Opinion ID: 2524503
Heading Depth: 3
Heading Rank: 1

Heading: Funding

Text: [ถ 114] The state contends that the Campbell disposition of capital construction was result-oriented and provided no guidance to the legislature as to the means of accomplishing the result. The state claims the legislature looked to local bonding as the solution because Hinkle plainly stated that each school district, acting separately, will have to provide financing for capital construction needs through bond issues and there can be no wealth-based disparity caused by bond financing. Accordingly, the state insists that this court has preapproved local bonded indebtedness as the sole method by which to finance capital construction without subsequent overruling in Washakie and Campbell. Hinkle is not authority for this contention, and this assertion is incorrect. As this court has stated during thirty years of jurisprudence in Hinkle, Washakie, and Campbell, Wyoming schools are the responsibility of the state as a whole and must be financed by the state as a whole. [ถ 115] Since Hinkle, we have offered a number of suggestions explaining how the legislature could achieve constitutional school financing. Hinkle was a very simple case centering around Bairoil, a rich school district. 491 P.2d at 1236. Bairoil had been aligned with Rawlins because of its close proximity; however, a Sweetwater County school district, in an effort to enhance its assessed valuation, attempted to unify with the Bairoil school district. Under facts vividly illustrating the harm of wealth-based disparities, Hinkle pointed out that relying upon local wealth to finance a state school system was unconstitutional. 491 P.2d at 1237. With much detail, Hinkle described the needed legislation required to resolve the unconstitutional wealth-based disparities. 491 P.2d at 1238. The state is correct that Hinkle did not disapprove of bonds issued locally; however, Hinkle cannot be read so simplistically as to believe that it limited capital construction funding to local school district bonding. At an early stage, Hinkle recognized the inherent inequities of school financing primarily dependent upon local wealth and declared it unconstitutional. Almost ten years later, this court again rejected these inherent inequities in Washakie. [ถ 116] As Washakie noted, local real and personal property taxes had remained the primary source of revenue for school districts. 606 P.2d at 323. Washakie held that unconstitutional inequalities in the educational opportunities available to Wyoming students were created when school districts' funding levels primarily depended upon local wealth. Noting that the state constitution only limited bonded indebtedness, Washakie stated that there is no constitutional requirement that school buildings must be built by creation of debt. It offered for consideration the option of a statewide reserve fund for building construction. 606 P.2d at 337. [ถ 117] Twelve years later, the situation remained unchanged, and Campbell reiterated this court's constitutional objections to the capital construction financing. At that time, an independent, state-commissioned study (MGT study) reported the schools' need for new construction, renovation, and repair totaled $275 million, and the legislature had designated a mere $5 million as capital funding. Campbell, 907 P.2d at 1274. [ถ 118] Campbell noted that, under the financing statutes then in place, the primary source of revenue for major capital facilities renovation and construction remained the sale of bonds paid for out of mills levied against a school district's assessed valuation. The constitution prohibits a school district from bonding beyond 10 percent of the assessed value of the school district. Wyo. Const. art. 16, ง 5. Due to low assessed valuation, five Wyoming school districts exceeded 100 percent of legal bonded indebtedness, and less wealthy districts could not rely on bonds to finance needed capital construction because total bonding capacity was far less than needed funds. At that point, bonding was futile. [ถ 119] Campbell determined that post- Washakie legislative changes, in actual operation, had not removed the inequities from this vital part of the total educational package. The requirement of statewide availability from total state resources for building construction or contribution to school buildings on a parity for all school districts had been virtually ignored. Washakie, 606 P.2d at 337. Capital construction financing was unavailable for many. Campbell, 907 P.2d at 1275. [ถ 120] Campbell reiterated that safe and efficient physical facilities with which to carry on the process of education are a necessary element of the total educational process and state funds must be readily available for those needs. Id. Since 1971, this court has rejected wealth-based disparities, and, since 1980, this court has stated that deficient physical facilities deprive students of an equal educational opportunity and any financing system that allows such deficient facilities to exist is unconstitutional. Despite this, the state presents a capital construction financing scheme that is fundamentally unchanged, unconstitutionally wealth-based, and inadequate. Once again, we plainly state that any capital construction financing system based primarily upon a school district's assessed valuation necessarily means that the financing system is primarily dependent upon local wealth. The disparities in local wealth will produce unconstitutional disparities in educational opportunity if the school districts' funding options are a function of assessed valuation. Washakie `s many recommendations had one aspect in common: change the financing basis from local wealth to the wealth of the state as a whole, as permitted by the state constitution, and collect revenues and redistribute them in a manner that ensures a constitutional education is delivered in a safe and efficient facility. 606 P.2d at 336. [ถ 121] Since Campbell, the legislature has again studied capital construction needs, and, as must have been expected, needs have risen dramatically and now stand at over $565,000,000 along with over $303,000,000 in deferred maintenance. More importantly, by the state's own assessment as well as the school districts', the percentage of inadequate facilities has risen and threatens the educational opportunity and quality of yet another generation of school children. [ถ 122] The legislature failed to enact any changes in capital construction financing legislation until 1999. That legislation required the DOE to establish standards for adequacy for new construction and an assessment program for existing facilities. Following assessment, school districts must be notified when a building appears on the list and must report proposed remedies back to the DOE. The DOE and its advisory committees notify the legislature when school districts either cannot or will not remedy the inadequacy because it has exceeded bonding capacity or voters refuse to pass bonds for funding. School districts can finance capital construction for deficient facilities in immediate need through either bond issuance that may earn them a state mill levy supplement for debt service [46] or through a lengthy, laborious application process for a state grant. [47] A state grant is available only if a district is at least at 90 percent of bonded indebtedness. The grant proposal is submitted to the governor and legislature for consideration by the legislature with no assurance of approval. The state argues that, because the statutes require the DOE to define and identify inadequate facilities and to make recommendations to the legislature to eliminate those inadequacies, the statute makes the wealth of the state available to all schools. This argument fails for two reasons. First, districts which have not bonded to 90 percent, which is beyond their control, cannot qualify despite proven need. Second, the statute lacks any plan or mandate to assure legislative approval and ultimate funding. The record is devoid of evidence that the legislature has funded or intends to fund the undisputed deficiencies any time soon. Despite notice in 1998 in the MGT study that needs exceeded $565 million, the DOE recommended only $54.6 million between 1998 and 2001 and only $30 million has actually been appropriated by the legislature. [ถ 123] We perceive the state's failure to reform the capital construction financing system consistent with this court's direction in Washakie and Campbell is caused by the political difficulties created by such reforms. This situation, perhaps as much as any other in our state's history, underscores the need for and wisdom of three separate and independent branches of government. It is the duty of the judiciary to assure the mandates of our state constitution are followed even if it is politically unattractive. We repeat our long held conviction that any system that places the primary financial burden of providing constitutionally adequate facilities on the school districts through local mill levy taxation and local bonds is wealth-based and inherently inequitable. We again affirm that the state bears the burden of funding and providing constitutionally adequate facilities to school districts that provide an equal opportunity for a quality education. [48] To date, the Wyoming legislature has limited school funding taxation to property taxes although nothing prohibits it from imposing other taxation or revenue raising mechanisms. That decision, however, is the prerogative of the legislature. [ถ 124] Having made the decision to fund schools by property taxation, however, the legislature is required by the state constitution to uniformly tax and assess property. Wyo. Const. art. 1, ง 28; art. 15, ง 11. Additionally, the taxation and revenue provisions of the Wyoming Constitution limit taxation levies, bonded indebtedness, and recapture amounts. Wyo. Const. art. 15, งง 4, 5, 17; art. 16, งง 1, 3, 5. Presumably because of these requirements and limitations, the present school financing statutes require a 12 mill statewide levy, a 6 mill county levy, and a 25 mill school district levy be imposed for funding of school finance operations. The levies are uniformly imposed by school district, meaning that each school district imposes a minimum of 43 mills. The legislature, however, does not impose any kind of statewide mill levy for capital construction financing. Since Washakie, the constitution was amended to authorize the legislature to recapture 75 percent of revenues generated by the local 25 mill school levy which exceeded an amount determined by formula. [49] The capital construction statutes contained in Wyo. Stat. Ann. งง 21-15-105 to - 112 (LEXIS 1999) do not direct that any recapture funds fund the state capital construction account established in ง 21-15-111, and the operations finance statute, Wyo. Stat. Ann. ง 21-13-102(b) (LEXIS Supp. 2000), appears to devote the local 25 mill school levy to school operations finance. [ถ 125] Instead, the present statutory scheme funds capital construction by placing the financial burden primarily on school districts through bonded indebtedness. School districts have not imposed bonded indebtedness levies uniformly. In 1998, fifteen school districts imposed no mill levies for bonding and interest, and thirty-three imposed levies ranging from 1.2 to 17.48. Additional mill levies are imposed which cause nonuniformity for the total number of school district mills levied. Those totals range from a low of 43 total mills levied to a high of 62.98 mills levied. We have recognized since Hinkle that this nonuniformity is directly caused by disparities in local wealth and is therefore unconstitutional. In addition, imposing the burden on the local school districts to tax locally to provide local enhancement denies the poorer districts the opportunity to fund local enhancement, as authorized by Campbell. Campbell did not define the term but suggested that local innovations could become the standard required for the state as a whole. Specifically, Campbell stated: The constitution requires the legislature to create and maintain a system providing an equal opportunity to a quality education. That system must be a function of state wealth. Once the legislature achieves the constitutional mandate of a cost-based, state-financed proper education, then assuming the legislature has a compelling reason for providing a mechanism by which local districts may tax themselves in order to enhance their programs in an equitable manner, that appears to be constitutionally permissible. However, we inject two notes of caution. First, in Skeen, the two dissenting state supreme court justices did not believe strict scrutiny permits a local enhancement mechanism. Skeen[ v. Minnesota], 505 N.W.2d [299,] 322 [(Minn.1993)] (Page, Gardebring, JJ, dissenting). Second, local enhancement may also result in substantive innovations which should be available to all school districts as part of a proper education. The definition of a proper education is not static and necessarily will change. Should that change occur as a result of local innovation, all students are entitled to the benefit of that change as part of a cost-based, state-financed proper education. 907 P.2d at 1274 (footnote omitted). Campbell discussed this concept after deciding the term local control could mean only a local role in implementing a legislatively defined proper education. Because school districts felt strongly that state control might result in dumbing down the education provided to students, Campbell defined the state's standard as the  best we can do and then provided for local enhancement to ensure that deciding what a proper education was would remain dynamic and continue to evolve. [ถ 126] Regarding capital construction, Campbell clearly allows a school district to build facilities considered innovative or world-class with money raised locally or by property taxes not subject to recapture under the constitutional provision and then leaves it to the legislature to ensure that type of local enhancement does not ultimately create a disparity in equal educational opportunity. Campbell `s discussion about a local role contemplated that, by requiring the legislature to define and fund the proper education, the role of a local school district would necessarily change from primarily deciding how to pay for the proper education with inadequate funds to the new and necessary role of raising funding for local enhancement in order to assure innovation. [ถ 127] The Wyoming Constitution does not prohibit the state from imposing a statewide mill levy taxation level for capital construction, nor does it limit the number of mills that can be levied for such a fund. Wyo. Const. art. 15, งง 4, 15. [50] It merely requires that it be uniform. Wyo. Const. art. 1, ง 28; art. 15, ง 11. Nothing in the state constitution prevents the legislature from raising the entire amount needed of more than $565 million for capital construction by enacting statutes imposing a new category of statewide mill levy for capital construction at whatever level is required to raise the desired amount of money, and, if it so desires, the legislature can act within any time frame including raising all funding in a single year. [ถ 128] Seizing on one sentence in Campbell, the state argues that the legislature's only constitutional obligation is to adopt a system that prevents deficient facilities. Although elimination of facilities deemed deficient according to state standards would go a long way toward meeting the constitutional mandate, equality of opportunity ultimately requires a rough measure of equality of facilities over time. Having allowed the disparities and deficiencies to develop over half a century, the legislature cannot realistically be expected to cure them quickly, and prioritizing its efforts to concentrate on truly deficient facilities is appropriate. However, all the affected parties should not lose sight of the constitutional mandate of equal opportunity, and any system ultimately adopted must be capable of providing essentially equal facilities to all Wyoming's school children over the long term. [ถ 129] We hold the legislature must fund the facilities deemed required by the state for the delivery of the full basket to Wyoming students in all locations throughout the state through either a statewide tax or through other revenue raising mechanisms equally imposed on all taxpayers. Individual districts may fund additional facilities deemed appropriate enhancements to the delivery of education in their respective districts with locally raised revenues. The state must assure that over time appropriate local enhancements are adopted as state required facilities as the standards for an adequate education evolve. In addition, local enhancements which are not appropriate as statewide standards must not result in disparities in educational opportunities that deny students an equal education appropriate for the times as required by the state constitution.