DeRolph v. State

[This opinion has been published in Ohio Official Reports at 89 Ohio St.3d 1.]

DEROLPH ET AL., APPELLEES, v. THE STATE OF OHIO ET AL., APPELLANTS.

[Cite as DeRolph v. State, 2000-Ohio-437.]

Constitutional law—Education—Schools—Defendants provided with more time to

comply with Section 2, Article VI of the Ohio Constitution—Supreme Court

declines to appoint special master to oversee state’s further efforts to

comply with Section 2, Article VI—Supreme Court maintains continuing

jurisdiction with matter continued to June 15, 2001.

1. “[T]he sovereign people made it mandatory upon the General Assembly to

secure not merely a system of common schools,” but rather a thorough and

efficient system of common schools. Miller v. Korns (1923), 107 Ohio St.

287, 297-298, 140 N.E. 773, 776, approved and followed.

2. “The attainment of efficiency and thoroughness in that system” of common

schools is “expressly made a purpose, not local, not municipal, but state-

wide.” Id., approved and followed.

3. A thorough system means that each and every school district has enough funds

to operate. An efficient system means one in which each and every school

district in the state has an ample number of teachers, sound buildings that

are in compliance with state building and fire codes, and equipment

sufficient for all students to be afforded an educational opportunity.

(No. 99-570—Submitted November 16, 1999—Decided May 11, 2000.)

APPEAL from the Court of Common Pleas of Perry County, No. 22043.

__________________

{¶ 1} In DeRolph v. State (1997), 78 Ohio St.3d 193, 677 N.E.2d 733

(“DeRolph I”), at the syllabus, this court determined that “Ohio’s elementary and

secondary public school financing system violates Section 2, Article VI of the Ohio

Constitution, which mandates a thorough and efficient system of common schools

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throughout the state.” For the background and procedural history of the events that

led up to that opinion, see 78 Ohio St.3d at 193-195, 677 N.E.2d at 734-735.

{¶ 2} In DeRolph I, this court recognized that a new funding system could

not be crafted and implemented without time and deliberation. Therefore, we

stayed the effect of our decision for twelve months, id. at 213, 677 N.E.2d at 747,

in order to give the General Assembly time to enact remedial legislation. We

remanded the cause to the trial court, ordering the trial court to “retain jurisdiction

until the legislation is enacted and, in effect, taking such action as may be necessary

to ensure conformity with this opinion.” Id.

{¶ 3} In entries issued after that decision, this court expounded on its order

of remand to the trial court. In particular, in response to a request from the

defendants for clarification and reconsideration of the decision, this court stated

that local property taxes could be part of the revised funding plan, but property

taxes could not be the primary means of funding a thorough and efficient system of

schools. 78 Ohio St.3d 419, 678 N.E.2d 886, 887. Furthermore, this court stated

that, consistent with the DeRolph I decision, upon remand to the trial court the

parties could present evidence regarding the enacted remedy, to establish whether

the remedy satisfied the Thorough and Efficient Clause of the Ohio Constitution.

78 Ohio St.3d at 420-421, 678 N.E.2d at 887-888. The parties could then appeal

the trial court’s ruling directly to this court, for final determination. Id. at 421, 678

N.E.2d at 888.

{¶ 4} From August 24, 1998 through September 3, 1998, the trial court held

a hearing on the General Assembly’s efforts in the wake of DeRolph I to create a

new funding method. Plaintiffs, who continued to assert that Ohio’s system of

funding public education is unconstitutional, are essentially the same plaintiffs who

pressed that position in DeRolph I. The defendants argued that the revised system

complies with the Ohio Constitution.

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{¶ 5} During the hearing, the trial court propounded inquiries to this court.

This court responded by stating that (1) the remand to the trial court involved the

Thorough and Efficient Clause of the Ohio Constitution and did not involve the

Equal Protection Clause, and (2) the state bore the burden of production and proof

on remand, and was required to show by a preponderance of the evidence that the

Constitution had been satisfied in order to prevail. 83 Ohio St.3d 1212, 699 N.E.2d

518, 518-519.

{¶ 6} After extensive briefing and the presentation of a great deal of

evidence, the trial court issued its decision on February 26, 1999. The decision,

reported at (1999), 98 Ohio Misc.2d 1, 712 N.E.2d 125, is two hundred sixty-three

pages in length in the Ohio Official Reports. Upon determining that the state had

failed to implement a complete systematic overhaul of Ohio’s school-funding

system, the trial court concluded that the state had failed to meet its burden of proof

that it had complied with the requirements of the Ohio Constitution. Id. at 263, 712

N.E.2d at 297.

{¶ 7} The cause is now before this court pursuant to the defendants’ appeal

as of right from the trial court decision, under the procedures established in

DeRolph I and subsequent orders of this court.

__________________

Bricker & Eckler, L.L.P., Nicholas A. Pittner, John F. Birath, Jr., Sue

Wyskiver Yount, Quintin F. Lindsmith and Susan B. Greenberger, for appellees.

Betty D. Montgomery, Attorney General, Mary Lynn Readey, Roger F.

Carroll and James G. Tassie, Assistant Attorneys General; Jones, Day, Reavis &

Pogue and Jeffrey S. Sutton; Dinsmore & Shohl, L.L.P., and Joel S. Taylor, for

appellants.

Joseph P. Sulzer, urging affirmance for amici curiae members of the Ohio

House of Representatives John R. Bender, Jack Ford, Barbara C. Pringle, Daniel

Metelsky, Charles A. Wilson, Jr., Troy Lee James, Barbara Boyd, William L. Ogg,

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Tom Roberts, David Hartley, Jerry Krupinski, Sylvester Patton, Jr., Sean D. Logan,

Joe Sulzer, William Healy, June H. Ferderber, Peter Lawson Jones, Dale Miller,

Betty Sutton, Vernon Sykes, Samuel Britton, Dixie J. Allen, Darrell Opfer, Erin

Sullivan, John E. Barnes, Jr., Bryan Flannery, L. George Distel, Jeanine Perry,

Chris Verich, Catherine L. Barrett, Robert Gooding, Joyce Beatty, Ray Miller, and

Shirley A. Smith; and Ohio Senators Ben Espy, Leigh Herrington, Daniel Brady,

Robert F. Hagan, Michael C. Shoemaker, Mark Mallory, and C.J. Prentiss.

Walter & Haverfield, James E. Betts and Frederick W. Whatley, urging

affirmance for amicus curiae Alliance for Adequate School Funding.

Raymond Vasvari and Gino J. Scarselli, urging affirmance for amicus

curiae American Civil Liberties Union of Ohio Foundation, Inc.

Means, Bichimer, Burkholder & Baker Co., L.P.A., Kimball H. Carey and

Katherine A. Francis, urging affirmance for amici curiae Buckeye Association of

School Administrators, Ohio School Boards Association, and Ohio Association of

School Business Officials.

Patrick F. Timmins, Jr., urging affirmance for amicus curiae Coalition of

Rural and Appalachian Schools.

Louis B. Geneva Co., L.P.A., and M. Jayne H. Geneva, urging affirmance

for amici curiae Coalition for School Funding Reform, Cleveland Heights-

University Heights City School District, East Cleveland City School District, Grand

Valley Local School District, Lakewood City School District, Shaker Heights City

School District, Waverly City School District, and Coalition for Greater

Cleveland’s Children.

Courtney Williams, urging affirmance for amicus curiae League of Women

Voters of Ohio.

Bernard Cohen, urging affirmance for amicus curiae Ohio Association of

Child Caring Agencies.

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John T. Ryerson, urging affirmance for amicus curiae Ohio Association for

Gifted Children.

Buckley King & Bluso, Robert J. Walter and Thomas C. Drabick, Jr., urging

affirmance for amicus curiae Ohio Association of Public School Employees

(OAPSE)/AFSCME Local 4, AFL-CIO.

Christopher Lopez; Kalniz, Iorio & Feldstein Co., L.P.A., Ted Iorio,

Christine A. Reardon and Donato Iorio, urging affirmance for amicus curiae Ohio

Education Association.

Schnorf & Schnorf Co., L.P.A., David M. Schnorf and Johna M. Bella,

urging affirmance for amicus curiae Ohio Federation of Teachers.

Ohio Legal Rights Service and Susan G. Tobin, urging affirmance for

amicus curiae Ohio Legal Rights Service.

Ennis, Roberts & Fischer and C. Bronston McCord III, urging affirmance

for amicus curiae West Clermont Local School District Board of Education.

John M. Haseley, urging affirmance for amicus curiae United States

Congressman Ted Strickland.

Chester, Willcox & Saxbe and John J. Chester, urging reversal for amicus

curiae Governor Bob Taft.

Benesch, Friedlander, Coplan & Aronoff, L.L.P., and N. Victor Goodman,

urging reversal for amici curiae Richard H. Finan, President of the Ohio Senate,

and Jo Ann Davidson, Speaker of the Ohio House of Representatives.

__________________

ALICE ROBIE RESNICK, J.

I

BACKGROUND AND INTRODUCTION

{¶ 8} In DeRolph I, after an exhaustive review of the evidence, a majority

of this court concluded that Ohio’s system of primary and secondary public schools

in place at that time fell well short of the mandate of Section 2, Article VI. DeRolph

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I recognized that, despite the earnest efforts of the General Assembly, it was simply

impossible to characterize the existing system as “thorough and efficient.”

Accordingly, this court declared the system unconstitutional and stated that the

General Assembly must devise and implement a new “thorough and efficient”

system.

{¶ 9} Now, this court is called upon to consider the same basic

constitutional question that was before us in DeRolph I—Can the revised system

be characterized as thorough and efficient pursuant to Section 2, Article VI of the

Ohio Constitution? Although the key inquiry is the same, the specifics of that

inquiry have changed commensurately with the state’s attempts to institute the

necessary reforms. Therefore, realizing that legislation involving schools is an

ongoing and ever-changing process as new laws are continuously enacted and

former laws are constantly amended or repealed, it is incumbent upon us to examine

the extent of those reforms to consider whether the mandate of the Constitution has

been satisfied.

{¶ 10} The benchmark of our inquiry remains the Thorough and Efficient

Clause, as set forth in Section 2, Article VI of the Ohio Constitution:

“The general assembly shall make such provisions, by taxation, or

otherwise, as, with the income arising from the school trust fund, will secure a

thorough and efficient system of common schools throughout the State * * *.”

{¶ 11} We reiterate the standard for a thorough and efficient system of

common schools as set out in Miller v. Korns (1923), 107 Ohio St. 287, 297-298,

140 N.E. 773, 776:

“This declaration is made by the people of the state. It calls for the

upbuilding of a system of schools throughout the state, and the attainment of

efficiency and thoroughness in that system is thus expressly made a purpose, not

local, not municipal, but state-wide.

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“With this very purpose in view, regarding the problem as a state-wide

problem, the sovereign people made it mandatory upon the General Assembly to

secure not merely a system of common schools, but a system thorough and efficient

throughout the state.

“A thorough system could not mean one in which part or any number of the

school districts of the state were starved for funds. An efficient system could not

mean one in which part or any number of the school districts of the state lacked

teachers, buildings, or equipment.”

{¶ 12} Furthermore, in Cincinnati School Dist. Bd. of Edn. v. Walter (1979),

58 Ohio St.2d 368, 387, 12 O.O.3d 327, 338, 390 N.E.2d 813, 825, this court

observed that a school system could not be thorough and efficient if any school

district in Ohio “was receiving so little local and state revenue that the students

were effectively being deprived of educational opportunity.” See, also, DeRolph I,

78 Ohio St.3d at 204, 677 N.E.2d at 741, citing both Miller and Walter with

approval.

{¶ 13} In DeRolph I, 78 Ohio St.3d at 212, 677 N.E.2d at 747, this court

identified four aspects of the school-funding scheme in place at that time that

contributed “to the unworkability of the system and which must be eliminated.”

Those four aspects were “(1) the operation of the School Foundation Program, (2)

the emphasis of Ohio’s school funding system on local property tax, (3) the

requirement of school district borrowing through the spending reserve and

emergency school assistance loan programs, and (4) the lack of sufficient funding

in the General Assembly’s biennium budget for the construction and maintenance

of public school buildings.”

{¶ 14} This court, in declaring the statutes unconstitutional, stated in

DeRolph I at 213, 677 N.E.2d at 747, that “[b]ecause of its importance, education

should be placed high in the state’s budgetary priorities. A thorough and efficient

system of common schools includes facilities in good repair and the supplies,

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materials, and funds necessary to maintain these facilities in a safe manner, in

compliance with all local, state, and federal mandates.”

{¶ 15} The defendants claim that they have enacted a package of remedial

legislation that meets and even exceeds the requirement for a system that is both

thorough and efficient. Defendants argue that the decision of the trial court should

be reversed and ask this court to “give the new, ongoing remedy a chance to

succeed.”

{¶ 16} Plaintiffs, on the other hand, urge this court to find that the state has

fallen woefully short of its obligations to craft a thorough and efficient system.

Plaintiffs argue that this court should affirm the judgment of the trial court, which

was in their favor on every significant point. Furthermore, plaintiffs request that

this court (1) declare that the right to an education is a fundamental right under the

Ohio Constitution, with a corresponding duty on the state to justify any disparities

in the funding system; (2) specify what programs and services must be provided to

children at every level, in order to define what level of educational opportunities

must be made available; (3) retain jurisdiction of the case and direct the parties to

a settlement conference under the supervision of a special master; and (4) issue an

interim funding order that, among other things, requires the state to fund the

foundation level at $5,051 per pupil, updated for inflation from FY99, and also

requires the state to fund school facilities at a minimum level of $1 billion for each

fiscal year.

{¶ 17} In DeRolph I, 78 Ohio St.3d at 198, 677 N.E.2d at 737, this court

stated that “Ohio’s statutory scheme for financing public education is complex.” In

addition, this court noted that “[s]chool funding has been, and continues to be, a

Herculean task.” Id. at 211, 677 N.E.2d at 746. These remarks apply with equal

force to the system now at issue. In fact, the educational system continues to be

extraordinarily complex, and as evidenced by the record now before us, reforming

that system continues to be a task of unparalleled magnitude. It is impossible to

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overstate the scope of the challenge presented to the state by this case. This case

implicates more than just funding; it also involves other complex intertwined

issues.

{¶ 18} The General Assembly must give this problem its undivided

attention. If it is not addressed and solved immediately, it will only increase in

magnitude. For example, the 1990 Ohio Public School Facility Survey determined

that Ohio’s public primary and secondary schools then needed $10.2 billion for

building repair and construction. In 1997, the Legislative Budget Office completed

a study and concluded that the need had risen to a staggering $16.5 billion, with the

state’s share estimated to be $7.2 billion and the local share estimated at $9.3

billion. In a 1996 report of the United States General Accounting Office, Ohio was

ranked very near the bottom among the states in many categories regarding the

condition of its school facilities, and was ranked dead last among the states in

percentage of schools with at least one inadequate building feature. Furthermore,

Ohio was ranked forty-eighth among the fifty states in percentage of schools

reporting the need to spend money to repair or upgrade schools to good overall

condition, with more than ninety-five percent of Ohio schools needing to spend for

that improvement. In a report released in March 2000 concerning construction

expenditures for school facilities, the General Accounting Office found that the

national average annual state construction expenditure per student for FY90

through FY97 was $473. Ohio ranked fortieth among the states, with an average

annual expenditure for the time period of $274 per student. School Facilities,

Construction Expenditures Have Grown Significantly in Recent Years,

GAO/HEHS-00-41 (Mar. 3, 2000) 29-30.

{¶ 19} Other statistics also illustrate the magnitude of the school-funding

challenge. There are six hundred eleven separate school districts in this state and

forty-nine joint vocational school districts. There are approximately 1.8 million

school children in primary and secondary public schools in Ohio and approximately

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one hundred eight thousand public school teachers. There are approximately three

thousand nine hundred public school buildings in the state. Appropriations for

primary and secondary education account for about forty percent of the state’s

overall budget for this biennium, with more than $6.5 billion appropriated for FY00

for primary and secondary education out of a total state budget of more than $16.2

billion. For FY01 the appropriation is more than $6.9 billion for primary and

secondary education out of a total state budget of more than $17.2 billion. These

numbers reflect only the share contributed by the state for the funding of primary

and secondary education and do not include the federal and local shares.

{¶ 20} In FY97, a statewide total of more than $10 billion in local, state,

and federal funds was spent on primary and secondary education. The federal

government’s contribution was approximately six percent of that total. Considering

only the combined state and local revenues of the districts, the state contribution

was about 43.8 percent, and the local share was about 56.2 percent. These statistics

illustrate the accuracy of this court’s observation in DeRolph I, 78 Ohio St.3d at

199, 677 N.E.2d at 738, that “Ohio relies more on local revenue than state revenue,

contrary to the national trend.”

{¶ 21} The Ohio school-funding system’s reliance on local revenue, chiefly

in the form of local property taxes, is one aspect of the overall system with deep

historical roots. In Ohio, as in many other states, the tradition of using local

property taxes as the primary means to fund public schools has been entrenched

since early statehood. See, e.g., 19 Ohio Laws 51, 55. As we recognized in

DeRolph I, Ohio is just one of many states in recent years to face the fundamental

problems caused by an overreliance on local property taxes.

{¶ 22} The inherent inequities of funding systems that rely too much on

local property taxes not only are extremely difficult to rectify, but also run counter

to our Constitution’s explicit requirement for a statewide system of public schools.

The valuation of local property has no connection whatsoever to the actual

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education needs of the locality, with the result that a system overreliant on local

property taxes is by its very nature an arbitrary system that can never be totally

thorough or efficient. In a very real sense, this problem underlies most of the other

deficiencies in Ohio’s school system and is either the direct or indirect cause of

them. The majority and all three separate concurring opinions in DeRolph I

specifically recognized the inadequacies of a system that is overreliant on local

property taxes.

{¶ 23} We recognize that the problems associated with school funding

being faced by recent and current sessions of the General Assembly are not of

recent vintage. Many of the current deficiencies in school-funding policies arose

over a long time and are the products of the failure for so many years of legislators

who have long since retired to appropriately place education as a high priority in

the state budget. To a significant degree, current members of the General Assembly

have inherited a problem that has been coming to a head for many years. Our

current legislators must confront problems that General Assembly members of the

past were reluctant to address because education was simply not in the forefront of

public concerns. Education was too often ignored, and issues relating to it were too

often given short shrift.

{¶ 24} Many factors have contributed in recent years to make what had been

a problematical system into one that has reached crisis proportions throughout the

state. The problems have escalated in part due to “unfunded mandates” imposed

by the state and federal governments, causing the cost of educating our children to

rise dramatically. Even when the state or federal government does fund a particular

program or endeavor, significant associated local costs may be incurred. Increased

costs for numerous programs and needs, such as special education, R.C. 3323.04,

vocational education, R.C. 3313.90, gifted-student programs, R.C. 3313.21,

transportation, R.C. 3327.01, facilities improvements (e.g., asbestos abatement and

wiring for technology, as well as day-to-day maintenance on deteriorating

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buildings), compliance with the Americans With Disabilities Act, Sections 12101

et seq., Title 42, U.S.Code, employee costs (e.g., benefits such as health care, and

for teacher certification, licensing, and development), increased staffing needs

(e.g., additional teachers of science, math, and computer skills, and speech, hearing,

and psychological educational aides), textbooks and supplies, R.C. 3315.17(A),

science labs, computers and other technology purchases, summer school

remediation, dropout-prevention programs, adolescent-pregnancy programs, Head

Start and preschool programs, adult-literacy programs, substance-abuse-prevention

programs, school lunch and breakfast programs, R.C. 3313.813(C), and a myriad

of other things, have exacerbated problems that seem less and less manageable as

total expenditures continually rise within a system impeded by the arbitrariness of

its revenue stream.

{¶ 25} It is apparent that the task of passing and implementing legislation

involving education is exceedingly complex—studies must be conducted, experts

must be consulted, goals must be formulated, and priorities set. There are many

options to choose from, and deciding upon the best option and then reaching a

consensus are formidable undertakings. In addition, a consensus must be reached

in a climate in which other budgetary considerations are always present, with other

spending priorities constantly lobbying for their own larger pieces of the limited

state budget pie. Political realities, such as an individual legislator’s reelection

concerns, also complicate the effort to devise a fair and adequate system. These

budgetary and political concerns must yield, however, when compliance with a

constitutional mandate is at issue. The task is difficult enough in prosperous times,

when the state’s coffers are full. However, the funding system that is devised must

be solid enough that it can also function in an economic downturn, because a

consistent revenue stream is an absolute necessity for a thorough and efficient

system.

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{¶ 26} Because the arguments before both the trial court and this court

focused so narrowly on school funding, it is extremely important to recognize that

funding is only one aspect of a thorough and efficient system of schools. We would

be remiss if we failed to acknowledge that thoroughness and efficiency embrace far

more than simply adequate funding. Even if the system were very generously

funded, if other factors are ignored, it might still not be thorough and efficient. If

teachers are ill prepared and students are unaware of what is expected of them, then

our state has failed them. If students have access to the latest technology but cannot

take advantage of it, then our state has failed them. If students have the most up-

to-date textbooks but cannot comprehend the material in those books, then our state

has failed them.

{¶ 27} The definition of “thorough and efficient” is not static; it depends on

one’s frame of reference. What was deemed thorough and efficient when the state’s

Constitution was adopted certainly would not be considered thorough and efficient

today. Likewise, an educational system that was considered thorough and efficient

twenty-five years ago may not be so today. Moreover, it is impossible to generate

an all-inclusive list that specifically enumerates every possible component of a

thorough and efficient system. In light of this, we offer the following guidance: A

thorough system means that each and every school district has enough funds to

operate. An efficient system is one in which each and every school district in the

state has an ample number of teachers, sound buildings that are in compliance with

state fire and building codes, and equipment sufficient for all students to be afforded

an educational opportunity.

{¶ 28} In November 1998, former Governor George Voinovich requested a

study by a group of experts, Achieve, Inc.,1 the purpose of which was to provide

1. According to its own description:

“Achieve, Inc., is an independent, non-profit, bipartisan organization created by the

nation’s governors and business leaders to help them follow up on the commitments made at the

1996 National Education Summit. Its twelve member Board of Directors includes former Governor

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incoming Governor Robert Taft and the new State Superintendent of Education, as

well as legislators and others, a candid assessment of the strengths and weaknesses

of Ohio’s reform strategy. When completed in March 1999, the Achieve, Inc.

Report made the following observations:

“Ohio can be proud of a substantial set of policy initiatives it has launched

in the 1990s, and of the deepening investments it has made in educational

improvement. Since Fiscal Year 1991, state education funding has increased by

approximately 50 percent, twice the rate of inflation. The increase has been greatest

for low-wealth districts. Legislation already enacted guarantees an additional 40

percent increase in state aid over the next five years.

“Over and above these increases in general state aid for education, there

have been substantial new investments in early childhood education, technology,

facilities, and urban education, and major policy initiatives to overhaul teacher

education and strengthen public accountability for results. Each of these initiatives

deserves comment, for each could be an important element in a comprehensive state

strategy to close the gap in student and school performance.”

{¶ 29} In some ways, funding is the most easily quantifiable of the many

factors that play a part in establishing a thorough and efficient system of schools.

When considering the per-pupil spending disparities and the inadequacies in

facilities that have of late characterized our system of schools, it is evident that

some of the most glaring problems are engendered by inadequate funding.

Therefore, remedying those problems is naturally of paramount importance. Yet

Voinovich and John Pepper, Chairman of Procter & Gamble and Chairman of the Ohio Business

Roundtable. Achieve provides advice and assistance to state policy leaders on issues of academic

standards, assessment, and accountability. It has a small staff, augmented by a team of Senior

Associates, and conducts much of its work in partnership with other education and business

organizations. To carry out this review, Achieve drew upon three of its Senior Associates—Denis

Doyle, Diane Ravitch, and Warren Simmons—as well as Susan Traiman, who directs The Business

Roundtable’s education work. The review team was headed by Achieve’s President, Robert

Schwartz, and was assisted by Seth Reynolds, graduate student at Harvard University’s Kennedy

School of Government.”

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all of the other requirements of a thorough and efficient system of education must

be developed along with funding. Ensuring adequate school funding is simply one

of the means to reach the end—with the end being a statewide thorough and

efficient system of schools that is adequately funded and that has statewide

standards for success.

{¶ 30} Even though remedying the scheme for school funding is not an end

unto itself, it is an important step in establishing the type of school system that the

Constitution requires. No one can ensure that adequate facilities and educational

opportunities will lead to the success of the students of this state. One thing that is

apparent, though, is that substandard facilities and inadequate resources and

opportunities for any of those students are a sure formula for failure.

{¶ 31} Our decision in DeRolph I required the General Assembly to respond

to the untenable funding situation that had developed over time. Rather than

allowing the status quo to continue, we realized that we could not, in good

conscience, ignore the overwhelming evidence before us that our statewide system

of public schools was simply not a thorough and efficient system. Significant

changes had to be made in the way primary and secondary public education is

funded, and if it took a judgment of this court to make those changes happen, then

so be it.

{¶ 32} We fully realize that no miraculous alternatives will suddenly appear

and make the General Assembly’s task any easier. In order to create a thorough

and efficient system of statewide common schools, hard choices must be made.

Moreover, because the stakes in this endeavor cannot be overestimated—we are

dealing with the futures of the children of this state and in reality the very future of

our state—the course must be stayed. As past experience has shown, the longer an

inadequate funding system is allowed to continue, the more difficult it is to reform

the system. The General Assembly should not allow the momentum of recent

efforts to be impeded for any reason. Everyone’s cooperation and best efforts are

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required as we strive to ensure that educational opportunities are available to all

children in this great state, not just those residing in affluent suburbs or in well-to-

do neighborhoods.

{¶ 33} Throughout its history, this case has presented two contradictory

features that have made it difficult for all parties involved, including the courts of

this state, to define the roles of those charged with solving the system’s problems.

On the one hand, the courts of this state are entrusted with the authority to determine

whether a school-funding scheme complies with the Constitution. See DeRolph I

at 198, 677 N.E.2d at 738. However, this court in DeRolph I did not require a

specific funding scheme and did not instruct the General Assembly as to what

legislation should be enacted, leaving it to the General Assembly to determine the

specifics of the remedial legislation. Id. at 212-213, 677 N.E.2d at 747. The reason

for this is the doctrine of separation of powers. The legislature has the power to

draft legislation, and the court has the power to determine whether that legislation

complies with the Constitution. However, while it is for the General Assembly to

legislate a remedy, courts do possess the authority to enforce their orders, since the

power to declare a particular law or enactment unconstitutional must include the

power to require a revision of that enactment, to ensure that it is then constitutional.

If it did not, then the power to find a particular Act unconstitutional would be a

nullity. As a result there would be no enforceable remedy. A remedy that is never

enforced is truly not a remedy.

{¶ 34} Thus, it might be tempting for this court to do its own analysis, for

example, determining the level of funding per pupil to achieve a thorough and

efficient system, and then ordering that amount of funding. For instance, we

conceivably could simply order, as plaintiffs request, that the foundation amount

be set in excess of $5,000 per pupil for FY00, and order the General Assembly to

fund that amount. However, this court respectfully declines to pursue that course.

That degree of involvement in fashioning a remedy in this case is not, nor should

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ever be, how we perceive our role. Our role, as we have declared in past cases, is

to decide issues of constitutionality—not to legislate, as some may believe.

II

SUMMARY OF LEGISLATIVE ACTIVITY

{¶ 35} A substantial amount of legislation has been enacted since DeRolph

I was decided. There are indications that Governor Taft and the General Assembly

have taken some of the steps necessary to remedy a situation that has been neglected

for more than twenty-five years. We now examine the laws that have been enacted

in response to DeRolph I. Before we consider the specifics of the legislation in

context, we summarize the developments that have occurred. The key initiatives

include:

• Am.Sub.S.B. No. 102 (“S.B. 102”) (signed into law on May 20, 1997)

created the Ohio School Facilities Commission (see R.C. 3318.30), transferred

responsibility for the Classroom Facilities Assistance Program from the State Board

of Education to that commission, required that commission to establish the

Emergency School Building Repair Program (see R.C. 3318.35), and instituted and

authorized money for the so-called Big Eight Repair Program for major renovations

and repairs of school facilities in some of the largest school districts in the state

(Section 7 of the Act).

• Am.Sub.H.B. No. 215 (“H.B. 215”) (the Biennial Budget Bill for FY98 and

FY99, signed into law on June 30, 1997) made adjustments in the basic aid formula

amount (R.C. 3317.022) and made other changes to R.C. Chapter 3317. It also

provided additional equity aid (Section 50.05 of the Act; see R.C. 3317.0213),

additional funding for textbooks (Section 50.16), additional funding for facilities

(Section 188), and additional funding for the SchoolNet (Section 69.01) and

SchoolNet Plus (Section 69.03) programs, as well as creating and providing initial

funding for the Disability Access Program (Sections 50 and 69).

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• Am.Sub.S.B. No. 55 (“S.B. 55”) (signed into law on August 22, 1997), the

student and school district “Academic Accountability Bill,” established school

district performance standards (R.C. 3302.02) and school district report cards (R.C.

3302.03), increased high school graduation requirements (R.C. 3313.603), and

instituted a “fourth-grade guarantee,” preventing students who do not pass the

fourth-grade proficiency test from advancing to the fifth grade unless exceptions

apply (R.C. 3313.608).

• Sub.H.B. No. 412 (“H.B. 412”) (signed into law on August 22, 1997), the

“School District Fiscal Accountability Act,” requires school districts to maintain

budget reserves (former R.C. 5705.29[K], now R.C. 5705.29[H]) and requires set-

asides for building maintenance (R.C. 3315.18) and textbooks and instructional

materials (R.C. 3315.17), and created the school district solvency assistance fund

(R.C. 3316.20).

• Am.Sub.H.B. No. 650 (“H.B. 650”) (signed into law on February 13, 1998)

and Am.Sub.H.B. No. 770 (“H.B. 770”) (signed into law on June 17, 1998) make

up the heart of the General Assembly’s remedy. H.B. 650’s stated purpose is “to

establish a new system for funding education.” H.B. 770, among other things,

modified some of H.B. 650’s provisions. This legislation set out the essence of the

current R.C. Chapter 3317 school-funding formula, including the base cost amount

and the adjustments and subsidies. It also provided money for school facilities.

H.B. 650 at Section 14.

• Am.Sub.H.B. No. 850 (“H.B. 850”) (the capital appropriations bill for the

biennium ending June 30, 2000, signed into law on December 17, 1998) provided

money for school facilities, some specified for districts with exceptional needs.

Sections 6 and 26 of the Act.

• Am.Sub.H.B. No. 282 (“H.B. 282”) (the biennial Education Budget Bill for

FY00 and FY01, signed into law on June 29, 1999) marks the first time that the

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state has created an education budget separate from its main operating budget, by

placing the education budget into its own bill. H.B. 282 made adjustments to the

R.C. 3317.02 per-pupil formula amount, and made other adjustments in the R.C.

Chapter 3317 funding formula, enacted R.C. Chapter 3324 pertaining to gifted

students, and provided additional money for SchoolNet plus. Section 11 of the Act.

• Am.Sub.H.B. No. 283 (“H.B. 283”) (the Biennial Budget Bill for FY00 and

FY01, signed into law on June 30, 1999) the main operating budget bill for the

biennium, allocated state budget surplus revenue to SchoolNet Plus and for school

facilities, with some of the facilities money to go to districts with exceptional needs.

Section 124 of the Act.

• Am.Sub.S.B. No. 192 (“S.B. 192”) (signed into law on March 3, 2000)

provided for the allocation of money received by the state pursuant to the Tobacco

Master Settlement Agreement, committing a significant amount of tobacco

settlement funds for school construction and repair. R.C. 183.02(F) and 183.26.

See, also, Section 17 of the Act.

{¶ 36} In addition, other initiatives are pertinent to our inquiry, including

Am.Sub.H.B. No. 1 (“H.B. 1”) (signed into law March 30, 1999; implemented the

OhioReads initiative); Am.Sub.S.B. No. 1 (signed into law May 6, 1999;

established school safety zones); and Senate Joint Resolution No. 1 (concurred in

by the House on May 4, 1999), which placed on the November 2, 1999 ballot a

proposed constitutional amendment (ultimately approved by the voters of the state)

to allow the state to issue general obligation bonds to pay for school facilities

(Sections 2n and 17, Article VIII).

III

REMEDIAL LEGISLATION AND ITS EFFECTS

{¶ 37} We will now examine the foregoing legislation and assess its

compliance with Section 2, Article VI of the Ohio Constitution.

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{¶ 38} We emphasize that due to the extent of some of the legislation,

especially H.B. 650 and H.B. 770, our discussion of it is not in any way intended

to be exhaustive.

A

Cost of an Adequate Education

{¶ 39} In DeRolph I, this court noted that Ohio’s system of public education

is a “statewide system” and admonished the General Assembly to “create an entirely

new school financing system.” Id., 78 Ohio St.3d at 213, 677 N.E.2d at 747.

{¶ 40} An essential aspect of the school-funding program contained in R.C.

Chapter 3317 is “basic state aid,” which provides eligible school districts with a

guaranteed minimum amount of support. R.C. 3317.022. It is dependent on the

base cost, calculated as the unweighted average cost per student of educating

students who were enrolled in a school district that in fiscal year 1994 met

seventeen out of eighteen performance criteria and that was not excluded on the

basis of wealth or income. R.C. 3317.012(B).

{¶ 41} In determining basic state aid, several components are considered in

calculating the amount a school district will receive: the guaranteed minimum

dollar level of financial support (the formula amount), the district’s cost-of-doing-

business factor, average daily membership (“ADM”), adjusted total taxable value,

and the charge-off amount. R.C. 3317.022.

{¶ 42} A district’s cost-of-doing-business factor is based on the cost of

goods and services in the county where the district is located. R.C. 3317.02(N)(1).

Since the cost of goods and services is not uniform throughout the state, the cost-

of-doing-business factor is intended to put all school districts on a more level

playing field.

{¶ 43} The ADM represents the number of students enrolled in a given

school district and is calculated pursuant to R.C. 3317.03(A). R.C. 3317.02(D)(1).

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If it is more advantageous, a district may use a “three-year average formula ADM”

to calculate its ADM. R.C. 3317.02(D)(2); 3317.022(A).

{¶ 44} A school district’s “adjusted total taxable value” is defined in R.C.

3317.02(W) and 3317.022(A)(2).

{¶ 45} The “charge-off amount” defines a district’s responsibility for its

portion of the funding requirement. To calculate the charge-off amount, a district’s

adjusted total taxable value is multiplied by the charge-off rate, which is currently

twenty-three mills ($0.023) per dollar of valuation. R.C. 3317.022. Subtracting

the charge-off amount from the rest of the formula yields the amount of basic state

aid the district will receive. Id.

{¶ 46} All of these variables function together so that the amount that an

eligible district will receive from the state as basic aid can be determined. The

current formula for basic state aid is: Cost-of-doing-business factor  formula

amount  (the greater of formula ADM or the three-year average of formula ADM)

– (0.023) (adjusted total taxable value). R.C. 3317.022(A)(1). The formula

demonstrates that as more per-pupil revenue is generated locally, the state’s

contribution declines.

{¶ 47} The formula amount is the “base cost for the fiscal year specified in

section 3317.012,” adjusted with a phase-in. R.C. 3317.012(B) sets forth the

criteria used by the General Assembly to determine the base cost figure for FY96.

This number was then adjusted for inflation at an annual rate of 2.8 percent. R.C.

3317.012(A). Consequently, the base cost per pupil in FY00 is $4,177 and in FY04

will be $4,665. Id.

{¶ 48} The base cost figure is phased in over a period of three years. R.C.

3317.02(B). Commencing in July 2001, and every six years thereafter, the

President of the Senate and the Speaker of the House of Representatives are

required to appoint three members to a committee, which will reexamine the cost

of an adequate education. R.C. 3317.012(C). This is certainly a positive step in

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view of the fact that the cost of an adequate education in Ohio had not been

determined since 1973-1974. DeRolph I, 78 Ohio St.3d at 261, 677 N.E.2d at 780

(Resnick, J., concurring).

{¶ 49} In addition to the basic aid, the state provides funding for certain

programs and school district operations individually, according to formulas

established by the General Assembly. Such programs include funding for special

education, R.C. 3317.022(C), education for gifted students, R.C. 3317.024(P),

vocational education, R.C. 3317.022(E), transportation, R.C. 3317.024(E) and

3317.07, and Disadvantaged Pupil Impact Aid (“DPIA”), R.C. 3317.029. These

supplemental expenditures are often referred to collectively as categorical aid. If

the formula takes local wealth into account, then the formula is referred to as

equalized.

{¶ 50} Special education is funded by the state in addition to the basic aid

formula. H.B. 650 and H.B. 770 require special education students to be counted in

ADM for determining basic aid. R.C. 3317.03(A). In addition to basic aid, districts

receive separate state aid for special education pupils based on a weighted ADM,

which is calculated based on the severity of the student’s disability. R.C. 3317.013,

3317.022(C), and 3317.02(F)(1) through (3). This treatment of handicapped

students differs from the prior law, under which students whose education was

separately funded were not also included in ADM for basic aid purposes. Former

R.C. 3317.02(A), H.B. 215; former R.C. 3317.024(N), Am.Sub.S.B. No. 230, 146

Ohio Laws, Part VI, 10301, 10304.

{¶ 51} The state continued to fund education programs for gifted children

through funding units separate from basic aid in 1999, R.C. 3317.024(P), and H.B.

650 increased the number of funding units available for FY99 from nine hundred

twenty-seven to nine hundred fifty. In H.B. 770 the General Assembly stated that

it would review and revise the formula used to fund education for gifted children.

Former R.C. 3317.024(P)(2).

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{¶ 52} Vocational education is another program for which districts receive

funds from the state in addition to those provided by the basic aid formula. “The

average vocational education additional cost per pupil can be expressed as a

multiple of the base cost per pupil calculated under section 3317.012 of the Revised

Code.” R.C. 3317.014. Generally speaking, each vocational student is counted as

one ADM in the basic aid calculation, R.C. 3317.03, and an additional percentage,

which is called a “weight,” is added to take into account additional costs incurred

in providing vocational education. R.C. 3317.022(E).

{¶ 53} The state also pays for transportation costs apart from the basic aid

formula. A district’s predicted costs are based on the density of the student

population and the number of miles traveled. R.C. 3317.022(D)(2). The state’s

share of calculated transportation costs in FY00 is 52.5 percent. R.C.

3317.022(D)(3). The percentage will increase annually until FY03, when the

state’s share will be sixty percent. Id.

{¶ 54} Disadvantaged Pupil Impact Aid (“DPIA”) is available to districts

that satisfy certain requirements. DPIA is designed to provide funding for programs

such as all-day kindergarten and class-size reduction to provide a select group of

students with individual attention. R.C. 3317.029.

{¶ 55} The present school-funding scheme contains a variety of guarantees

and caps. For instance, there are guarantees for basic aid, R.C. 3317.0212,

transportation funding, R.C. 3317.022(D)(4), and DPIA funding, R.C.

3317.029(B). Guarantees are often criticized because they tend to provide some

districts with more money than they would receive under the foundation formula

alone. “[G]uarantees work to the substantial benefit of wealthier districts and

represent a flaw in the system of school funding, because they work against the

equalization effect of the formula.” DeRolph I, 78 Ohio St.3d at 200, 677 N.E.2d

at 739. Warren G. Russell, the current Director of Legislative Services for the Ohio

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School Boards Association, expressed the belief that the continued need for

guarantees indicates that the basic aid formula has structural problems.

{¶ 56} Even though the current formula is almost identical to its

predecessor, we acknowledge that the state has made some alterations to the school-

funding scheme that was at issue in DeRolph I. See id., 78 Ohio St.3d at 199-200,

218, 677 N.E.2d at 738-739, 751. However, this does not mean that we retreat from

our mandate in DeRolph I, requiring Ohio’s public school financing scheme to

undergo a “complete systematic overhaul.” DeRolph I, 78 Ohio St.3d at 212, 677

N.E.2d at 747. Our assessment of compliance with this mandate is qualitative

rather than quantitative.

{¶ 57} In order to determine the cost of a basic education, the state engaged

the services of Dr. John G. Augenblick, an expert in school finance. The state

adopted Augenblick’s methodology, with three significant changes, which

ultimately lowered his base cost figure.

{¶ 58} The Augenblick methodology is an outputs-based approach, which

uses the eighteen performance levels enumerated in S.B. 55 to ascertain whether a

district is effective. R.C. 3302.02 and 3302.03(B)(1). A district that meets

seventeen of the eighteen criteria is deemed an effective district. R.C.

3302.03(B)(1). Augenblick screened out some districts using criteria intended to

measure administrative efficiency. In the first of the three changes to Augenblick’s

method, the General Assembly did not use this screening procedure.

{¶ 59} In the second change, the General Assembly enlarged the screen that

was intended to remove anomalous districts in terms of personal income, from the

fifth and ninety-fifth percentiles recommended by Augenblick to the tenth and

ninetieth percentiles. According to Dr. Stephen P. Klein, an independent

consultant, who is also employed as a Senior Research Scientist with Rand

Corporation in Santa Monica, California, this change lowered the basic expenditure

amount by “several hundred dollars.”

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January Term, 2000

{¶ 60} Using these two screens, Augenblick selected one hundred two

districts. As a result of the first two changes, the method used by the General

Assembly selected a substantially overlapping group of one hundred three districts.

Of the one hundred three districts used, the district with the lowest base cost per

pupil spent $2,755 per pupil, and the district with the highest base cost per pupil

spent $5,898.

{¶ 61} In the third change, the method used to calculate the base figure was

changed from a weighted per-pupil average to an unweighted district average, R.C.

3317.012, with no convincing rationale given for the change. This alteration further

reduced the figure for the base cost of an adequate education.

{¶ 62} As a result of these three changes, the base cost of an adequate

education was reduced from $4,269 for FY99 to $4,063. We can only hope that

Howard Fleeter, an Assistant Professor in the School of Public Policy and

Management at the Ohio State University, was incorrect when he opined that the

legislature made these changes in order to come up with a lower number because

some legislators were concerned with cost and the “necessity of responding to the

DeRolph decision at all because of the feeling that the state had already made

significant progress since 1991 and that they didn’t need to do anything else.”

{¶ 63} Although we recognize that deciding what methodology to adopt is

a policy determination, we are perplexed by the General Assembly’s actions of

enlisting an expert in the area of school financing and then, with no adequate

explanation, altering his method. According to Senator Robert Cupp, no one in the

working group was an expert in statistics or Augenblick’s methodology. Russell

testified that he did not believe that the legislature had the expertise to understand

the impact of the changes made to the Augenblick methodology and to grasp the

statistical concepts involved. We share Russell’s concern. Furthermore, Klein

questioned whether the Augenblick methodology or the one adopted by the General

Assembly would provide adequate funding for Ohio’s public schools.

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{¶ 64} Another matter that concerns us is the process of phasing in the base

cost over a three-year period. See R.C. 3317.02(B). Because of the phase-in, the

$4,063 figure that was deemed by R.C. 3317.012 to be the base cost of an adequate

education for FY99 will not be reached until FY01 in inflation-adjusted dollars.

We find it difficult to understand how the state can justify its position that it is

funding a thorough and efficient education for Ohio’s public school children when

it is currently funding below the level that the General Assembly deemed to be the

base amount for an adequate education.

B

Budgetary Residual

{¶ 65} In DeRolph I, we recognized that the state was funding education as

a “residual after other mandated programs” were funded. Id., 78 Ohio St.3d at 261,

677 N.E.2d at 780. This method for calculating the cost of a basic education

involved determining how much money the state could afford for education and

working backward to arrive at the per-pupil basic subsidy.

{¶ 66} According to Speaker Davidson, the General Assembly’s response

to the court’s concern that “the formula amount has no relation to what it actually

costs to educate a pupil” is the funding scheme set forth in H.B. 650 and H.B. 770.

Speaker Davidson claimed that the General Assembly has made a commitment to

fund primary and secondary education “based upon a rational methodology of

adequacy,” which is “locked into House Bill 650.” Senator Cupp claimed that as a

result, “there is no priority in that budget that now has a higher priority than

education.”

{¶ 67} The General Assembly divided the budget for the 2000-2001

biennium into two sections: H.B. 282, the Education Budget Bill, and H.B. 283,

the Biennial Budget Bill. Prior to this, the budget had never been split into two

separate bills, with one bill dedicated solely to the education budget. Both bills

proceeded through the General Assembly together and were passed almost

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January Term, 2000

simultaneously. Governor Taft signed H.B. 282, the Education Budget Bill, into

law on June 29, 1999, and H.B. 283 the next day.

{¶ 68} The system’s skeptics allege that residual budgeting remains despite

the new legislation. Dr. Samuel Kern Alexander, the current president of Murray

State University, a regional state university in Kentucky, criticized the formula for

being unreliable and subject to manipulation. Alexander testified that “factors are

just being added and subtracted to reach a dollar amount that is available, a

predetermined, presumably, dollar amount that the Legislature can afford, and Dr.

Augenblick is justifying it.” In July 1997, Speaker Davidson stated that the General

Assembly was considering lowering the $4,269 per pupil figure recommended by

Augenblick because “the amount was calculated on inexact data and that lower per-

pupil funding would help make up revenues lost from scrapping the cigarette tax

and expanding property tax relief.”

{¶ 69} We acknowledge the progress the General Assembly has made in

this area. We give defendants the benefit of the doubt, particularly in light of recent

developments, in their contention that they have not merely disguised residual

budgeting. However, we cannot totally discount evidence that the actual cost might

have been the deciding factor in selecting the method used to determine the base

cost of an adequate education.

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C

School Facilities—Funding for Construction and Maintenance

{¶ 70} In DeRolph I, we held that the Classroom Facilities Act, R.C.

Chapter 3318, was unconstitutional to the extent that it was underfunded. Id., 78

Ohio St.3d 193, 677 N.E.2d 733, syllabus. Our opinion presented graphic examples

of some of the deplorable conditions existing in primary and secondary schools

throughout the state. Id. at 206-208, 677 N.E.2d at 743-744. We further remarked

that “state funding of school districts cannot be considered adequate if the districts

lack sufficient funds to provide their students a safe and healthy learning

environment.” Id. at 208, 677 N.E.2d at 744.

{¶ 71} The Classroom Facilities Act in R.C. Chapter 3318 was enacted in

1957 and was substantially amended in May 1997. Am.Sub.S.B. No. 102. William

L. Phillis, who serves as the executive director in a consultant relationship with the

Ohio Coalition for Equity and Adequacy of School Funding, testified that

“historically not much money had been put into that program until the beginning”

of the 1990s. The 1990 Ohio Public School Facility Survey indicated that $10.2

billion was needed for facility repair and construction. DeRolph I, 78 Ohio St.3d

at 206, 677 N.E.2d at 742. The amount required as of August 1997 was estimated

to be $16.5 billion. Phillis also testified that a 1996 report issued by the United

States General Accounting Office listed Ohio as the state having the highest

percentage of school buildings with major flaws.

{¶ 72} The General Assembly’s response to this situation was Am.Sub.S.B.

No. 102, which was signed into law on May 5, 1997. S.B. 102 established the Ohio

School Facilities Commission, R.C. 3318.30(A), which oversees the Classroom

Facilities Assistance Program (R.C. 3318.02 through 3318.041), the Emergency

School Building Repair Program (R.C. 3318.35), and the Big Eight Program

(Section 7, S.B. 102).

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{¶ 73} The commission is also charged with assessing all classroom facility

needs and conditionally approving repair and construction projects. R.C.

3318.02(A) and 3318.04. Those districts whose adjusted valuation per pupil ranks

in the lowest one to five percent shall have priority in project approval. R.C.

3318.02(B). Once the commission conditionally approves a district’s project, the

project is submitted to the State Controlling Board for final approval. R.C. 3318.04.

If the board approves it, the district has one year to pass a half-mill levy representing

its share of the cost. R.C. 3318.05. See, also, R.C. 3318.032. If the district does

not pass a levy within that time, the conditional approval for the project shall lapse,

and the amount reserved and encumbered for the project is released. R.C. 3318.05.

If conditional approval for the district’s project lapses, that district shall be given

first priority for project funding as such funds become available. Id. The entire

process, from approval of the project to its completion, may take as long as four

years.

{¶ 74} S.B. 102 also established the Emergency School Building Repair

Program in order to fund districts’ urgent repair needs. R.C. 3318.35. Each eligible

district that applied could receive up to $500,000 in emergency repair funds, and

districts were not required to provide matching funds. As of trial, a total of two

hundred fifty-four districts had received emergency repair funds, totaling $118

million.

{¶ 75} The Big Eight Program is a repair program for the eight school

districts in the state that, roughly speaking, have more than twelve thousand pupils,

thirty percent of whom receive Aid to Dependent Children. Section 7, S.B. 102.

S.B. 102 set aside $100 million for this program, which requires these eight school

districts to match funds received from the state and use them for major repairs and

renovations of school facilities. Id.

{¶ 76} In July 1997, the General Assembly adopted Sub.H.B. No. 412,

effective November 21, 1997. One of H.B. 412’s provisions requires districts to

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establish a capital and maintenance fund and to deposit “four per cent * * * of all

revenues received by the district that would otherwise have been deposited in the

general fund, except that money received from a permanent improvement levy

authorized by section 5705.21 of the Revised Code may replace general revenue

moneys in meeting the requirements of this section.” R.C. 3315.18(A).

{¶ 77} We recognize that the General Assembly has attempted to formulate

a viable plan to fund the construction of new school facilities and to repair Ohio’s

decaying school buildings; however, we are not without concern. For instance, a

high school in the Mad River-Green Local School District in Clark County has a

bathroom that is infested with a lethal mold. Beacon Journal, “Schools Suffering

Despite State’s Fix” (Apr. 10, 2000). This situation appears to be of an urgent

nature, yet it has not been remedied. Consequently, Mad River-Green Local

Superintendent Denny Howell must keep the bathroom boarded up in order to

prevent students from being exposed to the lethal mold that resulted from “a leak

that allowed urine and feces to drain slowly into a ceiling.” The situation in the

Mad River-Green Local School District is not an isolated incident. Many other

facilities issues plaguing our schools involve sewage problems. At Park Street

Middle School, in the South-Western City School District, a section of a locker

room in the school’s basement had to be sealed off due to a sewage backup. During

a visit to one school, Phillis walked through a “stream of water” in the building and

smelled the odor of sewage.

{¶ 78} Randall Fischer, the Executive Director of the Ohio School Facilities

Commission, testified at the trial court hearing that except for the reserve for

emergency repair funds, the funds available for the Classroom Facilities Assistance

Program have been completely exhausted. In light of this, Fischer testified that

emergency situations were still in existence at the time of trial. For example,

thirteen schools in the Youngstown City School District did not receive funds for

asbestos abatement. Likewise, the Jackson City School District applied for but did

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January Term, 2000

not receive funds for asbestos removal. The Ruhlin Company served as one of the

Site Evaluation Team Leaders for the Ohio School Facilities Commission

Emergency Repair Grant Program and visited over one hundred ten schools in

forty-eight school districts in northwest Ohio. The Ruhlin Company made the

following observations: “Many of these buildings were built in the 1920s and

1930s. Although the roofs are not original, many are over 20 years old and have

reached the end of their expected life. Masonry tuckpointing has been neglected in

many buildings and exterior windows are old and leaking. The electrical systems

are not able to handle today’s power requirements for computers, TV’s and other

electronic equipment. Because of the rural nature of many of the schools, well

water and septic systems are utilized and do not meet today’s current EPA standards

and need [to be] replaced. Boilers are old and are nursed through each heating

season with yearly retubings and expensive maintenance.”

{¶ 79} Another troublesome aspect of the Classroom Facilities Assistance

Program is that an eligible district must pass a levy within one year in order to

receive funds from the state. R.C. 3318.05. Thus, a district that fails to pass a levy

the first time must wait until the General Assembly appropriates more funds for the

program and still must pass a levy as a condition of receiving the funds.

{¶ 80} Again, referring to the report compiled by Achieve, Inc., we note

that “despite significant recent investments the challenge remains severe. Although

estimates differ on the magnitude of the problem, by all accounts too many Ohio

children, especially in poor rural and urban districts, attend classes in dreadfully

sub-standard facilities. [Emphasis sic.] * * * During this decade [the 1990s] the

state has invested over $1 billion in capital improvement funds for schools, more

than tripling the investments made over the previous four decades. However,

without a reliable inventory of the state’s facilities and a solid cost estimate for

bringing all Ohio school[s] up to standard, it is impossible to know just how much

progress has been made. While the state has at least made a down payment on a

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long deferred problem, this is a major piece of unfinished business for Ohio’s

policymakers.” (Emphasis added.)

{¶ 81} In addition, according to Fischer, there is no degree of certainty as

to what the future funding from the state will be. Am.Sub.H.B. No. 770, effective

June 17, 1998, requires the Governor to recommend and request that no less than

$300 million be appropriated annually to school facilities when future budgets are

submitted to the General Assembly. R.C. 107.031. R.C. 107.031 merely requires

that the Governor shall “ensure that among the various budget recommendations

made * * * to the general assembly each biennium there are recommendations for

appropriations to the Ohio school facilities commission, aggregating not less than

three hundred million dollars per fiscal year.” R.C. 107.031. Phillis testified that

at a rate of $300 million per year, it would take fifty-five years to correct the $16.5

billion deficit, and this estimate does not take into account “rolling decay.”

{¶ 82} While visiting some of Ohio’s schools, Phillis made several

observations. At trial, Phillis described a school building in the Morgan Local

School District that was built before 1900 and has sunk approximately six inches.

As a result of this settling, the doors no longer fit in their frames. Phillis visited a

school that was heated with a coal-fired furnace and saw coal dust in the

classrooms. During a visit to Bloom Carroll Middle School, which was built in the

early 1900s, Phillis noticed that the brick on the building’s façade was cracked.

Additionally, Phillis noted that many of the buildings he visited lacked handicapped

access.

{¶ 83} From the foregoing, it is readily apparent that this is an important

area that will continue to require the attention of the Governor and future General

Assemblies. We acknowledge the initiatives in Am.Sub.H.B. No. 850 (effective

March 19, 1999), which appropriated $505 million for school facilities (see

Sections 6 and 26 of the Act), and Am.Sub.H.B. No. 283, which appropriated an

additional $325.7 million, by devoting money from the state’s budget surplus to

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school facilities. See Section 124 of the Act. When combined with moneys

appropriated from Am.Sub.S.B. No. 102, Am.Sub.H.B. No. 215, Am.Sub.H.B. No.

650, and commitments from other sources, recent appropriations for facilities are

in excess of $1.6 billion, yet the immediate needs are much greater. As recognized

in the reply brief of amicus curiae Governor Taft, on September 9, 1999, the

Governor proposed a school facilities allocation plan called “Rebuilding Ohio’s

Schools: A 12-Year Commitment.” The plan proposes to allocate an additional

$23.1 billion in state and local funds to school facilities from FY01 to FY12. The

state share of that amount would be $10.2 billion, broken down into $5.9 billion

from the capital budget, $1.8 billion from cash appropriations and interest earnings,

and $2.5 billion from the state tobacco litigation settlement. The plan calls for the

state share to be accompanied by $12.9 billion in local matching funds. In addition,

the plan calls for the establishment of a trust fund with some of the tobacco

settlement money to take care of future school needs.

{¶ 84} At the time of this writing, a significant component of the

Governor’s plan appears to be in place. On March 3, 2000, the Governor signed

into law Am.Sub.S.B. No. 192, which provides for the distribution of money

received by the state pursuant to the Tobacco Master Settlement Agreement. As

pertinent to our consideration here, this legislation allocates nearly $2.5 billion in

tobacco settlement funds through FY12 to go for school construction and repair,

through the Education Facilities Trust Fund. See R.C. 183.02(F) and 183.26. The

legislation also allocates funds for classroom technology, see R.C. 183.02(H) and

183.28, and establishes and allocates money to an Education Facilities Endowment

Fund, with investment earnings transferred each quarter to the Facilities Trust Fund,

R.C. 183.02(G) and 183.27. Provisions are also made addressing appropriations

for school construction and repair from FY12 to FY25. Section 17 of the Act. The

firmness of all the commitments contained within this legislation is of course

limited by the prohibition of Section 22, Article II of the Ohio Constitution, which

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prohibits the General Assembly from appropriating for more than a two-year

period. Thus, even though the long-term plan is in place, the General Assembly

must appropriate the money every two years.

{¶ 85} The task at hand is not one to be taken lightly. One-half of Ohio’s

school buildings are fifty years old or older. DeRolph I, 78 Ohio St.3d at 206, 677

N.E.2d at 742. Constructing and maintaining school buildings is an ongoing

process, and this court recognizes that it would be unreasonable to require the

General Assembly to remedy overnight what has taken decades of neglect to

develop, yet there remains an extensive amount of work to be done in order to

educate Ohio’s students in “safe and healthy learning” environments. Id. at 208,

677 N.E.2d at 744. Continuing funding in this area is of the utmost importance.

D

Borrowing

{¶ 86} In DeRolph I, this court found the following provisions, relating to

forced borrowing, unconstitutional: R.C. 133.301, which granted borrowing

authority to school districts, and R.C. 3313.483, 3313.487, 3313.488, 3313.489,

and 3313.4810, which provided for emergency school assistance loans. Id., 78

Ohio St.3d 193, 677 N.E.2d 733, syllabus. These statutes were deemed to be an

inherent weakness in the state’s school-financing system because they required

districts that were unable to satisfy their budgetary requirements to borrow funds at

commercial lending rates. Id. at 201, 677 N.E.2d at 739. When these borrowing

statutes were in effect, over $700 million was borrowed by local school districts so

that they could keep their schools operating.

{¶ 87} The first type of borrowing held unconstitutional in DeRolph I was

the “spending reserve” loan in R.C. 133.301, which enabled school districts to

borrow against a subsequent year’s revenue, as long as the district received

approval from the Superintendent of Public Instruction. Id. at 201, 677 N.E.2d at

739. If the spending reserve loan was not enough to enable the district to meet

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current operating needs, then the district was required to seek necessary funding

from a commercial lender. Id. at 201, 677 N.E.2d at 739; R.C. 3313.483 and

3313.483(D). These borrowing programs, which were characterized by this court

as “nothing less than a clever disguise for the state’s failure to raise revenue

sufficient to discharge its constitutional obligations,” drove school districts into

deeper financial distress. Id. at 202, 677 N.E.2d at 740.

{¶ 88} What is the status of forced borrowing today? Although the General

Assembly has taken some steps to eliminate forced borrowing from the school-

financing scheme, it remains unclear whether these changes will rectify the

problem.

{¶ 89} The Spending Reserve Loan Program is being phased out pursuant

to R.C. 5705.29(F)(1) and (2). Additionally, the School District Solvency

Assistance Fund, which is operated by the Ohio Department of Education, was

established in H.B. 412 and went into effect on November 21, 1997. R.C. 3316.20.

The Solvency Assistance Fund provides interest-free “advancements to school

districts to enable them to remain solvent and to pay unforeseeable expenses of a

temporary or emergency nature that they are unable to pay from existing resources.”

Id.

{¶ 90} One concern voiced by Russell is that many districts will still be

forced to borrow funds, because the circumstances that necessitated the initial

borrowing still exist, despite the recent legislation. Likewise, Charles Brown, the

Assistant Director of the Division of School Finance of the Ohio Department of

Education, is concerned that H.B. 412’s set-aside requirements will require

additional borrowing in order to comply with the mandates.

{¶ 91} The plaintiffs allege that the School Solvency Assistance Fund is no

different from the former Emergency School Assistance Loan Program, other than

the fact that the School Solvency Assistance Program Fund provides for interest-

free loans. According to Brown, the procedures for obtaining and repaying loans

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are virtually identical under both programs. For instance, the repayment period for

both types of loans is typically two years. Furthermore, districts must exhaust their

spending reserve before they can access advances from the solvency fund. R.C.

3316.20. This requirement mirrors one in the former Emergency School Assistance

Loan Program that required a district to borrow from its spending reserve fund

before obtaining approval for an emergency loan. See R.C. 3313.483(B).

{¶ 92} In addition to our concerns about the impact that the School

Solvency Assistance Fund will have on future borrowing, we are also troubled by

the influence H.B. 650 and H.B. 770 will have. At his deposition, David Brunson,

the Assistant Director of the Ohio Legislative Budget Office (“LBO”), testified that

the LBO did not research or analyze the effect that H.B. 650 and H.B. 770 would

have on borrowing. Moreover, Augenblick did not take borrowing or the

repayment of existing loans into account in arriving at a base cost figure.

Augenblick had no knowledge of the amount of money that school districts would

be required to pay in FY99 for borrowing that occurred during and prior to 1999.

{¶ 93} The final loans under the former Emergency School Assistance Loan

Program were approved by the State Controlling Board on February 9, 1998.

Repayment of these loans will continue through at least 2007 and will be made

from funds that districts would otherwise receive as school foundation payments.

{¶ 94} The lingering effects of the forced-borrowing scheme will haunt

school districts for many years to come. As we examine the new legislation

promulgated by the General Assembly in response to our holding in DeRolph I, we

are dubious that the new measures will resolve the problem. We recognize that

some type of borrowing provision may be necessary to provide funds in the case of

extreme emergencies or unexpected calamities; however, any system that entails

borrowing from future funds to meet ordinary expenses is not a thorough and

efficient system. Except in extreme cases, reliance on loans must be eradicated,

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and loans certainly must not be employed as a method to meet school districts’ daily

operational expenses.

E

Overreliance on Local Property Taxes

{¶ 95} In DeRolph I, this court held that one of the principal factors

rendering the school-funding system unworkable was the state’s heavy reliance on

local property taxes to fund primary and secondary education. Id., 78 Ohio St.3d

at 212, 677 N.E.2d at 747. Our holding in DeRolph I did not say that local property

taxes could not be a component of the state’s school-funding formula, but rather

that local property taxes could no longer be the primary means of providing for a

thorough and efficient system of schools. See id. at 262, 677 N.E.2d at 780

(Resnick, J., concurring). For instance, in FY97, the state contributed

approximately 43.8 percent to districts for school funding, excluding federal funds,

while the local share was approximately 56.2 percent.

{¶ 96} Property taxes are still the single most important source of funding

for schools, and seventy percent or more of all property taxes levied are allocated

to public schools. Overreliance on local property taxes was one of the factors that

rendered the school-funding scheme deficient, yet this aspect of the former system

persists in the state’s current funding plan, wholly unchanged. The system’s

dependence on local property taxes has resulted in vast disparities among Ohio’s

six hundred eleven public school districts due to the differences in revenue

generated by each. For instance, according to a memorandum prepared by Mike

Sobul at the Ohio Department of Taxation for the 1995 fiscal year, a one-mill

property tax on Class I real property produced $272.90 per student in the district

with the highest property tax base and $13.34 per student in the district with the

lowest. A system that places too much reliance on local property taxes puts

property-poor districts at a disadvantage because “ ‘they must tax at significantly

higher rates in order to meet minimum requirements for accreditation; yet their

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educational programs are typically inferior.’ “ DeRolph I, 78 Ohio St.3d at 204,

677 N.E.2d at 741, quoting Edgewood Indep. School Dist. v. Kirby (Tex.1989), 777

S.W.2d 391, 393.

{¶ 97} The state would like this court to believe that overreliance on local

property taxes will dissipate once the new measures are fully phased in, so that the

only reason a district would have to look to local property taxes would be that the

district wants to fund beyond adequacy. Unfortunately, the reality of the situation

at this time appears to be otherwise.

{¶ 98} A perfect example of overreliance on local property taxes is the

situation currently affecting the Toledo Public Schools. Toledo schools are faced

with an $18 million deficit, and in March voters rejected a 6.9-mill operating levy

that would have provided Toledo schools with $17.1 million annually. Toledo

Blade (Mar. 5 and Apr. 16, 2000). Now school officials may be forced to shut

down two secondary schools and eliminate two hundred thirty-five teaching

positions. This should not happen in a state-funded system of common schools.

{¶ 99} Moreover, recent legislation has the potential to actually increase

reliance on local property taxes beyond the level deemed unsatisfactory in DeRolph

I. The phase-out of the inventory tax in Am.Sub.H.B. No. 283 will result in

significant revenue losses. See R.C. 5711.22(E). As of May 1999, inventory was

assessed at a rate of twenty-five percent of its true value and then subjected to local

property taxation. In 1997, inventory tax revenues provided 7.77 percent of the

total local property tax revenue received by districts. The Legislative Budget Office

estimates that as a result of the phase-out local school districts will lose $60.9

million in revenue in 2002. The state has provided minimal replacement revenue.

According to a report prepared by Dr. Howard Fleeter in May 1999 for the

Education Tax Policy Institute (“ETPI”),2 this reduction “reduces the property tax

2. The Education Tax Policy Institute (“ETPI”) was formed in 1977 to act as an “independent, data-

driven organization” for the purpose of analyzing tax policy issues. ETPI’s membership includes

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revenues received by all of Ohio’s local government entities, including school

districts.” Furthermore, Fleeter used data collected for the years 1984 through 1993

to reach the conclusion that “school district millage increases play an important role

in ameliorating the decreases in revenue brought about by reductions” in the

inventory rate. In fact, Fleeter’s report establishes that “local tax increases served

to reduce actual revenue losses in Ohio school districts by more than 50%.” We

are in accord with Fleeter’s opinion that “the fact that local taxpayers are bearing

at least some of the brunt of this state policy change seems inescapable.”

{¶ 100} Additionally, the unfunded mandates in Sub.H.B. No. 412 and

Am.Sub.S.B. No. 55 will likely require increased reliance on property taxes. These

bills are projected to cost districts $343,758,940. According to Brown, districts

may be forced to levy additional taxes in order to satisfy the set-aside requirements

of H.B. 412.

{¶ 101} Ohio’s system of public education is a “statewide system.”

DeRolph I, 78 Ohio St.3d at 213, 677 N.E.2d at 747. The state is responsible for

funding an adequate education for all primary and secondary students who attend

public schools. In our earlier opinion, this court informed the General Assembly

that a school-funding scheme that relies too heavily on local property taxes for

revenue would not satisfy the Thorough and Efficient Clause of the Ohio

Constitution. See id. at 212, 677 N.E.2d at 747. Consequently, a revised funding

scheme that increases reliance on local property taxes would not be “thorough and

efficient.” Thus, the General Assembly must avoid compounding the school-

funding system’s infirmities with new legislation that increases reliance on local

property taxes.

{¶ 102} The state’s failure to specifically address the school-funding

system’s overreliance on local property taxes is of paramount concern as we

approximately one hundred school districts and several state-level groups representing public sector

organizations and employees.

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evaluate the state’s attempts to craft a thorough and efficient system of funding.

The state’s argument that it can minimize this problem by addressing the other

aspects identified in DeRolph I as contributing to the unworkability of the system

in place at that time, see 78 Ohio St.3d at 212, 677 N.E.2d at 747, is unconvincing.

We see no indication that anything significant has been done to remove this primary

impediment, which was the major factor in the previous funding system found

unconstitutional in DeRolph I. No further effort at specifically addressing this

overreliance on property taxes has been made since the voters of the state rejected

the one-cent sales tax increase on the May 5, 1998 ballot. The problem of

overreliance on local property taxes must be independently addressed, and all

potential solutions to this problem must be explored. The inequities inherent in a

system that relies too heavily on local property taxes will remain until this problem

is resolved by the General Assembly.

F

Phantom Revenue

{¶ 103} The phenomenon known as “phantom revenue” is one of the

weaknesses this court identified in DeRolph I as plaguing Ohio’s system of school

finance. Id., 78 Ohio St.3d at 201, 677 N.E.2d at 739. Although phantom revenue

is not easily defined, Frederick Church of the Legislative Budget Office says that it

can be thought of as occurring “when the growing property wealth of a school

district gives the illusion of a commensurably increasing revenue stream, which, in

fact, is not realized.”

{¶ 104} The consulting firm of Levin & Driscoll has identified three types

of phantom revenue.

{¶ 105} “Type I” phantom revenue, which is sometimes referred to as

“phantom millage,” occurs when a school district fails to levy at least twenty-three

effective mills. “[P]hantom revenue in this type equals the difference between the

revenue obtained from the district’s effective tax rate and the revenue that the

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district would receive from a 23 mill effective rate.” Type I phantom revenue can

occur as a result of either the application of 1976 Am.Sub.H.B. No. 920, 136 Ohio

Laws, Part II, 3182, or a district’s failure to obtain voter approval for at least twenty-

three mills. R.C. 319.301.

{¶ 106} Levin & Driscoll characterizes “Type II” phantom revenue as

property tax revenue credited to a school district when its tax base increases, but

which is never actually received by the district due to H.B. 920’s tax-reduction

factors, found in R.C. 319.301. See DeRolph I at 200-201, 677 N.E.2d at 739. R.C.

319.301 “requires the application of tax reduction factors when property values

increase due to reappraisal or update.” Id. at 201, 677 N.E.2d at 739. The purpose

is to “limit the effect of inflation in property values on growth of real property tax

revenues.” Id. at 221, 677 N.E.2d at 753. R.C. 319.301 gives real property owners

a tax credit, so that the amount paid on voted millage remains the same as it was

prior to the reappraisal or update. Consequently, a school district receives the same

amount of revenue “from voted tax levies after reappraisal as it did before

reappraisal, notwithstanding that real property valuation in the district has increased

through inflation since the time of the initial tax levy.” Id. at 221, 677 N.E.2d at

753 (Douglas, J., concurring).

{¶ 107} “Type III” phantom revenue “results from the use of an income-

adjusted tax base rather than actual taxable value for purposes of computing a

school district’s chargeoff.” Type III phantom revenue is the difference between

the revenue received from twenty-three mills and the yield required by the

chargeoff.

{¶ 108} According to a report prepared by Levin & Driscoll, all three types

of phantom revenue are problematic for school districts, because the basic aid

formula “counts local revenue without empowering the district to raise that

revenue.”

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{¶ 109} The state maintains that the phantom revenue problem has been

resolved because H.B. 650 provides for a charge-off supplement and power

equalization. R.C. 3317.0216(B) and (C); 3317.0215.

{¶ 110} The charge-off supplement is intended to ensure that districts

obtain the full amount of state and local funds that the basic aid formula allocates

to them. The charge-off supplement is also referred to as “gap aid.” If a district’s

charge-off amount is greater than the district’s total receipts available for current

expenses, then the state will pay the district an amount representing the difference.

R.C. 3317.0216(B). When new local revenue is generated, a district’s charge-off

supplement is reduced dollar for dollar.

{¶ 111} Power equalization is intended to act as an incentive for districts

with below-average property wealth to levy more than twenty-three mills. Power

equalization applies only to the Class I effective rate and mills between twenty-

three and twenty-five. R.C. 5713.041; 3317.0215. “If the total effective operating

tax rate of a district is greater than two and three-tenths per cent, the district shall

receive a payment computed by multiplying the lesser of two-tenths of one per cent

or the equalized tax rate by the amount by which the state taxable value per pupil

exceeds the district’s total taxable value per pupil times the district’s formula

ADM.” R.C. 3317.0215(B). Maxwell provided the trial court with the following

illustrative example of how power equalization works: if the valuation per pupil in

the state were $95,000, then one mill would yield $95, and if an eligible district has

a valuation per pupil of $55,000, then one mill would yield $55 per pupil. Since

only $55 is raised locally, under the concept of power equalization, the state makes

up the difference, $40, to arrive at the $95.

{¶ 112} In spite of provisions in H.B. 650, not every type of phantom

revenue has disappeared. Although we are encouraged by testimony that the

charge-off supplement is reducing Type I phantom revenue, we are mindful that

this type of phantom revenue may continue in some districts. Furthermore, H.B.

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650 does not alleviate Type II phantom revenue, which results from the application

of H.B. 920’s tax-reduction factors.

{¶ 113} Another concern is that H.B. 650 may even compound the phantom

revenue predicament by creating additional types of phantom revenue. Both

Russell and Maxwell testified that a new type of phantom revenue results from

power equalization. Maxwell believes that since “property valuation increases due

to reappraisal cause the millage rate to be reduced regularly,” some districts may

lose equalization payments and “would have to vote millage every time reappraisal

occurs.” Additionally, Maxwell testified that including special education pupils in

a district’s ADM creates a new type of phantom revenue. Ultimately, certain school

districts may be required to go back to the voters and ask for additional tax increases

to make up for lost revenue.

{¶ 114} Requiring school districts to seek additional tax increases to make

up for lost revenue is something that should be avoided, especially in view of our

holding in DeRolph I, which required overreliance on local property taxes to be

eliminated. The Achieve, Inc. report quoted one school superintendent who stated,

“I spend every third year running a political campaign, not running my school

district.” This is not how a thorough and efficient system should function and

further serves to emphasize why heavy reliance on local property taxes must end.

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G

Accountability

{¶ 115} In response to our decision in DeRolph I, the General Assembly

enacted several new pieces of legislation. Two of the bills focus primarily on

school district accountability: H.B. 412 is directed at fiscal accountability, and S.B.

55 establishes academic accountability.

Fiscal Accountability: House Bill 412

{¶ 116} H.B. 412 centers on implementing fiscal accountability for school

districts. This bill contains three set-aside requirements: a capital and maintenance

fund (R.C. 3315.18), a textbook and instructional materials fund (R.C. 3315.17),

and a “reserve balance fund” (R.C. 5705.29[H]).

{¶ 117} R.C. 3315.18(A) requires each district’s board of education to

create a capital and maintenance fund and to deposit into that fund “four per cent

of all revenues received by the district that would otherwise have been deposited in

the general fund, except that money received from a permanent improvement levy

authorized by section 5705.21 of the Revised Code may replace general revenue

moneys” in meeting these requirements. Money placed in this fund can be used

only for “acquisition, replacement, enhancement, maintenance, or repair of

permanent improvements.” Id. The four-percent requirement is phased in

according to the schedule set forth in Ohio Adm.Code 117-2-23(B).

{¶ 118} R.C. 3315.17(A) requires each board of education to “establish a

textbook and instructional materials fund” and to “deposit into that fund four per

cent, or another percentage if established in rules adopted under division (C) of this

section, of all revenues received by the district for operating expenses.” The four-

percent requirement is phased in according to the schedule set forth in Ohio

Adm.Code 117-2-23(A). Money deposited in this fund “shall be used solely for

textbooks, instructional software, and instructional materials, supplies, and

equipment.” R.C. 3315.17(A). If a district does not use all of these funds in a given

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fiscal year, the funds carry forward to the next fiscal year. Id. Additionally,

pursuant to subsection (D), a school district may opt out of this requirement. R.C.

3315.17(D). We are not addressing the content of the opt-out provision at this time.

{¶ 119} R.C. 5705.29(H)(1) requires each board of education to “establish

a reserve balance account to accumulate currently available resources to stabilize

the school district’s budget against cyclical changes in revenues and expenditures.”

Subject to certain exceptions, see Ohio Adm.Code 117-2-24, “[t]he balance in the

reserve balance account shall not at any time be less than five per cent of general

fund revenues for the most recently concluded fiscal year.” R.C. 5705.29(H)(1).

Beginning in fiscal year 2000, a district is required, subject to limited exceptions,

to set aside one percent of its revenue “until the balance in the reserve balance

account equals five per cent of the district’s revenues received for current expenses

for the preceding fiscal year.” R.C. 5705.29(H)(2)(a).

Academic Accountability: Senate Bill 55

{¶ 120} S.B. 55 is composed of various provisions mandating academic

accountability. The bill raises the number of credits required for high school

graduation (R.C. 3313.603[B]), creates a fourth-grade reading guarantee (R.C.

3313.608[A]), and sets standards for school district performance (R.C. 3302.02 and

3302.03).

{¶ 121} “Beginning September 15, 2001, the requirements for graduation

from every high school shall include twenty-one units earned in grades nine through

twelve.” R.C. 3313.603(B). S.B. 55 increases the number of credits required for

English language arts, mathematics, science, and social studies. R.C.

3313.603(B)(1), (3), (5), and (6).

{¶ 122} The fourth-grade reading guarantee states that “[b]eginning with

students who enter fourth grade in the school year that starts July 1, 2001, no

* * * school * * * shall promote to fifth grade any student who fails to attain” the

designated score on the test prescribed in R.C. 3301.0710(A)(1) that measures

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reading ability, unless either the pupil was excused from taking the test or the pupil

is deemed to be “academically prepared” to be promoted to the fifth grade. R.C.

3313.608(A)(1) and (A)(2).

{¶ 123} Pursuant to S.B. 55, school districts will be rated on performance

and receive annual report cards. R.C. 3302.03(A) and (D)(1). The provision for

evaluating district performance states that beginning July 1, 1999 (FY00), “every

three years the department of education shall calculate and report for each school

district its percentages on each of the performance indicators listed in section

3302.02 of the Revised Code and shall specify for each such district the extent to

which the acceptable performance indicator has been achieved and whether the

district is an effective school district, needs continuous improvement, is under an

academic watch, or is in a state of academic emergency.” R.C. 3302.03(A). In

addition to performance reports, the Department of Education is required to “issue

annual report cards for each school district and for the state as a whole based on

education and fiscal performance data.” R.C. 3302.03(D)(1).

Discussion of Accountability

{¶ 124} Jeffrey Sutton, the state’s attorney, described the current school-

funding system as placing “[k]ids first, money second,” and having “accountability

throughout.” We agree that accountability is an important component of a system

that provides funds. What is problematic, however, is a system that increases

academic requirements and accountability, yet fails to provide adequate funding.

{¶ 125} A Fiscal Note and Local Impact Statement prepared by the Ohio

Legislative Budget Office for S.B. 55 indicated that the “state would increase its

school funding in the range of a billion dollars per year beginning in FY 1999” and

that this “funding increase would help districts to make any necessary changes to

meet performance standards proposed by the bill.” The increased funding was not

part of S.B. 55 and was dependent on voter approval of a one-cent sales tax increase.

Both S.B. 55 and H.B. 412 were proceeding through the General Assembly at the

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same time as the proposed sales tax increase. On February 17, 1998, the Ohio

Senate approved H.B. 697, which placed the one-cent sales tax increase on the May

5, 1998 ballot for voter approval. The one-cent sales tax increase, which appeared

on the May 5 ballot as Issue 2, was not approved by voters. Consequently, school

districts are required to adhere to the bills’ additional requirements and standards

of accountability, but the anticipated funding must now come from a different

source.

{¶ 126} Since these mandates are essentially unfunded, a paramount

concern is that H.B. 412 and S.B. 55 will impose additional costs on school districts.

David Brunson testified that the Legislative Budget Office did not do a detailed

analysis to estimate what the cost of S.B. 55’s increased graduation requirements

would be throughout the state; however, the Fiscal Note indicates that those

“districts that currently require less than 21 units of credit for graduation would

incur additional costs.” The Legislative Budget Office conducted a random survey

of twenty school districts in an attempt to determine the potential impact of S.B.

55, and fourteen of the twenty districts indicated that they would incur additional

expenses as a result of the bill. Additional costs may be incurred in establishing

appropriate scientific laboratories and in hiring more teachers, especially those

qualified to teach mathematics and science courses. The Department of Education

estimates that the average cost for a biology laboratory is $140,000. Districts may

also face increased costs as a consequence of R.C. 3313.608(B) through (E), which

require remediation and intervention services for those students who do not pass

the fourth-grade reading test. What is particularly bothersome about these

unfunded mandates is that if a district does not have sufficient funds in its existing

budget, then it may have to seek additional funds from other sources, such as

passing additional levies or borrowing from lenders.

{¶ 127} From the foregoing discussion regarding academic accountability,

we do not want our concerns to be misconstrued as disfavor for the general concept

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of accountability. Instead, we clearly state that in order to have a thorough and

efficient system of schools, there must be statewide standards that are fully

developed, clearly stated, and understood by educators, students, and parents. The

report compiled by Achieve, Inc. succinctly sets forth the perspective that “states

need to have at the heart of their education reform strategy clear and rigorous

academic standards, challenging assessments designed to measure progress

against those standards, and an accountability system that rewards success and

takes action against persistent failure. We do not mean to suggest that standards,

assessment, and accountability can by themselves produce significant changes in

student performance; but they can and should be important drivers of change in

curriculum, instructional practice, and school organization. They need, most

importantly, to be accompanied by a thoughtful, comprehensive, sustained strategy

for strengthening the capacity of teachers, principals, and other education

professionals to change their practice, and a commitment to provide extra resources

and support to students and schools who start out furthest from the goal line. But

without a clear roadmap for teachers, parents, and students (i.e., standards), an

agreed-upon yardstick for measuring progress (i.e., assessments) and consequences

for results (i.e., accountability), states in our view are unlikely to help their schools

significantly improve student performance. Ohio has important building blocks in

place in its standards-assessment-accountability system, but we believe each of

these elements needs to be substantially strengthened if this system is to become a

powerful lever for improving teaching and learning in the classroom.” (Emphasis

sic.)

{¶ 128} The Achieve, Inc. report recognized that the lack of standards was

a significant deficiency in Ohio’s system. The report noted that “[s]trictly

speaking, Ohio does not really have statewide academic standards, at least as that

term is used in most other states. The absence of standards is particularly

troublesome because virtually all participants in Ohio education reform activities

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agree that clear standards should be the basis for pre-service training for teachers,

the curriculum, student assessments, classroom materials, and ongoing professional

development. Unless there is clear understanding of what students are expected to

learn, how can teachers’ colleges know what teachers are supposed to teach? How

can assessment developers know what to test? How can publishers of textbooks

and instructional materials know what to include at each grade level? How can

students prepare for the tests if there is no clear-cut agreement about what they are

supposed to learn?” (Emphasis sic.)

{¶ 129} Some of the same concerns encountered with regard to S.B. 55 arise

with respect to the set-aside requirements in H.B. 412. According to Maxwell and

Goff, those districts that are most likely to be affected are the ones borrowing or

paying back money that was previously borrowed. A Fiscal Note and Local Impact

Statement prepared by the LBO for H.B. 412 predicts that the four-percent set-aside

requirement for capital and maintenance and the four-percent set-aside for

textbooks and instructional materials could each total approximately $400 million

statewide.

{¶ 130} From the foregoing, it is readily apparent that a great deal of work

has yet to be done before Ohio can be said to have a constitutional thorough and

efficient system of public schools. We recognize that much more is involved in

this process than merely providing funds. Consequently, educators, lawmakers,

businesses, parents, and students must all work together to strengthen Ohio’s

system of public schools.

{¶ 131} Governor Taft recognized this need in his January 19, 2000 State

of the State Address, when he said, “Education is a matter of survival in today’s

world and the [proficiency] tests are helping to lift student achievement. We must

never retreat from high standards, rigorous assessment and accountability for

results! In fact, I believe we can do even more to build on our success and help

students reach those high standards, not only on the fourth grade test but also on

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the new tenth grade exams. That’s why we must closely align what we expect,

what we teach, how we assess, and how we reward performance and correct

failure.”

{¶ 132} Strict statewide standards must be developed and implemented, so

teachers know what they are required to teach, and students know what they are

required to learn. Governor Taft has recognized this need and has taken steps in

the right direction, as evidenced by his January 19, 2000 State of the State Address

in which he declared, “So today, I propose to establish the Governor’s Commission

for Student Success. Its members will represent employers, colleges and

universities, parents and children, educators, school board members and legislators.

I will ask this commission to address four questions:

“How do we make it crystal clear to students, parents, and educators what

students should know and be able to do in each grade and before graduation?

“How should we measure student performance and progress in each grade?

“How should we hold students and adults responsible for academic

achievement?

“And how do we make sure that all parts of the system work together in

complete alignment?”

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IV

CONCLUSION

{¶ 133} At the present time, it is apparent to us that, despite the past and

present efforts of Governor Taft and our General Assembly, the mandate of the

Constitution has not yet been fulfilled. We acknowledge the effort that has been

made, and that a good faith attempt to comply with the constitutional requirements

has been mounted, but even more is required. The process must continue.

{¶ 134} The most glaring weakness in the state’s attempts to put in place a

thorough and efficient system of education is the failure to specifically address the

overreliance on local property taxes. If this problem is not rectified, it will be

virtually impossible for the revised school-funding system to be characterized as

thorough and efficient.

{¶ 135} Despite our vast concerns over the failure to address the funding

system’s overemphasis on local property tax, we do perceive evidence of some

positive developments. Finally the Governor and General Assembly have

recognized that education can no longer be funded as a residual in the state budget.

Funding must be provided consistently with the Section 2, Article VI constitutional

mandate of a “thorough and efficient system of common schools.” With the recent

passage of H.B. 282, there is now a separate state budget for education. In addition,

Governor Taft has provided the impetus for recent initiatives to provide

significantly more money for school building construction and maintenance.

{¶ 136} Furthermore, other significant initiatives are being developed. The

SchoolNet and SchoolNet Plus programs, recognizing the value of developing

computer-literate students, continue to evolve and are clearly positive steps. See

H.B. 282, R.C. 3301.80 and 3301.801. Yet there is so much yet to be done in this

area. We are still a long way from the goal of providing sufficient computers to

allow a high quality education in this computer age. Moreover, there is no specific

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program in place to provide computers for students above the fifth-grade level.

This is a crucial need so that students nearing graduation will be computer-literate.

{¶ 137} The OhioReads initiative put into motion by Am.Sub.H.B. No. 1,

effective March 30, 1999, is another laudable step being championed by the

Governor. See R.C. 3301.85 et seq. By providing several types of grants (both to

schools and communities, see R.C. 3301.86 and 3301.87) to promote the fourth-

grade reading guarantee, and also by encouraging volunteer tutors to become

involved in their local school districts (see R.C. 3301.91[A]), OhioReads appears

to be a significant agent for improvement. Yet only time will tell if this initiative

will be successful in furthering the goals of the fourth-grade reading guarantee.

{¶ 138} In light of the progress that the Governor and General Assembly

have made, in some areas, thus far, and unwilling to reject in toto the sum of those

efforts, we determine that the best course of action at this time is to provide the

defendants more time to comply with Section 2, Article VI of the Ohio Constitution.

We are confident that, given the additional opportunity presented by this extension

of time, the General Assembly and the Governor will continue to deliberate over

the many obstacles they face, and will continue to seek solutions to these complex

problems.

{¶ 139} The following major areas warrant further attention, study, and

development by the General Assembly, but are not by any means the only areas

requiring scrutiny:

(1) Continued reliance on local property taxes as a primary means to fund

Ohio’s schools has not been specifically addressed and may in fact be compounded

by H.B. 283’s phase-out of the inventory tax, which may result in even greater

reliance on local contributions in the future. The failure to address this problem

will make it exceedingly difficult for any system of school funding to comply with

the Thorough and Efficient Clause, since the inherent inequities will remain.

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(2) The basic aid formula has structural deficiencies and may not in fact

reflect the amount required per pupil to provide an adequate education. The phase-

in aspect of the basic aid amount should be reconsidered.

(3) Continuing attention must be given to the mechanism implemented to

fund the construction of new school facilities and to repair older, decaying school

buildings, until the task is complete. Additionally, requiring local districts to pass

levies as a prerequisite for obtaining state funding should be reviewed.

(4) The School Solvency Assistance Fund established by H.B. 412 must be

reevaluated, so that funds are available and used only in case of extreme

emergencies and not for unfunded mandates or day-to-day expenses.

(5) The unfunded mandates in H.B. 412 and S.B. 55, which will necessitate

either increased reliance on local property taxes or additional borrowing from the

School Solvency Assistance Fund, must be addressed and immediately funded.

(6) The phenomenon known as phantom revenue has not been eliminated

and may increase as a consequence of H.B. 650.

(7) Strict, statewide academic guidelines must be developed and rigorously

followed throughout all of Ohio’s public school districts.

{¶ 140} The foregoing are the major areas that necessitate further attention

and review by all parties involved in Ohio’s educational system. We hope that

partisan views will be put aside and that everyone will work cooperatively for

Ohio’s children, as they are our future. The General Assembly, in particular, must

look beyond the political considerations involved, and must provide Ohio’s school

children with a thorough and efficient system of common schools as the Ohio

Constitution requires.

{¶ 141} As the Achieve, Inc. report noted, “this may be a propitious

moment to forge a new social compact between Ohio’s government policymakers

and its education community. The terms of the compact would be relatively simple

and straightforward: governmental leaders will commit to fix the funding system

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and provide adequate time and resources to enable educators to develop the skills

they need to teach to higher standards, in return for which the education community

will agree to be held accountable for making annual, measurable progress in helping

virtually all young people meet higher academic standards.

“***

“ * * * Now is the time for Ohio’s governmental, educational, and corporate

leaders to forge a new agreement to enable local communities and their schools to

move forward to realize those goals.”

{¶ 142} Governor Taft is providing the leadership to establish this compact,

and now is the time for the General Assembly, educators, corporate leaders, and

parents to join his efforts. As a result of this combined effort, Ohio can succeed in

providing all young people with a thorough and efficient system of public schools

pursuant to Section 2, Article VI of the Ohio Constitution.

{¶ 143} We affirm those portions of the trial court decision that are

consistent with the foregoing opinion. We decline to appoint a special master to

oversee the state’s further efforts to comply with Section 2, Article VI. This court

will maintain continuing jurisdiction. The matter is continued to June 15, 2001, at

which time this court will establish a briefing schedule.

So ordered.

DOUGLAS, F.E. SWEENEY and PFEIFER, JJ., concur.

DOUGLAS and F.E. SWEENEY, JJ., concur separately.

PFEIFER, J., concurs separately.

MOYER, C.J., COOK and LUNDBERG STRATTON, JJ., dissent.

COOK, J., separately dissents.

__________________

DOUGLAS, J., concurring.

{¶ 144} On March 24, 1997, this court released the opinion in DeRolph v.

State (1997), 78 Ohio St.3d 193, 677 N.E.2d 733 (“DeRolph I”). The opinion

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included a strong dissent severely castigating the majority for violating the

separation of powers doctrine and for deciding a nonjusticiable question. Id. at

264-283, 677 N.E.2d at 780-795. Joining this chorus were the then Governor of

Ohio, the leaders and some other members of the General Assembly, several large

Ohio newspapers through their reporting and editorial facilities, and a few

representatives of business interests. The message was always the same—there is

a crazy majority in the Ohio Supreme Court and, with the school-funding decision,

Armageddon is at hand. Notwithstanding all of that clamor and criticism,3 the

DeRolph I majority remained silent even though the temptation to respond was

great. It is now fair to say that, three years later, the world has not come to an end,

the republic has survived, and there is light at the end of the tunnel.

{¶ 145} Admittedly, the tunnel is long, the road remains full of potholes,

and the ultimate success of the journey is still in doubt, but we at least are on our

way. I believe that any fair-minded observer of the controversy would have to

admit that sans DeRolph I we would not have progressed to the point at which we

find ourselves today. Due at least in part to DeRolph I, thousands of Ohio’s young

citizens attending schools, teachers, principals, superintendents, and other

administrators are better off educationally than they were three years ago. Of

course, as with every contested issue, some will say that not enough has been done

and others will say that we have now reached the golden gates and no further action

is needed. All we can do, as Justice Resnick has so well done, is to take the facts

as they are presented to us, apply the law, and then reach a decision that

accommodates without capitulation, sheds light rather than heat, and constructively

builds rather than destroys. Unfortunately, not everyone joins us in this quest on

behalf of Ohio’s education system.

3. Canon 3(B)(2) of the Code of Judicial Conduct states that “[a] judge shall be faithful to the law

and maintain professional competence in it. A judge shall not be swayed by partisan interests, public

clamor, or fear of criticism.”

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{¶ 146} The dissenters herein, once again, criticize the majority for doing

anything—then criticize us for not doing enough. They can’t have it both ways,

and the majority opinion, recognizing this dichotomy, strikes a balance by, in

specifics, respectfully pointing out the constitutional shortcomings of the General

Assembly’s remedial efforts while refraining from mandating a particular course of

action. In doing so the majority further respects and recognizes that it is the right

and prerogative, as well as the sworn sacred duty, of the members of the General

Assembly to put in place the nuts and bolts of our state’s educational system. In

this regard, many of the proposals of the Ohio Coalition for Equity and Adequacy

of School Funding, such as “A Call To Build: Appropriate 21st Century School

Facilities” (Apr. 2000), while well-documented and well-researched, are specifics

(details) to be debated and decided by the General Assembly rather than this court.

Our sole mission is to see to it that the Constitution is honored and that Section 2,

Article VI of the Ohio Constitution is being obeyed.4 When it has been, we should

say so. When it has not—then it is our duty to say that too.

{¶ 147} Central to all of this is the role of Governor Bob Taft. As we have

seen in other states,5 Governors can be and are the players, more than any other

persons or institutions, with the standing and clout to shape the direction of

policymaking in education. The only caveat is that a Governor must choose to lead.

Ours has! The attention he and his staff have devoted to the school facilities

4. It is well to repeat just what this section of the Constitution provides—as opposed to what a

number of pundits have tried to make it say: “The general assembly shall make such provisions, by

taxation, or otherwise, as, with the income arising from the school trust fund, will secure a thorough

and efficient system of common schools throughout the State.” (Emphasis added.)

5. To date the Supreme Courts of sixteen of our sister states have found their state’s school funding

system unconstitutional, interpreting language in their Constitutions that is, in many, exactly or

remarkably like the words used in our Ohio Constitution. See DeRolph I, 78 Ohio St.3d at 204, 677

N.E.2d at 741 (naming fourteen states); see, also, Claremont School Dist. v. Governor (1997), 142

N.H. 462, 703 A.2d 1353; Opinion of the Justices No. 338 (Ala.1993), 624 So.2d 107. In addition,

twelve other states have school funding litigation pending at some level. Viewing these statistics,

it would seem that our action in DeRolph I was not such an aberration after all.

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problem has been extraordinary. He has chosen to immerse himself personally in

the never-ending death struggle that generally comes before passage of anything

worthwhile in education. He has lent and continues to lend credence to the age-old

adage that Governors “usually get what they want.” It is not unconstitutional to say

that with his leadership “all things are possible.”

{¶ 148} It is also fair to say that with the notable exception of the dissenters

herein, a number of the severest critics of the majority decision in DeRolph I have

responsibly moved to help decision-makers reach consensus on many of the

divisive issues. Significant, among others, was the lead editorial in The Columbus

Dispatch of Thursday, April 13, 2000, titled “Classroom Math.” The first

paragraph said that “Gov. Bob Taft’s proposal to spend $1 billion in the next two

years to fix or replace deteriorating school buildings in the state deserves full

support in the General Assembly.” The last paragraph said, “Clearly, Ohio’s

leaders have taken the court’s ruling seriously and have reoriented state priorities

to put education needs at the top of the list.” Such pronouncements have not gone

unnoticed or unappreciated.

{¶ 149} While much more could be said, in writing now I confine myself to

two specific matters. I believe that these matters lie at the heart of the next phase

of the continued quest for a constitutional funding system that strives, at the very

least, for an equal opportunity for all of Ohio’s school-age students to receive a

basic “thorough and efficient” education.

I

Am. Sub. H.B. No. 650 (“H.B. 650”)

Am. Sub. H.B. No. 770 (“H.B. 770”)

{¶ 150} As so well set out by Justice Resnick in the lead opinion, H.B. 650,

as supplemented by H.B. 770, is the cornerstone of the General Assembly’s school-

funding-formula remedy. While the lead opinion properly points out a number of

remaining concerns with this legislative remedy, I also join the majority opinion

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because I, somewhat differently, believe that the General Assembly has made a

good-faith effort at progress and that we should give its handiwork time to prove

itself worthy and, if the effort falls short, then there is time enough for the Governor

and the legislature to fine-tune, tinker with, and/or scrap what has been done in their

(and our) incessant search to do what is constitutional, necessary, and right.

{¶ 151} For me the heart of H.B. 650 is the “caps” formula. The General

Assembly had to balance the complexities of urban districts, poor districts, wealthy

districts, and districts with growing and declining enrollment. Just as with shoes,

no one size fits all. Thus the initial nine-and-one-half-percent and eleven-percent

caps for the first effective year and the ten-percent and twelve-percent caps for the

next year were necessary both fiscally and logistically. While the caps appear to

help some districts and hurt some districts, a real start has been made and, for me,

the redeeming feature is that all caps roll off in the year 2002 when the formula will

take full effect. At that time, if I understand the formula, major increases in state-

funded support will then take effect in a number of our state’s neediest school

districts.

{¶ 152} Is that soon enough? Will the level of support be adequate? Can

those districts in trouble survive the wait? Districts in the greatest need, and there

are more than one hundred, will answer “no.” Those persons in charge of making

policy and finding the finances to make progress will answer “yes.” The majority

of this court answers “maybe,” and therein lies the reasoning for the one-year grace

period provided in the lead opinion.

{¶ 153} Obviously, this counsels patience. I recognize that Ludwig Börne

(1786-1837), a German political author and satirist, had a point when he once said,

“Not through patience, but through impatience, are peoples liberated.” The

International Dictionary of Thoughts (1969) 543. However, Edmund Burke (1729-

1797), an eighteenth-century British statesman, political writer, and orator, allowed

that “[o]ur patience will achieve more than our force.” Id. With patience acorns

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become oak trees; aggregate, sand, and cement become concrete; and revolutions

spawn democracies. Force, on the other hand, even if available, is to be eschewed

as only compounding an already difficult problem. John Milton (1608-1674), the

English poet, was instructive when he counseled that “[w]ho overcomes by force,

hath overcome but half his foe.” Id. at 298.

{¶ 154} While the education revolution, in which we are all engaged, seems

to be endless, it is well to remember the progress that has been made in just the

three short years since DeRolph I, especially when compared with the twenty-one-

year period (and before) since this court issued its decision in Cincinnati School

Dist. Bd. of Edn. v. Walter (1979), 58 Ohio St.2d 368, 12 O.O.3d 327, 390 N.E.2d

813.

{¶ 155} Is there still work to be done? Yes—substantial—which brings me

to my second issue.

II

Overreliance on Local Property Taxes

{¶ 156} In Part III(E) of the majority opinion, Justice Resnick, ably and

without flourish, lays out the brutal facts. Those facts and the conclusions to which

they lead are inescapable. When the foundation of a structure is weak and is built

on shifting sand, the structure is doomed to fall. While well-meaning at its

inception and effectively marketed (by those who would avoid their responsibility)

under the rubric of local control, heavy reliance on local property taxes for school

funding is the inherent weakness in the foundation and, inevitably, the structure

will continue to fall—piece by piece—until this difficult issue is met, at least in

part, head-on.

{¶ 157} None would dispute the importance of education to the very

existence of democracy. Scholarly commentators at home and abroad (Alexis de

Tocqueville and Baron Acton, to name two) often made the point that our education

system in America, open to all regardless of rank or residence in our society,

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favorably set us apart from life in European societies. How then has our system, at

one time so widely acclaimed, grown progressively weaker? While it is contended

that there are other reasons such as lack of accountability, waste, control by others

than school boards and administrators, family failures and discipline, it must also

be conceded, I believe, by any fair-minded observer that funding, and the method

of funding, also factors large into the equation. This should not surprise us, as the

problem is not of recent vintage.

{¶ 158} It is interesting to note that from the beginning of our republic, the

method for funding public education did not support the goal of having an equal

and open educational opportunity for all. In 1777, when Thomas Jefferson was

Governor of Virginia, he shepherded through the House of Burgesses a bill whose

purpose was “For the Greater Diffusion of Knowledge.” Unfortunately, and it is a

familiar story in many of our United States, the Virginia legislature did not provide

an adequate funding structure to support the legislation Jefferson had caused to be

enacted. Sometime later, in the 1820s and just before Jefferson’s death, he

recognized the weak and faulty foundation of educational funding when he

lamented the actions of his beloved state by expressing his disappointment that the

legislature had not provided commonwealth-wide taxes to support education but,

instead, had provided an educational funding system based on local, town-by-town

taxation. Jefferson said that such a system would never work because the wealthier

towns in the commonwealth would never support the education of those children

who found themselves in the poorer towns of the commonwealth. That was one

hundred eighty years ago, and, as in so many other venues where we hark back to

the revered genius of Monticello, we again find him right. This is where we have

found ourselves for a long time in our state, and all that has happened is that the

problem has grown worse. This is where we found ourselves at the time of Walter

(1979) and DeRolph I (1997). And this is where we still find ourselves today.

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{¶ 159} For whatever reason, the General Assembly has chosen to ignore

this basic fundamental problem and our request that something be done to reverse

the course of heavy reliance on local property taxes. In fact, since DeRolph I, the

problem has been exacerbated. Local share of total funding vis-à-vis state share of

total funding has increased since 1997. All the while, since our decision in March

1997, not only was the local tax issue ignored, but also the General Assembly has

given tax refunds of $1,257,474,801 to Ohio citizens that, I would venture to say,

most Ohioans (including me) didn’t even realize we were receiving. If even one-

half of that sum had been applied to the total $6,000,000,000 of local real estate

and personal property taxes paid to support our common schools, a one-time

reduction of ten percent of those taxes could have been realized with the promise

that we are moving in the right direction (a dollar-for-dollar shift to sales and

income taxes) and that more effort would follow. Instead, we see yet today that

there is talk in the General Assembly of yet another tax refund of millions and

millions of dollars with no consideration being given to the fundamental problem

that causes the lack of equal protection (opportunity) for all of Ohio’s elementary

and secondary students.

{¶ 160} In March of this year, one hundred sixty-one school districts in

Ohio had to seek additional local funds from their voters to operate, repair, and/or

build their schools. The passage rate was sixty-eight percent. Thus it is clear that

the citizens of Ohio are doing and are prepared to do their part. Notwithstanding

this, an overwhelming majority of these good citizens have asked this court for our

help because others have been unresponsive. Well over five hundred of Ohio’s six

hundred eleven school districts are party plaintiffs in this suit. The response of the

dissenters herein, who so severely take us to task for having a different view than

they do, is, “Just stay out of it.”

{¶ 161} In 1996, at the Jesse Fell Lecture Series at Illinois State University,

Distinguished Professor Emeritus George Alan Karnes Wallis Hickrod said that

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“[w]e have a society that is increasingly unequal, we have schools that are

increasingly unequal, and if we do not do something about it we will end up with

an increasingly well educated ‘elite’ and an increasingly poorly educated

‘underclass.’ No responsible observer that I know expects democracy to do well

under those conditions.” Our mission statement cannot be better stated. The cause

of educational opportunity is a noble one. We should not shrink from our duty. In

order to meet the dictates of Section 2, Article VI of the Ohio Constitution, the

General Assembly must, as Governor Engler and the legislature did in the state of

Michigan, actively pursue a solution to the continued heavy overreliance on local

property taxes for school funding. Unless and until that happens, it is difficult to

see how any legislative response would make this case go away—a hope that all

involved fondly cherish.

III

{¶ 162} It is easy to criticize. It is far more difficult to be a problem-solver

than a problem maker. The majority herein prefers to be problem-solvers by

helping the Governor and General Assembly solve a problem that, by any objective

appraisal and appraiser, has existed for far too long. The dissenters would continue

the status quo by simply saying “Let George do it.”6 Well, my valued colleagues,

“George” hasn’t done it! It is obvious that “George” was nowhere to be found until

our decision in DeRolph I. Now the dissenters would have us say “all is well” when

even they know that would be calumny of the first order.

{¶ 163} The prophets of gloom and doom have now declared that they were

right. The court should just have ignored the plaintiffs and their hard evidence and

given only a wink to our Constitution. They warned us, they say, thus attempting

to bring about their own self-fulfilling prophecy. But where would the kids and

6. “George” is generic in nature and makes reference to no particular individual, dead or alive.

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school system of this state be today if the dissenters in DeRolph I had prevailed?

Just to ask the question answers it. I, very respectfully, concur.

F.E. SWEENEY, J., concurs in the foregoing concurring opinion.

__________________

PFEIFER, J., concurring.

{¶ 164} Two very different constitutional interpretations and consequential

courses of action are again laid out by the members of this court.

{¶ 165} There is, of course, the simple and efficient alternative

constitutional interpretation offered by Chief Justice Moyer and Justices Cook and

Lundberg Stratton. Despite the state’s failure ever to advance this theory, my

dissenting colleagues continue to argue that Section 2, Article VI of the Ohio

Constitution has no discernible meaning, or if it has meaning, it is up to the General

Assembly rather than this court to interpret its meaning and decide upon

compliance.

{¶ 166} In doing so, the dissenters pay no heed to Cincinnati City School

Dist. Bd. of Edn. v. Walter (1979), 58 Ohio St.2d 368, 384, 12 O.O.3d 327, 336,

390 N.E.2d 813, 824, where this court stated that “the issue concerning legislation

passed by the General Assembly pursuant to Section 2, Article VI of the Ohio

Constitution presents a justiciable controversy.” In the dissenters’ view, this court

is unable to interpret the phrase “thorough and efficient” and should therefore not

even try. But, see, id., 58 Ohio St.2d at 383, 12 O.O.3d at 336, 390 N.E.2d at 823

(“We wish to state clearly at the outset that this court has the authority, and indeed

the duty, to review legislation to determine its constitutionality under the

Constitution of Ohio and to declare statutes inoperative.”). Instead, my dissenting

colleagues would essentially throw up their hands in dismay at the difficulty of

interpreting two rather common words: “thorough” and “efficient” are, after all,

used every day by both common and uncommon people.

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{¶ 167} Their approach strikes at the core of constitutional law, that courts

are the final arbiters of what the Constitution means, which was decided long ago.

See Marbury v. Madison (1803), 5 U.S. (1 Cranch) 137, 2 L.Ed. 60. See, also,

Walter, 58 Ohio St.2d at 383, 12 O.O.3d at 336, 390 N.E.2d at 823 (“The doctrine

of judicial review is so well established that it is beyond cavil.”).

{¶ 168} They quote one college professor, a legal encyclopedia, and a

second-year law student. They do not, however, mention Marbury or any of the

hundreds, perhaps thousands, of cases decided in this country, in which judges have

declared federal or state legislation to be unconstitutional. They essentially state

that the Thorough and Efficient Clause is little more than an aspiration, even if it is

part of Ohio’s Constitution.

{¶ 169} It is a very tidy solution—simple, efficient and inexpensive.

Unfortunately, it would turn two hundred years of constitutional jurisprudence,

dating back to Marbury v. Madison, on its head. It also would allow the General

Assembly to continue to disregard the section of the Constitution that mandates a

“thorough and efficient” education system. See Miller v. Korns (1923), 107 Ohio

St. 287, 297-298, 140 N.E. 773, 776.

{¶ 170} Despite the protestations of my dissenting colleagues and some

members of the General Assembly, this court’s decision in DeRolph v. State (1997),

78 Ohio St.3d 193, 677 N.E.2d 733, is binding legal authority in this state.

Subsequent to the announcement of this court’s March 24, 1997 DeRolph decision,

the General Assembly has slowly embarked on a course of action that addressed

some well-documented deficiencies in Ohio’s system of public education, but only

marginally confronted the constitutional shortcomings that are at the core of this

case. Specific and detailed guidance is apparently required, and now possibly is

even desired by the General Assembly.

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{¶ 171} “The general assembly shall make such provisions * * * as * * *

will secure a thorough and efficient system of common schools throughout the

state.” Section 2, Article VI, Constitution of the State of Ohio.

{¶ 172} The first step toward constitutional compliance is monumental. It

requires acceptance of the fact that the simple declaration of Section 2 was intended

by the framers to, and therefore does, require a specific and ongoing duty to act.

Presumably, a respect for the Ohio Constitution and for this court’s duty to interpret

it will help foster that realization.

{¶ 173} The second step, setting statewide minimum educational

requirements, while subject to continued revision, is seemingly in place and not the

subject of dispute in this case. The State Department of Education and the General

Assembly have determined what constitutes a basic education. This court has not

been a part of that discussion. The reason that DeRolph is here is not because the

state does not know what it takes to provide a basic education, but because some

children are not receiving what the state has determined that they need. For

example, setting minimum requirements for the availability of basic modern

textbooks and computers does not meet the mandate of Section 2, Article VI when

those standards are simply not met for many school children. It is the duty of the

state to ensure actual compliance with its own standards.

{¶ 174} Assessing the cost of those basic requirements is where the state

continues to stumble. Compliance with minimum requirements would necessarily

entail a certain threshold minimum cost. Here the state did understand this court in

DeRolph and undertook the task of determining minimum cost. However, new

programming and other new mandated local school expenditures were not included

in the calculation. The incomplete minimum cost in dollar value, having been

determined, was then fractionally reduced and then complete compliance was

deferred for several years. Finally, no provision was made to update this financial

cost measurement for each biannual budget.

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{¶ 175} The bedrock constitutional challenge undertaken in this case

focuses on the horrible funding inequities that persist between school districts in

Ohio due to the state’s heavy reliance on local property taxes in formulating the

school foundation formula. That was the constitutional tripwire in DeRolph I and

could not have been set forth more forcefully by this court. It is in conquering this

colossus that the General Assembly decided to polish up the existing formula,

declare victory, and call in their legal team without attempting the climb.

{¶ 176} Local property taxes raise such a mountain of money that it is not

realistic to expect total replacement. That is not what the Constitution requires, nor

was it suggested by this court. What is required is an immediate good faith effort

to comply with the Constitution.

{¶ 177} Getting there is fourth grade math. First, determine an honest per-

pupil current minimum operating cost. Next, determine the minimum property tax

millage rate that every school district in Ohio will be expected to collect in support

of the minimum operating cost. Finally, fill the gaps by adopting a minimum state

school foundation formula that lifts every school district and school student in this

state to the minimum dollar target beginning this next school year. Those simple

steps, properly completed, will bring the state to the threshold of constitutional

compliance. It is not a very high place.

{¶ 178} There will still be room for a supplemental education budget that

allows legislators to provide, on a rational basis, extra state funds for all the special

needs of children in circumstances that merit targeted funding.

{¶ 179} Tracking in tandem with these school-funding issues are the

considerable school facilities deficiencies. While the school building problems are

much easier to visualize, they are somewhat harder to fit into a mold of

constitutional compliance or noncompliance. Unfortunately, school facilities have

become so desperate that Ohio has been ranked at or near the bottom of the nation

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by outside observers of these conditions. It is the shame of low rankings rather than

the hammer of this litigation that has prompted legislative action.

{¶ 180} Is the state’s commitment large enough, fast enough, or certain

enough? Certainty is a constitutional impossibility, given a constitutionally

mandated two-year budget cycle. The dollar amount is large, but so is the

documented need. Section 2, Article VI would appear to be met by a plan that

commits the state to a timely path of remediation and includes a method for constant

review of the need and for acceleration of assistance when warranted.

{¶ 181} This case is not about high standards. It is about a constitutionally

required foundation of basic educational opportunity. The difficulty lies not in

building that foundation, but in sustaining a democracy without it.

__________________

MOYER, C.J., dissenting.

{¶ 182} The sole issue now before us, as it was in DeRolph v. State (1997), 78

Ohio St.3d 193, 677 N.E.2d 733 (“DeRolph I”), is whether the Ohio General

Assembly has violated the words and intent of the Ohio Constitution that require it to

“make such provisions, by taxation or otherwise, as * * * will secure a thorough and

efficient system of common schools throughout the State.” Section 2, Article VI of

the Ohio Constitution. In DeRolph I a majority of this court held that Ohio school-

financing laws then in place did not comply with this constitutional provision.

{¶ 183} I, along with Justices Cook and Lundberg Stratton, dissented,

recognizing that the General Assembly had in fact established a statewide school

system in which schools were open, teachers were teaching, buses were running,

and all Ohio children had available to them an opportunity to learn. Our dissent

was based on our conviction that resolution of issues of the level and method of

school funding is dependent upon judgments regarding the quality of education to

be provided by the state. It was further grounded on our firm belief that

constitutional history, precedent, and logic warrant the conclusion that those

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qualitative judgments should be committed to the will of the people as expressed in

the election of representatives to the General Assembly and local school boards and

in the determination of voted taxation issues to support the schools. In short, the

determination of what constitutes minimum levels of educational opportunity to be

provided to Ohio’s children is committed by the Ohio Constitution to legitimate

policy makers—not the courts, whose proper role is interpretation and application

of law.

{¶ 184} The wide divergence of opinion between the majority and the

minority members of this court as to proper interpretation of the Thorough and

Efficient Clause, as manifested in the various separate opinions in DeRolph I, remains.

I continue to believe that decisions regarding the level of educational quality to be

made available to Ohio school children are dependent upon policy decisions—

political, budgetary, and value judgments—that require a balancing of interests that is

not appropriately struck in the Supreme Court of Ohio. “The judicial branch is simply

neither equipped nor empowered to make these kinds of decisions.” DeRolph I, 78

Ohio St.3d at 269, 677 N.E.2d at 785-786 (Moyer, C.J., dissenting).

{¶ 185} Today the majority, having examined the current statutory school-

funding system, acknowledges that significant steps have been taken since our

decision in DeRolph I by the General Assembly, as well as by two Ohio Governors,

to improve public elementary and secondary education in our state. The majority

summarizes a multitude of initiatives adopted by the executive and legislative

branches in recent years to improve school quality in Ohio, and specifically recognizes

that the General Assembly has taken steps to “formulate a viable plan to fund the

construction of new school facilities and to repair” physical deficiencies in Ohio

school buildings. The majority recognizes the complexity of the educational system,

and describes the task of reforming that system as one of “unparalleled magnitude.”

{¶ 186} What the majority fails to fully recount is the magnitude of the state’s

monetary commitment to education. Pursuant to the Classroom Facilities Act, from

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1990 to May 1998, twenty-three new construction projects had been completed and

fourteen more were under construction. The General Assembly has earmarked $1.6

billion for the School Facilities Commission for classroom facilities improvements

since DeRolph I. Funding for technology improvements in the schools totaled $256

million at the time of trial before the common pleas court in 1998, 1997 Am.Sub.S.B.

No. 215, Section 69, with additional funding of $196 million appropriated in 1999,

Am.Sub.H.B. No. 282, Section 11. The General Assembly has provided a $50 million

textbook subsidy for all but the wealthiest school districts, 1997 Am.Sub.H.B. No.

215, Sections 50 and 50.16. Since fiscal year 1991, the Department of Education has

received the largest increase in state dollars of any agency, totaling approximately

$1.7 billion, and receives more state money than any other agency or department in

the state.

{¶ 187} Nevertheless, although the majority acknowledges progress in

achieving the criteria set in DeRolph I, including significant initiatives and

developments, it concludes that “a great deal of work has yet to be done before Ohio

can be said to have a constitutional thorough and efficient system of public schools.”

{¶ 188} The majority retains jurisdiction of this case for at least another year,

after which it will again scrutinize the public school statutory framework in light of

its own unpredictable and indefinite concepts of educational thoroughness and

efficiency. In the interim, the General Assembly and the executive branch of

government are asked to further improve the system, in accordance with direction

created by the majority which remains vague and generalized. In so doing, and while

recognizing that the coequal executive and legislative branches of government have

acted in good faith to comply with DeRolph I, the majority in effect claims veto power

over policy determinations made by the General Assembly, thereby reserving to itself

ultimate authority over public educational policy within the state.

{¶ 189} In DeRolph I, our joint dissent expressed the view that the majority

had failed to provide the General Assembly with sufficient guidance for creating a

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constitutional school-financing system and noted that “[a]spirational phrases urging

that state financing of educational systems enable citizens to ‘fully develop their

human potential,’ and afford ‘high quality educational opportunities’ are no more

amenable to judicial interpretation or enforcement than is the term ‘thorough and

efficient.’ ” 78 Ohio St.3d at 268-269, 677 N.E.2d at 785. This criticism applies to

today’s majority opinion as well. The majority still has not clearly told the General

Assembly what “thorough and efficient” means, or what “overreliance” on property

tax is, or what would constitute the kind of educational opportunity it believes the

Ohio Constitution guarantees to every Ohio child. Instead, the majority today tells the

General Assembly once again to go back to the drawing board, while not describing

in a meaningful way what the final design must look like.

{¶ 190} Today the majority elevates two statements from Miller v. Korns

(1923), 107 Ohio St. 287, 140 N.E. 773, to syllabus law. Paragraph one of the syllabus

provides that the General Assembly must secure not merely a system of common

schools but rather a thorough and efficient system of common schools. The second

paragraph of today’s syllabus provides that the attainment of efficiency and

thoroughness in that system is a statewide purpose, that is, efficiency and

thoroughness throughout the state are goals toward which the General Assembly

should strive. I do not object to adoption of these principles, although I remain

committed to the proposition that determination of whether Ohio’s public school

system is thorough and efficient is committed by the Constitution to the General

Assembly itself.

{¶ 191} The third paragraph of the syllabus constitutes an attempt to define

the phrases “thorough system” and “efficient system.” The majority defines a

thorough system as one in which each and every school district has “enough” funds

to operate, and an efficient system as one in which each and every school district has

“ample” teachers and equipment, “sufficient for all students to be afforded an

educational opportunity,” as well as buildings compliant with building and fire codes.

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However, in attempting to clarify the ambiguous phrase “thorough and efficient,” the

majority merely substitutes additional ambiguous and subjective criteria. Whether a

district has “enough” funds, or an “ample” number of teachers, is in the eye of the

beholder.

{¶ 192} Moreover, I take issue with the majority’s conclusion that an efficient

system is dependent upon “each and every school district” in the state meeting the

criteria. The majority thereby shifts its focus from analysis of the educational system

to case-by-case analysis of individual school districts, and presumably individual

schools themselves. One can only infer that the majority intends to retain jurisdiction

of this case until it finds every school in the state to be thorough and efficient, even

though the Constitution requires, by its own terms, only a thorough and efficient

system—not a system in which every school is thorough and efficient.

{¶ 193} This inference is reinforced by the majority’s recitation of instances

of deficiencies in individual schools, e.g., schools with mold-infested bathrooms, or

schools plagued by sewage problems. But problems in individual schools do not in

and of themselves demonstrate a failure of the statewide system of common schools

as a whole. For instance, William L. Phillis, executive director of the Ohio Coalition

for Equity and Adequacy of School Funding, testified at trial that he walked through

a “stream of water” and smelled the odor of sewage at Park Street Middle School, in

the South-Western City School District, where a section of a locker room in the

school’s basement had to be sealed off due to a sewage backup. However, in

November 1998, voters in the South-Western City School District approved a 4.92-

mill bond issue to build seven new schools and improve others. See South-Western

City Schools web site, http://www.swcs.k12.oh.us/construction.htm. Park Street

Middle School is to be demolished following the scheduled opening in 2001 of a new

intermediate school, now under construction. See id. at

http://www.swcs.k12.oh.us/psms.htm. The statewide system of common schools in

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effect in 1998 thus appears to have been adequate to correct the problem described by

Phillis’s anecdotal evidence.

{¶ 194} One need not have served on a board of education to know that the

condition of the physical facilities, the quality of school learning materials, the salaries

of teachers and employees, and the efficiency of school administrators are determined,

in large measure, by decisions made in each local school district. The majority

opinion takes no account of that significant reality.

{¶ 195} Nor do I agree that the mandate of the Constitution to the General

Assembly to establish a thorough and efficient system of common schools is

equivalent to a mandate that the General Assembly establish a state-funded system of

common schools. Even accepting the proposition that Ohio’s system of public

education is to be a “statewide system,” I disagree with the majority’s statement that

the “state is responsible for funding an adequate education for all primary and

secondary students who attend public schools.” (Emphasis added.) What words of

the Constitution preclude a system in which local school districts are held even

partially responsible for funding a basic education at local schools? An overriding

state obligation may be desirable, but the issue before us is the interpretation of a

constitutional mandate, not the desirability of a particular legislative policy.

{¶ 196} Furthermore, such a construction is totally inconsistent with the

history of education in Ohio as well as the circumstances surrounding public

education at the time the Thorough and Efficient Clause was adopted. See DeRolph

I, 78 Ohio St.3d at 280, 677 N.E.2d at 793 (Moyer, C.J., dissenting) (“While it is true

that the framers of our Education Clause envisioned educational opportunity for all,

the framers contemporaneously acknowledged and approved of a statewide

educational system in which local districts were primarily responsible for providing

educational opportunity to their children. When the Education Clause was adopted,

determination of adequacy was dependent upon the resources available at the local

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level and the amount local residents were willing to spend on educating local

children.”).

{¶ 197} The majority includes a list of seven major areas that it asks the

General Assembly to scrutinize, and presumably change, before the majority will

relinquish jurisdiction of this case. However, the list raises questions with no answers.

{¶ 198} For instance, the majority finds fault with continued “reliance” on

local property taxes as a “primary” means to fund Ohio’s schools. Each member of

this court may hold an opinion regarding the appropriateness of the real property tax

versus other more uniform or statewide forms of taxation, but that has never been the

test for determining the constitutionality of statutory law. The majority notes that

statewide, state funding constitutes forty-four percent of the total, excluding federal

funds, versus fifty-six percent from local funding, and implicitly finds that proportion

to be constitutionally deficient as a primary reliance or an overreliance on local

property tax, even though the majority has already conceded that property tax may be

continued as a legitimate source of school funding. DeRolph v. State (1997), 78 Ohio

St.3d 419, 419-421, 678 N.E.2d 886, 887.

{¶ 199} Today the majority says the General Assembly has not gone far

enough in increasing the proportion of state funding to local funding, noting that “this

aspect of the former system [overreliance on local property tax] persists in the state’s

current funding plan, wholly unchanged.” (Emphasis sic.) It makes this statement

despite the fact that the poorest Ohio school districts now receive roughly ninety

percent of new construction costs in state aid, with a ten-percent local contribution.

“Reliance,” however, remains undefined, let alone “overreliance.” If the percentage

of local to state funding were inverted would that be sufficient, or is the majority

seeking only a fifty-one-percent reliance on state funds? In stating that the General

Assembly must establish a state-funded system of common schools, the majority

hints, without expressly saying, that it intends to retain jurisdiction until the property

tax component of school funding is significantly changed, or eliminated, despite its

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earlier ruling that local property taxes could be part of a constitutionally acceptable

revised funding plan. DeRolph v. State, 78 Ohio St.3d at 419, 678 N.E.2d at 887. But

ultimately one can only guess as to the meaning of these terms.

{¶ 200} Moreover, reliance on property tax has very little, if anything, to do

with thoroughness and efficiency. The majority explicitly observes that the flaw in

dependence on local property tax is the creation of “vast disparities among Ohio’s six

hundred eleven public school districts,” noting that it puts “property-poor districts at

a disadvantage.” But these are statements directed not to the adequacy of funding of

the public schools, but rather to the equity of the system. Indeed, the majority opinion

more than once suggests that the fundamental problem with property tax funding is

that it creates inequities. Yet this court has previously expressly rejected the

contention that the Ohio Constitution mandates equal educational opportunity

throughout the state. DeRolph I, 78 Ohio St.3d at 211, 677 N.E.2d at 746

This text is long and has been trimmed here. Open the source document for the complete record.