Three-Judge panel says block grant school finance law unconstitutional

A three-judge panel on Friday June 26 ruled the state's new block grant school finance law is unconstitutional and ordered additional funding to help districts with lower property wealth. 

The Shawnee County District Court panel described the block grant as “pernicious” but its decision allows the block grant to go forward — at least for now — if two important changes are made. Those changes are increasing funds for local option budgets and capital outlay equalization, which, if implemented would add approximately $32 million in LOB and $16 million in capital outlay assistance.

Kansas Attorney General Derek Schmidt said his office was reviewing the decision to determine whether to appeal.
(Please note: KASB's statement on today's court decision follows below.)

Here is a link to the opinion and order from the court. KASB will conduct a Webinar on the decision from on Monday, June 29. Please watch for additional details.

During the past, record-length legislative session, the Legislature repealed the former school finance formula, which provided funding on a per pupil basis, and replaced it with a two-year block grant that essentially froze the level of state operating funds available to schools. KASB testified against the block grant for many of the same reasons cited by the court panel. 

But Gov. Sam Brownback, who complained the former formula was complicated, mired in litigation and lacked accountability, said the block grant would give legislators time to adopt a new formula.

But districts involved in a long-running lawsuit over school funding argued the block grant distributed funds in a way that shorted many school districts, especially poor ones.

Opponents also said the block grant cut $50 million in operating and maintenance funds, upset school operations by forcing budget cuts late in the fiscal year and failed to provide extra funding for changing situations, such as growing student enrollment or an increase in students who needed programs to learn English.

The three-judge panel, in an 87-page opinion released just hours after the Legislature officially adjourned the 2015 Legislative Session, agreed with the plaintiff school districts. The panel said the new law, which eventually became Senate Bill 7, was unconstitutional in equity to low wealth districts and overall adequacy.

"This method of state aid distribution adopted by House Substitute for SB7, as just described, can find no accepted factual basis or any principle that has ever been approved by any court or supported by any expert or educator for determining the appropriate financing of Kansas K-12 schools," the panel said.

Schools for Fair Funding, which represents the plaintiff districts, said the court decision was a victory for public school students. But Senate President Susan Wagle, R-Wichita, said, “Topeka judges aren’t legislators, and it’s time they stopped auditioning for the role in their rulings. I’m hopeful the Supreme Court justices will show more restraint.

Kansas Association of School Boards -Statement on Today's Gannon Decision

KASB supports immediate compliance with the court order on LOB and capital outlay funding as referenced in today's court decision, and urges the development of a school finance system that provides adequate, equitable funding to support all students in meeting the state's educational goals.

The three-judge panel made several rulings today that reflect KASB's positions.

First, the panel has ordered the state to restore approximately $50 million in local option budget and capital outlay aid funding that was removed exclusively from less property wealth districts.  As KASB stated in its testimony on the block grant program, "We can think of no educational, constitutional, or moral reason for this action."

Second, the three-judge panel found the block grant system does not provide adequate funding to meet the state's own educational standards - the Rose capacities - and essentially freezes this inadequate funding level in place for the next two years.  KASB stated in testimony that funding in the block grant bill falls short of ANY of the measures established for adequate funding.

Third, today's ruling notes that additional funding provided for KPERS contributions - while necessary to preserve the health of the state retirement system - does not provide additional current funding to meet the educational needs of students.

Fourth, the panel notes that the block grant system fails to provide for changes in district student populations and needs. As noted in testimony, KASB opposed the block grant concept "because it does not take into account differences in educational costs that we believe are critical to any school finance formula."