Court Opinion

ID: 8915141
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:41:50.505729+00
Date Added: 2024-06-11T17:08:54.556557
License: Public Domain

SWYGERT, Senior Circuit Judge.
This court has previously addressed both liability and remedial issues in the Indianapolis school desegregation case. We shall *1186not repeat the history of the litigation. See 637 F.2d 1101 (7th Cir. 1980). The only issue here is who shall pay the cost of the desegregation plan ordered by the district court for interdistrict violations in Marion County, Indiana.
The following statements constitute the law of this case and underlie our decision.1 Only the State of Indiana was found liable for the interdistrict violations. 456 F.Supp. 183, 188. The basis for its liability included the enactment of Uni-Gov legislation. Ibid. Neither the Board of School Commissioners of the City of Indianapolis, Indiana (hereinafter “IPS”) nor the suburban school districts were found liable for the interdistrict violations. 506 F.Supp. 657, 666-68. The district court established a desegregation plan to remedy the interdistrict violations. It ordered black students from IPS to be transferred to designated suburban districts; it also ordered the state to design, implement, and pay the costs of in-service training and other ancillary relief. 506 F.Supp. at 671-74. We have affirmed these findings and orders. 637 F.2d 1101 (7th Cir. 1980). The Supreme Court has denied all petitions for certiorari. 449 U.S. 838, 101 S.Ct. 115, 66 L.Ed.2d 45 (1980).
On June 19, 1981 four suburban school districts filed with the district court a petition that sought a ruling on who was financially responsible for the cost of the desegregation plan. The school year was to begin soon, the Indiana General Assembly had met and adjourned without appropriating funds for the desegregation plan, and the petitioners were understandably concerned about where the funds for the plan would come from. Allocating the costs of a desegregation plan is, of course, part of the remedial power of the district court. See Milliken v. Bradley, 433 U.S. 267, 289-90, 97 S.Ct. 2749, 2761-62, 53 L.Ed.2d 745 (1977). The district court held that the State of Indiana should pay the entire cost of remedying the interdistrict violations because it alone had been found liable for them. Memorandum of Decision, July 17, 1981, at 3.
The district court also held that the State of Indiana must pay the receiving school corporation the transfer tuition for any IPA student sent to it. The state may then deduct the transfer tuition from state distributions otherwise payable to IPS. The state must pay all transportation costs, including the cost of transportation in extracurricular activities. The state must reimburse IPS for increased costs attributable to the loss of enrollment and reduction in staff resulting from the court’s remedial orders. Finally, the state must initially make these payments from unappropriated funds, and state officials may not discriminatorily reduce state distributions to the school corporations affected by the court’s order.
The state alleges various grounds for reversal. For the reasons stated below, we affirm the district court’s order.
I
In 1974 the Indiana General Assembly enacted Indiana Code § 20-8.1-6.5 — 1 et seq. (hereinafter the “Transfer Statute”). It provides that the State of Indiana will pay one-half of the cost of transportation ordered by a court (while the local school districts involved will bear the balance) if the following three conditions are met:
A. A transferor corporation has violated the equal protection clause of the Fourteenth Amendment to the Constitution of the United States by practicing de jure racial segregation of the students within its border,
B. A unitary school system within the meaning of such Amendment cannot be implemented within the boundaries of the transferor corporation, and
C. The Fourteenth Amendment compels the Court to order a transferor corporation to transfer its students for education to one or more transferee corporations to effect a plan of desegregation in the transferor corporation which is acceptable within the meaning of such amendment.
*1187Ind. Code § 20-8.1-6.5-1. The state contends that the district court erred in not following the terms of this statute. It argues that the transfer statute applies to this case, that the three conditions are met, and so the financial liability of the state should be limited to fifty percent of the costs.
A
The state asserts that the applicability of the transfer statute is the law of the case because the district court has held previously that the three conditions for the applicability of the statute have been satisfied. This contention is erroneous. In an earlier ruling the district court did interpret the transfer statute as a substantive basis for liability. We reversed, holding that the statute is procedural only. 637 F.2d at 1112. Neither court has previously decided whether the transfer statute has any applicability at the remedial stage.
B
We hold that the transfer statute has no applicability here.2 The statute by its own terms applies only to instances of constitutional violations by the transferor corporation (here, IPS). This appeal, however, involves a remedy for interdistrict violations for which the State of Indiana, not IPS, is responsible. 637 F.2d at 1108. The statute does not address the situation where the State of Indiana is the wrongdoer.
In addition, the situation that triggers the transfer statute is now a legal impossibility. In Milliken v. Bradley, 418 U.S. 717, 94 S.Ct. 3112, 41 L.Ed.2d 1069 (1974), the Supreme Court held, in effect, that a unitary school system can always be established within the geographical boundaries of the school district that committed the de jure segregation. 418 U.S. at 745—46, 94 S.Ct. at 3127-28. The Court held that district courts cannot remedy de jure segregation confined to one school system by transferring students outside that system. Ibid. The transfer act was passed prior to Milliken I and makes sense only in light of preMilliken I jurisprudence.
For both of these reasons, therefore, the transfer statute is inapplicable.
C
Even if the transfer statute applied, the district court would not be bound by its terms. The state notes that the Tenth Amendment as well as basic principles of federalism gives it inherent authority to structure its finances. The transfer statute, it argues, is a financing statute that was duly enacted by the Indiana General Assembly, and so must be followed.
We reject this argument. The State of Indiana, and only the State of Indiana, has been found liable for the interdistrict violations. The cost of remedying these violations is the issue before this court. The state is asserting that, despite the fact that it alone has been adjudicated the wrongdoer, it can limit the power of a federal court acting in equity to remedy violations of the federal Constitution. This is not the law. In Milliken v. Bradley, 433 U.S. 267, 97 S.Ct. 2749, 53 L.Ed.2d 745 (1977) (Milliken II), the Chief Justice, writing for the Court, stated:
The Tenth Amendment’s reservation of non-delegated powers to the States is not implicated by a federal-court judgment enforcing the express prohibitions of unlawful state conduct enacted by the Fourteenth Amendment. Cf. Fitzpatrick v. Bitzer, 427 U.S. 445 [96 S.Ct. 2666, 49 L.Ed.2d 614 (1976). Nor are the principles of federalism abrogated by the decree.
433 U.S. at 291, 97 S.Ct. at 2763. As Justice Powell also observed:
Ordinarily a federal court’s order that a State pay unappropriated funds to a locality would raise the gravest constitutional issues. . . . But here, in a finding no longer subject to review, the State has been adjudged a participant in the constitutional violations, and the State Ulere*1188fore may be ordered to participate prospectively in a remedy otherwise appropriate.
433 U.S. at 295, 97 S.Ct. at 2764 (Powell, J., concurring) (citations omitted).
The state’s reliance upon Evans v. Buchanan, 582 F.2d 750 (3d Cir. 1978), is inapposite. In Evans the court of appeals reversed the district court’s action of setting a local property tax rate at a level different from that imposed by the state legislature. It held that the district court gave insufficient deference to the broad authority of a state to establish levels of taxation. Our situation is quite different. ■ The district court has not attempted to restructure state or local taxation. It has neither established tax rates nor mandated a particular method of determining tax rates. The district court has only forbidden the state from shirking its responsibility for the costs of remedying its wrongdoing.
II
As an alternative ground the state argues that the district court abused its discretion by requiring the state to pay the entire cost of the desegregation plan. The state admits that in equity cases, and especially in school desegregation cases, the trial court has broad discretion in fashioning remedies. It contends, however, that the school districts in Marion County are also liable for the constitutional violations and so should share the cost of remedying them. We disagree. •
The issue here is who shall pay for the desegregation plan ordered by the district court for interdistrict violations.3 Only the State of Indiana was found liable for these violations. 637 F.2d at 1108. IPS and the other school districts in Marion County were found not liable for them. 637 F.2d at 1112. Given these findings, we do not see how the district court could have ruled any other way on the issue of financial liability.4 It is a basic equitable principle that the wrongdoer is liable for the cost of rectifying his wrongful conduct. The fact that a court’s equitable remedies implicate state funds is no bar to the court’s exercise of its equitable powers. Hutto v. Finney, 437 U.S. 678, 98 S.Ct. 2565, 57 L.Ed.2d 522 (1978); Milliken v. Bradley, 433 U.S. 267, 289, 97 S.Ct. 2749, 2761, 53 L.Ed.2d 745 (1977); New York State Assoc. for Retarded Children, Inc. v. Carey, 596 F.2d 27, 39 (2d Cir.), cert. denied, 444 U.S. 836, 100 S.Ct. 70, 62 L.Ed.2d 46 (1979). The state alone is liable for the interdistrict violations that gave rise to the desegregation plan the cost of which is at issue on this appeal. The wrongdoer cannot evade the cost of remedying its wrongdoing.
The state’s reliance upon Milliken v. Bradley, 433 U.S. 267, 97 S.Ct. 2749, 53 L.Ed.2d 745 (1977) (Milliken II); Liddell v. Board of Educ. of City of St. Louis, 667 F.2d 643 (8th Cir. 1981); Reed v. Rhodes, 500 F.Supp. 404, 425-26 (N.D.Ohio 1980), aff’d, 662 F.2d 1219 (6th Cir. 1981); and Penick v. Columbus Board of Education, 519 F.Supp. 925, 942 (S.D.Ohio 1981), aff’d, 663 F.2d 24 (6th Cir. 1981), is misplaced. First, all these cases involved intradistrict violations. Second, in all these cases the local school districts, as well as the states, were found to be wrongdoers. In those eases, therefore, it was equitable to divide the financial burden between the state and the local school districts. Here only the state was found liable for interdistrict violations. The district court did not abuse its discretion.
Ill
The state also contends that the district court erred in allocating two specific costs to the state: (1) the cost of reimbursing IPS for its financial losses caused by the student transfers; and (2) the cost of the extracurricular transportation for the transferred students. The district court has broad discretion in fashioning equitable remedies for Fourteenth Amendment violations. Our standard of review is whether the district court abused its discretion.
*1189The district court found that IPS will suffer losses because of the one-way transfer of students. The state made no showing that this factual finding was clearly erroneous. The state contends that the formula used to compute IPS’s losses is arbitrary. Nonetheless, there is ample support in the record for the validity of the formula. We find no abuse of discretion.
Desegregating extracurricular programs is necessary when desegregating school districts. See Green v. County School Board, 391 U.S. 430, 435, 88 S.Ct. 1689, 1692, 20 L.Ed.2d 716 (1968). The state admitted at oral argument that for many of the transferred students the distance from the suburban schools to their homes is very great. Participation by these students in after-school programs would be extremely difficult without transportation. Moreover, only black students are being transferred; not providing them with extracurricular transportation would place an added burden on innocent black children.
The fact that the Indiana General Assembly has not chosen to finance extracurricular transportation for any school district is irrelevant. We previously rejected this argument in a similar context. In an earlier order the district court held that certain ancillary, in-service programs were necessary to ensure effective implementation of its interdistrict remedy, and it directed the state to pay the costs that were not paid by federal funds. 506 F.Supp. at 674. On the authority of Milliken II, we rejected the state’s argument that the court could not order the state to implement these programs because the general assembly had not appropriated money for these types of programs in any school district. 637 F.2d at 1116. Parallel reasoning supports the district court’s order here. The court found extracurricular transportation necessary for effective implementation of its plan; that finding justifies requiring the state to pay the cost.
The state has not challenged the educational value of the extracurricular activities. It has not challenged the necessity of extracurricular transportation to prevent the exclusion of black IPS students from after-school activities. The state has failed to demonstrate that the district court abused its discretion.
IV
Finally, the state challenges paragraph 6 of the plan. The paragraph states:
Source of Funds. All payments required to be made by the State under the provisions of this Plan shall first be paid from funds not appropriated for any other purpose. In particular, payments made by the State under this Plan shall not, except where otherwise provided herein, reduce in any manner payments or distributions from State funds to which any of the school corporations which are parties to this Plan are, or would be, entitled under applicable law if no students had been transferred for educational purposes, nor shall any payments hereunder reduce distributions to which any other school corporation in the State of Indiana is entitled under applicable law.
The state argues that this provision is an improper invasion of its sovereignty. We disagree.
When the district court entered its order the Indiana General Assembly had already adjourned after enacting appropriations for fiscal year 1981. The Indiana Constitution permits state officials to expend money only in accordance with appropriation. Indiana Constitution, Art. 10 § 3. Paragraph 6 was necessary, therefore, to ensure that the affected school districts would not have to use their regular allotments to pay the cost of the desegregation plan during the period before the general assembly resolved the financing issue. Absent this provision of the order, state officials would lack funds to make the payments required by the plan.
Moreover, the provision does not prevent the Indiana General Assembly in the future from allocating funds in any way it chooses so long as it appropriates sufficient funds for the desegregation plan. Paragraph 6 only prevents the General Assembly from carving out the funds for the desegregation plan from a school district’s regular appropriations. To force IPS and the suburban *1190school districts to finance the plan out of their regular appropriations would reduce the amount of money that they would have for educational purposes below the level that all other school districts in the state would have. See Ind. Code §§ 21-3-1.6-1 et seq. and §§ 21-3-3.1-1 et seq. The court’s provision forbids the General Assembly from discriminating in this way against the students in the school districts subject to the court’s desegregation order. Innocent black children in IPS have suffered enough. This court cannot countenance their being further victimized by requiring them to pay the cost of remedying their own injuries. The district court did not abuse its discretion. See, Griffin v. County School Board, 377 U.S. 218, 233, 84 S.Ct. 1226, 1234, 12 L.Ed.2d 256 (1964).
The General Assembly retains its authority over school financing subject only to the requirement that it adequately support the desegregation plan. The court’s order does not limit the power of the General Assembly to reallocate state funds for all functions of state government, including the general support of local public schools, in light of the court-ordered obligations. The General Assembly may reduce appropriations to public schools generally, reallocate appropriations for other governmental functions, or raise taxes. It is not the province of a federal court to instruct the legislature on how it should finance its obligations. The district court did not attempt to do so. The court did what was within its authority — order a wrongdoer to pay the cost of remedying its wrongdoing.
The district court’s order is affirmed.

. The issue of who shall pay the cost of remedying intradistrict violations within IPS is not before this court. That issue, of course, would present a different posture.

. Because the State of Indiana has argued that the transfer statute is the only available means for implementing the federal court order, we are required to interpret the statute to determine whether it applies to these facts.

. As noted previously, the issue of remedying intradistrict violations in IPS is not before the court in this appeal.

. We cannot allow relitigation of the issue of liability through discussion of remedies.