Court Opinion

ID: 4328803
Source: CourtListenerOpinion
Date Created: 2018-11-08 01:02:19.056583+00
Date Added: 2024-06-11T14:46:52.234904
License: Public Domain

Case: 18-60500    Document: 00514715297    Page: 1   Date Filed: 11/07/2018

         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT

                                No. 18-60500                 United States Court of Appeals
                                                                      Fifth Circuit

                                                                    FILED
                                                             November 7, 2018

TEXAS EDUCATION AGENCY,                                        Lyle W. Cayce
                                                                    Clerk
                                          Petitioner,

versus

UNITED STATES DEPARTMENT OF EDUCATION,

                                          Respondent.

                     Petition for Review of a Final Order
                        of the Secretary of Education

Before HIGGINBOTHAM, SMITH, and GRAVES, Circuit Judges.
JERRY E. SMITH, Circuit Judge:

      Under the Individuals with Disabilities Education Act (“IDEA”), a state
may receive federal funding for special education, provided it complies with
statutory requirements. One such condition—known as the “maintenance of
state financial support” (“MFS”) clause—prohibits a state from reducing the
amount of state financial support made available for special education and
related services below the amount for the previous fiscal year. See 20 U.S.C.
§ 1412(a)(18)(A). If the state reduces the amount of its financial support, the
     Case: 18-60500       Document: 00514715297          Page: 2     Date Filed: 11/07/2018

                                       No. 18-60500
Secretary of Education may withhold federal funding by a corresponding
amount. See id. § 1412(a)(18)(B).

       In fiscal year 2012, Texas made available roughly $33.3 million less for
special education and related services than it did during fiscal year 2011.
Accordingly, the Department of Education issued a proposed determination
that Texas was ineligible for $33.3 million of future grants because of the short-
fall in both aggregate and per capita state funding. The state asserted that it
had complied with the MFS requirement because funding under a weighted-
student model had remained constant. Texas further maintained that the
MFS provision violated the Constitution’s Spending Clause in that it failed to
provide clear notice that a state could not decrease its aggregate or per capita
appropriations. The Secretary ultimately rejected both arguments. Because
the weighted-student model contravenes the plain meaning of the MFS clause,
we deny the state’s petition for review.

                                              I.
       Part B of the IDEA, id. § 1400 et seq., authorizes the Secretary to extend
federal grants to assist states in providing special education and related
services for children with disabilities. “Congress enacted IDEA in 1970 to
ensure that ‘all children with disabilities are provided a free appropriate public
education which emphasizes special education and related services designed
to meet their unique needs [and] to assure that the rights of [such] children
and their parents or guardians are protected.’” 1

       To qualify for these grants, a state must submit a “plan that provides
assurances to the Secretary that the State has in effect policies and procedures

       1Forest Grove Sch. Dist. v. T.A., 557 U.S. 230, 239 (2009) (citations omitted). See also
20 U.S.C. § 1400(d).
                                              2
    Case: 18-60500     Document: 00514715297      Page: 3    Date Filed: 11/07/2018

                                  No. 18-60500
to ensure that the State meets each” of the twenty-five stipulated conditions.
Id. § 1412(a). Among these is the MFS clause, which Congress added in the
1997 Amendments. 2 The MFS requirement forbids a state from “reduc[ing]
the amount of State financial support for special education and related services
for children with disabilities, or otherwise made available because of the excess
costs of educating those children, below the amount of that support for the
preceding fiscal year.” Id. § 1412(a)(18)(A). See also 34 C.F.R. § 300.163. If a
state does not comply, then the Secretary “shall reduce the allocation of funds”
to the state “by the same amount by which the State fails to meet the require-
ment.” 20 U.S.C. § 1412(a)(18)(B). Alternatively, the Secretary may waive the
MFS condition if she finds that a state provided clear and convincing evidence
that all children with disabilities have available to them a free appropriate
public education. See id. § 1412(a)(18)(C)(ii); see also 34 C.F.R. § 300.164.

      In its 2013 application for IDEA Part B funds, Texas reported a shortfall
of $377,284,114 between the state funding appropriated for special education
in fiscal years 2012 and 2011. Texas noted that the reduction had resulted
from decreases in enrollment and in the level of services required by individual
children with disabilities. The Department warned Texas that it was at risk
of having its funds reduced the following fiscal year and informed Texas it
could satisfy the MFS requirement by showing that the total amount of state
funding was no less than that of the previous fiscal year (aggregate method) or
that the funding per individual child was at least equal to the previous fiscal
year’s (per capita method). Applying the per capita method, the Department
determined that Texas’s shortfall was only $33,302,428. The Department
notified Texas of the opportunity to seek a waiver of the MFS provision, but

      2 See Individuals with Disabilities Education Act Amendments for 1997, Pub. L.
No. 105-17, § 101, 111 Stat. 37, 68 (1997).
                                         3
    Case: 18-60500    Document: 00514715297     Page: 4   Date Filed: 11/07/2018

                                 No. 18-60500
the state did not do so. Consequently, the Department issued a proposed deter-
mination that Texas was ineligible for the corresponding $33.3 million in
future grants.

      In response, Texas maintained that it had fully complied with the MFS
clause through its faithful application of the weighted-student model. Under
that approach, an “individualized education program” team assesses the spe-
cial education needs of each student with a disability. Funds are then allocated
according to the number of hours and the types of special education services
received by a full-time equivalent student in average daily attendance. The
amount of state funding can therefore fluctuate yearly depending on the num-
ber of enrolled students and their unique instructional arrangements. For
instance, if a student requires daily tutoring sessions in one year but only
biweekly sessions in another, his school would receive less funding to account
for the change in special education needs.

      The weighted-student model has existed in its current form since 1995.
Because Texas did not alter its core statutory mechanism for funding special
education in 2012, the state asserted that it had not reduced the funds made
available for disabled children. According to Texas, what had changed in 2012
was not the support for special education, but rather the special education
needs of children with disabilities. Finally, Texas posited that the MFS re-
quirement exceeded Congress’s spending power by failing to provide clear
notice that reductions in aggregate and per capita funding were forbidden.

      On May 23, 2018, the administrative law judge (“ALJ”) determined that
the weighted-student model contradicted the plain language of the MFS provi-
sion, which required states to maintain the same level of allocations from year
to year.   The ALJ further rejected Texas’s argument under the Spending
Clause, finding that the MFS condition was clear and unambiguous. The

                                       4
     Case: 18-60500       Document: 00514715297         Page: 5    Date Filed: 11/07/2018

                                      No. 18-60500
Secretary did not review the ALJ’s ruling, which therefore became the final
decision of the Secretary on July 9, 2018. Texas filed a petition for review.

                                             II.
       This court reviews an agency’s final determination under the standards
in the Administrative Procedure Act. 3 The court will set aside agency action,
findings, and conclusions found to be “arbitrary, capricious, an abuse of discre-
tion, or otherwise not in accordance with law” or “contrary to constitutional
right, power, privilege, or immunity.” 5 U.S.C. § 706(2).

       Texas maintains that the weighted-student method complies with the
MFS requirement, given the statutory language, context, and purposes of the
IDEA. We disagree.

                                             A.
       “[T]he meaning of a statute must, in the first instance, be sought in the
language in which the act is framed . . . .” Caminetti v. United States, 242 U.S.
470, 485 (1917) (citations omitted). We give undefined words “their ordinary,
contemporary, common meaning,” 4 presuming “that the legislature says in a
statute what it means and means in a statute what it says there.” 5 The judicial
inquiry thus “begins with the statutory text, and ends there as well if the text
is unambiguous.” BedRoc, 541 U.S. at 183 (citations omitted).

       The MFS clause provides that a state must “not reduce the amount of
State financial support . . . made available” for special education and related

       3  ExxonMobil Pipeline Co. v. U.S. Dep’t of Transp., 867 F.3d 564, 571 (5th Cir. 2017)
(citing 5 U.S.C. § 706).
       4 Contender Farms, L.L.P. v. U.S. Dep’t of Agric., 779 F.3d 258, 269 (5th Cir. 2015)
(citations omitted).
       5 BedRoc Ltd. v. United States, 541 U.S. 176, 183 (2004) (citation and alteration
omitted).
                                             5
    Case: 18-60500       Document: 00514715297       Page: 6   Date Filed: 11/07/2018

                                     No. 18-60500
services for children with disabilities. 20 U.S.C. § 1412(a)(18)(A) (emphasis
added). But under the weighted-student model, Texas may reduce the amount
of funding for special education if it determines that the needs of children with
disabilities have changed. Indeed, Texas does not dispute that it reduced the
amount of state funding by $33.3 million between fiscal years 2012 and 2011.
In doing so, Texas violated the plain requirements of the MFS clause and is
thus ineligible for the corresponding amount of future IDEA Part B grants.

      Texas responds by noting that the statute does not define the operative
terms “reduce,” “support,” or “made available.” Resorting to the dictionary,
Texas observes that the common meaning of “support” is “to pay the costs of:
maintain.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY, UNABRIDGED
2297 (1986). To “maintain,” in turn, is “to keep in a state of repair, efficiency,
or validity.” Id. at 1362. The state thus asserts that the word “support” has a
broader meaning than mere “spending” or “financing.” Therefore, Texas claims
that the statute permits reductions in the absolute amount of state funding, so
long as the state maintains the same level of support for the changing needs of
disabled students.

      But Texas overlooks that the adjective “financial” modifies “support,”
thereby limiting the scope of that term. 20 U.S.C. § 1412(a)(18)(A). The MFS
requirement therefore focuses narrowly on the amount of funding made availa-
ble for special education. Accordingly, the statute makes clear that states must
maintain the same level of funding, irrespective of any fluctuations in the
actual needs of children with disabilities.

      Texas next posits that the phrase “made available” refers to something
that is capable of being used, not actually used. 6 As a result, Texas asserts

      6   See WEBSTER’S, supra, at 150 (defining “available” as “capable of use for the
                                           6
     Case: 18-60500      Document: 00514715297        Page: 7   Date Filed: 11/07/2018

                                     No. 18-60500
that money can be made available for special education and related services
even if it is not ultimately claimed or spent on such services. The state urges
that it complied with the MFS requirement because its statutory algorithm for
funding special education has remained unaltered since 1995. And under
Texas law, the state cannot refuse to provide local schools with the funding
that the weighted-student model guarantees. Hence, Texas claims that even
though the amount of state funds spent in 2012 may have dropped, the amount
“made available” under the weighted-student model did not.

      Admittedly, the phrase “made available” does not require that funds
actually be expended. But at a minimum, a state must appropriate funds to
make them available. Without a suitable appropriation, funding is not capable
of immediate use. Because Texas appropriated about $33.3 million less in 2012
than in 2011, the state can hardly be said to have made those funds available
in any practical way.

      Lastly, Texas accuses the Secretary of adding words to the statute by
measuring compliance with the MFS provision only on an aggregate or per
capita basis. Under the aggregate method, a state may not reduce the total
amount of funding made available from year to year. Conversely, the per
capita method requires a state to maintain at least the same amount of funding
per child with a disability that it made available during the previous year.
According to Texas, nothing in the text of the IDEA supports the Secretary’s
decision to permit the aggregate and per capita methods but not the weighted-
student model. Though the statute prohibits states from reducing the amount
of financial support, it does not explicitly define how to calculate that
reduction. It neither uses the term “aggregate” nor “per capita.” Thus, Texas

accomplishment of a purpose: immediately “utilizable”).
                                            7
    Case: 18-60500     Document: 00514715297      Page: 8    Date Filed: 11/07/2018

                                  No. 18-60500
claims that the Department has impermissibly “add[ed] terms or provisions
where [C]ongress has omitted them.” See Sale v. Haitian Ctrs. Council, Inc.,
509 U.S. 155, 168 n.16 (1993) (citations omitted).

      Yet as we have already observed, the statutory text instructs a state not
to reduce the “amount of State financial support.” 20 U.S.C. § 1412(a)(18)(A)
(emphasis added). Hence, the relevant inquiry is not whether a state has
adequately provided for the special needs of disabled children, but whether it
has maintained the same amount of monetary aid. Both the aggregate and per
capita methods correctly concentrate on the level of state funding made availa-
ble from year to year. In contrast, the weighted-student model allows a state
to reduce the amount of funding based on the changing needs of children with
disabilities. It therefore contradicts the ordinary meaning of the text.

                                        B.
      A statute must be read in “the specific context in which that language is
used, and the broader context of the statute as a whole.” Robinson v. Shell Oil
Co., 519 U.S. 337, 341 (1997) (citations omitted). Accordingly, we must inter-
pret the MFS provision alongside the statutory standards for waiving that con-
dition. Because the weighted-student model renders the waiver process super-
fluous, it does not comply with the clear requirements of the MFS clause.

      As a “cardinal principle of statutory construction,” the presumption
against superfluity requires the court to “give effect, if possible, to every clause
and word of a statute . . . rather than to emasculate an entire section.” Bennett
v. Spear, 520 U.S. 154, 173 (1997) (citation omitted). Yet the weighted-student
model violates that canon, rendering superfluous the carefully-wrought waiver
process established by Congress. Under the IDEA, the Secretary may waive
the MFS requirement for one fiscal year at a time if she finds that a state has
provided clear and convincing evidence that all children with disabilities have

                                         8
     Case: 18-60500        Document: 00514715297          Page: 9     Date Filed: 11/07/2018

                                        No. 18-60500
available to them a free appropriate public education. 7

       The weighted-student model circumvents the waiver process by allowing
a state to reduce its amount of financial support whenever the state—rather
than the Secretary—determines that the special education needs of children
with disabilities are adequately funded. Indeed, Texas claims to have funded
special education according to the diverse instructional arrangements that its
students need to succeed. But the state admits that those needs are deter-
mined by an “individualized education program” team. Conversely, the IDEA
entrusts that discretion to the Secretary, permitting a waiver only if she con-
cludes that all disabled children enjoy a free appropriate public education. See
20 U.S.C. § 1412(a)(18)(C)(ii). Thus, the weighted-student model undermines
the waiver process by enabling a state to decide, on its own initiative, that it
sufficiently funded the needs of children with disabilities.

       Additionally, under Texas’s view, a state may reduce the amount of its
funding, so long as it “provides assurances” that “[a] free appropriate public
education is available to all children with disabilities.” 20 U.S.C. § 1412(a),
1412(a)(1)(A). 8 But that interpretation would dramatically reduce the burden
of proof that a state must ordinarily shoulder to receive a waiver. After all, the
IDEA requires a state to “provide[] clear and convincing evidence that all

       7   To grant a waiver, the Secretary must “determine[] that . . . the State meets the
standard in paragraph (17)(C) for a waiver of the requirement to supplement, and not to
supplant, funds received under this subchapter.” 20 U.S.C. § 1412(a)(18)(C)(ii). Paragraph
(17)(C), in turn, permits a waiver “where the State provides clear and convincing evidence
that all children with disabilities have available to them a free appropriate public education
. . . .” Id. § 1412(a)(17)(C).
       8 Texas suggests that conclusion throughout its briefs. See, e.g., Pet’r Br. at 26 (“[T]he
record does not indicate that Texas students designated for special education do not receive
a free appropriate public education.”); Pet’r Reply Br. at 1 (“[T]he Department’s brief never
suggests that children in Texas do not receive a free appropriate public education—and noth-
ing in the record would support such a proposition.”).
                                               9
    Case: 18-60500    Document: 00514715297      Page: 10    Date Filed: 11/07/2018

                                  No. 18-60500
children have available to them a free appropriate public education” to qualify
for a waiver. Id. § 1412(a)(17)(C). Because the weighted-student model would
thus “emasculate” the stringent waiver process, it flouts the presumption
against superfluity. See Bennett, 520 U.S. at 173.

      The state yet asserts that the statutory context supports the weighted-
student model. Noting that the MFS condition appears beside the phrase “for
children with disabilities,” Texas insists that Congress intended the require-
ment to be read in the context of the needs of individual children, not program-
wide budgets. Texas urges that, whereas the aggregate and per capita meth-
ods measure compliance via statewide metrics, the weighted-student model
properly assesses whether children with disabilities receive the funding they
require.

      That theory might make sense, as a policy matter, if we were legislators.
But the plain language of the statute mandates that the “State . . . not reduce
the amount of State financial support.” 20 U.S.C. § 1412(a)(18)(A) (emphasis
added). As a result, the MFS condition may just as plausibly be read to focus
on statewide funding, rather than on the individual needs of students. More-
over, the phrase “for children with disabilities” does not mandate on its face an
individualized approach to funding special education. Instead, Texas appears
to commit the same blunder that it attributes to the government. In contend-
ing that the MFS requirement looks to the individual needs of children with
disabilities, Texas has itself added words to the statute.

      The state further maintains that the aggregate and per capita methods
effectively write “for children with disabilities” out of the statute, treating the
phrase as mere surplusage. Texas claims that if Congress intended to mandate
those methods, then it need only have said, “The State does not reduce the
amount of State financial support for special education and related services.”

                                        10
    Case: 18-60500       Document: 00514715297         Page: 11     Date Filed: 11/07/2018

                                      No. 18-60500
According to Texas, the phrase “for children with disabilities” therefore does
no work under the Secretary’s interpretation.

       That claim also lacks merit. Congress included the phrase to clarify that
“State financial support for special education and related services” must be
made available “for children with disabilities”—rather than for other demo-
graphic groups. Id. Even under the Secretary’s reading, the phrase thus
retains independent meaning.           Consequently, the weighted-student model
accords with neither the language nor the context of the MFS clause.

                                             C.
       Where the meaning of a statute is plain, the court has no occasion to
consider its underlying purposes. 9 Instead, “the sole function of the courts is
to enforce [the provision] according to its terms.” Caminetti, 242 U.S. at 485
(citations omitted). Because the weighted-student model violates the plain
meaning, we need not consider the legislative history.                 Nevertheless, the
legislative history of the statute only confirms the Secretary’s interpretation.

       In drafting the MFS clause, Congress sought to prevent a state from
reducing its contributions to special education and shifting the financial bur-
den of such services to the federal government. 10 There is no indication that
Texas actually defunded special education in 2012, but the weighted-student
model certainly poses the potential for future abuse.                Though Texas law
requires the state to allocate funding based on the needs of disabled children,

       9 See BedRoc, 541 U.S. at 183; Dep’t of Hous. & Urban Dev. v. Rucker, 535 U.S. 125,
132 (2002) (“[R]eference to legislative history is inappropriate when the statute is unambig-
uous.”) (citation omitted).
       10 See 143 Cong. Rec. S4295, S4300 (daily ed. May 12, 1997) (statement of Senator
Harkin) (noting that the MFS provision was meant “to ensure that increases in Federal
appropriations are not offset by State decreases”); id. at S4304 (statement of Senator Jef-
fords) (explaining that the MFS provision “say[s] to the States that, if we give them more
money, they can’t just reduce their share”).
                                             11
   Case: 18-60500           Document: 00514715297         Page: 12   Date Filed: 11/07/2018

                                           No. 18-60500
it is the state itself that assesses what those needs are. Hence, the weighted-
student model creates a perverse incentive for a state to escape its financial
obligations merely by minimizing the special education needs of its students.

      Texas counters that one of the stated purposes of the IDEA is to “ensure
that all children with disabilities have available to them a free appropriate
public education that emphasizes special education and related services de-
signed to meet their unique needs and prepare them for further education, em-
ployment, and independent living.” 20 U.S.C. § 1400(d). According to Texas,
the weighted-student model comports fully with that purpose by providing the
necessary funding to address the “unique needs” of students with disabilities.

      This argument is unpersuasive. As we discussed above, the IDEA has
an exception to the MFS clause where a state can show, by clear and convincing
evidence, that it has adequately met the “unique needs” of students with dis-
abilities by providing all students with disabilities with a free appropriate pub-
lic education—that portion of the statute is the waiver provision. See 20 U.S.C.
§ 1412(17)(C). The statute is internally consistent; Texas’s interpretation of it
is not. Because the weighted-student model plainly contradicts the text of the
MFS clause, the state may not invoke the broad purposes of the IDEA to create
ambiguity where none exists.

                                                 III.
      Finally, we consider whether the MFS clause exceeds Congress’s spend-
ing power by failing to provide sufficiently clear notice of its requirements.
Under the Spending Clause, 11 Congress may “condition[] receipt of federal
moneys upon compliance by the recipient with federal statutory and

      11   See U.S. CONST. art. I, § 8, cl. 1.
                                                 12
    Case: 18-60500         Document: 00514715297         Page: 13     Date Filed: 11/07/2018

                                        No. 18-60500
administrative directives.” 12 Given that such legislation is “much in the nature
of a contract,” the legitimacy of Congress’s power so to enact “rests on whether
the State voluntarily and knowingly accepts the terms of the ‘contract.’” Penn-
hurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981) (citations omit-
ted). Yet “[s]tates cannot knowingly accept conditions of which they are ‘un-
aware’ or which they are ‘unable to ascertain.’” Arlington Cent. Sch. Dist. Bd.
of Educ., 548 U.S. 291, 296 (2006) (citing Pennhurst, 451 U.S. at 17). Plainly
put, “if Congress intends to impose a condition on the grant of federal moneys,
it must do so unambiguously.” Pennhurst, 451 U.S. at 17 (citations omitted).

      When evaluating whether the IDEA provides unambiguous notice of its
conditions, the Court “view[s] the IDEA from the perspective of a state official
who is engaged in the process of deciding whether the State should accept
IDEA funds and the obligations that go with those funds.” Arlington Cent.,
548 U.S. at 296. The Court then “ask[s] whether such a state official would
clearly understand” the IDEA’s requirements. Id.

      Texas posits that the MFS clause fails to provide clear notice that it for-
bids aggregate and per capita reductions in funding even when weighted-stu-
dent support remains constant.             But as already discussed, the weighted-
student model contravenes the plain meaning of the MFS provision by allowing
a state to reduce its special education funding based on its unsupported claim
that the needs of its disabled students have declined. Texas therefore had clear
notice that its interpretation was incompatible with the MFS requirement.

      The petition for review of the final order of the Secretary is DENIED. 13

      12   South Dakota v. Dole, 483 U.S. 203, 206 (1987) (citations omitted).
      13  At oral argument, Texas requested a prompt ruling, so that it may adequately pre-
pare its budgetary request for the 2019 Texas Legislature. For that reason, we direct that
the mandate issue forthwith.
                                              13