Opinion ID: 2271000
Heading Depth: 1
Heading Rank: 4

Heading: the taxpayers' hancock claims

Text: Commonly referred to as the Hancock Amendment, article X, sections 16 to 24 of the Missouri Constitution aspire[] to erect a comprehensive, constitutionally-rooted shield erected to protect taxpayers from government's ability to increase the tax burden above that borne by the taxpayers on November 4, 1980. Fort Zumwalt Sch. Dist. v. State, 896 S.W.2d 918, 921 (Mo. banc 1995). In relevant part, article X, section 16 of the Missouri Constitution states, The state is prohibited from requiring any new or expanded activities by counties and other political subdivisions without full state financing, or from shifting the tax burden to counties and other political subdivisions. Article X, section 21 prohibits the state from requiring unfunded new or increased activities or services: The state is hereby prohibited from reducing the state financed proportion of the costs of any existing activity or service required of counties and other political subdivisions. A new activity or service or an increase in the level of any activity or service beyond that required by existing law shall not be required by the general assembly or any state agency of counties or other political subdivisions, unless a state appropriation is made and disbursed to pay the county or other political subdivision for any increased costs. Mo. CONST. ART. X, § 21. As stated in Fort Zumwalt, 896 S.W.2d at 921, By its clear language, Section 23 [of the Hancock Amendment] limits the class of persons who can bring suit to enforce the Hancock Amendment to `any taxpayer.' It states in relevant part: Notwithstanding other provisions of this constitution or other law, any taxpayer of the state, county, or other political subdivision shall have standing to bring suit in a circuit court of proper venue... to enforce the provisions of sections 16 through 22.... Mo. CONST. ART. X, § 23 (emphasis added). Further, [t]he school district plaintiffs do not, because they cannot, claim status as taxpayers. Fort Zumwalt, 896 S.W.2d at 921. As the trial court noted, the KCMSD is without standing to bring actions to enforce article X, sections 16 and 21 because a school district may not claim status as a taxpayer. Id. The individual taxpayer plaintiffs, however, do have standing to bring both Hancock claims.
The taxpayers argue section 160.415 of the 2005 act creates an unfunded mandate in violation of article X, sections 16 and 21 in requiring the KCMSD to transfer a portion of its local tax revenue to charter schools. Because, for the reasons noted above, the amendment does not transfer a portion of local tax revenue to charter schools, this argument is without merit. Even were this not the case, the charter schools act does not authorize an unfunded mandate. The Hancock Amendment's bar on unfunded mandates can be violated in two ways: either if the state requires a new or increased activity or service of a political subdivision or if the political subdivision experiences increased costs in performing an existing activity or service without receiving additional funding from the state. See Neske v. City of St. Louis, 218 S.W.3d 417, 422 (Mo. banc 2007); Miller v. Dir. of Revenue, 719 S.W.2d 787, 788-89 (Mo. banc 1986). The burden is on the plaintiffs to prove that an unfunded mandate exists by offering specific proof of new or increased duties and increased expenses, and these elements cannot be established by mere `common sense,' or `speculation and conjecture.' Brooks v. State, 128 S.W.3d 844, 849 (Mo. banc 2004), quoting, Miller, 719 S.W.2d at 789. In Neske, the standard for proof of an unfunded mandate was not met because, while it was more expensive for the city to fund its police retirement system and firemen's retirement system than it had been in a previous fiscal year, the same formula was used. This did not amount to a new or increased activity funding mandate. 218 S.W.3d at 422. As this Court stated, The question is whether the City has been mandated to bear new responsibilities in relation to this activity. It has not. Id. The City's requirements to pay are unchangedthe City still is required to pay the entire amounts certified by the PRS and the FRS boards of trustees. There is no new or increased activity. Id. On the other hand, this Court found there was an unfunded mandate in Rolla 31 Sch. Dist. v. State of Missouri, 837 S.W.2d 1 (Mo. banc 1992). In that case, the department of elementary and secondary education sent a letter to all Missouri school districts advising them that school districts were obligated to provide special education and related services for disabled three- and four-year-old children beginning with the 1991-92 school year. Id. at 6. This meant that school districts were required to provide educational services to a new population of district residents, yet they were not provided with the funds to do so, and this constituted an unfunded mandate under Hancock. Id. at 6-7. This case is more like Neske than Rolla. First, it is clear that while the General Assembly now has authorized charter schools, that authorization did not require a new or increased activity on the part of the KCMSD. It did not require establishment of charter schools at all; it merely authorized them. Before the act, the KCMSD (and other public school districts) were required to provide a free public education to all eligible pupils who attended. This requirement remains. The KCMSD serves no role in funding the charter schools, and their existence does not create or increase any mandate to the district. Second, plaintiffs are correct that the Hancock Amendment prohibits the state from reducing the state financed proportion of the costs of any existing activity or service required of counties and other political subdivisions. Mo. CONST. ART. X, § 21. But the KCMSD did not show that the state decreased its proportion of funding of state-mandated programs beyond that permitted by the Hancock Amendment without a vote of the people. As this Court noted in Fort Zumwalt, to establish a violation of section 21, plaintiffs must present evidence to establish the program mandated by the state in 1980-81 and the ratio of state to local spending for the mandated program in that year and further prove costs of the mandated program in each subsequent year and the ratio of state to local spending for the mandated program in each subsequent year. 896 S.W.2d at 922. It is well-settled that the calculation of a mandated program's costs  may not include any discretionary expenditures a district undertook that went beyond the state mandate and requires that plaintiffs clearly distinguish resources directly committed to the state mandates... from those not so dedicated. Id. (emphasis added). Providing these factors for 1980-81 and each subsequent year... require[s] sophisticated budgetary evidence and economic expertise. Id. at 923. The trial court below was presented with conflicting evidence as to whether increased costs were placed on the KCMSD to perform state-mandated existing activities or services as a result of the charter schools act. The trial court is free to believe or disbelieve all, part or none of the testimony of any witness. Watson, 298 S.W.3d at 525-26, citing, T.B.G., 772 S.W.2d at 654. Here, the trial court found that it could not rely on plaintiffs' expert's testimony to the extent her opinions overstated the amount of state-mandated activity and treated variable or semi-variable costs as fixed costs; as a result, plaintiffs did not meet their burden under Fort Zumwalt. This Court will affirm this determination unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Murphy, 536 S.W.2d at 32. At trial, plaintiffs presented an expert witness who testified as to two possible formulas for determining the applicable ratio of state-to-local spending. Her testimony, if believed, tended to show that the percentage of funding for state-mandated programs decreased since the 1980-1981 school year. The defendants' evidence, found to be more credible by the trial court, showed that the district's expert failed to identify the amount of local revenues actually expended on state-mandated activities and expenses as opposed to discretionary ones or expenses imposed by federal requirements such as the No Child Left Behind Act. For example, the expert considered expenses the KCMSD chose to pay for teacher salaries in excess of the state-mandated minimum teacher salary, yet the KCMSD expert admitted her figures assumed all teacher salary expenses were mandated by the state and further did not reduce the number of teachers in proportion to the reduction in pupils served by the KCMSD. This was improper, as this Court clearly noted in Fort Zumwalt: For example, to the extent that district finances permitted greater-than-required salary increases for special education instructors, aides, and other personnel, the taxpayers may not include these in the school district portion of the ratio. 896 S.W.2d at 922-23. Similarly, state law does not mandate any particular level of spending for benefits for teachers and other employees, nor does state law require spending for FICA and Medicare payments; yet the expert included district-chosen benefits and federally mandated spending in her calculation of state-mandated costs. The KCMSD expert also included all building costs without any deduction for the fact that the KCMSD school board's own study found that in 2006 the District had excess building capacity and an average utilization rate for its buildings of around 70 percent. She did not address whether such a substantial underutilization is reasonable, and the trial court could have accepted the view of opposing experts that it was improper not to consider the excess cost of such building expenditures to not be state-mandated. The trial court also heard from the charter schools' expert, who testified discretionary expenditures classified as state-mandated by the KCMSD included inefficient transportation costs. This is not to suggest that the KCMSD's additional expenditures were not of benefit to the students of the district; many such discretionary expenditures, as well as those federally required, are undoubtedly important for the proper education of students in the KCMSD. But if expenditures are not mandated by the state, they are not relevant for Hancock purposes. It was within the trial court's discretion, based on the evidence presented, to determine that state-mandated expenditures, without consideration of discretionary or federally mandated expenditures, did not violate Hancock because the proportion of mandated expenses paid by the state has not decreased