Tenth Circuit OKs Cap on School Taxes

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     (CN) – Tracing a school finance case back to Brown vs. Board of Education, the 10th Circuit on Monday upheld a Kansas limit on school districts’ taxing powers.
     Parents in a wealthy, high-performing school district in Johnson County challenged the state’s limit on school districts’ Local Option Budget.
     In a rare move in these tax-averse days, the parents wanted to raise their own property taxes to counter budget cuts and teacher layoffs. They claimed the state’s cap on property taxes violated the Constitution.
     The 10th Circuit disagreed.
     The ruling in Diane Petrella et al. vs. [Gov.] Sam Brownback et al. rejected what the judges called parents’ “kitchen sink approach … that the U.S. Constitution requires the state of Kansas to grant its political subdivisions unlimited taxing and budget authority.”
     It’s the latest step in a long history of contention over school funding in Kansas, which the 10th Circuit ruling traces back to the Supreme Court’s 1954 ruling in Brown vs. Board of Education that found Topeka’s racially segregated schools unconstitutional.
     Sixty years later, in a 2014 ruling , the Kansas Supreme Court found that the state was underfunding its public schools.
     In the Petrella appeal, 17 parents of children in Shawnee Mission Unified School District claimed that Kansas’ Local Option Budget (LOB) cap, which limits how much money from property taxes can go toward education, violated their rights to free speech , among other things.
     The 10th Circuit upheld the district court’s refusal to issue a preliminary injunction, and its partial dismissal of the case.
     “Plaintiffs’ position is that the U.S. Constitution requires the state of Kansas to grant its political subdivisions unlimited taxing and budget authority. We discern no support for their novel and expansive claims,” Judge Carlos Lucero wrote for the three-judge panel.
     School funding in Kansas comes from a mixture of local, state and federal taxes, with state taxes making up shortfalls in poor districts, to try to equalize educational with wealthier districts.
     The cap on local property taxes keeps the balance from tipping too far in favor of wealthy school districts, the 10th Circuit said.
     Shawnee Mission is one of the wealthiest school districts in the state. More than 84 percent of its teachers hold master’s degrees and every high school student received a MacBook Air in 2014. It has the highest assessed property value of any school district in Kansas, and its students’ test scores are well above state and national average, Judge Lucero wrote.
     But that did not stop Kansas’s budget cuts and the Great Recession from forcing teacher layoffs and school closings in the district.
     But Lucero said other factors were at play, and that Shawnee Mission’s “decision to cut positions and close schools reflected a choice to continue paying its staff high wages as compared to other districts.”
     Though the LOB cap prevents plaintiffs from raising property taxes for education, they have other options, Lucero wrote, including private fund raising and increased sales taxes.
     “Despite plaintiffs’ stubborn insistence in mischaracterizing the LOB cap, it does not prevent anyone from contributing their own money. It simply limits the ability of residents to enact property taxes at the school district level that would compel their neighbors to make expenditures. The First Amendment neither recognizes nor protects any such right,” Lucero wrote.
     “No court has ever recognized that a limit on public funding of education constitutes a limit on speech. … (T)he LOB cap does not restrict the speech of plaintiffs (or their children in the classroom) in any way; it simply limits the authority of SMSD to raise revenue.” (Parentheses in ruling.)
     Nor did Lucero buy plaintiffs’ claim that there is “no legitimate reason to ever restrict education expenditures.”
     “As the Kansas Supreme Court has repeatedly recognized, the LOB cap maintains a reasonably equitable distribution of education funding throughout the state,” Lucero wrote.
     Nor does the cap violate plaintiffs’ right of association: “The LOB cap does not obstruct plaintiffs’ desire to come together to achieve a common end. They may lobby the Kansas Legislature to change school financing policy, an activity in which SMSD itself already engages. They may propose a voter initiative for a city or county government to levy a sales tax that will be transmitted to SMSD. They may collectively donate money to SMSD, or solicit their neighbors to do so. But plaintiffs’ associational rights do not require the State of Kansas to grant unlimited taxing authority to the political subdivision in which they reside.”
     Viewing the issue in a larger context, Lucero wrote: “Plaintiffs, narrowly focusing on the interests of SMSD alone, fail to recognize that districts compete with one another for educational resources, like high-quality teachers. By limiting the ability of individual districts to outspend their neighbors, Kansas rationally promotes an equitable distribution of resources throughout the state and seeks to prevent an inter-district arms race from raising the cost of education statewide. Further, by limiting local authority, Kansas channels the efforts of those seeking increased education spending for their own children towards the state level, where such efforts can benefit a broader class of students.”
     He added: “Nothing in the history and tradition of the U.S. Constitution indicates that there is a fundamental right to tax one’s neighbors without limitation at the local government level to fund education.”
     Kansas Attorney General Derek Schmidt praised the ruling in an email to Courthouse News: “I am pleased that the 10th Circuit has recognized that one of the essential components of the Kansas school finance system – the equitable distribution of resources – is constitutional under the United States Constitution,” Schmidt wrote.
     “I wholly agree with the court’s conclusion that it is ‘not the province of a federal court to manufacture from whole cloth a novel set of rights that would upend a carefully crafted and comprehensive state funding scheme.'”
     Schmidt said he will ask the district court to dismiss “what little remains of the plaintiffs’ case.”
     Plaintiffs’ attorneys did not respond to a request for comment.