Cave Creek Unified School District et al. v. State of Arizona
The state is once again refusing to adequately fund education and by doing so, is in violation of its own laws. This time, the state has failed to update the school funding formula by using all of the inflation adjustments required by Proposition 301, a referendum approved by a majority of Arizona voters.
The Center brought this case in conjunction with the LaSota & Peters law firm to force the legislature to honor Arizona voters' decision to support Arizona's schoolchildren. The Center represents several school districts, the Arizona Education Association, and the Arizona School Boards Association in this case.
In 2000, the Arizona Legislature passed S.B. 1007 and portions of this law were referred to the voters for approval in Proposition 301. A majority of Arizona voters approved Prop. 301, which requires the legislature to adjust the "base level" education funding formula each year in accordance with inflation. The "base level" provides all funding for the maintenance and operations of Arizona's schools.
The legislature's 2010-2011 budget reconciliation bill, however, failed to adjust the "base level" for inflation and in fact, did not provide any increase to the base level at all. The Center's lawsuit alleged that the legislature is not only in violation of its own laws, but that its actions are unconstitutional because Proposition 301 is protected under the Voter Protection provisions of the Arizona Constitution.
On February 9, 2011, Maricopa County Superior Court Judge Kenneth Mangum ruled that Proposition 301 enacted by Arizona voters in 2000 did not require the Arizona legislature to annually inflate education funding for Arizona’s public schools. Judge Mangum held that Proposition 301 merely states the intention of the voters that an appropriation be made to protect schools from the effects of inflation but the Proposition by itself is not self executing. He stated that, “the voters cannot require the legislature to enact a law that provides for that appropriation.” Judge Mangum then held that the Proposition itself did not constitute an appropriation and that, therefore, Proposition 301 amounted to nothing more than a "request" by the people of Arizona that the legislature increase education funding.
On March 8, 2011, the plaintiffs filed an appeal. In an opinion published January 15, 2013, the Court of Appeals reversed the lower court and held that as a voter approved law, Prop. 301 required the legislature to increase the funding formula to keep pace with inflation. On May 29, 2013 the Supreme Court granted review but limited its review to a single question: "Does the Voter Protection Act authorize the voters to require the legislature to increase 'the base level or other components of the revenue control limit' as provided in A.R.S. 15-901.01?" (Order dated May 29, 2013, Arizona Supreme Court No. CV-13-0039-PR.) On September 26, 2013 the Supreme Court answered that question in the affirmative. The Court issued an opinion that not only affirmed the Court of Appeals decision, it issued an opinion that make it clear that voters have broad legislative powers and voter-approved laws are fully protected from legislative tampering by the Voter Protection Amendment. The opinion is below.
The matter was remanded back to the trial court to determine the appropriate remedy. After extensive briefing by the parties, in a decision dated July 2, 2014 and filed July 11, 2014, Judge Katherine Cooper ordered that the base level funding be reset to the level it would have been if it had been inflated properly over the last five years. Judge Cooper also ordered that an evidentiary hearing be held on whether the state should be required to pay the money lost in the preceding five years to determine whether school districts could legitimately spend the retroactive amount ($1.3 billion) and whether the state has the money to pay for it. You can read the decision below.
The state defendants have appealed Judge Cooper's July 2014 decision regarding base level funding. In the meantime, Judge Cooper held the evidentiary hearing in October 2014 to determine whether the state should retroactively reimburse Arizona schools $1.3 billion for unpaid inflation adjustments for fiscal years 2011 through 2014. Shortly after that hearing concluded (but before the Judge issued her ruling) the Court of Appeals asked the parties to enter into mediation with the hope of reaching a settlement agreement. While the mediation proceeded, everything else in the case was stayed. Negotiations broke down, however, this past summer and the parties declared an impasse.