Lujan v. Colorado State Board of Education

DUBOFSKY, Justice,

dissenting:

I write separately to' set out in some detail my conclusion that the state limitations on funding of school district capital . expenditures violate equal protection of the laws and the requirement of Colo.Const. Art. IX, § 2 that the state provide a “thorough and uniform system of free public schools.”

Capital expenditures are large-scale expenses of school districts not included in day-to-day operating costs and encompass such one-time expenditures as construction of new schools, alterations and improvements to existing school structures, and the purchase of classroom furniture and school buses. School districts finance capital expenditures principally in two ways. One is through a special tax levy, the funds from which are placed in a capital reserve fund authorized under section 22-45-103(l)(c), C.R.S.1973. Under section 22 — 40-102(4), C.R.S.1973, this special levy may not exceed four mills in any year. The other method of financing capital outlays is through bonded indebtedness. Under section 22-42-104(l)(a), C.R.S.1973, the bonded indebtedness of each school district may not exceed 20% of the value of taxable property in that district. Under section 22-42-102(1), C.R.S.1973, a school bond must be approved by a majority of voters in a school district. Bonds are redeemed by another special levy, the proceeds of which are placed in a bond redemption fund. The bond redemption and capital reserve funds are funded solely through local levies. The state provides no funding to local school districts for capital outlays.

The district court found and the majority recognizes that high-wealth districts can raise more revenue from levying the statutory maximum of four mills than low-wealth districts can. Similarly, higher taxable property value enables high-wealth districts to raise more money for capital improvements without exceeding the 20% indebtedness ceiling. The majority finds that the capital outlay financing scheme, including the four-mill levy limitation and the 20% debt ceiling, does not violate equal protection because the components of the scheme are rationally related to the legitimate state purpose of “controlling the public debt.” The majority also finds that the scheme does not violate Colo.Const. Art. IX, § 2. I disagree. Because the levy and debt *1029 limitations effectively prevent poorer districts from raising adequate funds for capital expenditures and because the majority enunciates no legitimate state purpose furthered by the limitations, I think they violate equal protection guarantees. In addition, I conclude that the state’s failure to provide any mechanism for mitigating the vast disparities in school districts’ abilities to finance capital expenditures, combined with the funding limitations, violates the requirement of Article IX, § 2 of the Colorado Constitution that the state provide a thorough and uniform system of education.

The majority determines that all aspects of school financing at issue in this case need only bear some rational relationship to a legitimate state interest. According to the majority, this Court is not justified in employing some level of enhanced scrutiny in evaluating any part of the state school financing scheme, because none of its aspects either abridge a fundamental right or classify individuals on the basis of a suspect criterion. In determining that the school financing laws do not impose an unconstitutional classification on the basis of wealth despite the admitted variations between high- and low-wealth school district expenditures per pupil, the majority relies on the U. S. Supreme Court’s analysis in San Antonio Independent School District v. Rodriguez, 411 U.S. 1 , 93 S.Ct. 1278 , 36 L.Ed.2d 16 (1973) (Rodriguez). In Rodriguez , the Supreme Court acknowledged that in prior decisions it had applied strict scrutiny in reviewing wealth-based classifications, but only in those cases where, “[bjecause of their impecunity, members of the affected group were completely unable to pay for some desired benefit, and as a consequence, they sustained an absolute deprivation of a meaningful opportunity to enjoy that benefit.” 411 U.S. at 20 , 93 S.Ct. at 1289 . See Tate v. Short, 401 U.S. 395 , 91 S.Ct. 668 , 28 L.Ed.2d 130 (1971); Williams v. Illinois, 399 U.S. 235 , 90 S.Ct. 2108 , 26 L.Ed.2d 586 (1970) (incarceration of defendants unable to pay fine ruled unconstitutional); Douglas v. California, 372 U.S. 353 , 83 S.Ct. 814 , 9 L.Ed.2d 811 (1963) (indigent defendants have right to court-appointed counsel on direct appeal); Griffin v. Illinois, 351 U.S. 12 , 76 S.Ct. 585 , 100 L.Ed. 891 (1956) (indigent defendant entitled to transcript on appeal). Rodriguez contrasted this line of cases with challenges to wealth-based classifications brought by poor individuals on whom a designated fine or fee merely imposes a heavier burden. The Court in Rodriguez concluded that, because the challenge to the Texas school finance system did not allege an “absolute” deprivation of education to poorer districts, enhanced scrutiny was not mandated.

The Supreme Court in Rodriguez left open the question whether a state imposed limitation on a school district’s ability to levy for educational expenditures which in fact prevented a district from raising adequate funds would constitute a wealth-based classification subject to enhanced scrutiny under equal protection. For example, the Court in Rodriguez indicated that a Texas statutory provision establishing a maximum levy of $1.50 per $100 of assessed valuation for school maintenance might present a constitutional question, but that since the plaintiff school district’s levy was barely one-third of the maximum allowed, the Court was not required to decide the issue. 411 U.S. at 50, n. 107 , 93 S.Ct. at 1305, n. 107 .

The majority of Colorado school districts are already levying at the four-mill limit, with the number increasing yearly, and the record here establishes that low-wealth districts have difficulty funding capital expenditures. For example, in 1977, Frisco school district, with a capital reserve levy of four mills, raised $386.52 per pupil, while South Conejos school district, with the same four-mill levy, raised only $23.60 per pupil. In 1978, 136 of the 181 school districts in Colorado levied the statutory maximum of four mills. Of the sixteen plaintiff school districts, thirteen levied the maximum of four mills. Similarly, the debt ceiling results in widely disparate abilities of school districts to raise money through issuance of bonds. For example, South Conejos school district with 782 students had a debt ceiling of $935,020 for 1977 and $954,452 for 1978. *1030 Granby school district with 838 students had a debt ceiling of $8,173,380 for 1977 and $8,833,818 for 1978. Thus, Granby’s debt ceiling was approximately nine times that of South Conejos.

At trial, an educational finance economist testified that a lower-wealth district, which would be able to generate only a fraction of the capital financing from the four-mill levy as compared with a high-wealth district, would be unlikely to provide for its long-term capital outlay needs. The debt ceiling presents identical problems. For example, Douglas County school district has issued bonds for school construction up to the 20% limit and cannot issue additional bonds, even if authorized by a majority vote, until assessed valuation increases. Given the 20% limitation, the district’s 1980 assessed valuation of property, $120 million, would have to increase to $1.1 billion in order to allow bond-financed funds of $220 million estimated to be the cost for construction of schools to accommodate the influx of population within its boundaries. It is unlikely that the assessed valuation of property in Douglas County will reach necessary levels in time to provide for new school construction, and since the district is already assessing the maximum levy of four mills, it has no means of funding additional capital expenditures.

Capital financing limits represented by the four-mill levy limitation and the 20% debt ceiling inhibit low-wealth school districts from providing adequate replacements for aging facilities or meeting changes in educational emphasis. Moreover, rising costs alone threaten the ability of these districts to provide adequate capital outlays. In 1973, the average capital reserve fund levy was 1.79 mills. In 1977, it was 3.52; in 1978, 3.67; and in 1980, it was 3.70. The number of districts levying taxes at the four-mill maximum increases each year as capital expenses increase at a rate faster than assessed valuation.

I conclude that the levy and bond limitations in Colorado’s statutes, together with the failure to provide any mechanism for correcting the resulting disparities among school districts, in effect constitute an absolute deprivation of educational opportunity to students in poorer school districts which would justify the employment of an enhanced level of scrutiny, requiring at least that the financing limitations bear a substantial relationship to important governmental objectives. See Craig v. Boren, 429 U.S. 190 , 97 S.Ct. 451 , 50 L.Ed.2d 397 (1976); Rodriguez, 411 U.S. at 98 , 93 S.Ct. at 1329 (Marshall, J., dissenting). I believe that the majority has failed even to demonstrate that the limitations rationally further any legitimate state interest, as required under lower-level scrutiny. The majority certainly has failed to justify the limitations under a more demanding constitutional standard. 1

The majority recognizes that neither limitation was accompanied by any legislatively declared purpose and asserts that these limitations “are an important part of the state’s system of financing public services and . . . are rationally related to the goals sought to be achieved.” To the extent that both provisions limit, directly or indirectly, annual property tax levies, the majority analogizes these limitations to the levy restrictions in section 32-l-1101(l)(a), C.R.S. 1973 (1981 Supp.) on fire protection, hospital, and park and recreation districts. The *1031 majority then concludes that “controlling the outer limits of any agency’s taxing authority” is tied to the purpose of preventing “the present pledging of future public reserves.” This rationale does not relate to the four-mill levy limitation, which involves the collection of present revenues, not the pledging of future ones, and the majority provides no other justification for the levy limitation.

In seeking to supply a rationale for the bonded indebtedness limitation, the majority merely cites cases concerning debt limitations on the state and municipalities. See In re Interrogatories by Colo. State Senate, 193 Colo. 298 , 566 P.2d 350 (1977); City of Trinidad v. Haxby, 136 Colo. 168 , 315 P.2d 209 (1957). None of the cases cited explain the school district debt limitation, nor does the majority explain how the reasoning of these cases can be generalized to justify this limitation.

If the guarantee of equal protection of the law means anything, it must mean that citizens are to be protected from arbitrary classifications which affect important interests. The majority supplies no basis for asserting that the levy and debt limitations are not wholly arbitrary. The limits on the districts’ ability to tax and incur debt are based not on the needs of a district, but on the amount of assessed valuation in the district. Thus, wealthy districts, whose spending is more than adequate to satisfy capital needs, are not precluded from raising additional funds, while poorer districts, which may have only the barest of funds to spend on capital items, are precluded from raising additional money.

Moreover, the levy limitations subvert the state’s purported interest in local control which the majority found as the underlying legitimate state end achieved by the school finance provisions for current operating expenditures. Clearly, the state-imposed four-mill limit prevents localities from an unrestricted determination of the level of taxation necessary to further desired educational goals. With respect to bonded indebtedness, section 22-42-102(1) requires that any school bond be approved by a majority of the district’s voters. Yet the debt limitation provision would preclude the issuance of bonds in excess of 20% of the value of the district’s taxable property, even if a majority of the electorate approved the bond issue. This cannot be squared with the goal which the majority asserts is furthered by the state’s financing system of affording “a school district the freedom to devote more money toward educating its children than is otherwise available [by] the state guaranteed minimum amount,” and enabling “the local citizenry greater influence and participation in the decision making process” regarding educational expenditures. Maj. op. at 1023.

Since the majority opinion articulated no legitimate basis for the levy limitation and debt ceiling, I conclude that the capital expense limitations fail to satisfy even the lenient rational relation test employed by the majority. Of course, were a more stringent level of scrutiny employed, these provisions would fail that test as well.

I also disagree with the majority’s conclusion that the capital outlay provisions do not violate Article IX, § 2 of the Colorado Constitution. The state’s failure to ameliorate the disparity in the ability of different school districts to raise funds for capital outlays, while exacerbating the effect of these disparities through the levy and debt limitations, violates the constitutional requirement that the state “provide for the establishment and maintenance of a thorough and uniform system of free public schools throughout the state. ... ”

The wide disparities in capital outlay funding are manifest from the trial court’s findings. In 1977, those school districts in the top 10% of assessed valuation per pupil imposed a capital reserve fund levy of 3.51 mills, which yielded an average of $254.79 per pupil or $72.59 per pupil per mill. By contrast, districts in the bottom 10% in assessed valuation per pupil levied at a rate of 3.50 mills and raised an average of $28.68 per pupil, or $8.01 per pupil per mill. Similarly, low-wealth districts have higher bond redemption tax rates than high-wealth districts, but produce far less revenue per pu *1032 pil. In 1977, the school districts in the top 10% of assessed valuation per pupil imposed an average bond redemption levy of 3.33 mills for an average yield of $206.81 per pupil, or $62.11 per pupil per mill. School districts in the bottom 10% levied at an average rate of 8.04 mills for a yield of $61.62 per pupil or $7.66 per pupil per mill.

Other states, faced with similar disparities, have intervened to equalize the capacity of districts to finance capital expenditures. Colorado is one of only 14 states which provide no capital funding to local school districts. Expert testimony at trial indicated that there is general agreement among school financing experts that states should be involved in assessing districts’ capital needs and funding these needs, effectuating a distribution of the burden for financing school capital outlays across district lines. For example, in New York, the state provides 49% of capital expenditures for districts of average wealth and proportionately more aid, up to a limit of 90% of the cost of a particular facility, to low-wealth districts.

Again, no rational basis exists for the state's failure to intervene. It cannot be justified on the basis of enhancing local control, since the levy and debt ceilings limit local autonomy in this area of school finance. The capital financing scheme and the state’s failure to remedy existing inequities violate even the majority’s formulation of the requirement of Art. IX, § 2, which finds the constitution satisfied “if thorough and uniform educational opportunities are available through state action in each school district.” Maj. op. at 1025 (emphasis added). Not only has the state failed to meet its obligation to insure this level of opportunity, but through the debt and levy limitations, it has made its attainment impossible in some districts.

Because of my conclusion that the capital financing provisions violate the constitutional guarantee of equal protection and the thorough and uniform guarantee of Article IX, § 2 of the Colorado Constitution, I would affirm the trial court’s ruling striking down this portion of the Colorado school financing system. In addition, I concur with Justice Lohr’s conclusion that the Colorado public school financing scheme as a whole violates the Colorado Constitution. See n.l, supra at p. 6.

. My conclusion that the capital finance limitations work an absolute deprivation of educational opportunity on students in poorer school districts leads me to conclude that even under the U. S. Supreme Court’s analysis in Rodriguez , which would not accord education the status of a fundamental right, these capital limitations would be entitled to enhanced scrutiny. Justice Lohr, in his well-reasoned dissent, would subject all aspects of school financing to an enhanced level of scrutiny based on the “favored status explicitly accorded education in this state.” His analysis is independent of Rodriguez and is founded on this Court’s ability to interpret equal protection rights under the Colorado Constitution differently from the U. S. Supreme Court’s analysis under the U. S. Constitution. 1 concur in Justice Lohr’s analysis, which would constitute an independent basis for invalidating the capital finance provisions. I also agree with his conclusion that all aspects of Colorado’s school finance scheme would fail to satisfy a heightened level of scrutiny.