local voters were not given the opportunity to preapprove any changes in the school board. R.C. 3311.71 et seq.
{¶ 46} In analyzing this specific issue in the case before us, the Court of Appeals for Franklin County opined that the plain language of Section 3, Article VI "does not give those [local] voters more power than the General Assembly to create policy and organize and administer a system of public education throughout the state." 2004-Ohio-4421, ¶ 39. We agree with this statement.
{¶ 47} Voters in city school districts have the right to vote on the number of members and the organization of their city school boards. In turn, the school boards have authority over the districts they are elected to serve. Section 3, Article IV governs questions of size and organization, not the power and authority, of city school boards. In Marion Local School Dist. Bd. of Edn. v. Manon Cty. Bd. of Edn. (1958), 167 Ohio St. 543, 545, 5 O.O.2d 216, 150 N.E.2d 407, this court held that "[b]oards of education have only such powers as are conferred by statute." A board of education is "a mere instrumentality of the state to accomplish its purpose in establishing and carrying forward a system of common schools throughout the state." Cincinnati Bd. of Edn. v. Volk (1905), 72 Ohio St. 469, 485, 74 N.E. 646. By choosing to create community schools as part of the state's program of education but independent of school districts, the General Assembly has not intruded on the powers of city school boards. Applying the facial-challenge standard, we hold that the appellants have not proved, beyond a reasonable doubt, that the powers of city school districts have been usurped, rendering R.C. Chapter 3314 unconstitutional. Section 3, Article VI of the Ohio Constitution does not prevent the General Assembly from creating additional schools that are located within city school districts but are not part of the district.
2. Diversion of local tax money
{¶ 48} Count four also alleges that R.C. Chapter 3314 violates Section 5, Article XII of the Ohio Constitution by diverting local tax dollars to community schools, a contention similar to the constitutional claim asserted under the Thorough and Efficient Clause.
{¶ 49} Section 5, Article XII of the Ohio Constitution provides:
{¶ 50} "No tax shall be levied, except in pursuance of law; and every law imposing a tax, shall state, distinctly, the object of the same, to which only, it shall be applied."
{¶ 51} In support of this claim of diversion of local tax dollars, the appellants maintain that the community-school funding scheme violates voters' rights by taking the locally voted property taxes approved for the local school districts and giving them to community schools. While the appellants admit that "the money given to community schools comes from the State's bank account," they contend that deducting the full per-pupil formula amount from the school district's money when a student leaves for a community school is equivalent to taking local tax money.
{¶ 52} Community schools are funded differently than are traditional schools. Funding for traditional schools is set forth in R.C. 3317.012; funding for community schools is set forth in R.C. 3314.08. Community schools are primarily funded by a per capita subsidy taken from the state's basic aid to the school districts that the students in community schools are entitled to attend. R.C. 3314.08 clearly confirms that funding for community schools comes from state funds pursuant to the funding formula. Funds raised by local school districts, such as funds derived from local levies, are never sent from the local school district to the community schools, nor are any funds from the local school district to the state ever redirected to the community schools.
{¶ 53} Funding formulas for traditional and community schools are complex, although we may summarize them by saying that state money follows the student. In general, under both formulas, the state guarantees a basic minimum level of funding for each student, called the "formula amount." R.C. 3317.02. The General Assembly has determined the formula amount for both school districts and community schools, and these amounts have been codified in separate sections of the Revised Code. For community schools, the formula amount of R.C. 3314.03 can never exceed the traditional schools' amount of R.C. 3317.02(B). Community schools must set forth this amount in their annual financial plans under R.C. 3314.03(A)(15). Each district and each community school also has a cost-of-doing-business factor assigned to it, which varies from county to county. R.C. 3317.02(N) and 3314.08(A)(2) and (C)(1)(a).
{¶ 54} Under the school districts' formula, they are funded from a combination of state and local tax dollars. To reach the state and local amount for a school district, the state multiplies the formula amount by the cost-of-doing-business factor to reach a preliminary amount. R.C. 3317.022.
{¶ 55} The "charge-off amount," representing the local tax dollars raised, comes into play next in the formula. Local property-tax contributions are not determined on a per-student basis, but are instead determined by property wealth and the tax rate within a district. Each district is assumed to contribute 23 mills times the value of local tax base to its funding level, R.C. 3317.022, and as stated earlier, this local district share is a constant amount that does not fluctuate based upon student population. The charge-off amount is then subtracted from the preliminary amount. Once the charge-off amount is deducted, the remaining funding comes from the state in order to reach the formula amount specified in R.C. 3317.12 by the General Assembly.
{¶ 56} In using the formula for community schools, the ODE multiplies the number of students enrolled in a community school times the base formula amount times the cost-of-doing-business factor. R.C. 3314.08(D). For each student, the state then deducts the formula amount, adjusted by the cost-of-doing-business factor, from the funding for the school district that the student would have attended. R.C. 3314.08(C). Consequently, when a student transfers to a community school from a school district, the district loses as much funding as it would if the student leaves for another school district, for a private school, or to be home schooled.
{¶ 57} The appellants argue that because the state deducts the entire formula amount for any student who leaves a traditional school for a community school, the deduction has the effect of increasing school districts' local share. However, a change in the number of students does not affect the amount of the school district's local share, because local tax dollars are contributed by the district's taxpayers and do not depend upon the number of students attending the school. R.C. 3314.08 and 3317.022. The full amount of the local tax money will continue to be available to the local school district. In other words, state funds follow the student; local funds do not.
{¶ 58} We are not persuaded by appellants' argument that local tax money is diverted to community schools under the funding formula. Certain traditional schools may rely more on local tax dollars, but students who leave the district leave with their own per-student allocation of state money, so this means that local tax dollars are never actually paid to community schools. Under the funding provisions of R.C. 3314.08(D), the tax dollars that fund community schools come entirely from the state.
{¶ 59} The appellants are concerned that students are leaving traditional schools for community schools and that traditional schools are bearing the burden of competition. Community-school opponents point to certain community schools that have experienced financial and operational issues as reason for rejection of the whole concept. Today's question, however, is not whether particular schools are operating within the law but whether R.C. Chapter 3314, as enacted, satisfies the Constitution. Any allegations about the manner in which certain community schools are run are properly addressed in the appellants' second cause of action, pending in the trial court. School funding continues to be an educational policy matter of immense concern and heated debate. Educational policy matters, however, are best left to the General Assembly, which is charged with enacting legislation that reflects the policy choices of the state's constituents.
{¶ 60} We are now considering only the constitutional challenges in this case, and from a constitutional perspective, we conclude that appellants have not proved a violation of the prohibition in Section 5, Article XII against the application of local taxes, because local tax dollars are not diverted to the state-funded community schools.
{¶ 61} The final claim at issue in this case deals with the financial relationship between the state and community schools under two constitutional provisions.
E. Count Seven: Sections 4 and 5, Article VIII: Community schools and state credit and loans
{¶ 62} Count seven of the third amended complaint alleges that R.C. 3314.08(J), which permits community schools to borrow money from the state, and R.C. 3318.50 and 3318.52, which provide loan guarantees to community schools, are unconstitutional.
1. Extending state credit to community schools
{¶ 63} Section 4, Article VIII of the Ohio Constitution provides:
{¶ 64} "The credit of the state shall not, in any manner, be given or loaned to, or in aid of, any individual association or corporation whatever; nor shall the state ever hereafter become a joint owner, or stockholder, in any company or association, in this state, or elsewhere, formed for any purpose whatever."
{¶ 65} The provisions of the statutes at issue here, R.C. 3314.08(J), 3318.50, and 3318.52, allow community schools to borrow money in anticipation of state funding, establish a classroom-facilities loan-guarantee program, and establish a community-school loan-guarantee fund. Citing Section 4, Article VIII, the appellants contend that guaranteeing loans and funding to community schools constitutes an unconstitutional lending of the state's credit to aid individual associations or corporations. In challenging the statute on its face, they must prove its constitutional defect beyond a reasonable doubt. State ex rel. Dickman v. Defenbacher, 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59, paragraph one of the syllabus.
{¶ 66} Section 4, Article VIII has generally been interpreted to prohibit lending the state's credit to private business enterprises, but not to organizations created for a public purpose, even if they are corporations. State ex rel. Kauer v. Defenbacher (1950), 153 Ohio St. 268, 282, 41 O.O. 278, 91 N.E.2d 512. In opposing the appellants' argument, the appellees argue that community schools are not private business enterprises, so statutory provisions for the state's guarantee of loans to community schools are constitutional. The plain language of R.C. 3314.03(A)(1) does not permit for-profit entities to become community schools. Community schools may be organized only as nonprofit corporations or as public-benefit corporations. R.C. 3314.03(A)(1).
{¶ 67} We have held that Section 4, Article VIII is satisfied where the state's credit is used by a public organization to advance a "public purpose." State ex rel. Kauer v. Defenbacher, 153 Ohio St. at 282, 41 O.O. 278, 91 N.E.2d 512 ("whether it is a corporation or not, the turnpike commission is a public organization created for a public purpose," and so advancement of state funds to the commission is constitutional). See State ex rel. Dickman v. Defenbacher, 164 Ohio St. 142, 57 O.O. 134, 128 N.E.2d 59 (state grants to veterans' organizations are constitutional); State ex rel. Leaverton v. Kerns (1922), 104 Ohio St. 550, 554, 136 N.E. 217 (county grant to a county agricultural fair is constitutional because it is "a public institution designed for public instruction"); Perkins v. Stockert (1975), 45 Ohio App.2d 211, 74 O.O.2d 334, 343 N.E.2d 340 (funding of legislatively created "new community authorities" to assist private entities in community development is constitutional because each authority is created for a public purpose). In State ex rel. Dickman v. Defenbacher, we held that under Section 4, Article VIII, the legislature could validly appropriate public funds to a private entity for a public purpose. 164 Ohio St. at 151, 57 O.O. 134, 128 N.E.2d 59.
{¶ 68} Community schools were developed to further the state's public school system of education. We cannot imagine a greater public purpose than educating our state's children. Applying the facial-challenge standard to R.C. 3314.08(J), 3318.50, and 3318.52, we hold that the appellants have not established that the statutes are unconstitutional beyond a reasonable doubt.
2. Funding community schools through loan guarantees
{¶ 69} Under this claim, the appellants assert that the loan guarantees for community schools allowed by R.C. 3318.50 and 3318.52 violate the provisions of the Constitution that prohibit the state's assumption of the debt of any corporation unless certain exceptions apply. Section 5, Article VIII of the Ohio Constitution provides:
{¶ 70} "The state shall never assume the debts of any county, city, town, or township, or of any corporation whatever, unless such debt shall have been created to repel invasion, suppress insurrection, or defend the state in war."
{¶ 71} Turning to the plain language of the Constitution, the appellants highlight the statement "The state shall never assume the debts of any corporation whatever." Because community schools must be formed as nonprofit or public-benefit corporations, R.C. 3314.03(A)(1), they argue that the statute offends this constitutional provision.
{¶ 72} Ohio's school districts are not included within this provision's prohibition, for Section 5, Article VIII does not forbid the state's assumption of the debt of political subdivisions that are not of the types named. Butler Cty. Transp. Improvement Dist. v. Tracy (1997), 120 Ohio App.3d 346, 359, 697 N.E.2d 1089 (Section 5, Article VIII does not apply to many types of political subdivisions in Ohio, such as school districts, regional water and sewer authorities, solid waste authorities, or transportation-improvement districts). The appellees argue that community schools are regarded as school districts because they are required to comply with certain Ohio laws as if they were school districts. See, e.g., R.C. 3314.03(A)(ll)(d) and 3314.08(F). Earlier in this opinion, we concluded that community schools belong to the state's system of common schools. By statute, they are "part of the state's program of education." R.C. 3314.01(B). Like traditional schools, community schools are funded by the state, cannot charge tuition, and are charged with educating Ohio children. As a result, they are not private business corporations the debt of which the state is prohibited from assuming under Section 5. Therefore, community schools are also exempt from this provision. Accordingly, we do not find a constitutional violation beyond a reasonable doubt under Section 5, Article VIII of the Ohio Constitution.
IV. Conclusion
{¶ 73} We hold that the appellants in this case have not shown constitutional defects in R.C. Chapter 3314, on its face or as applied. When the General Assembly enacted Ohio's Community-Schools Act, it was entrusted with making complicated decisions about our state's educational policy. These policy decisions are within the purview of its legislative responsibilities, and that legislation is entitled to deference. Brady v. Safety-Kleen Corp. (1991), 61 Ohio St.3d 624, 632, 576 N.E.2d 722 (a court has nothing to do with the policy or wisdom of a statute. That is the exclusive concern of the legislature). The General Assembly always has the prerogative to determine that Ohio's community schools are not meeting the purpose for which they were established and, consequently, has the ongoing opportunity to modify or dismantle them. After full consideration, we cannot say that the concept of community schools itself violates the Ohio Constitution.
{¶ 74} We therefore affirm the decision of the Court of Appeals for Franklin County to dismiss part of count four, as community schools do not violate Section 3, Article VI of the Ohio Constitution. We reverse the court of appeals' decision to remand the remaining constitutional claims under Section 5, Article XII; Section 2, Article VI; Section 4, Article VIII; and Section 5, Article VIII for further proceedings. As there were no disputed issues of fact, we hold as a matter of law that R.C. Chapter 3314, relating to the establishment of community schools as part of the state's educational system, is constitutional both on its face and as applied.
Judgment affirmed in part and reversed in part.
Moyer, C.J., Lundberg Stratton and O'Connor, JJ., concur.
Resnick and Pfeifer, JJ., dissent.
O'Donnell, J., dissents and would dismiss the appeal as having been improvidently accepted.
. We acknowledge the amicus briefs filed in this matter.
. Revisions to R.C. Chapter 3314 have included Am.Sub.S.B. No. 55, 147 Ohio Laws, Part III, 6542, 6567, which expanded the ability to create community schools; Am.Sub.H.B. No. 770, 147 Ohio Laws, Part III, 5609, 5638, which extended the maximum term of sponsorship contracts from three to five years; Am.Sub.H.B. No. 282, 148 Ohio Laws, Part I, 1956, 2020, which changed certain features of community schools, requiring them to have fiscal officers and requiring the ODE to issue an annual report card for each school; Am.Sub.H.B. No. 94, 149 Ohio Laws, Part III, 4126, 4555, which created a loan-guarantee program; 2002 Sub.H.B. No. 364, which made the ODE responsible for the oversight and approval of sponsors. This list is not comprehensive, but serves to show some of the amendments to charter-school legislation.
. Had we waited to consider all issues as Justice O'Donnell suggests, the parties would have been back before this court later, with most of the same claims. (The court of appeals remanded most of the claims but affirmed the dismissal of two. If we had not accepted review of that appellate decision or if we dismissed the case now, the decision on those claims would remain standing as res judicata, and those claims would not be subject to further litigation on remand or a subsequent appeal.) The constitutional issues have been joined and have been fully briefed. With respect to those legal issues, there is no fact-finding to be done.
. The court of appeals determined that res judicata did not bar litigation of counts 5 and 6 and remanded these counts to the trial court for further proceedings. The court of appeals also remanded count seven, advising that the trial court may at the same time examine the issues in this count, even if only as a part of the remaining claims.
. Other states, like Michigan, California, Utah, and New Jersey, have considered similar claims under similar constitutional provisions and have rejected them. Council of Orgs. & Others for Edn. about Parochiaid, Inc. v. Engler (1997), 455 Mich. 557, 566 N.W.2d 208; Wilson v. State Bd. of Edn. (1999), 75 Cal.App.4th 1125, 89 Cal.Rptr.2d 745; Utah School Bds. Assn. v. Utah State Bd. of Edn. (Utah 2001), 17 P.3d 1125,1129,1131; and In re Grant of Charter School Application of Englewood on the Palisades Charter School (2000), 164 N. J. 316, 753 A.2d 687.
. R.C. 3314.04 exempts community schools from most state laws and regulations dealing with public schools except the state laws that grant certain rights to parents and laws specified in the sponsor contract and in R.C. Chapter 3314 itself. See Appendix A for a list of those laws that community schools must still comply with.
. Compare R.C. 3314.03(A)(ll)(d) with the original 1997 version in Am.Sub.H.B. No. 215, 147 Ohio Laws, Part 1,1190.
. State funding of school districts depends on enrollment. R.C. 3317.022 and 3317.03.
. R.C. 3314.08 offers many adjustments to the formula, including the possibility of proration in R.C. 3314.08(D), but for ease of discussion we have excluded the nuances and possible permutations to the formula.