IN THE SUPREME COURT OF THE STATE OF KANSAS

LUKE GANNON, etal,

Plaintiffs,

v.

THE STATE OF KANSAS,

Defendant.

Case No. 15-113267-S

County Appealed From:

District Court Shawnee County, Kansas, in the Matter of Proceedings Before the Three­Judge Panel Appointed Pursuant to K.S.A. 72-64b03 in re School Finance Litigation

District Court Case No.: 2010CV1569

Proceeding Under Chapter: 60

Party or Parties Who Will Appear as Appellees: UNIFIED SCHOOL DISTRICT NO. 259; UNIFIED SCHOOL DISTRICT NO. 308; UNIFIED SCHOOL DISTRICT NO. 443; and UNIFIED SCHOOL DISTRICT NO. 500

MOTION OF THE STATE OF KANSAS FOR STAY OF OPERATION AND

ENFORCEMENT OF THE PANEL'S JUDGMENT

Pursuant to Supreme Court Rule 5.01, K.S.A. 2014 Supp. 60-262(f)(1), and K.S.A. 60-

2101 (b), the State of Kansas moves for an order staying the operation and enforcement of the

judgment entered by the Three-Judge Panel ("Panel") on June 26, 2015. See attached

"Memorandum Opinion and Order and Entry of Judgment Regarding Panel's Previous Judgment

Regarding Equity and Plaintiffs' Motion for Declaratory Judgment and Injunctive Relief'

(hereafter "Order").

An immediate stay is warranted in order to maintain the status quo while this Court

reviews and considers the Panel's unprecedented ruling. Among other unprecedented aspects of

the decision, the Panel declares unconstitutional the entire block grant school funding system the

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Legislature adopted earlier this year, and then purports to revive repealed statutes, even though

many of those provisions already have been repealed (effective date in April 2015) and Kansas

Constitution Article 2, Section 16 imposes very clear and explicit requirements for any statute to

be "revived," and those requirements do not authorize any court to "revive" a repealed statute.

Furthermore, the Panel orders the immediate payment of approximately $50 million in State

funds that legally cannot be disbursed as the Panel directs. Obviously, the Panel's unprecedented

decision has massive implications for the State's budget and finances.

Finally, in a move that can only be perceived by the public and objective observers as

cynical, calculated and unfortunately "political," the Panel issued its decision on the very day

and barely one hour after the Legislature finally adjourned, sine die, for the 2015 session,

notwithstanding that the Panel has had these issues before it for several months and had a hearing

on these matters in early May. Given all of these circumstances, as well as the likelihood that this

Court will identify errors in the Panel's decision on appeal, the public interest is not served by

the extraordinary relief the Panel purports to order, some of which is supposed to occur in the

next two days.

In many respects, to rule as it did here, the Panel had to ignore fundamental due process

principles and rules of procedure that require pleadings, pretrial proceedings, discovery, and a

trial. Indeed, the Panel declared unconstitutional legislation enacted less than three months ago,

concluding that it violates both Article 6's adequacy and equity components after conducting a

hearing (in early May) the ostensible purpose of which was to address the Plaintiff Districts'

motion to alter and amend the Panel's December 30, 2014 decision. The Panel instead clearly

addressed and ruled upon constitutional challenges to Kansas' school finance statutes enacted in

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2015, statutes which by definition were never part of underlying the 2012 trial which resulted in

the first appeal to this Court. See Gannon v. State, 298 Kan. 11 07, 319 P.3d 1196 (2014).

In June 2014, after the remand from this Court, the Panel found that the State had

substantially complied with this Court's mandate requiring remedy of public school finance

equity infirmities. However, Plaintiff Districts asked the Panel to alter or amend this finding in

early 2015. Then the Panel scheduled a May 7-8 hearing that "[would] be limited to equity and

equity compliance," explaining: "We intend to consider the effect of all measures taken or not

taken by State officials since the [Gannon] Mandate was issued that affect the equity aspects of

the Mandate." Panel's April 20, 2015 e-mail to counsel. The State prepared accordingly.

This last school year the State provided approximately and distributed to local districts

$138 million more in LOB and capital outlay aid in response to the Court's decision in Gannon.

Exhibit 507, p. 2; L. 2014, ch. 93; 2015 House Substitute for Senate Bill 7, §§ l (a) & 63(c)(2);

2015 Senate Substitute for HB 2353, §§ 8 & 63; 2015 House Substitute for SB 112, § 20(b) &

(d). See also Opinion, at 47. This amount was more than the KSDE had estimated was necessary

to comply with this Court's decision when the Legislature passed the legislation in 2014.

The Panel changed its mind just before the May 7-8 hearing, however, eschewing

procedures designed to afford due process and overlooking that it lacked jurisdiction over the

matters that are the subject of the State's docketed Article 6 adequacy appeal. E.g., State v. Fritz,

299 Kan. 153, 155, 321 P.3d 763 (2014) (district court loses jurisdiction over case after direct

appeal is docketed). On Friday, June 26, 2015, the Panel filed a "Memorandum Opinion and

Order and Entry of Judgment Regarding Panel's Previous Judgment Regarding Equity and

Plaintiffs' Motion for Declaratory Judgment and Injunctive Relief' (hereafter "Order"). In the

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Order, the Panel reversed and withdrew its December 30, 2014 finding that the State had

substantially complied with Article 6's equity requirements articulated in Gannon. Id. at 2-3.

HB 2353 and SB 112 were not even written until after the May 7-8 hearing, yet the

Panel found portions of those laws unconstitutional in its June 26 order.

Remarkably, the Panel found 2015 House Substitute for Senate Bill 7 ("SB 7"), parts of

2015 House Substitute for Senate Bill 4 ("SB 4") and parts of 2015 Senate Substitute for HB

2353 ("HB 2353"), 2015 House Substitute for SB 112 ("SB 112"), each of which amended or

supplemented SB 7, unconstitutional in violation of Art. 6, § 6(b) of the Kansas Constitution, but

stayed "what would otherwise be the consequence demanded of our ruling pending appeal,"

subject to a "temporary restraining order." Order, pp. 62, 78-79.

The Panel's "temporary restraining order" (a misnomer if there ever was one)

purports to require the following:

1. Additional supplemental general state aid ("LOB aid") and capital outlay state aid must

be paid under the terms of the "before January 1, 2015" version of state aid statutes

K.S.A. 72-6434 and K.S.A. 72-8814. Order, at 69-70.

2. The Kansas State Board of Education is made a party to the case now and, with the

Kansas Secretary of Administration and Treasurer of the State of Kansas and "other

executive official of the State of Kansas," is ordered to comply with the Panel's directive

and enjoined from doing anything contrary. Id.

3. State funds necessary for payment of the additional capital outlay aid are "encumbered"

for FY 2015 distribution. Id. at 70.

4. State funds necessary for payment of the additional FY 2015 LOB aid will be distributed

from "FY 2016 revenues available for supplemental general state aid." Id. at 76. The

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State understands these revenues are in SB 7's FY 2016 block grant appropriation

because strictly speaking there is no longer separate supplemental general state aid under

SB 7.

5. Distribution of general state aid in FY 2016 and FY 2017, under the Classroom Learning

Assuring Student Success Act ("CLASS") adopted by SB 7, will be based upon weighted

student count in the current school year in which distribution is to be made, not the

weighted or unweighted student count in FY 2015 (the just completed 2014-15 school

year). Id. at 58; and

6. LOB and capital outlay state aid portions of districts' block grants under CLASS must be

calculated as the statutes providing for such aid existed before January 1, 2015. Id. at 67-

68, 75-76.

Under these orders, the State must hold funds appropriated for other State programs or

raise funds and then pay immediately to qualifying local districts about $16.6 million in capital

outlay state aid and about $33.4 million in LOB aid. Order, at 29, 42-43. The Panel

acknowledged that its order will require additional appropriations by the Legislature. Id. at 68,

76.

In another unprecedented and remarkable move, the Panel alternatively, entered orders

that would rewrite SB 7 and associated subsequent legislation, striking and substituting language

so that the School District Finance and Quality Performance Act ("SDFQPA"), K.S.A. 72-6405,

et seq., as it existed in January 1, 2015, replaced CLASS. Order, at 80-83. That portion of the

decision looks precisely like a bill "markup" that takes place in the legislative process, with the

Panel striking words, phrases and sentences to write the statute it prefers. The only possibly

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positive thing that can be said about this part of the Panel's decision is that the Panel "stayed"

implementation of these alternative orders for the time being. Id. at 79.

Using the words of the Plaintiff Districts' counsel, in the worst case, the "temporary

restraining order" places Kansas on the road to educational "Armageddon" because non­

severability provisions in SDFQPA and CLASS will leave no funding mechanisms. While less

dramatic, if not stayed, the "temporary restraining order" will cause other irreparable harms,

including violation of separation of powers, reduction of general state aid to all local districts and

reductions in funding to some districts that are advantaged by SB 7, as amended.

I. Background of Motion and Appeal

This is an appeal from a judgment in a "school finance" case brought only against the

State generally by four school districts - U.S.D. 259 in Wichita, U.S.D. 308 in Hutchinson,

U.S.D. 443 in Dodge City and U.S.D. 500 in Kansas City, Kansas.

Plaintiff Districts asked the three-judge Panel, appointed under K.S.A. 72-64b03, to hold

that the SDFQPA and the State's associated primary and secondary education appropriations

violate Article 6, § 6 of the Kansas Constitution. After a bench trial in the summer of 2012, the

Panel rejected most of the Plaintiff Districts' claims and arguments, but concluded: (l) the then

failure to fully fund "equalization aid" in certain parts of the Act was unconstitutional and (2) the

then amount of Base State Aid Per Pupil ("BSAPP") provided under the SDFQP A was

unconstitutional. The Panel ordered full funding of Local Option Budget ("LOB") state

equalization aid under K.S.A. 72-6434 and capital outlay equalization state aid under K.S.A. 72-

8801, et seq. Rather than giving the State an opportunity to consider appropriate remedies, the

Panel ordered the BSAPP be funded at $4492 for FY2014 and adjusted afterward to account for

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inflation. The State appealed; and Plaintiff Districts cross-appealed asserting the BSAPP should

be much higher than $4492.

On March 7, 2014 the Kansas Supreme Court issued its opinion. It affirmed, in part, the

Panel's judgment concerning funding of LOB and capital outlay aid, holding that the Legislature

needed to address inequities in the funding of this state aid. Gannon, 298 Kan. at 1176-89.

However, the Court rejected the Panel's ordered "cures." It remanded to the Panel instructing

that the State's response to the inequities was to "be measured by determining whether it

sufficiently reduces the unreasonable, wealth-based disparity so the disparity becomes

constitutionally acceptable, not whether the cure necessarily restores funding to the prior levels."

Id. at 1181, 1188-89.

The Court reversed the Panel's judgment regarding SDFQPA's funding because the

Panel had applied the wrong constitutional standard concerning adequacy of funding required

under Article 6. It remanded the case to the Panel for findings and conclusions as to "whether the

State met its duty to provide adequacy in public education as required under Article 6 of the

Kansas Constitution[.]"Id. at 1199.

After the Supreme Court's decision, legislation was promptly passed which addressed the

inequities found in the funding of capital outlay and LOB aid. On May 1, 2014, 2014 Senate

Substitute for House Bill 2506 ("HB 2506") became law. 33 Kansas Register, No. 18, p. 438

(May 1, 2014). The KSDE had estimated and advised legislators that:

a. The FY 2015 appropriation needed to provide 100 percent funding of Supplemental General State Aid, under the SDFQPA, was $103,865,000 if calculated with a base state aid per pupil of $4,433;

b. An additional FY 2015 appropriation of approximately $5 million in Supplemental General State Aid was needed as a result of the ability of local school district to increase their local options budgets under HB 2506; and

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c. One hundred percent funding of capital outlay state aid would amount to $25,200,786 in FY2015.

Exhibit 507, p. 2. Passing HB 2506 into law, the Legislature funded LOB state aid by providing

$109,265,000 in additional funding appropriated during the 2014 legislative session. The

Legislature appropriated capital outlay state aid, with "no limit," and the State's FY 2015 budget

included $25,200,786 million for the aid.

The Panel conducted a hearing on June 11, 2014. At the conclusion of the hearing, the

Panel announced the legislation complied with the Supreme Court's order regarding capital

outlay and LOB aid.

On December 30, 2014, the Panel released its Memorandum Opinion and Order on

Remand. It reaffirmed that the State had complied with the Supreme Court's order regarding

capital outlay and LOB aid. However, the Panel entered a declaratory judgment that the Kansas

public education financing system for grades K-12 failed to meet the adequacy test articulated in

Gannon. It held the system-through structure and implementation-is not presently reasonably

calculated to have all Kansas public education students meet or exceed the Rose factors and,

therefore, is unconstitutional in violation of Article 6 of the Kansas Constitution. The Panel did

not order any affirmative relief to "remedy" the violation that it found.

On January 23, 2015, the State filed a motion to alter and amend to obtain clarification of

the Panel's December 30, 2014 order and additional findings of fact. K.S.A. 60-2102(b)( l )

requires filing of a notice of appeal within 30 days of the entry of a decision finding a violation

of Article 6 of the Kansas Constitution. On January 28, 2015, the State filed such notice of

appeal.

On February 12, 2015, SB 4 became law. 34 Kansas Register, No. 7, p. 129 (Feb. 12,

2015). This law amended K.S.A. 2014 Supp. 72-8814 by directing a demand transfer of

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$25,300,000 for capital outlay aid on February 20, 2015 and another transfer on June 20, 2015 of

"the remaining amount of moneys to which the school districts are entitled to receive from the

state general fund to the school district capital outlay state aid fund." Id., p. 135, § 54(d).

But, on April 2, 2015, SB 7 became law. 34 Kansas Register, No. 14, p. 267 (April 2,

2015). Effective as of April 2, 2015, SB 7

• Appropriated an additional $27,350,000 for districts' general funds (effectively replacing reductions in BSAPP made by an allotment in 2015). SB 7, § l (a).

• Amended the calculation of LOB aid in K.S.A. 2014 Supp. 72-6434. SB 7, § 38.

• Appropriated an additional $1,803,566 for FY2015 LOB aid. SB 7, § l (a).

• Amended the calculation of capital outlay state aid in K.S.A. 2014 Supp. 72-8814 as amended by SB 4. SB 7, § 63(b).

• Authorized an additional $2,200,000 for FY15 capital outlay state aid. SB 7, § 63(c)(2).

• Appropriated $4,000,000 for distribution, through a new fund, to districts that show extraordinary needs. SB 7, § l (b).

• Repealed both K.S.A. 2014 Supp. 72-6434 and K.S.A. 2014 Supp. 72-8814 as amended by SB 4. SB 7, § 80.

Also under SB 7, effective July 1, 2015, CLASS will replace the SDFQPA. SB 7, §§ 4-

22; 81. CLASS changes K-12 public school finance, awaiting a complete overhaul of school

finance formulas, by:

• Providing districts with fund flexibility at the district level; that is, funds can be transferred to the general fund of the district with no cap on the amount of the transfer. Excluded from this flexibility are three funds: bond and interest, special education, and the special retirement contributions fund. SB 7, § 62.

• For FY 2016, appropriation of $2,751,326,659 from the State General Fund (SGF) as a block grant to school districts. A demand transfer from the SGF to the School District Extraordinary Need Fund will be made in an amount not to exceed $12,292,000. An SGF appropriation of $500,000 will be made to the Information Technology Education Opportunities Account (a program to pay for credentialing

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high school students in information technology fields, funded previously in the Board of Regents' budget). SB 7, § 2.

• For FY 2017, appropriation of $2,757,446,624 from the SGF as a block grant to school districts. A demand transfer from the SGF to the School District Extraordinary Need Fund will be made in an amount not to exceed $17,521,425. An SGF appropriation of $500,000 will be made to the Information Technology Education Opportunities Account. SB 7, § 3.

• The block grants for FY 2016 and FY 2017 include General State Aid equal to what school districts are entitled to receive for school year 2014-15, as adjusted by virtual school aid calculations and a 0.4 percent reduction for an Extraordinary Need Fund; supplemental general state aid and capital outlay state aid as adjusted in 2014-15; Virtual state aid as recalculated for FYs 2016 and 2017; Amounts attributable to the tax proceeds collected by school districts for the ancillary school facilities tax levy, the cost of living tax levy, and the declining enrollment tax levy; and KPERS employer obligations, as certified by KPERS. SB 7, §§ 4-22.

• Providing the funding for FY 2016 and FY 2017 above the General State Aid school districts were entitled to receive for school year 2014-15, as adjusted by virtual school aid calculations and a 0.4 percent reduction, is distributed to each district in proportion to the school district's enrollment. SB 7, § 6(£).

On March 11, 2015, the Panel entered a Memorandum Opinion and Order denying the

State's Alter and Amend. On March 16, 2015, the State filed a second notice of appeal which

included the March 11 order.

On March 16, 2015, Plaintiff Districts filed a Motion for Injunction and Declaratory

Relief in which they asked the Panel to enjoin 2015 House Substitute for Senate Bill 7 ("SB 7"),

a law which has substantively changed the Kansas public education financing system for grades

K-12.

The hearing on Plaintiff Districts' Motion to Alter and Amend Panel's Previous

Judgment Regarding Equity was conducted on May 7 and 8, 2015. After the hearing, HB 2353, §

8 and SB 112 §20 became law which effectively increased FY 2015 capital outlay and LOB aid

by $1,756,400 and $1,976,818 respectively.

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On June 26, 2015, almost immediately after the longest Kansas Legislative session in

history concluded, the Panel issued its Order. The State filed its notice of appeal on the same

date. See attached Notice of Appeal.

II. Argument

This Court stayed the Panel's judgment for the duration of the last appeal, with good

reason. There is even more reason to stay the Panel's decision pending this appeal.

The immediate stay the State requests targets the Panel's "temporary restraining order"

because the Panel itself stayed several aspects of its judgments in its June 26 Order. The

"temporary restraining order," however, is to take immediate effect and suffers from several

legal flaws. First, the "temporary restraining order" is no such thing. A temporary restraining

order is designed to preserve the status quo, until a hearing on a whether a temporary injunction

should be imposed. K.S.A. 60-903(b). See State v. Alston, 256 Kan. 571, 579, 887 P.2d 681

(1994); Unified School Dis!. v. McKinney, 236 Kan. 224, 227, 689 P.2d 860 (1984). A temporary

restraining order must not last, absent exceptional circumstances, more than 14 days. K.S.A. 60-

903(b). Generally, a bond is required. Id. , 903(f). Similarly, a temporary injunction concerns the

period before final judgment is entered. K.S.A. 60-902. See also Wichita Wire, Inc. v. Lenox, 11

Kan. App. 2d 459, 461, 726 P.2d 287 (1986) (temporary injunction is not proper if it effectively

accomplishes the whole object of the suit without bringing the cause or claim to trial). Again,

bond is generally required. K.S.A. 60-905(b).

The Panel's "temporary restraining order" is, in fact, simply part of the Panel's final

judgment which the Panel has not stayed. If this Court does not stay the "temporary restraining

order," that ruling is certain to produce some or all of the following adverse consequences:

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1. Violation o/separation o/powers.

An affront to the constitutional powers of a branch of government is hard to quantify, but

is by no measure insignificant. The confidence of the public in its institutions hangs in the

balance here. Not only did the Panel time its ruling in a way that suggests "political"

consideration, the ruling is unprecedented in its direct and substantial intrustion into the

legislative process. The Panel's rulings should not take effect unless and until this Court, as the

final arbiter of the Kansas Constitution, has had the opportunity to carefully consider and address

all of the issues in play.

Ordering payment of state aid to districts is tantamount to ordering appropriations, a

power granted to the Legislature and denied to the Judicial Branch. See Kan. Const., art. 2, §§ 1,

24 (power of appropriation is a core legislative power). Under Kansas law, the "legislative

power" - which includes the power to tax - is a power vested exclusively in the legislature by

Kan. Const., art. 2, §§ 1, 24. These provisions give the Legislature the exclusive power to pass,

amend, and repeal statutes. State ex rei. Stephan v. Finney, 251 Kan. 559, 577, 836 P.2d 1169

(1992). Accord, State ex. rei. Morrison v. Sebelius, 285 Kan. 875, 179 P.3d 366 (2008). The

power of appropriation is a core legislative power that is exercised when appropriations are

"made by law." Kan. Const., art. 2, §§ 1, 24. Thus, an order compelling the Legislature to make

appropriations necessarily and unconstitutionally usurps the legislative power. See State ex. reI.

Morrison v. Sebelius, 285 Kan. 875, 898-99, 179 P.3d 366 (2008) ("[W]hen the legislature is

considering legislation, a court cannot enjoin the legislature from passing a law. This is true

whether such action by the legislature is in disregard of its clearly imposed constitutional duty or

is the enactment of an unconstitutional law.") (internal quotations omitted).

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Furthermore, the Panel lacks the power to segregate and encumber money in the State's

general fund. K.S.A. 60-723(d) provides:

All property, funds, credits and indebtedness of the state or of any agency of the state shall be exempt from garnishment, attachment, levy and execution and sale, and no judgment against the state or any agency of the state shall be a charge or lien on any such property, funds, credits or indebtedness.

2. Reduction in 2016-17 funding for K-12 operational costs.

SB 7 was enacted to maintain K -12 school funding at current levels for the next two years

while the Legislature fully considers and explores the complicated methods and formulas for

school funding, and then ultimately adopts a new system for the State's future. The law includes

in its definition of general state aid the FY 2015 calculations of capital outlay and LOB state aid.

SB 7, § 6(a)(1)(D). The funds appropriated do not allow for distribution of more or less capital

outlay and LOB state aid because of changes in enrollments or student weightings in FY 2016

and 2017 or different levels of local districts' levies for capital outlay and LOB.ld.

However, the Panel's "temporary restraining order" is a game changer. The Panel clearly

contemplates and expects that more money will be appropriated to cover any additional general

state aid required by its orders, but the Panel did not order increased general state aid funding.

As a consequence FY 2016-17 funding for local districts' operational costs will be

reduced in proportion to any increases in LOB or capital outlay state aid because of FY 2016-17

changes in enrollments and weightings. The districts unfairly impacted by the Panel's order are

those which do not raise much LOB and capital outlay. For example, the Galena school district

does not levy any capital outlay taxes and, therefore, receives no capital outlay state aid. Exhibit

3008, column "USD Total Actual Levies." If general state aid is prorated down to offset

increased sums spent on LOB or capital outlay state aid, districts like Galena will be the losers.

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3. Reduction in funding to some districts.

Plaintiff Districts are just four of 285 local districts. They lack standing to assert claims

or demand remedies for these other districts. See Hernandez-Carrera v. Carlson, 547 F.3d 1237,

1255 (10th Cir. 2008) ("A plaintiff may challenge a statute . . . on an as-applied basis 'only

insofar as it has an adverse impact on his own rights, '" quoting County Court of Ulster County v.

Allen, 442 U.S. 140, 155 (1979». See also, State v. Thompson, 221 Kan. 165, 172, 558 P.2d

1079 (1976) (holding that "unconstitutional governmental action can only be challenged by a

person directly affected and such a challenge cannot be made by invoking the rights of others").

Plaintiff Districts' and the Panel's sentiments about SB 7 may not be shared by all 285

districts. For example, SB 7 changed the formula for funding virtual students. Some districts may

be benefitted by that change. In fact, the Shawnee Mission District, which attempted to intervene

in this case, disagrees with the relief the Plaintiff Districts sought and the Panel ordered. If

nothing else, this divergence among the interests of various districts in the State illustrates the

impropriety of treating this case as if it is a class action in which all Kansas school districts share

the same views and positions.

The Panel's "temporary restraining order" inherently pits district against district. The

"temporary restraining order" takes from some districts to give to others by requiring calculation

of general state aid under 2016-17 enrollments and weightings. The local district which loses

students in 2016-17 receives less general state aid as a result of the Panel's requirement. Such a

district's average assessed value per pupil is increased, reducing its ability to get capital outlay

and LOB state aid. Moreover, districts also lose the opportunity to continue to receive state aid

even if they reduce their local tax levies for capital outlay and LOB.

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However, Districts shorted or disadvantaged by the Panel's "temporary restraining order"

have no remedy if the Panel's Order is not stayed and then subsequently reversed.

4. Instability for local districts' FY 2016 budgeting.

The "temporary restraining order" injects uncertainty into local district budgeting

decisions. This likely will produce results that the Panel did not intend and, in process, force

choices that reduce some districts willingness to fund programs or additional salaries.

Local districts must prepare and publish for public comment and vote to approve their

2015-16 school year budgets before mid-August 2015. The district boards will not know what to

expect in available revenues. If the districts calculate their budgets assuming revenues ordered by

the Panel and the Panel's judgments are reversed, even in part, districts intended to be

advantaged by the "temporary restraining order" will be confronted with fewer funds than

planned to meet commitments made during the budgeting process. Thus, some may

conservatively choose to assume funding will ultimately be provided under CLASS. However

districts disadvantaged by the "temporary restraining order" are likely forced to reduce spending

on programs which they believe are valuable to their students' education, losing the advantages

accorded them by CLASS, if the "temporary restraining order" is not stayed.

5. Loss of all K-12 Funding.

The SDFQPA is the only authority for state funding for K-12 operational expenses in FY

2015. CLASS assumed that mantle for FY 2016 and 2017. Also, the local districts' LOB taxing

authority was provided exclusively by the SDFQPA and now CLASS. The Panel's conclusion

that provisions in both the SDFQP A and CLASS are unconstitutional necessarily invalidates

both acts in their entirety because both statutes include explicit non-severability provisions.

Thus, the interrelated nature of the SDFQPA, see K.S.A. 72-6405(b), and now CLASS, see SB 7,

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§ 22, may produce an earlier, if not immediate, halt to all state and local funding for K -12

schools.

As matters stand, the Panel has found K.S.A. 72-6434, as amended by SB 7 (LOB aid)

[before it was absorbed into SB Ts block grants for FY 2016 and 2017], to be unconstitutional,

and the Panel has purported to strike portions of the statute. The statute, however, is part of the

SDFQPA which has a non-severability clause. The SDFQPA explicitly provides that if any part

of the Act is found "invalid or unconstitutional," the entire Act is to be held invalid:

"b) Except for the provisions of K.S.A. 75-2321, and amendments thereto, the provisions of the school district finance and quality performance act are not severable. Except for the provisions of K.S.A. 75-2321, and amendments thereto, if any provision of that act is stayed or is held to be invalid or unconstitutional, it shall be presumed conclusively that the legislature would not have enacted the remainder of such act without such stayed, invalid or unconstitutional provision.

K.S.A. 72-6405(b).

In Petrella v. Brownback, 980 F. Supp. 2d 1293 (D. Kan. 2013), ajJ'd 2015 U.S. App.

LEXIS 9088 (10th Cir. Kan. June 1, 2015), the federal court refused to enter a temporary

injunction against the cap on the amount of LOB a district can vote and raise each year, K.S.A.

2014 Supp. 72-6434(a)(1), reasoning as follows:

Specifically, the Court concludes that plaintiffs cannot show that their alleged harm in being subject to the LOB cap outweighs the harm to the State and to the public from an injunction against enforcement of the cap. The Court has previously analyzed the issue and concluded that the LOB cap is not severable from the rest of the statutory school funding scheme under Kansas law. Thus, because the school funding scheme may not be applied without the LOB cap, the injunction sought by plaintiffs would also completely upend the entire system of public education in Kansas. Such a result would work a tremendous hardship on public-school students and the rest of the public throughout Kansas, and that potential hardship easily outweighs plaintiffs' alleged harm from continued enforcement of the LOB cap pending the outcome of this litigation.

980 F. Supp. 2d at 1310.

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The significance of the invalidation of the SDFQPA should be marginal because FY 2015

is over. However, the Panel relies on the SDFQPA to replace CLASS, the latter of which the

Panel also found to be unconstitutional. In CLASS, the Legislature provided:

New Sec. 22. (a) The provisions of sections 4 through 22 [CLASS], and amendments thereto, shall not be severable. If any provision of sections 4 through 22, and amendments thereto, is held to be invalid or unconstitutional by court order, all provisions of sections 4 through 22, and amendments thereto, shall be null and void. (emphasis added).

Thus, the Panel cannot selectively invalidate and rewrite parts of CLASS. The Legislature

expressly retained the right to fashion statutes that govern the Kansas school finance system.

In spite of the non-severability clause in CLASS, the Panel purported to invalidate only

certain provisions of the statute, including the provisions which provide the authority for

distribution of LOB and capital outlay aid as part of the Act's block grants, and provisions which

distribute general state aid based upon FY 2015 entitlements.

III. Relief Requested

Kansans - including students, parents, teachers, legislators, other government officials,

and concerned citizens - recognize the importance of the Kansas constitutional goal of making

suitable provision for finance of the educational interests of the State. There are many ways to

achieve that goal, and appropriate processes for doing so. There are serious and substantial

factual and legal disputes about whether that goal has been achieved. Unfortunately, the Panel's

decision not only attempts to resolve those disputes but also orders extraordinary and

unprecedented relief that may well exceed the bounds of judicial power. It is uncumbent upon

this Court to ensure an orderly process for hearing this appeal and protecting the interests of all

involved while this Court ultimately resolves the constitutional, legal, and factual issues in play.

17

The State has the right to appeal the Panel's conclusion that the State has violated Article

6, § 6 of the Kansas Constitution. K.S.A. 60-2101(b). The issues in this appeal are important,

indeed compelling, and among the most fundamental to all Kansans.

The Panel's decision merits careful and deliberative review by this Court, and the State

should not be put to a Hobson's Choice between proceeding with no operative school finance

system or capitulating to the Panel's decision without this Court's review.

Pursuant to K.S.A. 2014 Supp. 60-262(f), the State respectfully requests that this Court

grant an immediate stay that suspends all of the Panel's Order and maintains the real status quo

until the Court can review the Panel's decision and issue its own mandate in this case. A stay

may be granted under this Court's plenary powers, K.S.A. 20-101, K.S.A. 2014 Supp. 60-262(f)

and/or K.S.A. 60-2101(b). No bond or other security may be required because this appeal and

request is by the State of Kansas. K.S.A. 2014 Supp. 60-262(e).

Respectfully submitted,

OFFICE OF ATTORNEY GENERAL DEREK SCHMIDT

c idt, KS Sup. Ct. No. 17781 Attorney General of Kansas

Jeffrey A. Chanay, KS Sup. Ct. No. 12056 Chief Deputy Attorney General

Stephen R. McAllister, KS Sup. Ct. No. 15845 Solicitor General of Kansas

M. 1. Willoughby, KS Sup. Ct. No. 14059 Assistant Attorney General

Memorial Bldg., 2nd Floor 120 SW 10th Avenue Topeka, Kansas 66612-1597 Tel: (785) 296-2215 Fax: (785) 291-3767 E-mail: jeff.chanay@ag.ks.gov

18

steve .mcallister@trqlaw.com mj. willoughby@ag.ks.gov

and

HITE, FANNING & HONEYMAN, LLP Arthur S. Chalmers, KS Sup. Ct. No. 11088 Gaye B. Tibbets, KS Sup. Ct. No. 13240 Jerry D. Hawkins, KS Sup. Ct. No. 18222 Rachel E. Lomas, KS Sup. Ct. No. 23767 100 North Broadway, Suite 950 Wichita, Kansas 67202 Tel: (316) 265-7741 Fax: (316) 267-7803 E-mail: chalmers@hitefanning.com tibbets@hitefanning.com hawkins@hitefanning.com lomas@hitefanning.com

Attorneys for the State of Kansas

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on the 29th day of June, 2015, a true and correct

copy of the above and foregoing was mailed, postage prepaid, to:

Alan L. Rupe Jessica L. Skladzien Mark A. Kanaga LEWIS BRISBOIS BISGAARD & SMITH 1605 North Waterfront Parkway, Suite 150 Wichita, KS 67206-6634 Alan.Rupe@lewisbrisbois.com Jessica.Skladzien@lewisbrisbois.com Mark.Kanaga@lewisbrisbois.com

John S. Robb Somers, Robb & Robb 110 East Broadway Newton, KS 67114-0544 johnrobb@robblaw.com

Attorneys for Plaintiffs

19

Tristan L. Duncan Zach Chaffee-McClure 2555 Grand Blvd. Kansas City, MO 64108 zmcclure@shb.com tlduncant@shb.com

Attorneys for Us. D. 512

Steve Phillips Assistant Attorney General OFFICE OF ATTORNEY GENERAL DEREK SCHMIDT 120 S.W. 10th, 2nd Floor Topeka, KS 66612 steve. phillips@ag.ks.gov

Attorney for State Treasurer Ron Estes

Philip R. Michael Daniel J. Carroll Kansas Department of Administration 1000 SW Jackson, Suite 500 Topeka, KS 66612 philip.michae1@da.ks.gov dan.carroll@da.ks.gov

Attorneys for Secretary of Administration Jim Clark

MJ. Willoughby L

20

•

•

•

filED BY CLEM KS. DISTRICT coufur

THliW JUDICI,'\L 0lS1 TOPEKA, K�

1015 JUN 2 b A II: 22

IN THE DISTRICT COURT OF SHAWNEE COUNTY, KANSAS,

IN THE MATTER OF PROCEEDINGS BEFORE THE

THREE-JUDGE PANEL APPOINTED PURSUANT TO

K.S.A. 72-64b03 IN RE SCHOOL FINANCE

LITIGATION, to-wit:

LUKE GANNON, By his next

friends and guardians, et air

Plaintiffs,

vs.

STATE OF KANSAS,

Defendant.

Case No. 2010CV1569

MEMORANDUM OPINION AND ORDER AND ENTRY OF JUDGMENT

ON PLAINTIFFS' MOTION TO ALTER JUDGMENT REGARDING

PANEL'S PREVIOUS JUDGMENT REGARDING EQUITY AND

PLAINTIFFS' MOTION FOR DECLARATORY JUDGMENT AND

INJUNCTIVE RELIEF

NATURE OF THESE PROCEEDINGS AND FINDINGS:

This matter is first before the Court on

Plaintiffs' Motion to Alter Judgment Regarding Panelrs

Previous Judgment Regarding Equity set out on its

previous judgment of December 30, 2014. The Court

issued that Opinion in response to the directive of the

1

Kans a s S upreme Court in i t s a f f i rman c e o f this Panel ' s

f i nd i n g s in r e gard t o the S t a te ' s ob l i gati ons i n regard

to c ap i t a l out lay s t ate aid funding and s upplemental

gene r a l s t ate aid ( l o c a l opt i o n budget e qua l i z at i on )

funding .

W e h e l d that the l e g i s l a t u r e ' s a c t i o n through the

enactment of 2 0 1 4 S e na t e Subs t i tute for HB2 5 0 6 ' s

amendmen t s and funding o f tho s e s t a t uto r y s cheme s , and

a c c omp anying as suran c e s by the S t at e ' s c ounsel o f any

n e c e s s a r y future supp l emental a c t i o n that could be

r e qu i r e d , sub s tant i a l l y comp l i e d with the Kans a s

S upr eme Court ' s j udgment s in r e g ard t o tho s e two

e quitab l e funding s t atute s . B e c au s e none o f the

furthe r curat ive a c t i on s a s s u r e d to be t a ken i f

n e c e s s a r y In the 2 0 1 5 l e g i s l a t i v e s e s s i o n have been

con f i rmed to have been t a ken , we now conclude that our

f i nding in our Decembe r 3 0 , 2 0 1 4 Opi n i on o f sub s tant i a l

c omp l i an c e w i t h t h e Gan n on j Udgment s o n these i s sue s

w a s b o t h prematur e and inc o r r e c t f o r r e a s on s we w i l l

exp l a i n sub s e quent l y . We , the r e for e , withdraw our

2

p revl o u s f inding o f s ub s t a nti a l c omp l i ance and reopen

tho s e e qu i ty comp l ian c e l s sue s .

The G overnor c a l l ed f o r a K- 1 2 s choo l finance

ove rhaul in h i s S t ate o f the S t a t e addre s s on January

1 5 , 2 0 1 5 ( Pl a i nti f f s ' Exh ibit 6 5 0 ) . Neve rthel e s s , his

budget i n c luded f u l l fund i ng of b o th c ap i t a l out l a y

s t a t e a i d and LOB sta t e a i d . ( Pl a int i f f s ' Exhibit 6 4 1 ,

p p s . 1 1 5 - 1 1 6 ) . There we r e no p ending or pre- f i l ed

b i l l s t o modi fy capit a l o u t l a y s t a t e a id o r LOB s t a t e

a i d , t h e f i r s t b e i ng 2 0 1 5 SB7 1 f i l ed o n Januar y 2 6 ,

2 0 1 5 . I t purported t o mod i fy the fo rmu l a for

s up p l emental gene r a l ( LOB) s t a t e a i d by r e structuring

t h e ave r a g e valua t ion pe r pup i l ( AV P P ) a r ray upon whi ch

a d e t e rmi nat i o n o f e l i gib i l it y i s ba s ed .

b i l l w a s sub s e quently aba ndoned .

Thi s s enate

On February 5 , 2 0 1 5 , b a s e d on a p roj e cted revenue

s h o rt f a l l in FY2 0 1 5 , the G ove rnor exe r c i s ed his

a l l otment autho r i t y , whi c h inc luded an a l l otment

a g a i n s t g ene r a l s t at e a i d for un i f ied s chool d i s t r i c t s

( US D s ) i n the amount o f o v e r $ 2 8 mil l i on , thus reduc ing

3

the p r e va i l ing b a s e s tudent a i d p e r pup i l ( BSAP P ) from

$ 3 8 5 2 t o $ 3 8 1 0 . He condit i oned imp l ement a t ion o f the

a l l o tme nt on l e g i s lat ive a c t i o n b e i ng t a k e n in l i e u t o

r e f o rm e qua l i zation a i d formu l a s a n d " t o s t al l " the

i n c r e a s e of $ 5 4 mi l l i o n yet due i n FY2 0 1 5 for cap i t a l

out l ay s t a t e a i d and L O B s t ate a i d p e r t h e exi s t i ng

f o rmul a s for the i r ca l cu l a t i on ( Pl a i nt i f f s ' Exhib it

6 1 0 ) . S h o r t l y fol l owing the Gove rnor ' s a ct ion , Hou s e

Sub s t itute f o r S B 4 wa s pa s s ed ( 2 / 1 2 / 1 5 ) , which

" s t a l l e d " the FY2 0 1 5 capit a l out l a y s t a t e aid payment s

y e t due by s p e c i fying a f i x e d payment amount f o r

Feb rua r y 2 0 1 5 , and s t a l l in g any ba l ance d u e unt i l June

2 0 , 2 0 1 5 . ( Id. § 4 ) .

On January 1 2 th o f th i s ye a r , 2 0 1 5 S B 7 , whi ch then

wa s a S enat e b i l l dea l i ng with i n f o rmat i o n techn o l ogy

aud i t s w a s introduced . It w a s eventua l l y pa s s e d out o f

the S e n a t e o n February 2 5 , 2 0 1 5 , 4 0 - 0 and was s ent to

the Hou s e and the re r e f e r r e d to the Hou s e

App r op r i at i ons Commi tt e e . On March 1 1 , 2 0 1 5 , S B 7 , a s

h a d b e e n p a s s ed by the S e na t e , wa s gut t e d b y t h e Hou s e

4

C ommit t e e and the sub s t ance o f what b e c ame Hou s e

S ub s t itut e f o r SB7 wa s i n s e r t e d a s it s ub s t ant i a l l y

ex i s t s t o thi s date . Thi s s ub s t ituted l e gi s lation

p a s s ed In the Hou s e and wa s then r e ferred back t o the

S e n a t e for cons i de r a t i on and wa s pa s s e d March 1 6 , 2 0 1 5

b y the S e nate and s i gned b y the Governor March 2 5 th• It

change d the f o rmul a f o r capital out l a y s t a t e a i d and

r e s t r i c t e d the amount o f the fina l trans fer of capi t a l

o u t l ay s t ate a i d c o r r e spond i n g l y ( § 6 3 ) . I t changed

the LOB s t ate aid f o rmul a ( § 3 8 ) . The change s t o b oth

f o rmu l a s reduced funding under e a ch fo rmu l a to

s ub s tant i a l l y coincide with the e s t imat e s provided t o

t h i s Pane l i n i t s June 1 1 , 2 0 1 4 hea ring o n comp l iance

with the equity j Udgme nt s r e nde r e d in Ga n n on . Thi s , in

f a c t , o c curred and the f i s c a l r e s u l t c a n be compare d .

The f i r s t p ropo s e d cha n g e s p r ompt e d the Plaint i f f s

t o f i l e a mot i on t o a l t e r o r ame nd o u r e qu i ty f i ndi n g s ,

t h e n the ena c tme nt o f Hous e Sub s t i tute f o r SB7 p r ompted

a furt h e r mot i on f r om P l a i nt i f f s o n March 2 6 , 2 0 1 5

a s king f o r a d e c l a r a t o r y j udgment f inding 2 0 1 5 Hou s e

5

S ub s t i tut e f o r SB7 uncons t i tut i o n a l and a s king for

i n j unc t i v e re l i e f . By an Order dated Ap r i l 3 0 , 2 0 1 5 ,

t h e Kan s a s Supreme Court i nvo ked the jur i s dict i o n o f

t h i s C o u r t and t a s ked it w i t h con s i de r at i on o f this

l a t t e r mo t i o n as we l l as t h e pending Pl a i nt i f f s ' mot i on

t o a l t e r o r amend i t s Dec embe r 3 0 , 2 0 1 4 , fi ndings in

r e g a r d to equ ity .

Acc o rding l y , and a ft e r a h e a r ing h e l d on the s e

mo t i ons o n May 7- 8 , 2 0 1 5 and r e qu i s i t e b r i e fing o f the

l s s ue s , w e , now , upon ful l c o n s i de r at i on , find , for

r e a s on s a s wi l l be di s cus s ed sub s e qu e nt l y , that 2 0 1 5

H o u s e Sub s t i tute for S B 7 v i o l a t e s Art . 6 , § 6 ( b) o f t h e

K a n s a s C o n s t i tut i o n , b oth i n r e g a rd t o i t s ade quacy o f

funding and i n i t s change o f , and in i t s embedding o f ,

i n e quit i e s in the provi s i on o f c a p i t a l out lay s t a t e a i d

a n d supp l emental gene r a l s t a t e a i d .

2 0 1 5 Hou s e Sub s t i tute f o r SB 7 ' s chan g e s to the

c a p i t a l o ut l a y s t a t e aid fundi ng formula and the

f o rmula for e qua l i zation funding unde r the loca l opt i o n

budget autho r ity nece s s a r i l y emb r a c e t h e que s t i on o f

6

the S t a t e ' s comp l i ance w i t h the j udgme nt s o f the Kan s a s

Sup r eme C ourt i n Ga nnon , a s f i r s t r a i s ed b y Pl aint i f f s '

ini t i a l mot i on to a l ter our j udgment i n r e gard t o

e qu i t y a s was e xpr e s s e d i n our Dec emb e r 3 0 , 2 0 1 4 ,

Opi n i on . We f i nd, as w e l l , that 2 0 1 5 Hou s e Sub s t itute

f o r S B 7 ' s prov i s ions r e l evant t o t ho s e two pendi ng

e qu i t ab l e funding i s sue s are not only unc onstitu t i ona l

on t he i r face , but are a l s o non- c omp l i ant with t h e

not e d Ma rch 1 4 , 2 0 1 4 j udgment o f t h e Kans a s Supr eme

Court in r e gard to supp l eme nt a l g e n e r a l s t ate a i d and

cap i t a l outlay s t a t e a i d .

We f i nd that the " PLAI NT I FFS ' PRO PO S E D FIND I NGS O F

FACT AND CONCLUS IONS O F LAW REGARDING PLAINTIFFS '

MOTION TO ALTER JUDGMENT REGARDING PANELS ' PREVIOUS

JUDGMENT REGARDING EQUITYN, which t hough l imi ted in i t s

p r o f fe r e d capt ion , a l s o e n c omp a s s e s P l a i nt i f fs ' March

2 6th mot i on for de c l ar a t o r y and inj unc t ive re l i e f , a l l

o f whi ch p r o f fe r ed fa ct s and c onc l u s i ons w e he reby

adopt a s our own , unle s s o the rwi s e s p e c i f i ca l ly noted .

The p r o f f e r ac curat e l y s e t s out the mat e r i a l and

7

r e l evant fact s o f re cord , t h e r e levant and mat e r ial

e x h ib i t s , and supp o r t ing a r gume nts whi ch we adopt i n

s up p o r t o f our conclus i ons t o b e r e a ched a s we w i l l

e xp o und upon fol l owing . Our concur rence with

P l a i nt i f f s only ends at the i r sugge s t e d r e que s t for an

imm e d i a t e inj unct ive remedy i n r e g a rd to § § 4- 2 2 o f

Hou s e Subst itute for S B 7 . Whi l e the b a s i s advanced by

P l a i nt i f f s for such a r emed y would e xi s t , we current l y

de c l i n e t o exe r c i s e that s ugge s t ed reme dy and othe r s at

t h i s p o i nt in t ime as r e qu e s t e d by P l a inti ffs in 1s

1 0 1 , 1 0 3 , 1 0 7 , 1 1 0 , 1 1 1 , and 1 1 2 of the i r prof fer .

DI S CUS S I ON :

We f ind best p r a ct i ce d i c t a t e s an e x amina t i o n f i r s t

o f 2 0 1 5 House Sub s t i tute f o r S B 7 i n gener a l . W e

p r op o s e t o exp l a i n what its e f fe ct i s ; wha t i t s e f f e ct

i s i n l i ght o f any f inding s on the remanded l s sue o f

t h e c o n s t itut i ona l adequ a c y o f the funding of our

K an s a s K- 1 2 s ch o o l s ys t em , whi c h we had f ound In our

January 1 1 , 2 0 1 3 , Opi n i on w a s i nade quat e and whi ch we

r e a f f i rmed as i nade quat e i n our De c emb e r 3 0 , 2 0 14 ,

8

Opi n i on and in an Order i s s ue d by us o n March 1 1 , 2 0 1 5

o n t h e S t a te ' s mot i on to a l t e r o r ame nd that Decemb e r

2 0 1 4 Opi n i on ; and wha t i t s e f f e ct lS I n l i ght o f i t s

e qu i t ab l e ( o r ine quitable) component s , genera l l y and

s p e c i f i c a l l y , as it d e a l s w i t h capit a l out lay s t a t e a i d

and LOB e qual i z at i on s t ate a i d , which , t o o , re f l e ct o n

t h e r emanded que s t ions o f t h e Stat e ' s comp l iance with

the f i n a l j udgment s o f the Kan s a s Sup r eme Court In

Gannon I n regard t o t h e s e l a t t e r two c omp o nent

e qu i t ab l e funding me chani sms . As a mat t e r of

p r o c e e ding , we de fer to the l a s t the que s t i ons of Hou s e

S ub s t i tu t e for SB 7 ' s overa l l e f f e ct o n the ade quacy o f

fund i n g and any e qui t y i s s u e s in gene r a l unt i l a f t e r

o u r s p e c i fic dis cus s i on o f t h e l o ca l opt i o n budget

( LOB) and cap i t a l out l ay c omp onen t s o f House Sub s t i tute

f o r S B 7 .

WHAT HO USE S UBSTI T UTE FOR S B7 DOE S :

H ou s e Sub s titute for S B 7 , though p romoted a s a

change and an improvement in K-1 2 funding , rea l l y

encomp a s s e s - exc lusive o f i t s change s t o the formu l a s

9

r e g a r d i n g capital out l a y s t a t e a i d and LOB supp l ement a l

s t a t e a i d - what i s no mo r e than a fre e z e on U S D

op e r a t i o n a l funding for two ye a r s b a s e d o n FY2 0 1 5

( 7 / 1 / 1 4 - 6 / 3 0 / 1 5 ) funding , with any increa s e in gener a l

s t at e a i d only coming b y way o f adding in , unde r the

gUl s e o f ope rationa l funds , Kan s a s Pub l i c Emp l o ye e

Ret i r eme nt System ( KPE R S ) emp l o y e r cont ributi o n s for

FY2 0 1 6 and FY2 0 1 7 t o the " b l o c k " o f funds provided.

The s e K PERS contr ibut i o n s h e r e t o f o r e were made i n

s ep a r a t e l ine items o f annua l approp r i a t i o n bi l l s.

( Hou s e S ub s t i tute f o r S B 7 , § 6 ( a ) ( 6 ) ) . These i n clude d

KPERS p a yment s wou l d s how f o r FY2 0 1 6 a nd FY2 0 1 7 a s

i n c re a s i ng , but n o t due to emp l o ye e headcount s , except

i n c ident a l l y , but rathe r to othe r l e g i s lat ive

ena ctme n t s requiring incre a s ed contributi ons t o the

KPERS p e n s i on fund in an a t t emp t t o reduce KPE R S "

pub l i c l y de c l a red unde r funde d l i ab i l i t i e s .

Neve rthe l e s s , i f p e nding l e g i s l at i on i s pa s s ed t o

r e t r e a t from the e a r l i e r a dop t e d i n cr e a s e s in the

emp l oy e r cont ribut i ons as a budget r e duct ion me a sure ,

1 0

e v e n the purp o r t e d inc r e a s e i n FY2 0 1 6 and FY2 0 1 7

do l l a r s in the s e " b l o c k" g rant funds that are b o l s t e r e d

b y t h e s e K PERS payment s , a n d now bund l e d f o r de l ive r y

a l o n g with U S D op e rati onal funds , wi l l be l e s s .

( T e s t imony o f Da l e Denni s ) . T hi s , i n fact , ha s

o c cu r r e d . S e e 2 0 1 5 Hou s e Sub s t i tute f o r S B l 1 2 , §§ 1 1 4 -

1 1 5 .

A s we have always b e l i ev e d t o b e the case , KPERS

c ont r ibut i ons are not abl e t o be u s e d for gene r a l

s ch o o l di s t ri c t operat i ons and pa s s s t ra i ght through

U S Ds t o KPERS o r are o therwi s e p l a c e d onl y temporar i l y

i n a s ch o o l di s t r i ct ' s spe c i a l r e t i r ement fund . (Id. §

6 9 ) . We r e i t e ra t e , from our p a s t Opi n i on s , KPERS

c o nt r ibut i on funds have e i the r never b e e n cons ide r e d b y

exp e r t s o r other c ompe t ent p r o fe s s i o n a l s i n eva luat i n g

t h e adequacy o f K-1 2 s choo l funding o r , i f so

c o n s i de r e d ( Augenb l i c k & M ye r s Study ) , s u ch KPERs

cont r ibut i ons were r e f l e c t e d a s an add- on incre a s e t o

the p e r pup i l c o s t s ( BSAP P ) , n ot a s an i n-lieu o f , o r

in s ub s t itute f o r , other n e ed e d funds projected by

1 1

the s e experts to reach a l eve l o f adequacy for K- 12

s ch o o l funding .

Hou s e Sub s t i tute for S B 7 fu rther c a rr l e s an

app r o p r i a t ed category o f funds denominated as an

" ex t r a o r dinary need fund " . ( Id . § 1 7 ) . However , the

o r i g i n o f thi s fund i s not new mon e y , but mone y

s ub t ra c t ed ( Id . : § 6 ( a ) ( 6 ) : " l e s s " ) from what wou l d

h a ve o t h e rwi s e been i n the amount o f U S D funds

app r o p r i ated in "b l o c k" to the U S D s ' g e ne r a l funds

b e f o r e t h e subt ract i on . Thi s s ub t r a c t i o n i s

c a l c u l a t e d at a 0 . 4 % rat e . ( Id . § 6 ( a ) ( 7 ) ) . Thi s

c a l cu l a t e d subt r a c t i o n amount i s then p l aced i n thi s

s e p a r at e l y denomina t e d " extrao rdinary need fund " .

T h e ava i l ab i l i t y o f moni e s I n thi s ext raordinary

need fund to a USD i s b a s e d o n an app l i cat i on by a U S D

s h o w i n g e i ther " ext r a ordina r y e n r o l lment i ncre a s e s " , an

" ext r a o rdinaryh drop in prop e r t y tax app r a i sed value s ,

o r oth e r un fo r e s een a ct s o r c i r cums t a n c e s that

" s ub s t an t i a l l y impa ct" an app l yi ng U S D ' s budge t . The

fund i s admini s t e re d by the S t a t e Finance C ounc i l ,

1 2

whi c h i s chaired by the Governo r , and con s i s ts

othe rwi s e of legi s l at iv e l e ade r s . The l aw requ l r e s a

ma j o r i t y vote o f the F i nance Counci l for a re l e a s e o f

funds t o a U S D ( Id . § 1 7 ) . We f i nd t h i s s choo l need

eva l ua t i o n , being entru s t e d to the S t a t e Finance

Counci l , to be oddly p l ace d . As p l a c e d , i t app e a r s t o

b e mo r e a s t ate budget cont r o l devi c e rather than a

true n e e d s a s s e s s in g f a i l s a fe f o r a U S D that finds

i t s e l f with de ficient revenue s to obt a i n its

e ducat i on a l obj e ct i ve s . The Kan s a s S t at e Board o f

Educ at i o n , at l e a s t I n the f i r s t instance , ha s the

c on s t i tu t i onal dut y of the ove r s i ght o f U S Ds . The

needs eva luat ion p r o c e dure adop t e d i n c lude s no p a rt f o r

t h a t B o a r d .

Hou s e Sub s titut e f o r S B 7 ' s ove r a l l " b l o ck g rant "

funding i s based on the FY2 0 1 5 g ene ral s t ate a i d to

USDs s t a t ewide ( Id . § 6 ( a ) ( 1 ) ) , FY2 0 1 5 supplement a l

gene r a l s t ate a i d funding ( Id . § 2 ) , and FY2 0 1 5 cap i t a l

out l a y s t ate a i d funding ( Id . § 3 ) . The l egi s l ature ,

b y Hou s e Sub s t itut e f o r S B 7 , repea l s the exist i ng

1 3

S cho o l D i s t rict Finance and Qua l i ty P e r formance Act ,

K . S . A . 7 2 - 6 4 0 5 e t s e q . However , it gr ounds its b l o c k

g rant funding amount s f o r FY2 0 1 6 and FY2 0 1 7 on that

A ct ' s p r ov i s i ons , a s amende d by Hou s e S ub s t itut e for

S B7, f o r determi ning the budget amount s t o carry

f o rward . The S chool D i s t r i ct F i nance and Qua l i t y

P e r f o rman c e Act ' s s t ructure inc l uded exp e r t -de s i gned

w e i gh t i ng s , which accommodated and p rovided for mo r e

r evenue s p e r pup i l to U S D s with sub g roup s deeme d mo r e

e xp e n s ive to e duc ate . Howeve r , by fr e e z ing thi s FY2 0 1 5

funding l evel for FY2 0 1 6 and FY2 0 17 , the funding f o r

t he s e l a t t e r two f i s ca l ye a r s wi l l n o t a c c ommodat e any

s uch demo graphi c chang e s in a s choo l d i s t r i ct ' s s tudent

makeup and , as not e d , even chang e s I n the numbe r o f

fu1l t ime equivalent ( FT E ) s tudents I n a U S D ove r a l l a r e

o n l y di s c reti onar i l y a c c ommodat e d with incre as e d

funding when the enrol lment inc r e a s e lS

" ex t r a o rdinaryu . The h i s t o r y o f the t r a j e ctory o f t he

Kan s a s K - 1 2 s choo l popul a t i o n h a s b e e n up as ha s b e e n

1 4

the demo graphi c dive r s i t y o f the K - 1 2 s tudent

p opu l at i on .

By examp l e , P l a int i f f U . S . D . 5 0 0 ' s e s t imat e d - but

n o t c l e a r l y unu sual - i nc r e a s e of 5 0 0 s tudents p e r ye a r

w ou l d not b e ac c ommodated i n FY2 0 1 6 o r FY2 0 17 , much

l e s s a c c ommodated for t he f a c t that s tudent s in that

U S D d i s p ropo rti onat e l y fa l l into s ubgroup s for which

w e i g ht in g s wou l d have p ro v i de d an enhanc e d amount o f

s t a t e funds p e r pup i l i n o r d e r t o fund the learning

n e e d s o f tho s e incr e a s e d s t udents that fe l l int o

s u b gr oup ing s . ( Te s t imo ny o f Dr . Lane , Sup erint e ndent ,

U S D 5 0 0 , May 7 - 8 , 2 0 1 5 he a r i ng ) . Wi thout an ove ral l

de c r e a s e In we i ght e d s tude nt s , five hundr e d new

s tudents In FY2 0 1 6 cou l d p r o j e ct 8 3 4 w e i ghted s tudent s ,

e x c l u s ive o f s p e c i a l e duc a t i on , f o r funding purp o s e s I n

U S D 5 0 0 . This lS b a s e d o n i t s rat i o o f unweighted t o

we i ghted students I n FY2 0 1 5 o f 1 t o 1. 6 6 8 . P l a i nt i f f s '

E xh ib i t 6 0 3 : FY2 0 1 5 Le g a l Max , c o l . 4 ( c ) , col .

fo l l ow i ng c o l . 1 7 ( a ) ) . At the curr ent B SAPP o f $ 3 8 5 2 ,

thi s c ou l d me an an addi t i o n a l c o s t to U S D 5 0 0 o f

1 5

$ 3 , 2 1 2 , 5 6 8 to educate the s e new s tudent s . At a BSAPP

o f $ 4 9 8 0 , wh i ch we found in our D e cemb e r 3 0 , 2 0 1 4

Opi n i on t o be the inf lat i on- adj u s t e d BSAP P for a leve l

o f c o n s t i tut i ona l ade qua cy i f we i ght ings we re not

adj u s t ed upwa rds , that c o st would be $ 4 , 1 5 3 , 32 0 . I n

FY2 0 1 5 , t he U S D 5 0 0 i ncr e a s e in s tude n t s was 5 0 0 , but ,

othe rwi s e , due to we i ght ing adj u s tment s l owering the

ove r a l l w e i ghted s tudent count , the net galn r o s e by

j u s t 2 7 7 . 7 student s . Neverthe l e s s , t h i s l atter

i n c re a s e alone would add $1, 0 6 9 , 7 0 0 to the co s t s for

the i r e ducat i on . See P l a int i f f s ' Exhib i t 6 1 8 .

Hou s e Sub s t i tute for SB7 a l s o purpo r t s to incre a s e

a U S D ' s f l exib i l i t y i n the u s e o f funds f o r ove rall

operat i o n s by not r e quir ing them t o b e p l aced in

s ep a r a t e cat e g o r i c a l funds , such a s h e r e t o fore s et

a s i de f o r certain we i ght ed funds o r other funds such a s

a contingency r e s e rve fund . Furth e r , even if such

funds a r e ma intained separat e l y , i t p e rmi t s e s s enti a l l y

f r e e t ra n s fer between funds a t a U S D ' s d i s c retion to

otherw i s e ident i fy its mo st p re s s ing ne e d s . Only

1 6

e x c ep t e d a r e funds for KPERS , bond and int ere s t

p a yment s , and the l o c a l t a x p o rt i o n o f s p e cial funds

s u ch a s funds In a cap i t a l out l a y fund that are

g e n e r a t e d from a s p e c i a l l o ca l mi l l l evy for that

s p e c i f i c u s e ( Id . § § 1 9 , 3 9 , 6 2 ) . However , fund t r ans f e r

f l exibi l i t y h a s b e e n s ub s t a nt i a l l y ava ilable s in c e 2 0 1 1

( K . S . A . 72 - 6 4 6 0 ) .

The S t ate con s i s t e nt l y p o i nt s t o U S D s cont ingency

r e s e rve funds as w i de l y ava i l ab l e . H owev e r , a s w e have

p o i nt e d out in previous Opi n i on s , the s o u r ce o f the s e

c o nt ingency r e s e rv e funds c ome s p r in c ipa l l y out o f

o p e r a t i o n a l funds , whi ch h ave be e n , and a r e , inadequate

to the t a s k overal l . Art i c l e 6 o f t h e Kan s as

C o n s t i tut i on p lace s the r e spo n s ib i l i t y fo r ope r a t ing

and ma i n t a i ning Kan s a s s ch o o l s w i t h l o cal scho o l b o a rds

to be ove r s een by the Kan s a s S t a t e Bo a rd of Educat i o n .

T h e l e g i s l atur e i s p r i nc ip a l l y d i r e c t e d t o as sur e the

n e c e s s a r y funding for K- 1 2 educat i on . As Dr . Lane o f

U S D 5 0 0 t e s t i f i e d , it co s t s over a mi l l i o n do l l a r s a

d a y t o run that s choo l di s t r i ct , i t s c ont ingency

17

r e s e rve s holding app roximat e l y a 3 0 day supply o f c a s h .

T o a s s e rt that l o c a l s choo l boa rds should abandon t h e i r

c o n s t itut ional dut i e s t o K - 1 2 s tudent s b y f a i l i ng t o

h e d g e the r i s ks inherent i n inadequat e funding thr ough

ma i ntain ing r e s e rve funds s o a s to cont i nu e the i r

c o n s t i tut ional dut i e s a s l o ng a s p o s s ib l e i n the f a c e

o f the f a i lure o f othe r s t o ful fi l l the i r s i s a g r o s s ly

mi s p la c e d propo s i t i on . I f funding i s i nadequat e t o

b e g in w i th , fund f l exib i l i t y i s me r e l y a que s t i o n o f

whi ch funds should be u s ed f i r s t , not whi ch funds c a n

b e u s e d better .

Hou s e Sub s t itut e f o r S B 7 f r e e z e s change s made

e a r l i e r by 2 0 1 4 HB 2 5 0 6 , such as e l iminat i o n of the non­

p r o f i c i ent wei ghting whi ch wou l d have othe rwi s e

p r o duced $ 4 , 8 8 5 , 4 8 5 in FY2 0 1 5 t o e l i g i b l e s ch o o l

di s t r i ct s . Otherw i s e , Hou s e S ub s t i tute f o r S B 7 mad e

change s to the s t a t ut o r y f o rmul a s f o r c a l culat ing LOB

e qu a l i z at i on p a yments ( § 3 8 ) and capi t a l o utlay s t a t e

a i d ( § 6 3 ) e f fe ctive fo r F Y 2 0 1 5 ent i t l emen t s , p r o du c ing

r e duct i ons in FY2 0 1 5 s t ate aid for tho s e two purpo s e s .

1 8

T h e s e FY2 0 1 5 reduct i o n s In d o l l a r s ava i l ab l e are f r o z e n

g o i n g f o rward through FY2 0 1 7 .

L a s t l y , l o c a l s c ho o l b o a rds were glven aut h o r i t y t o

i nc r e a s e the i r LOB s p e rcenta g e s , both by 2 0 1 4 S enate

S ub s t i tute f o r HB2 5 0 6 and b y 2 0 1 5 Hou s e Sub s titute f o r

S B 7 . For tho s e that did not do s o f o r FY2 0 1 5 , t h e r e l S

n o w a o n e sho t opp o r tuni ty that mu s t b e accomp l i s h e d b y

Jul y 1 , 2 0 1 5 , i f t o b e done a t a l l . Howeve r , i f done

n o w , a s chool board' s adopt i on or voter approva l , whe r e

r e qu i r e d , for such e nhan c e d LOB autho r i t y - o r any

o t h e r change by the e nd o f FY2 0 1 5 by a U S D , such as t o

me r e l y r a l s e i t s autho r i t y t o the s t anda rd cap o f 3 0 %

o f i t s general fund f r om a l ower p e r cent age - wi l l not

ma k e the s e new LOB revenu e s e l igible f o r inclu s i on I n

de t e rmining L O B s upp l eme nt a l gene r a l s t a t e aid gOlng

f o rw a r d , as s uch a i d is ba s e d on the FY2 0 1 5 amount s ,

whi ch were adopted b y the FY2 0 1 5 LOB budgets in 2 0 1 4 .

( Id . r §§ 12 , 1 3 ) . Hence , the revenue s d e r ivative o f any

i nc r e a s e in l o c a l p r op e r t y t ax l evy author ity, wh i l e

augmenting a U S D ' s l o c a l opt i on budget , s t i l l l e ave s ,

1 9

a U S D ' s d o l lar ent i t l ement f o r suppl ement a l ge n e r a l

s t a t e a i d at the FY2 0 1 5 l e v e l . Furthe r , i t s l o c a l

p r o p e r t y t ax r e ceipt s are f r o z en going fo rward t o an

amo unt n o t gre ate r than that r a i s ed f o r FY2 0 1 5 or that

whi ch c o u l d have been ra i s e d f o r FY2 0 1 6 , r e gar d l e s s o f

p r o p e r t y valuat ion change s ( Id . § 1 2 ) �

CAPI TAL OUTLAY STATE AID FUNDING AND HO USE SU BS T I T UTE

FOR SENATE BILL NO . 7 :

T h i s Pane l de t e rmi ned , b y i t s Opi n i on o f Janu a r y

1 3 , 2 0 1 3 , that the t o t a l e l imina t i on o f capit a l o ut l ay

s t a t e a i d by the l e g i s l ature , a s K . S . A . 2 0 1 3 S upp . 7 2 -

8 8 1 4 ( c ) t hen dire c t e d , c r e a t e d an uncons t i tuti o n a l

we a l t h -b a s ed dispar i t y i n t h e ava i lab i l i t y of funds f o r

cap i t a l o utlay purpo s e s betwe e n p rope rty t ax w e a l thy

di s t r i ct s and tho s e l e s s s o . Thi s ru l i ng was a f f i rmed

on app e a l . Ga nnon v . S t a t e , 2 9 8 Kan . 1 1 0 7 , 1 1 7 5 - 1 1 8 4

( 2 0 1 4 ) . Con s e quent l y , the Kan s a s Supr eme Court ' s

e n fo r c ement dire ct i o n s t o thi s Panel f o l l owing that

a f f i rmanc e we re exp r e s s ed as f o l l ows :

"We remand f o r the p a n e l to enforce t he s e a f f i rmed equity rUling s . Because the l e g i s lature should have an opportun i t y to

2 0

exp e d i t i ou s l y a ddre s s t he s e inequi t i e s , its actions may require additional pane l review . S o we p r ovide the f o l l ow i n g guidance t o the pane l :

1 . As to cap i t a l o u t l a y :

a . I f b y Jul y 1 , 2 0 1 4 , the l e g i s l ature

ful l y funds the c a p i t a l out l a y provision a s contemp l ated in K . S . A . 2 0 1 3 Supp . 72 -8 8 1 4 , the pane l n e e d n o t t a ke any additi onal action on t h i s i s s u e .

b . I f by Jul y 1 , 2 0 1 4 , the l e g i s l a ture act s to cur e-whether b y s t atutory amendme nt , l e s s than f u l l r e s t orat ion o f funding to p r i o r l eve l s , o r otherwi se-the panel must app l y o u r t e s t to dete rmine whe the r that l e gi s l at ive a c t i on cures the inequi t i e s it f ound and whi ch we have

a f f i rmed . More s p e c i f i c a l l y , the p ane l mus t a s s e s s whethe r the cap i t a l out lay s t a t e a i d-through s t ructure and imp l ementat i on-the n gives s ch o o l dist r i c t s rea s onably equa l a c ce s s t o sub s t antia l l y s imi l a r educati onal opportuni t y through s imi l a r tax e f fo r t . I f the l e g i s l at ive cure f a i l s thi s t e s t , the pane l should enj o in its operat i on and e n t e r such orde r s a s the pane l de ems app r op r i at e .

c . I f by Ju ly 1 , 2 0 1 4 , the l e g i s l atur e t a k e s no curat ive a ct i o n , the panel sha l l de c l a r e null and v o i d that p o r t i o n o f K . S . A . 2 0 1 3 Supp . 7 2 - 8 8 1 4 ( c ) p rohibiting trans f e r s from the state g e ne r a l fund to the s chool di s t r i c t c a p i t a l out l a y state a i d fund . Thi s will enab l e the funds env i s i oned by the s t atut o r y s cheme to be ava i l ab le t o s cho o l d i s t r i c t s a s intended .

2 1

d . Ul tima t e l y , the p ane l mu s t e n s ure the inequit i e s in the p r e s ent o p e rat i on o f the capital out l a y s t atut e s , K . S . A . 7 2 - 8 8 0 1 e t

s e q . , a r e cur ed . "

Ga n n on at p . 1 1 9 8 .

Upon recelvl n g the Kan s a s S upreme Court ' s Man da t e

o n Ma r ch 3 1 , 2 0 1 4 , we s chedu l ed a h e a r ing o n a l l

a f f i rmed equi ty i s sue s f o r June 1 1 , 2 0 1 4 . By that date

the l e g i s l ature had adj ourne d , but h a d r e sp onded to the

S up reme Court ' s j udgment by the enactment o f Senate

S ub s t i tute f o r HB 2 5 0 6 , whi ch ame nded K . S . A . ( 2 0 1 3

S upp . ) 7 2 - 8 8 1 4 ( c ) , a s f o l l ow s , i n i t s S e ct i on 4 7 :

" ( c ) The state b o a r d sha l l c e rt i fy to the d i r e ctor o f a c co unt s and report s the e n t i t l ement s o f s cho o l d i s t r i c t s det e rmined under the pro v i s ions o f sub s e ct i on ( b ) , and an amount e qual the reto sha l l b e t rans f e rred by t he dire c t o r from the s t at e gene r a l fund to the s chool d i s t r i ct cap i t a l out l ay s t ate aid fund f o r d i s t r ibut i o n to s c ho o l di s t r i ct s , except

that no transfers shall be made from the state

general fund to the school district capital

outlay state aid fund during the fiscal years

ending June 3 0 , 2 0 1 3 , June 3 0 , 2 01 1 , June 30 ,

2 0 1 5 , or June 30 , 2 0 1 6 . Al l t r a n s fe r s made I n a c c o rdanc e w i th the prov i s i ons o f th i s s Ub j e ct i on s h a l l b e cons i de red t o b e demand t rans f e r s from t he s t a t e genera l fun d . "

2 2

Th e L e gi s l atur e l ater ln that se s s ion ame nded thi s

s e ct i o n t o ma inta i n t h e b a r through June 3 0 , 2 0 1 4 . See

L . 2 0 1 4 , ch . 1 4 3 , § 1 1 2 ( c ) .

The 2 0 14 l e gi s l at u re t hrough Senate Sub s t i tute f o r

HB2 5 0 6 i n its S e ct i on 7 ( j ) , a l s o , as h a d been i t s

p r a c t i c e prior t o adding t h e p r i o r r e s t r i ct ive prOV1 S O ,

made a " no limi t " app r op r i a t i o n o n the capital out l a y

s t a t e a i d fund f o r FY2 0 1 5 , whi c h then p e rmitted the

demand t rans f e r f r om the g e ne r a l fund as provided f o r

i n i t s amende d 7 2 - 8 8 1 4 ( c ) t o p r o c e ed a s int ende d . I n

other w o rds , the c ap i t a l o ut l ay a i d f o rmu l a wa s a l l owed

t o ope r at e as it w a s t he r e t o fo r e exi s t ing and intend e d ,

i t s rev e nues f l owing f r om the f o rmul a without

l e g i s l a t ive a l te r a t i o n e i t h e r b y s t a t ute o r

app r op r i at ion .

The l e gis l atur e had b e en p r ovided an e s timate o f

the e f f e ct s o f the adopt i o n o f S enate Sub s t i tute f o r

HB2 5 0 6 b y a memo randum from t h e Kans a s State Depa rtme nt

o f E du c a t ion dated Ap r i l 6 , 2 0 1 4 . S e e Exhibit D

S t a t e ' s No t i ce of Ful l Equ a l i za t i on Fun di n g . . An d

2 3

t o Di sm i s s th e Equ i ty Cl a im s f i l ed Apri l 2 5 , 2 0 1 4 . A

s l i ght l y updated ve r s i on o f that memo randum wa s

e xamp l e d at our June 1 1 , 2 0 1 4 h e a r i n g and i s a g a i n

b e f o r e u s now ( P l a i nt i f f s ' Exhi b it 5 0 7 : Ap r i l 1 7 , 2 0 1 4

Memo r andum ) . As exp l a ined a t our June 1 1 , 2 0 1 4

hea r i ng , and agaln I n o u r mo st r e c e nt h e a r ing M a y 7 - 8 ,

2 0 1 5 , t h e e s t imat e s the r e p r e s e nted o f the ave r a g e

v a l uat i o n p e r pup i l ( AV P P ) f o r e a ch US D u s e d i n that

memo randum wa s b a s e d o n the j us t - p r e ceding y e a r ' s -

2 0 1 2 - 2 0 1 3 - p roperty va luat i o n s , with the current

yea r ' s v a luations upon whi c h the fo rmu l a was di r e cted

t o op e r a t e for FY2 0 1 5 - the 2 0 1 3 -2 0 1 4 va l uatio n s - yet

to be c omp i l e d . At our Jun e 1 1 , 2 0 1 4 , hear ing , and in

r e c o gni t i on that the Kan s a s S t a t e Department o f

Educat i o n ' s memo randum w a s but a n e s t imate o f t h e

do l l a r r evenues to b e p r oduced by t h e f o rmul a , t h e

S t a t e ' s coun s e l advi s e d t h e Pan e l , a s f o l l ows :

"No w , what happe n e d he r e a s it g e t s ba c k t o the l e gi s l ature , the l e g i s l ature h a s Gan n on ,

i t s ays ful l y funded . I t g o e s t o i t s agen c y , s a y s how much d o e s that me a n . W e c an ' t know exa c t l y , but t e l l u s what t hat mean s , and w e ' l l

2 4

do that . We don ' t fund s h o rt of i t , we ' l l g o the full amount .

I think what the l e g i s l a t ure de s e rves i s a p a t o n the b a c k . I w o u l d hope that we are n o t i n t o thi s ide a that s omehow w e c a n ' t t rust t h e l e g i s l ature , w e n e e d t o moni t o r them to the b i t t e r end . That is u n fa i r . I t ' s not rea s o n when you cons ider the di f f e r ent l e g i s l atures t hat have l o o ked at t h i s , the di f fe r ent a dmin i s t rations . I t ' s not f a ctu a l l y bas ed . I t p r obably i s i t e s t amen t mo re t o the di fficul t y i n unde r s t anding , a s I think we ' ve a l l found , what Art i c l e 6 me ans t han i t l S a nything e l s e .

But the r e ' s a punch l i ne t o a l l o f th i s o n t h e d i smi s s a l i s sue a n d o n t h e i de a that , we l l , we a r e de a l ing with a n e s t ima t e h e r e . The w a y that LOB i s funded ove r the c our s e o f the y e a r i s y o u p a y it ove r i n i n s t a l lment s . The l a s t i ns t a l lment i s p a i d a n d wi l l be p a i d July and I don ' t think i t i s actua l l y Ju ly 1 , but aft e r the f i r s t o f Jul y i n 2 0 1 5 . I t w i l l b e pos t e d , f o r a ccount ing r e a s on s , June o f 2 0 1 5 . So i f we get to the end o f the year and the 1 0 9 ends up b e ing 1 0 8 , then that mone y i s shored back t o t h e s ystem . I f t h e 1 0 9 e nds up b e ing 1 1 0 , then in next yea r ' s app rop r i at i o n s , they j ust add a mi l l i on on and i t wor k s i n . S o the way the s ys t em i s s e t up , a l t hough we have an estima t e , t h e r e ' s a way to true up the fac t o r at the end .

S o we have c omp l i an c e with what the mandate has inst ruct e d , ful l c omp l i ance by a l l r e c o gnit ion . There i s n o eviden c e t o sugge s t anything opp o s i t e and a way t o ma ke s ure we c o u l d have it trued up at the end . Under t h e c i rcums tance s , we thi n k i t ' s app r op r i ate f o r the p ane l to do what t he sup r eme court ha s sugge s t e d , which i s t o do no mo r e , which wha t

2 5

do e s that do with thi s c a s e a s it g o e s wit h the e qu i t y ? It dismi s s e s i t . And that ' s the r e l i e f that we a r e r e qu e s t ing . "

At the June 1 1 , 2 0 1 4 h e a r i n g , thi s Panel made an

o r a l f inding of " sub s t ant i a l c omp l iance " with t h e

Kan s a s Supreme Court ' s j udgment , b u t de f e r red entry o f

a f o rma l rul i ng p endin g i t s ove ra l l Opi n i on , whi ch

wou l d include the remanded i s s ue o f funding ade quacy a s

we l l a s our forma l opinion o n t he remanded issue s o f

comp l i an c e with the Kan s a s Sup r eme Court ' s j udgment s

c o n c e rnlng capi t a l out l a y s t a t e a i d and suppl emental

g e n e r a l s t ate a i d . Our Opi n i on o f Decemb e r 3 0 , 2 0 1 4

de c ided a l l rema ining i s s u e s b e f o r e u s emanat i n g from

the Kan s a s Supreme Court ' s Ma r ch 2 0 1 4 Ga n n on mandate t o

us . Between June 1 1 , 2 0 1 4 and De c emb e r 3 0 , 2 0 1 4 we

r e c e ived no advi s o rie s that the e s t imat e s advanced i n

Jun e had change d .

A s we s e t out ea r l i e r , on January 1 5 , 2 0 1 5 , the

Governor a s ke d the 2 0 1 5 l e g i s l ature to change t h e

S t a t e ' s s chool f i nanc e formu l a a n d to enact a b l o ck

grant s y s t em in the i n t e r im p e nding c o n s i derat i on o f

2 6

what changes shou l d be made . The Gove rnor ' s budget

r e l e a s e d January 1 5 , 2 0 1 5 , re f l e cted cap i t a l out l ay

s t a t e a i d payable for FY2 0 1 5 due o f $ 4 5 mi l l i o n , whi ch

w a s wha t wou l d have been what the exi s t ing formula a s

w r i tt e n would have de l iv e r e d b a s e d o n 2 0 1 3 - 2 0 1 4

va luat i o n s and the r e s u l t i n g ave rage valuat ion p e r

p up i l ( AV P P ) calcu l a t i on s made . ( P l a i nt i f fs ' Exhib i t

7 0 1 , S e c t ion 3 : $ 4 5 , 6 2 9 , 7 2 5 ) . On Feb rua ry 5 , 2 0 1 5 , the

Governo r impo sed the he r et o fo r e noted a l l o tmen t , i t s

u l t imat e imp l ement ation conting ent on l e g i s lat ive

a c t i on t o re form e qua l i z at i on formu l a s and " t o s t a l l "

FY2 0 1 5 s ums yet due .

B y e nact ing Hou s e Sub s t itute for S B 7 , the Kan s a s

l e gi s l ature , b y the Ac t ' s § 6 3 , a lt e r ed the cap i t a l

o u t l a y f o rmu la then ex i s t i ng i n K . S . A . ( 2 0 1 4 S upp . ) 7 2 -

8 8 1 4 , a s had been mode s t l y changed b y Hous e Sub s t i tute

f o r S B 4 , § 5 4 , p a s s e d February 1 2 , 2 0 1 5 , which had o n l y

s t a l l e d tho s e cap i t a l out l a y s t at e a i d p a yment s f o r

FY2 0 1 5 . I t did s o by a l t e r ing the s t a r t ing point f o r

t h e a r r a y o f USDs ' AVP P rankings from t h e lowe s t rather

2 7

t h a n the me dian rankings and chang ing the percentage

u s e d to c a l culate the formu l a ' s cap i t a l out lay s t ate

a i d such that the new a r r a y for U S D s ' AVP P ret urned

o n l y $ 2 7 , 0 5 9 , 8 6 6 , or $ 1 8 , 5 6 9 , 8 5 9 l e s s than othe rwi s e

due f o r FY2 0 1 5 had t he formu l a i n p l a c e a t the t ime o f

o u r hear ing in June , 2 0 1 4 b e e n honored , thus c l o s e l y

c o n f o rmi ng with the KS DE p r o j e ct i o n s in i t s memo r andums

of Apr i l 2 0 1 4 o f $ 2 5 , 2 0 0 , 7 8 6 . We are now advi s e d thi s

r i s e in dol lar amount o c cur red because o f a ri s e in

a s s e s s e d va luat i ons for the 2 0 1 3 - 2 0 1 4 ye a r and the fact

man y s ch o o l di s t r i c t s were a b l e t o inc r e a s e the i r

cap i t a l out lay l evi e s from the property t a x reduct i o n s

a r l s lng from t h e a n t i cipa t ed ful l funding o f l o c a l

opt i on b udget s upp l eme nt a l gene r a l state a id . Howeve r ,

that p r operty valua t i o n s h i s t o r i c a l ly fluctuate both up

and down i s demo n s t r a t e d b y the S t a t e ' s Exhibit 3 0 0 9 .

Hou s e S ub st itut e f o r S B 7 § 6 3 provided that the a l t e red

f o rmu l a would b e app l i e d r e t ro a c t i v e l y f o r FY2 0 1 5 ,

whi c h s um then a l s o s e t the amount o f cap i tal outlay

2 8

s t a t e a i d to be p a i d g O l ng forward I n each of FY2 0 1 6

and FY2 0 1 7 .

The r e s u l t o f thi s cha nge on U S D s ' s a nticipat e d ,

a n d a l r e a dy budge t ed , r e c e ipt s i s evidenc e d in Exhib i t

7 0 1 , S e ct ion 1 and , sp e c i f i ca l l y f o r c api t a l out l a y a t

Exhib i t 7 0 1 , S e ct i on 3 . A s t h e t o t a l l o s s of

$ 1 8 , 5 6 9 , 8 5 9 in cap i t a l out l ay state aid for FY2 0 1 5

c a r r i e s ove r for e a ch o f FY2 0 1 6 and FY2 0 1 7 , that ma ke s

the r e du c t i on a r e - o c c u r r i ng l o s s by a l l e l i gib l e U S D s

i n e a ch o f tho s e y e a r s g o i n g f o rward and the actual

l o s s o f e l igibi l i t y by s ome . Further , i n FY2 0 1 5 ,

b e c au s e the KSDE, pur s uant to i t s autho r i t y , and i n

ant i c ipation o f t h e ful l fund i ng o f t h e c apit a l out l a y

s t a t e a i d formu l a , had p r i o r t o the p a s s a g e o f House

S ub s t i tute for S B 4 and Hou s e S ub s t itute for S B 7 made

s ome d i s tribut ions o f cap i t a l out l ay s t at e aid funds t o

U S D s s o ent it l e d , s ome U S D s t hen s t o o d a s ove rpa i d in

t e rms o f this s t a t e a i d . The t o t a l f o r a l l the s e U S D

ove rpayment s i s $ 1, 7 5 6 , 4 0 0 . S e e Exhibi t 7 0 2 . Furthe r ,

Hous e S ub s t i tute f o r S B 7 , by § 6 3 ( c ) , l imi ted demand

2 9

t r an s fe r payment s to no mo r e than $ 2 7 , 5 0 2 , 0 0 0 .

Howeve r , we j udicial l y not i c e that 2 0 1 5 S enate

S ub s t itute for HB2 3 5 3 has b e e n enacte d , whi ch amended

Hou s e S ub s titute for S B 7 and r a i s ed the t r ans fe r

p a yment s by $ 1 , 7 5 6 , 1 0 0 , e f f e ct ive l y fo rgiving any

ove rp ayment . ( § 8 ( c ) ( 2 ) ) . Furthe r , we j udici a l l y

n o t i c e 2 0 1 5 House Sub s t itute fo r S B l 1 2 a t § 2 0 ( d ) ,

whi ch f o r g ive s the s e ove rp a yment s .

I t s hould be not e d that § 6 3 s e eming l y con f l i ct s

w i t h o t h e r s e ct i ons . By examp l e , § 4 o f House

S ub s t itute for SB7 purport s to h o l d US Ds " harml e s s f r om

any de c r e a s e s to the final 2 0 1 4 - 2 0 1 5 amount o f t ot a l

s t a t e f i nanci a l supp o r t " i n FY2 0 1 6 and FY2 0 1 7 , whi ch a s

s t ructu r e d , i n c lude s capi t a l out l a y s t a t e aid . Id . §

6 ( a ) ( 3 ) . Furthe r , t h i s l a t t e r s e ct i o n , by re f e rence ,

s p e c i f i c a l l y r e f e r s t o K . S . A . 2 0 1 4 Supp . 7 2 - 8 8 1 4 p r i o r

t o i t s r epeal as the r e fe r en c e t o det e rmine a U S D ' s

c a p i t a l out l a y s t ate a i d e nt it l ement , not to i t s § 6 3

and spe c i f i c a l ly not t o i t s sub s e ct i o n § 6 3 ( c ) ' s fund

t ra n s f e r limi t ation s e f fe c t i ve for FY2 0 1 5 only .

3 0

S e c t i on s 4 - 2 2 o f Hou s e Sub s t itute f o r S B 7 are

denomina t ed as the Cl a s sro om L e a rn i n g A s s uring S t uden t

S u c c e s s A c t ( CLASS) and govern s the FY2 0 1 6 and FY2 0 1 7

b l o c k g r ant s . Howeve r , § 6 3 , b e ing p a r t o f tha t

l e g i s l a t i o n , spe ci f i ca l l y c ont r o l l i ng the FY2 0 1 5 b a s e

o f c ap i t a l out l a y funds to c a r r y f o rwa r d , has

unde rmi ned the s e other not e d s e ct i on s . We are a dvi s e d ,

and the exhibit s and a r gume nts a dvance d support , that

the app ropriati ons cont a i n e d w i thin House Subst i tut e

f o r S B 7 ( § l ( a ) ) and t he t r ans f e r l imi t at i ons i n § 6 3

( c ) do not hold U S D s harml e s s f r om the ret roact ive

r e duct i on s in e qua l i z at i on aid in FY2 0 1 5 , but r athe r

p o r t the reduct i o n s f o rwa r d f o r FY2 0 1 6 and FY2 0 1 7 .

Furthe r , s i nce the ove rpayment s a c c ommodat e d by 2 0 1 5

S e na t e S ub s t itute for HB 2 3 5 3 ' s amendment t o § 6 3 ( c )

d i d not c omport with the amend e d f o rmu l a , it app e a r s

tho s e overpayment s wi l l n o t be c a r r i e d forward in the

b a s e for FY2 0 1 6 and FY2 0 1 7 .

L o c a l cap i t a l out l ay l evy auth o r i t y , i ncluding §

6 3 , i s repe a l ed a s o f Jul y 1 , 2 0 1 5 ( § § 8 0 , 8 1 ) . Any

3 1

exi s t i n g USD l evy re s o lutions , except tho s e approved

b e twe e n May 1 , 2 0 1 4 and Jul y 1 , 2 0 1 5 , a r e not p r e s e rved

( § 7 8 ) . Neve rthe l e s s , cap i t a l out l a y tax l evy

autho r i t y is reenacted b e g i nning Jul y 1 , 2 0 1 5 ( § 7 9 ) .

I n t h i s l i ght , it i s s i gn i f i cant a s a mat t e r o f equ i t y

that no s e ct i on o f Hous e Sub s t itute f o r S B 7 n o r any

o t h e r s t atute prevent s any U S D f r om l e vying i t s l o c a l

c ap it a l out l a y tax l e vy and the u s e o f t h e revenue s

t h e r e b y p r oduced . Thus , we a l t h i e r p r op e r t y tax U S D s

a r e n o t d i s advant a g e d i n the s l i ghte s t b y House

S ub s t itute for SB7 , o n l y US Ds that have r e l i ed on

c ap i t a l out l a y s t a t e aid t o any d e g r e e are prec luded

f r om any cap i t a l out l a y s t a t e a i d above FY2 0 1 5 amount s

f r om any change i n l ev y autho r it y .

T hough when f i r s t f a c e d with a cha l l e nge t o

l e g i s l at ive change t o t h e capit a l out l a y s t ate a i d

f o rmu l a a t t h e init i a t i on o f thi s l aw s ui t , the de fe c t

wa s t h e t o t a l e l iminat i o n o f such a i d to otherw i s e

e l i g i b l e d i s t r i ct s a l t o gethe r . The c ha l l e nge now lS to

l e gi s l at ive chang e s t o the cap i t a l out l a y a id f o rmul a

3 2

a imed a t l imi t i ng the cap i t a l s t a t e a i d entitl ements o f

U S D s . We be l i eve the cha l l enge lS a d i s t inct i o n

w i thout a di f fe rence . I n t e rms o f the Ga n n on opinion

of the Kansas Supreme Cour t i n thi s c a s e , the

s at i s f a ct i on o f the j udgment in r e lat i on t o cap i t a l

out l a y s t ate a i d r e s t e d f i r s t in opt i o n " a " , whi ch wa s

t o ful l y fund the then - ex i s ti n g formu l a , which we now

f i nd i s not the ca s e .

Opt i o n "b" re s t e d In l e g i s l at ive action " t o cure -

whe the r b y st atutory amendment , l e s s than ful l

re s t o r at i on o f funding t o p r i o r l eve l s , o r oth e rw i s e -

. c u r e s the inequ i t i e s found . " Here the

l e g i s l ature p r o ffered the a c c omp l i shment o f opt i on " a "

i n 2 0 1 4 , but in 2 0 1 5 i t b a c k t r a c ke d and now the

eva lua t i o n of comp l iance fa l l s into option "b" .

He r e , by a lte ring the formu l a to modi fy the a r r a y

o f t h e AVPPs u s e d t o det e rmin e t h e e x t ent o f t h e

ent i t l ement , the amount o f the ent i t l ement fo r a l l

tho s e e l i g ib l e has b e e n r e duced t o s ome degre e , even

e l imina t e d for s ome U S D s , yet l e aving the cap i t a l

3 3

out l a y g a lns l evy auth o r i t y at ful l f l owe r for tho s e

d i s t r i c t s heret o fo r e that w e re de emed t o have n o need .

Furthe r , any hi ghe r levy s u b s e quent up to an 8 mi l l

l ev y b y a di s t r ict her e t o f o r e r e c e iving such a i d would

n o t be e qua l i z e d i f emp l oy e d to ma ke up for the

r e duct i o n s ac comp l i shed by § 6 3 of Hou s e S ubs t i tut e for

S B 7 . Again property we a l t h i e r di s t r i c t s - tho s e not

h e r e t o f o r e rece iving c a pi t a l out l a y s t ate aid - remain

un s c athe d , and onl y tho s e t hat had demo n s t rated n e e d

a r e t a s ked with paying t h e p r i c e o f the capit a l out l a y

s t a t e a i d reductions . Canniba l i z a t i o n o f a U S D ' s other

ope rat i n g funds or need s , as w e have p revi ous l y

di s cu s s e d I n e a r l i e r Opi n i on s r wou l d b e l i ke l y t o o c cur

c ommen surat e t o the un s at i s fi e d ne e d . Thi s di s p a r i t y

do e s n o t produc e " re a s onab l y e qual a c c e s s t o

sub s t a nt i a l l y s imi l ar e ducational oppo rtunity t h rough

s imi l a r tax e f f o rt " .

Ac c o rding l y , we f i nd § 63 o f Hou s e Sub s t i t u t e for

S B 7 f a i l s t o c omp l y w i t h t h e Gan n on j Udgment . One

cannot cure an equity d e fe c t b y a l l ow i ng full autho r i t y

3 4

t o t ax and spend for s ome U S Ds t o cont i nue , ye t redu ce

or e l imi nate the amount of s uch a i d for the re s t .

Whi l e i t might b e sugge s t e d that wha t the l e gi s l atur e

h a s done has me r e l y provided l e s s funding , whi c h the

K a n s a s S upreme C ourt under i t s " b " opt i on mi ght s e em to

have s an ctione d , the l e g i s l ature ha s , r a the r , by no t

r e s t r i ct i ng the autho r i t y o f wea l th i e r d i s t rict s to

keep and use the ful l revenue s o f such a l evy , mere l y

r e duce d , not cur e d , the w e a lth-b a s e d di s pa r ity f ound

that d i sparity f ound unc o n s t i tut i onal in Ga nnon . W e

f i nd s uc h a s o lution s t a nds e qua l l y - independent o f

t h e Gan n on j udgme nt - a s yet ma intaining an

u n j u s t i f i able wea lth b a s ed di s p a r it y . T he legi s lature

me r e l y c onformed the cap i t a l out lay s t a t e a i d f o rmu l a

t o t h e amount o f money i t w i s h e d to prov ide rat her

t h a n , as has been its p r a ct i c e in the pa st , to e it h e r

b a r i t s funding o r , a s i n t h e c a s e o f L O B e qua l i zat i on ,

p ro r a t e the funding .

I f t he h i s t o r y o f the enfo r c ement o f Brown v . Board

o f Edu c a t i on has taught u s anything , i t i s that a

3 5

j udgment fundament a l l y grounde d o n principles o f

e qua l i t y o f opportuni t y c annot be sat i s f i e d b y me r e l y a

p r o f f e r o f a l e s s e r d e g r e e o f the same inequa l i t y . See

Gan n on T r i a l Court Opi n i on , p p s . 2 4 0 - 2 4 2 ( 1 / 1 1 / 1 3 ) .

A c c o rding l y , we f i nd t he Stat e f a i l e d to c omp l y

w i t h t h e March 7 , 2 0 1 4 Gan n on j ud gment i n regard t o

cap i t a l outlay s t a t e a id .

SUPPLEMENTAL GENERAL S TATE AID ( LOCAL OPT I ON BUDGET

EQUALI ZAT ION) AND HOUSE SU BST I T UTE FOR SENATE BILL NO .

7 :

H ou s e Sub s t i t ute f o r S B 7 redu c e s l o c a l opt i o n

bud g e t e qual i z at i on funds that we r e t o be due f o r

FY2 0 1 5 a n d then f r e e z e s t h a t FY2 0 1 5 s t ate aid amount

f o r FY2 0 1 6 and FY2 0 1 7 . T h i s a id i s t hen i nc o rpo r a t e d

i n t o t h e "b l o c k" o f funds pro vide d t o the USDs . Whi l e

c ap i t a l outlay l evy autho r i t y f o r FY2 0 1 6 and FY2 0 1 7 and

f o r w a r d was r e enacted by Hous e Sub s t i tute for SB7 ( §

7 9 ) , but without c ap i t al o ut l a y s tate a i d s upp l eme nt a l

autho r i t y , Hou s e Sub s t itute f o r S B 7 ' s LOB budg et l evy

auth o r i t y for U S D s wa s r e s t r i c t e d going f o rwa r d , then

abo l i s h e d Jul y 1 , 2 0 1 7 . A s noted ear l ie r , it would

3 6

a l l ow U S D s one t ime autho r i t y , for tho s e U S Ds not

previou s l y having done s o , to incr e a s e the i r LOB

p e r cent a g e authority to b e app l i e d t o the i r gen e r a l

fund budget , includi ng t h e opt i o n t o b a s e i t up o n an

LOB that could have b e e n r a i s e d f o r FY2 0 1 6 , rather t han

wha t wa s r a i s ed by t he LOB in FY2 0 1 5 . What eve r

p e r c ent a g e o r budget ye ar b a s e was e s t ab l i shed would

the n c omp r i s e a US D ' s LOB budget autho r i t y thro ugh

FY2 0 1 7 . Howeve r , whi l e any incre a s ed tax revenue s

r e c e ived from l o cal budget autho r i t y above the revenues

gene rat e d from the FY2 0 1 5 l o c a l opt i o n budget c ould be

r e t a i ne d , s uch revenue s wou ld not b e s ub j e ct t o

inc l u s i o n i n c a l cul at ing s uppl ement a l gene ral s t ate aid

ent i t l ement s . Such ent i t l ement s g o ing fo rward a r e t o

be c a l cu l a t e d f r om a ctua l FY2 0 1 5 ent i t l ements a s

de t e rmi n e d by the amende d f o rmu l a t hat w a s app l i ed

ret r oa c t ive l y .

Thu s , b e yond the fr e e z e o f the b a s e f r om whi ch

l o c a l o p t i o n budget ent i t l ement s would b e calcu l at e d

and capp e d , § 3 8 o f SB7 p r ovide s t hat t h e foll owing

3 7

p o l i c y b e imp l emented ret r o a ct ive ly t o det ermine the

FY2 0 1 5 LOB s uppl ement a t i o n p a yme nts due by amend i ng the

h e r e t o f o r e e x i s t ing formul a f o r t he i r ca l culat i on a s

s hown f o l lowing :

" S e c . 3 8 . K . S . A . 2 0 1 4 S upp . 7 2 - 6 4 3 4 i s hereb y amended t o read a s f o l l o ws : 7 2 - 6 4 3 4 . ( a ) -±-fi each school year For s ch o o l yea r 2 0 1 4 -2 0 1 5 ,

e a ch di s t r i ct that h a s adop t e d a l o c a l opt i o n budget i s e l igib l e f o r entit l eme nt t o a n amount o f s uppl ement al gene r a l s t a t e a i d . Except a s p r ovided by K . S . A . 2 0 1 4 Supp . 7 2 - 6 4 3 4 b , and amendme n t s there t o , ent i t l ement o f a d i s t r ict t o s upp l eme n t a l gene ral s t a t e aid s ha l l be de t e rmi ned by the s t at e b o a rd as p rovide d in t h i s sub s e ct i on . The state board sha l l :

( 1 ) Det e rmin e the amount o f the a s s e s s e d valuation p e r pup i l in t h e p r e c eding s choo l y e a r o f e ach di s t ri c t i n the s t a t e ;

( 2 ) rank the di s t r i ct s from l ow t o high on the b a s i s o f the amount s of a s s e s s e d valuat i on p e r pup i l determined unde r s ubs e c t i on (a ) ( 1 ) ;

( 3 ) i dent i f y the amount o f the a s s e s s e d valuation p e r pup i l l o c a t ed at t h e 8 1 . 2 p e r cent i l e o f the amount s ranked under s ub s e c t i on ( a ) ( 2 ) ;

( 4 ) divide the a s s e s s e d valu a t i o n per pup i l of the d i s t r i c t i n the preceding schoo l

year a s de t e rm i n ed u n de r s ub s ec t i on (a ) ( 1 ) b y t he amount i dent i f i e d under s ub s e c t i on (a ) ( 3 ) ;

3 8

( 5 ) (A) subtract the ratio obtained under

( 4 ) from 1 . 0 . I f the resulting ratio equals or

exceeds 1 . 0 , the eligibility of the district

for entitlement to supplemental general state

aid shall l aps e . I f the resulting ratio is less

than 1 . 0 , the district is entitled to receive

supplementa l general state aid in an amount

whi ch shall be determined by the state board by

mUltiplying the amount of the local option

budget of the district by such ratio . The

product is the amount of supplemental general

state aid the district is entitled to receive

for the school year , i f t h e qu o t i en t obta i n ed

un der s ubs e c t i on (a ) ( 4 ) i s l e s s t h a n one r s ub t ra c t t h e qu o t i en t ob t a i n e d un der

s ub s e c t i on (a ) ( 4 ) from on e r a n d m u l t ip l y s u ch

di fferen ce by the amo u n t o f t h e l o ca l op t i on

b u dge t of the s cho o l di s t ri c t ; or

(B) i f th e qu o t i en t ob ta i n ed under

s ub s e c t i on (a ) (4) e qua l s o r exce e ds

on e r the s ch o o l di s tri c t sh a l l n o t be en t i t l ed

t o re ceive supp l em en t a l gen era l s ta t e a i d ; a n d

( 6) de t erm in e t h e am o u n t of s uppl emen t a l

gen era l s ta te a i d for ea ch s ch o o l d i s t ri c t

e l i gi b l e t o re cei ve s u ch s ta t e a i d a s fol l ows :

(A) For t h ose s ch o o l di s tri c t s ranked i n

t h e l owes t qu i n t i l e o f th o s e s ch o ol d i s tri c t s

e l i gibl e t o re cei ve s uppl em en t a l gen e ra l s ta te

a i d under s ubs e ct i on ( a ) ( 5 ) r m u l t ip l y th e

produ c t ca l cu l a ted under s ubs e c t i on ( a ) (5) (A)

by 9 7 % ;

(B) for those s ch o o l di s t ri c t s ra nked i n

t h e s e con d l owes t qu i n t i l e o f th o s e s ch o o l

di s t r i c t s e l i gibl e t o re c e i ve s upp l em en t a l

gen era l s ta te a i d u n de r s ubs e c ti on (a ) (5) r

3 9

m u l t iply the produ c t ca l cu l a ted under

s ub s e c t i on (a ) (5) (A) by 9 5 % ;

(C) for th o s e s ch o o l di s tri c t s ran ked i n

t h e th i rd l owes t qu i n t i l e o f th o s e s ch ool

di s tr i c t s e l i gi b l e t o rece i ve s upp l em en ta l

gen era l s ta te a i d unde r s ub s e c t i on (a ) (5) r

m u l t iply the produ c t ca l c u l a ted un der

s ub s e c t i on (a ) ( 5 ) (A) by 92 % ;

(D) for t h o s e s ch o o l di s tri c t s ran ked i n

th e s econd h i gh e s t qu i n t i l e of t h o s e s ch o o l

di s t r i c t s e l i gi b l e t o rece i ve s upp l emen ta l

gen era l s ta te a i d u n de r s ub s e c t i on (a ) (5) r

m u l t iply the produ c t ca l cu l a ted un der

s ub s e c t i on (a ) ( 5 ) (A) by 82 % ; a n d

(E) for t h o s e s ch o o l di s tri c t s ran ked i n

t h e h i gh e s t qu i n t i l e o f th o s e s ch o o l di s t r i c t s

e l i gibl e t o rece i ve s uppl em en t a l gen e r a l s ta te

a i d under s ubs e c t i on ( a ) ( 5 ) r m u l t ip l y the

p r o d u c t ca l cu l a ted under s ubsec t i on ( a ) ( 5 ) (A)

by 72 % .

( b ) I f t h e amount o f approp r i a t i on s f o r s upp l ementa l g e n e r a l s t a t e a i d i s l e s s than the amount e a ch di s t r i c t is ent i t l e d to r e ceive for the s chool ye a r , the s t a t e board s h a l l pr o r ate t h e amount app ro p r i a t e d among t he d i s t rict s In p r op o rt i o n t o the amount e a ch di s t r i ct is e nt i t l ed to r e c e ive .

( c ) The s t a t e board sha l l p r e s c r i b e t h e da t e s up on wh i ch the d i s t r ibut i on o f payment s o f s upp l ement a l genera l s t a t e a i d t o s choo l d i s t r ict s sha l l b e due . P a yment s o f s upp l emental gene r a l s t a t e a i d sha l l b e d i s t ribut e d t o d i s t r i c t s o n the dat e s p r e s cribed b y the s t a t e b o a r d . The s t a te

4 0

b o a r d sha l l c e rt i fy t o the direct o r o f acc ount s and r epo r t s the amount due e a ch d i s t r i ct , and the director o f a c c ount s and rep o rt s sha l l draw a war rant on the s t a t e t re a surer payab l e to the t r e a s urer of the d i s t r i c t . Up on r e ceipt of the war rant , the t r e a su r e r o f t he district shal l credit the amount the r e o f to the

s upp l ement a l gene r a l fund of the d i s t r ict to b e u s e d f o r t h e purp o s e s o f s uch fund .

( d ) I f any amount o f s upp l eme n t a l gene r a l s t a t e a i d that i s due t o b e p a i d dur ing the month of June of a s c h o o l year p u r s uant to the other provi s i ons o f t h i s s e c t i on i s not paid on or be fore June 3 0 of s uch s chool ye a r , then s uch payment sha l l be p a i d on or a ft e r the e n s uing Jul y 1 , a s s o o n a s moneys a r e ava i l ab l e there for . Any payment o f s upp l eme ntal gene r a l s t a t e a i d that i s due t o be p a i d dur ing the month o f June of a s cho o l ye a r and that is p a i d t o s choo l d i s t r i c t s on o r a f t e r t h e e nsuing Jul y 1 s ha l l be r e c o rded and ac count e d for by s choo l d i s t r i c t s as a r e c e ipt for the s cho o l y e a r ending on the pre cedi n g June 3 0 .

( e ) ( 1 ) Except a s p r ovided by p a r agraph ( 2 ) , mone y s re ce ived a s s upp l eme n t a l gene r a l s t a t e aid sha l l b e u s e d t o me et t h e r e qu i remen t s unde r the s chool p e r f o rmance a c c redit a t i on s ys t em a dopted by the s t ate b o a r d , to p r ovide p r o g r ams and s e rv i c e s r e qu i red b y l a w a n d t o imp rove s t udent p e r fo rmanc e .

( 2 ) Amount s o f sup p l ement a l g e ne ral s t a t e a i d attr ibutab l e t o any Hou s e Sub s t i t ute f o r p e r c ent a g e over 2 5 % o f s t ate financi a l aid det e rmin e d for the cur r ent s choo l year may be t rans ferred to the cap i t a l improveme n t s fund o f the d i s t r i ct and the c ap i t a l out l ay fund o f the

4 1

d i s t r ict i f s uch t r a n s f e r s are s p e c i f i e d I n the r e s o l ut i o n autho r i z i n g the adopt i o n o f a l o cal o p t i o n budget in ex c e s s o f 2 5 % .

( f ) F o r the purp o s e s o f de t e rmi n i n g the t o t a l amount o f s t a t e mon e y s p a i d t o s choo l d i s t r i ct s , a l l moneys app r o p r i a t e d a s s up p l emen t a l genera l s t a t e a i d sha l l b e de emed t o be state moneys f o r e du c a t i o n a l and support s e rvices for s cho o l di s t r i ct s .

(g) For s ch o o l yea r 2 0 1 4 -2 0 1 5 r for th o s e

s ch o o l di s tri c t s wh o s e t o t a l a s s es se d va l u a t i on

for s ch o o l yea r 2 0 1 5 -2 0 1 6 i s l es s tha n such

d i s t r i c t r s t o t a l a s s e s s e d va l ua t i on for school

y e a r 2 0 1 4 -2 0 1 5 r and th e di fferen c e in t o ta l

a s s es s ed va l ua t i on be t we en s ch o o l yea r 2 0 1 4 -

2 0 1 5 and s ch o o l year 2 0 1 5 -2 0 1 6 i s a n am oun t

t h a t i s grea t er than 2 5 % o f the t o t a l a ss e s s ed

v a l ua t i on of s u ch di s tri c t for s ch o o l yea r

2 0 1 4 -2 0 1 5 r a n d s u ch redu c t i on i n t o t a l a s s e s s ed

va l ua t i on i s the di re c t res u l t of the

c l a s s i fi ca t i on o f t a n gi b l e persona l proper ty

w i t h i n s u ch di s tri c t for proper ty tax purp o s e s

p urs uan t t o K . S . A . 2 0 1 4 S upp . 7 9 - 5 0 7 r and

a m e n dmen t s there t o r th e a s s es s ed va l u a t i on per

p up i l for purp o s e s of de t e rm i n i n g s upp l emen t a l

gen eral s t a t e a i d sha l l b e ba sed o n s u ch s chool

d i s t ri c t r s t o t a l a ss e s s e d va l ua t i on for s ch o o l

y e a r 2 0 1 5 -2 0 1 6 . "

E xhibit 7 0 1 , S e ct i o n 2 , demo n s t r a t e s the e f fect o f

§ 3 8 o n U S D ' s e nt i t l ement s w i t h the r educt i on i n

s upp l emental s t a t e a i d t o a l l e l i gi b l e U S D s t o t a l ing

4 2

$ 3 5 , 4 5 1 , 4 7 1 . Thus , the r e duct i o n for FY2 0 1 5 c a r r l e s

forwa rd i n each o f FY2 0 1 6 and FY2 0 1 7 re g a rdl e s s o f , by

examp l e , lncre a s e s or de c r e a s e s i n AVP P , or any

inc r e a s e in LOB autho r i t y .

Aga i n , j us t a s with t h e mandated r e t r o active

reduc t i o n in cap i t a l out l a y state aid for FY2 0 l 5 ,

supp l eme n t a l gene r a l s t ate a i d p ayment s had be e n

di s t r ibut e d i n part b y the Kan s a s S t a t e Bo ard o f

E du c a t i o n in r e l iance on e x i s t i n g law , whi ch would have

c r e a t e d , by the reduct i on s in ent i t l ement s ,

ove rpayment s made t o s ome d i s t r i ct s . The tot a l o f

ove rpayment s for a l l U S D s o f supp l eme nt a l gene r a l s t ate

aid s t ands at $ 1 , 9 7 6 , 8 1 8 . See Exhibit 7 0 2 . Fur the r , as

not e d f o r cap i t a l out l ay s t a te a i d , S e ct i o n 4 o f SB7

evidenced an intent t o ho l d U S D s harml e s s from FY2 0 1 5

bud g e t r e duct ions made in 2 0 1 5 . Howeve r , § 3 8 , be ing

spe c i fi c , neve rthe l e s s , would s e emingl y negat e the

intent e xp re s s e d in § 4 . Howeve r , we j ud i c i a l l y not i c e

a r e c ent b i l l p a s s e d i n t h e l e g i s lature ( S ena t e

Sub s t itute f o r HB2 3 5 3 ) whi ch ame nded § 6 3 o f House

4 3

S ub s t i tu t e f o r SB7 , e f f e ct ive l y f o r g iving overpayment s

f o r FY2 0 1 5 o f cap i t a l o u t l a y s t a t e a i d ( § 8 ) , howeve r ,

i t ame nded § 3 8 at s ub s e ct i on ( g ) o n l y , whi ch would not

a f f e c t s upp l emental gene r a l s t a t e a i d ove rpayment s .

Neverthe l e s s , 2 0 1 5 Hou s e Sub s t i t ut e f o r S B 1 1 2 , §

2 0 ( d ) , o p e r a t e s independent l y t o f o r g�ve any

overpayment s both for s upp l ement al gene r a l state aid as

w e l l a s cap i t a l out l ay s t a t e a i d . I t s § 2 0 ( b ) a l s o

app r op r i at e s the monie s to c ove r the amount o f

overpayment s for LOB equal i z a t i o n overpayment s .

T h i s Pan e l ' s Opi n i o n o f Janu a r y 1 1 , 2 0 1 3 found that

whi l e the LOB supp l ementation f o rmul a had not b e e n

chang e d , l e g i s l at ive app r op r i a t i on s had increa s i ng l y

not b e e n fo rthcoming t o fund i t ful l y , s u c h that

p r o r at i on o f the ent i t l ements o f tho s e U S D s hav ing

e l i g ib i l i t y for such supp l ement a t i o n at and b e l o w the

8 1 . 2 p e r cent i l e o f the ave r age p r o p e r t y tax va l u a t i o n

p e r pup i l a r ray f o r e a c h U S D ( AVPP ) h a d o ccur r e d .

T hu s , a t the t ime o f that de c i s ion , o n l y about 8 0 % o f

e a ch US D ' s entitlement was b e i n g p a id t o e ach U S D s o

4 4

e n t i t l ed . We f ound , without further a na l y s is o f the

8 1 . 2 cap impo s ed on the equal i z a t i o n t o be provided b y

t h e formu l a , that such p r o r at i on c r e a t e d a n

un c o n s t i tut i o n a l wealth-ba s ed di s p a r i t y b e tween U S D s .

Th i s finding w a s a f f i rmed b y the Gan n o n Opi n i on o f

M a r ch 1 4 , 2 0 1 4 . The enfo r c ement o f t h i s a f firme d

j udgment was r emanded t o u s with d i r e c t i o n s , as

f o l l ows :

" 2 . A s to the l o c a l opt i o n budget and supp l ement a l gene r a l s t a t e a i d :

a . I f by Jul y 1 , 2 0 1 4 , the l e gi s l ature fu l l y funds the s up p l emen t a l general s t ate a i d p rovi s i o n a s c o nt emp l ated in the e xi s t i ng SDFQPA, K . S . A . 7 2 - 6 4 0 5 e t s e q ' r

without prorat ion , the pane l n e e d not t a ke any a dditional a c t i o n on t h i s i s s ue .

b . I f by Jul y 1 , 2 0 1 4 , the l e gi s l atur e acts t o cure-whether by s t atutory amendment , l e s s t h an ful l r e s t o r ation o f funding t o p r i o r l eve l s , o r o therwi s e-the p ane l mus t app l y our t e s t t o de t e rmine wheth e r such act i on cur e s the i n e quit i e s i t f o und and whi c h f i ndings w e have a f f i rmed . I f the p a n e l then dete rmine s tho s e inequ i t i e s a r e not cure d , i t should enj o i n ope ration o f the l o c a l op t i on budge t fundin g me chani sm, K . S . A . 2 0 1 3 Supp . 7 2 - 6 4 3 3 and 7 2 - 6 4 3 4 , o r e n t e r s u ch othe r o rde r s a s it deems appr op r i at e .

4 5

c . I f by Jul y 1 , 2 0 1 4 , the l e gi s l ature t a k e s no curat ive a c t i o n , the pan e l s hould enj o i n ope ration o f the l o c a l opt i on budg e t funding me c hani sm, K . S . A . 2 0 13 Supp . 7 2 - 6 4 3 3 and 7 2 - 6 4 3 4 , or ent e r s u ch othe r orde r s a s i t de ems app r opr i ate .

d . U l t ima t e ly , the pane l mu s t ensure the inequ i t i e s in the p r e s ent ope rat i on o f the loca l opt i on budg e t and s upp l eme n t a l gene r a l s t ate a i d s t atut e s a r e cured . "

Gan n on , 2 9 8 Kan . at 1 1 9 8 - 1 1 9 9 .

T hu s , much a s was the c a s e with c api t a l out lay

s t a t e a i d , an end t o p r o ra t ing and the ful l funding of

the t h e n - exi s t i ng s t atute would have s ati s fied the

j udgme nt by o p t i on " a . " Ag a i n , a s wa s the ca s e with

S enat e S ub s t i tute for HB2 S 0 6 ' s funding of cap i t a l

out l a y s t ate a i d , we r e l i e d o n i t s fundin g of the

s up p l emental gene r a l s t a t e aid e s t imat e d amount s , a g a l n

with t h e S t a t e ' s c ouns e l ' s a s s urance o f r e conc i liat ion

with the formula i f e s t imat ed amount s we r e ami s s . Due

to a n i ncre a s e in the 2 0 1 3 - 1 4 p r o p e r t y va l uat i ons whi c h

r a i s e d t h e AVP P 8 1 . 2 p e r c e nt i l e t h r e s h o l d amount and

the f a ct mo re U S D s than o r i gi na l l y ant i c i p ated rai s ed

the i r LOB p e r cent a g e s gene r a l l y o r d i d s o pur s uant t o

4 6

the l e g i s l ative autho r i t y g rant e d In S enat e Sub s t itut e

f o r HB2 5 0 6 , the e s t imate g i ven i n the Kans a s S t at e

Dep a r tme nt o f Educat i on ' s Memo r andum o f Apr i l 1 7 , 2 0 1 4

t o the l e g i s l ature , and s imi la r l y provided to u s

( Exhib i t 5 0 7 ) , was short o f the r e a l i t y . Howeve r ,

rather t han f o l l owing through o n opt i on " a " with a

supp l eme ntal app r opr i a t i on t o ma ke up the di f f e r ence ,

the 2 0 1 5 l e g i s lature changed the LOB e qua l i zat i on

f o rmu l a , s uch that what would have b e e n due in norma l

cour s e f o r op e r at i on o f the exi s t ing f o rmu la w a s

r e du c e d d own t o about 9 2 . 7 % o f t h e do l l a r s whi ch woul d

have o t h e rwi s e b e e n due had the then- e x i s t ing FY2 0 1 5

f o rmul a b e e n f o l l owe d . The amount derived from the

ame nded f o rmul a b a c kt r a c k s fundi n g t o app r oxima t e the

Ap r i l 2 0 1 4 e s t ima te s . Rather t han cau s lng pro ration o f

the ent i t l ement by unde r funding a s done in the past ,

the l e g i s lature amended the formu l a t o conform t o the

mon e y t h e y wi shed to p r ovide .

T h e new formu l a ' s r e du c t i o n s are n o t app l i e d

e qua l l y a c ro s s the b o a r d i n t e rms o f the p e r c e nta ge o f

4 7

r educt i o n , a s had b e e n done b y the p r l o r prorat i ons ,

but , r a t he r , the reduct i on s are mo r e r at ab l y

s t ruct u r e d , such that t h e reduct i o n s a r e progre s s ive ly

l e s s the mo re property t ax-p o o r e r a d i s t r i ct i s .

Notw i t h s t anding , a ratab l y imp o s e d i n e qu i t y i s s t i l l an

i nequ i t y and s t i l l l e ave s a c o n s t itut i o na l l y

unaccept ab l e wealth-ba s ed d i sp a r i t y b e tween US D s de emed

w i thout a need for s uch aid and tho s e that have that

n e e d . Hence , S e c t i o n 3 8 , though mo r e equitab l y s ty l e d ,

e f fe c t i v e l y repre s e n t s a front door p r o r a t i o n , r athe r

than o n e imp l ement ed b y an unde r app r op r i a t ion o f funds

a s b e f o r e . Tho s e that have n o need f o r s u ch a i d a r e

a b l e t o g e n e r a t e s u f f i c i ent tax revenues w i th l e s s tax

l evy wh i l e tho s e needing such aid wi l l r e quire a

g r e at e r t ax l evy t o j u s t s t a y eve n . Furthe r , even an

i ncrea s e i n the l o ca l o p t i o n budge t autho r i ty f o r such

p rope r t y p o o r di s t r i c t s gOlng fo rwa r d , imp l emented t o

ma ke up f o r t h e s h o rt f a l l going f o rw a r d , l S , a s wa s

d i s cu s s e d , not sub j e c t t o s upp l ement a t i o n . C r i t i c a l l y ,

and immediate the r e fo r e , - b e c au s e s uppl ementat i on i s

4 8

f r o z en a t FY2 0 1 5 ent i t l emen t s - i s the fact that no

p r o c e s s e x i s t s for a USD t o levy a tax that wou l d

e qu i t ab l y a l l ow i t t o recover from o r remedy the

l e g i s l a t i ve l y - imp o s ed r e t roact ive short f a l l in

FY2 0 1 5 , yet wi thout s uch a t ax inc r e a s e , budget cut s or

the canniba l i z a t ion of funds intended for othe r

purp o s e s would o c cur - a s s uming s uch other purp o s ed

fund s , I n fact , we re ava i l a b l e and adequate to the

n e e d . N o s uch hards hip o r negative cho i c e exi s t s by

thi s l e g i s lat i o n for USDs above the 8 1 . 2 p e rcent i l e .

We f ind the condition c reated ove r a l l - and

p a r t i cu l a r l y i t s ret roact ive and c a r ryove r featur e s -

t o r e p r e s ent a c l ear fa i l u r e t o a c c o r d " s cho o l

d i s t r i c t s reas o nab l y e qu a l acce s s t o s ub s tant i a l l y

s imi l a r e ducat i onal opportuntt y through s imilar tax

e f f o r t " . As we have mul t i p l e t ime s concluded, money

doe s ma ke a d i f ference . Al l U S D s c a r e fu l l y and

p ub l i c l y a s s emb l e d the i r budget needs for FY2 0 1 5 In

Aug u s t 2 0 1 4 . Now only tho s e USDs e l i gib l e to r e ceive

s upp l emental general s t ate a i d f o r FY2 0 1 5 o r cap i t a l

4 9

o ut l a y s t ate aid a r e exp e c t e d t o summa r i l y shuf f l e o r

abandon the s e ne e d s , yet tho s e U S D s that had n o ne e d

f o r s uch a i d , yet l i kewi s e budge t e d in the b e s t

i nt e r e s t o f the i r s t udent s l o c a l l y , have had their

c ho i c e s honored . That di s p a r i t y in cho i c e between

t he s e two catego r i e s of s c h o o l d i s t r i c t s e x i s t s going

f o rw a r d through FY2 0 1 7 . That d i s p a r i t y wi l l thus b e

l i ke l y t o be exa ce rbated b y the p o t ent i a l f o r incr e a s e s

i n LOB autho rity f o r s ome , whe reby the inc r e a s i ng l y

t ax -w e a l thy dis t r i c t s w i l l have the i r e ducational g o a l s

h on o re d , pre s e rve d , and funded , inc luding de c i s ions in

r e g a rd to holding c a s h re s e rve s , whi l e tho s e ne edi n g

a i d w i l l be at the burden o f incre a s e d , but

unsub s i d i z e d , taxat i on a s the i r p r i c e of incre a s ed

budge t in g cho ice . Such cho i c e s , i f made , w i l l be b o rne

b y t he s e l o c a l taxp a ye r s a l one .

A s we s a id I n r e gard t o the Stat e ' s app r o a ch p o s t ­

Gan n on t o funding capital out l a y s t a t e a i d , we find the

p r o f f e r of but a l e s s e r degree o f inequa l i t y d o e s not

s at i s fy e ither Art . 6 , § 6 ( b ) no r the Ga n n on court ' s

5 0

j udgment in r e gard t o funding s uppl eme nt a l gene r a l

s t a t e a i d . Furthe r , it s h o u l d be kept in mind that the

e l i g ib i l ity c ap for supp l ement a l gene r a l s t ate a id l S

a t 8 1 . 2 , whi c h me ans the r e a l r e ady e x i s t s a 1 8 . 8

p e r cent i l e di sparity betwe e n the w e a l t hi e s t di s t r i ct s '

t a x e f f o r t p e r mi l l and the i r cho i ce s for the budge t e d

u s e s f o r such revenu e s a nd the f i r s t e l i g ib i l i t y l ev e l

f o r U S D l o c a l option budget s upp l ement al general s t a t e

a i d . Thu s , � z e r o t o l e ranc e " has not b e e n app l i e d by us

a s the me a s u r ing s t i c k or p oint of re f e r e n ce for

me a suring a w e a lth b a s ed d i spa r i t y nor the fre e dom o f

l o c a l cho i ce s o accorde d . Neve rthe l e s s , we wou l d admit

t h a t were we unfett e red in our dec i s i on ma king , we

w o u l d f i nd l i t t l e r o om to devi ate from a s trict V l ew In

r e g a rds t o tax e qu i t y nor t h e con s e qu e nt e quity I n

f r e e dom o f choice a c corded by s uch e qu i t y since - among

a l l the fact o r s that could b e a r on s choo l finance - t ax

e qu i ty i s the l e a s t sUb j e ct ive o f any . While t h e r e may

b e many a r e a s where the mon e y ava i l ab l e p e r student may

n o t , and ne e d not , b e e qua l - we i ght i ngs being a n

5 1

examp l e - neve rthe le s s , the u l t imate g o a l o f

c omp a rat ive equ a l educ a t i o n a l opp o rtun i t y lS the s ame .

Whi l e the e f fe ct ivene s s o f a cou r s e o f s tudy or the

qua l i t y o f the p e r s on t e a ching i t may not be a s s ured l y

c ont r o l l e d , a d i s p a r i t y i n e ducat ional oppo rtunity

should not be a l l owed to a r i s e f rom the d i f ference I n

p r o p e rty tax w e a l t h betwe e n s cho o l di s t r i cts .

The f o rmul a a dopt e d b y § 3 8 , whi l e n o t dropp ing the

e l i g ib i l i t y thr e s ho l d , per s e , would have , but f o r the

g r a duated reduc t i ons through qui nt i l e s , e f fect ive l y

reduced the e l i g ib i l it y c a p t o t h e 7 5 . 2 7 p e rcent i l e had

the r e duct i on s been accomp l i shed by s t r i c t pro r a t i on o f

the d e funded amount . Th i s would be n e a r the

e l i g ib i l i t y thr e shold pre - ex i s t ing the Mon toy

de c i s i ons . The thre s ho l d b o a st f o r e l i g ib i lity t o the

8 1 . 2 p e r c e nt i l e l eve l f rom the 7 5 th p e r ce nt i l e w a s one

b a s i s f o r that C ourt to f i nd the l e g i s l a t ive re spons e

t o Mon t oy wa s i n " sub s t ant i a l comp l i ance " with tho s e

rul i ng s s uch a s t o wa rrant d i smi s s a l o f the Mon t oy

c a s e . Mon t oy v . s t a t e , 2 8 2 Kan . 9 , 1 6 - 1 7 ( 2 0 0 6 ) .

5 2

Furthe r , a s we extens ive l y d i s cu s s in our Decemb e r

3 0 , 2 0 1 4 Opi n i on r the p r e s ent u s e o f b a c kdoor funding

through the LOB is now t o the p o int whe reby tho s e LOB

r e s ou r c e s - b e caus e o f the inade quacy in the funded

b a s e s tudent a i d ( B SAP P ) a s w e i ghted - a r e now

n e ce s s a r i l y emp l oyed and a lmo s t unive r s a l l y con s umed

i n a t t emp t s t o fund me r e l y a c on s t itut i ona l l y adequa t e

- Ros e fa c t ors comp l i ant - e du c at i on . T h i s fact

e nhan c e s the importance o f t a x e qu i t y princip l e s and

any f a i l ure in acco rding it e x a c e rba t e s inter-di s t r i ct

d i spa r i t y in b e ing ab l e to p r ovide that const itutional

s t anda r d o f e ducat ion - p a r t i cul a r l y s ince the

emp l o yme nt o f , and the do l l a r extent o f , an LOB l S ,

otherw i s e , vo lunta ry .

H e nc e , t o dep rive p r op e r t y p o o r d i s t r i ct s o f LOB

e qua l i z at i on aid and cap i t a l o ut lay s tate a i d , for

whi ch t h e re i s no re a l i s t i c a l l y a s s u red t a x b a s e n o r

any e qu i t ab l y-ba s ed tax a l t e r nat ive for funding , turns

the s t ruggle for adequacy in many of the s e di s t r i c t s

i n t o o n e s o f j us t surv iva l . He r e , the prom i s ed LOB

5 3

e qua l i z at i on a i d for FY2 0 1 5 a l l owe d s ome p oorer

p rope r t y tax di s t r i ct s t o be ab l e t o use the mi l l l evy

s avings ga rne red from the ir LOB supp l ementation a i d for

t he i r c a p i t a l out l a y l evy needs , a l l to the ben e fit of

the i r s ch o o l s and student s . Thi s appe a r s to be a l o c a l

cho i c e t hat de s e rves t o be hono r e d , not undermi ned .

ADEQUACY AND EQUITY AND HOUSE SUB S T ITUTE FOR SENATE

B ILL NO . 7 :

As t h i s Pane l found in i t s o r i g i n a l De cemb e r 3 0 ,

2 0 1 4 Opi n i on on the r emand from the Kan s a s Sup r eme

Court t o r e - eva luate our opi n i o n conce rning K- 1 2

fundi n g adequacy in l i ght o f the " Ro s e factors " and as

we furth e r a f f i rmed i n our March 1 1 , 2 0 1 5 Opin i on on

the S t a t e ' s mot i on t o alter o r amend our De cemb e r 3 0 ,

2 0 1 4 Op i n i on , the ade quacy o f S t a t e K- 1 2 funding

through FY2 0 1 5 wa s wh o l l y cons t i t u t i on a l ly ina de qua t e

from a ny ra t i on a l perspe c t i ve . C e r t a i n l y , the n , House

Sub s t i tu t e for S B 7 , b y i t s f a i lure to provide funding

con s i s te nt w i th the needs found in our Opi n i on o f

Decembe r 3 0 , 2 0 1 4 and b y fre e z i ng the inadequa c y we

found ex i s t i ng through FY2 0 1 5 f o r FY2 0 1 6 and FY2 0 1 7 ,

5 4

a l s o s t ands , unque sti onab l y , and une quivo cally , a s

c o n s t itut i ona l ly i nade qua t e in i t s funding .

S imp l y , j ust s ett ing out the var i ous funding

p a r amet e r s of Hou s e Sub s t i tute for S B 7 ' s "bloc k "

g r a nt s , l e s s , as w e have h e r e t o f o r e d i s cus se d, the

K P E RS p a s s t h r ough cont r i but i ons inapprop riat e l y touted

a s a p r op e r me asure of c o n s t itut i ona l adequacy , s p e a k s

o u r op l n l on o f Hous e Sub s t i tute for S B 7 ' s

c o n s t itut i on a l inadequacy in t e rms o f K- 1 2 funding . I t

r e p r e s en t s o n l y a new fa�ade f o r a c ontinuing l a c k o f

a d e qua t e fund ing .

Fur t h e r , turn ing 0 . 4 o f 1 % o f he r e t o fore

demon s t r ab l y needed funds into mo re or l e s s a

c a t a s t r ophic event s fund ( " e xt r a o rdinary need fund" )

o n l y dimini s h e s funding a dequacy . Only 0 . 4 o f 1 % o f

t h e KPERS p o r t ion in that extraordinary need fund cou ld

b e deeme d new money . That fund i s c e rt a i nly not the

" fa i l s a fe " funding me cha n i sm as we e nvi s ioned the

e x i s t e n c e o f one mi ght b e in our De c emb e r 3 0 , 2 0 1 4

Opi n i on .

5 5

T o o , Hous e S ub s t itute f o r SB7 , by uS lng i t s § 3 8

and § 6 3 , and a s amende d b y S enate Sub s t i tute for

HB2 3 5 3 at § 7 and § 8 , to manipul a t e the FY2 0 1 5 funding

b a s e f o r LOB equ a l i z at i on a i d and cap i t a l outlay s t a t e

a i d , re spect ive l y , for c a r r yove r t o FY2 0 1 6 and FY2 0 1 7

fo r Hou s e Sub s t i tut e f o r S B 7 ' s §§ 4 - 2 2 CLAS S Act b l o c k

g r a n t s , ma ke s , f o r rea s ons we have e a r l i e r di s cus s ed ,

t h e C LAS S Act i t s e l f cons t i tut i ona l l y inequitab l e .

L a s t l y , the funding f o r FY2 0 1 6 and FY2 0 1 7 , being

b l i nd to any cha nge s in the numb e r and demo graph i c s o f

the K- 1 2 student popul a t i o n go i ng forward , except in

" ex t r a o rdinary" c i r cums tan c e s , s tands a s a par t i cul a r l y

c o n t r a r i an and a rbitrary d e c ipher o f adequ ate funding

and mo s t l i kely w i l l r e s u l t in s it uat i ona l - f e a s t o r

fam i ne - fundin g inequ i t i e s between s cho o l di s tr i ct s .

S e e , b y examp l e , P l a i nt i f f s ' E xhib i t 6 1 8 . Whi l e tho s e

o n t h e " fe a s t " e nd o f the d i s t r ibut i o n - b e cau s e o f t h e

ove r a l l inadequ a c y o f fund i n g - wi l l h a v e " extra"

n e e d e d r evenues whe n t he i r w e i ghted s tudent count

de c r e a s e s , tho s e on the " f amin e " end o f the

5 6

d i s t r ibut i on - cau s e d by an inc r e a s e I n we i ght e d

s tudent c ount - wi l l c l e a r l y s u f f e r f r om a l o s s o f

e du ca t i o n a l opportunit i e s due t o the l a c k o f funds t o

fund t h e needs generated f r om that i n c re a s e in

s tudent s , many of whi c h s tudent s ne e d , as a l l expert s

and e du c a t o r s concur and the exp e rt de s i gned we i ghtings

a c c ommo d a t e , mo re funding to me e t the s e educat i onal

n e e d s .

T h i s part icul a r a spe ct o f the b l o c k gr ant - flat

funding - me chani sm for the d i s t r ibut i on of s chool

funding r e source s is so p e r n i c i ous and its negat ive

e f f e ct s s o imme d i a t e that we b e l ieve a t emp o r a r y

r e s t r a i n ing o rde r should be i s sued p e nding re s o lut i o n

o f t h e a pp e a l o f our de c i s i on s that w o u l d a t l e a s t

mi t i gat e the s e e f f e c t s a n d s omewhat maintain t h e s t a tus

quo , at l e a s t to a p o i nt in t ime whe r eby conformity

w i t h the app r op r i a t i on fundi ng could not otherw i s e b e

r e c onc i l ed . The t emp o r a r y r e s t raining o rder would

r e qu i r e that any d i s t r ibut i o n o f gene r a l s t ate aid t o

any uni f i ed s cho o l di s t r i ct be b a s e d o n the we i gh t ed

5 7

s t u den t c o u n t �n the c urren t s ch o o l year i n wh i ch a

di s t ri b u t i on i s t o be m a de pur s uant t o § 6 and § 7 o f

Hou s e Sub s t itute f o r S B 7 , not me r e l y the t otal money

ava i l ab l e that is b a s e d o n the w e i ght e d or unwe i ghted

s tudent c o unt in s cho o l y e a r 2 0 1 4 - 1 5 ( FY2 0 1 5 ) . Further

enj o i ned would be the c o l l e ct i on o f repayments f o r any

ove r a g e s o r the paymen t o f any unde r a g e s until s uch

p o int whe r eby reconci l i ation o f amount s d i rect e d by the

p a r t i c u l a r approp r i at i on act c o u l d not be had o r

othe r w i s e upon furthe r order o f the c ourt where the

ca s e was t hen pending . See Id . , § 8 .

Our d e c i s ion i s b a s e d on P l a i n t i f f s ' Exhib i t 6 1 8

whi ch c o r r e ct l y ana l y z e s what the e f f e ct o f the s e fund

d i s t r ibut i on change s w ou l d be i f b a s e d s o l e ly o n money

r e c e ived i n the p a s t r ather than b a s e d on wei ghted

s tudent c o unt s in the ye a r of di s t r ibut i o n . W i thout

such a r e s tra ining order condit i o ning di s t ribut i o n o f

the s t a t e funds b a s ed on the r e a l i t y o f current s chool

ye a r w e i ghted student s , the do l l a r shi ft i s

sub s t ant i a l . Whi l e the overa l l do l l a r c o s t to the

5 8

S t a t e b y an i nc r e a s e in w e i ght e d s tude nt s from FY2 0 1 4

t o FY2 0 1 5 o f 1 8 0 we i ghted s t ude n t s would have b e e n

$ 6 9 3 , 3 6 0 at a BSAPP o f $ 3 8 5 2 , neverthe l e s s , the e f fe c t

o f a di s t ribut i o n f o r FY2 0 1 5 t h a t h a d been fix e d o n

FY2 0 1 4 s t ate r e c e ipt s by e ach U S D , rat he r than FY2 0 1 5

w e i ght e d student s , would have s h i f t e d $ 2 5 , 2 2 3 , 2 8 1 o f

s t a t e a i d from USDs that had an incre a s e in we i ghted

s tudent s I n FY2 0 1 5 t o US D s that reported l e s s w e i ghted

s tudent s In FY2 0 1 5 . Thi s would b e i n addi t ion t o the

$ 6 9 3 , 3 6 0 l o s t to the s e U S D s with i nc r e a s e d student

c ounts f o r whi c h the S t a t e woul d have otherwi s e b e e n

o b l igat e d to fund f o r t h e incre a s e d w e i ghted s t udent

c ount s in FY2 0 1 5 , but that would n o t be p a id i f the

b l o c k g r a nt - f l at - funding - concept of Hous e

S ub s t i t u t e f o r SB7 had b e e n in e f fect . Thus , the t o t a l

l o s s o f funds f r om tho s e w i th imp e r at ive need f o r s uch

funds due to incre a s e s in s tudent count would b e

$ 2 5 , 9 1 6 , 6 4 1 i f t h e s ame c i r cums t anc e s were to e x i s t I n

s tudent c ount s f r om FY2 0 1 5 t o FY2 0 1 6 .

5 9

T h i s me thod o f s t ate a i d di s t r ibut i o n adopted by

Hous e Sub s t itute for S B7 , as j us t de s c ri b e d , can f ind

no a c cepted factual b a s i s or any princip l e that h a s

e v e r b e e n app r oved by any c o u rt o r s upp o rted by a n y

e xp e rt o r educat o r f o r determining t h e approp r i a t e

f i na n c i n g o f Kan s a s K - 1 2 s ch o o l s . We b e l i eve our

t emp o r a r y re s t rai ning order meet s all the t e s t s for i t s

e nt r y a s art i cul a t ed i n S te ffes v . Ci ty o f La wren c e ,

2 8 4 Kan . 3 8 0 , 3 9 5 - 3 9 6 ( 2 0 0 7 ) .

O t h e rwi s e , he r e , we can a dd noth i ng mo re In r e g a r d

t o a d e quacy o r e quity than what we have s a id h e r e i n o r

h e r e t o f o r e .

ORDER

H o u s e Sub s t i tute for SB No . 7 , whethe r stripped o r

uns t r ipped o f i t s r e l i ance o n the inequi t y we have

f ound in each o f § 3 8 and § 6 3 , would s t a nd a s

unc o n s t i tut i onal I n v i o l a t i o n o f Art . 6 , § 6 ( b ) o f the

Kan s a s Consti tut i o n through the lack of c onst itut i ona l

adequacy in i t s funding o f t he amoun t s n e c e s s ary t o

6 0

p ro v i de a c onstitut iona l l y ade quate � Rose fa c t o rs

c omp l i ant � educat ion t o a l l Kan s a s K� 1 2 student s .

W e have noted the i napprop r i a t e ne s s o f the

p l a c ement o f the de terminat i on for U S D reque sted r e l i e f

thr ough t h e " extraordinary r e l i e f fund" with the State

Finance C ounc i l . I n a ddit i on , we h ave noted the ab j e ct

f a i l u r e o f the b l o c k g r ant funding p r o cedure to

a c c ommodate ordina r y i n c re a s e s in the K�12 stude nt

p opu l a t i on o r change s i n that s tude nt p opulation ' s

demo graphi c s and the c o n s e quent t o t a l d i s re gard o f the

o p i n i o n o f experts and edu c a t o r s that opined the

i nc r e a s ed c o s t s a s s oci a t e d the r ewi t h and the r e a s ons

t he r e fo r e .

W e f i nd the s e s t ructur a l anoma l i e s are princip a l l y

g r ounde d in , and r e l a t e mo r e t o , the inade quacy o f

a s s u r e d funding ove r al l , i n c luding the fai l ure o f that

b l o c k g r a nt funding s t r ucture to cons i de r the c o s t s

that e xp e rt s have deta i l ed a s n e ce s s a r y t o provide a

demo graph i c a l l y va r i ed student p opu l a t i on wi th an

e ducat i o n that can me e t the Ros e fa c to rs for every K� 1 2

6 1

s t u den t . However , t he u l t imat e r e s o lut i o n o f the s e

a d e quacy i s s u e s by the Kan s a s S upr eme Court , i f w e a re

a f f i rmed , should ope rate t o a l l eviate the s e

d i s l o cat i ons and the y wou l d then ex i s t a s temp o r a r y

o n l y . Hence , we f i nd that a t emp o r a r y r e s train ing

o rd e r a s we previou s l y de s c r ib e d and the availab i l i t y

o f an app l i cation t o the S t at e Finance C ounc i l f o r a id

f r om the ext r a o rdinary n e e d fund by a U S D for r e l i e f

f r om a b urdening inequit y , pa r t i cu l a r l y , when coup l e d

w i t h our de c i s i ons i n r e g a r d t o § 3 8 and § 6 3 , wou l d

p r ob ab l y provide e f fe ct ive and pract i c a l r e l i e f unt i l

t h e ult imate r e s o l u t i o n o f thi s c a s e can b e had without

immediat e l y upe nding Hou s e S ub s t i tute f o r SB7

a l t ogeth e r at this t ime . According l y , we stay what

w o u l d otherwi s e be the c o n s equence demanded of our

r u l i ng p e nding appe a l .

Fur t her , our cho i c e s o f d i spo s it i on in regard t o §

3 8 and § 6 3 o f Hou s e S ub s t i tute for S enate B i l l No . 7 ,

a s amended by S enat e S ub s t i tute for HB2 3 5 3 , as we w i l l

d i s cu s s s ub s e quent l y , mi t i ga t e s the n e e d f o r a p r e s ent

6 2

r emedy pr ohibit ing the r e s t o f Hou s e S ub s t itute for S B 7

f r om g o i ng fo rwa rd , wh i ch mo s t l i ke l y wou l d have

r e s u l t e d in the re newa l o f the p r e - ex i s t i n g K- 1 2 s cho o l

f inanc ing formul a b e f o r e i t s purp o r t e d rep e al .

N eve r t he l e s s , m ore unc erta inty would have been created

i f t h e p r e s ent funding p r ovided i n Hou se S ubstitut e f o r

S B 7 a n d i t s me thod o f di s t r ibut i o n b e c ame too

unce r t a i n , particula r l y , g iven a l l U S D s ' August

b ud g e t ing deadl ine .

N everthe l e s s , a s we have de c l ared , and do dec l a r e ,

Hou s e S ub s t itut e for S enat e B i l l No . 7 , a s ame nde d ,

do e s n othing t o a l leviate t h e unconst i tut i onal

i n a d e quacy of funding as exp re s s e d in our Opi n i on s but ,

r a t h e r , exacerb a t e s i t . Henc e , we have c o nsidered and

s o d e c l a r ed i t s p r ovi s i ons in that re gard as

unc o n s t i tutiona l p u r s uant t o the r evi ew o f 2 0 1 5 Hou s e

S ub s t i tute f o r SB7 , a s amended b y 2 0 1 5 S enate

S ub s t i tute for HB2 3 5 3 , whi ch we b e l i eve w a s permi t t e d

t o u s by the Kan s a s S upreme Court ' s Order of Ap r i l 3 0 ,

2 0 1 5 and Plaint i f f s ' mot i o n for a de c l a r a t o ry rul i n g in

6 3

that r e g a rd . C l e a r l y , t he ove r a l l l s s ue o f adequacy ,

a s remanded t o u s , i s re ady f o r review , inc luding the

i s s ue o f Hou s e S ub s t i tute for S e na t e B i l l No . 7 ' s , a s

amende d , cons t it u t i o nal funding a dequacy o r inadequacy

and i t s means for d i s t r ibut i on o f cons t it ut i ona l l y

n e e d e d funds .

However , our de c i s i o n t o add re s s Hou s e Sub s t itute

f o r S en a t e B i l l No . 7 ' s , a s amende d , e qu i t y comp onent s

in i t s § 3 8 ( supp l ement a l gene r a l s t a t e a i d - l o ca l

opt i on b udge t equa l i z a t i on ) and i n i t s § 6 3 ( capital

out l a y s t at e a i d ) , as b o t h a r e amended by S enat e

S ub s t i t u t e f o r HB2 3 5 3 , r e s t s on e nt i r e l y d i f f e r ent

g r o unds . Whi l e we h ave found t h e s e l a t t e r s e ct i ons a r e

unc o n s t i tuti ona l i n vi o l a t i o n o f Art . 6 , § 6 ( b ) ' s

i n c o rp o r a t e d equ i t y p r incip l e s , the i r me re ex i s t ence

and further ope r at i o n a l s o cont i nue s to impugn the

j udgment s re ached in Gan n on in r e g a r d to tho s e two

f o rms o f s t a t e a i d .

Whi l e the S upreme Court sugge s t e d we enj o i n cap i t a l

out l ay l evy autho r i t y i n t h e event o f " n o cur a t ive

6 4

a c t ion" b e ing taken ( Ga n n on at p . 1 1 9 8 , option " c " ) ,

mo r e f l e x ib i l i t y h a s b e e n acco rde d o u r Pan e l i f a

" cu r e " w a s att empted und e r "bFf , but f a i l e d the e qu i t y

t e s t . T o pa raphra s e , we may " enj o in [ § 6 3 ' s J ope rat i on

and ent e r such orde r s a s we deem app r opriate" . Id .

Neverth e l e s s , a s part " dFf o f the Court ' s directive t o

u s s t a t e s : " the panel mus t ensure the inequi t i e s in the

p r e s e nt operation o f the c api t a l out l a y s t atut e s

a r e curedFf •

Ac c o rding l y , we s t r i ke as unc on s t itu t i ona l the

e n t i r e t y of § 63 of Hous e Sub s t i t ute for SB7 ; we s t r i ke

§ 5 4 o f House Sub s t itute for S B 4 ; we s t r i ke § 7 9 o f

H o u s e S ub s t itute for S B 7 ; we s t r i ke § 7 8 o f Hou s e

S ub s t itute f o r SB7 ; w e s t r i ke the fo l l owing from the

r e p ea l i n g clause in § 8 0 o f House Sub s t itute f o r S B 7 :

" S e c . 8 0 . K . S . A . 2 0 1 4 Supp . 7 2 - 6 4 3 4 , 7 2 -6 4 6 0 and 7 2 8 8 1 4 , as amended by s ection 5 4 o f

2 0 1 5 House Substitute for Senate Bill No . 4 a r e h e r eby rep e a l e d . " ;

we s t r i ke the f o l l ow i n g f r om the rep e a l ing c l au s e

I n § 8 1 o f Hou s e Sub s t i tu t e f o r S B 7 :

6 5

" S e c . 8 1 . From and a f t e r Jul y 1 , 2 0 1 5 , K . S . A . . 72 8 8 0 1 , 7 2 8 8 0 1a , 72 8 8 0 1 .

7 2 8 8 1 1 , as amended by section 63 o f this act ,

7 2 8 8 1 4b , 7 2 8 8 1 5 , . are hereby repeal e d . " ;

we s t r i ke § 8 o f S e na t e Sub s t i tute f o r HB2 3 5 3 i n

i t s e nt i rety ; w e s t r i ke from § 1 4 o f S enate Sub s t itute

f o r HB2 3 5 3 , the f o l l owing :

" S e c . 1 4 . K . S . A . 2 0 1 4 Supp . 7 2 - 6 4 3 4 , a s amended by s e ct i on 3 8 o f 2 0 1 5 H ou s e Sub s ti tute for S enate B i l l No . 7 , and 7 2 8 8 1 1 , as amended

by section 63 of 2 0 15 House Substitute for

Senate Bill No . 7 , are hereby r ep e a l ed ; "

we s t r i ke from § 1 5 o f S enat e Sub s t i tute for HB2 3 5 3 ,

the f o l l owing :

" S e c . 1 5 . From and a f t e r Jul y 1 , 2 0 1 5 , K . S . A . 7 2 - 5 4 2 3 a n d K . S . A . 2 0 1 4 Supp . 7 2 - 1 0 4 6b , a s amended b y s e ct i on 2 9 o f 2 0 1 5 H o u s e S ub s t itute for S enate B i l l No . 7 , 7 2 - 3 7 1 5 , a s amended b y s e c t i on 3 6 o f 2 0 1 5 Hou s e Subst i t ute f o r S enate Bill No . 7 , 7 2 - 5 4 1 3 , 7 2 - 6 4 3 4 , a s amended by s e c t i on 7 o f thi s a c t , 7 2 8 8 11 , as

amended section 8 of this act , 7 5 - 2 3 1 9 , a s ame nded b y s e ct i on 7 2 o f 2 0 1 5 Hou s e Subs t i tute f o r S enate B i l l No . 7 , 7 6 - 7 1 5 a and 7 6 - 7 1 5b and S e ct i on s 5 and 6 o f 2 0 1 5 Hous e Sub s t i t ute f o r S enate Bi l l No . 7 are h e reby r ep e a l ed . " ' and

we s t r i ke from Hous e Sub s t i tut e f o r S B l 1 2 , it s § 2 0 ( c )

a s f o l l ows :

" ( c ) On the effect ive date of this act ,

notwithstanding the provlslons of K . S . A . 7 2

6 6

8 8 1 4 , as amended by s e etion 63 o f 2 0 1 5 House

Substitute for Senate Bill No . 7 , prior to its

repeal , or any other statute , during the fiscal

year ending June 30 , 2 0 15 , the director of

accounts and reports shall trans fer an amount

not to exceed $ 3 , 95 8 , 9 0 0 from the state general

fund to the s chool district capital outlay

state aid fund . Provided r That the state board

o f education shall distribute such moneys to

pay the , remaining proportionate share of the

entitlement to each school district as

det ermined under the provisions o f K . S . � . 72

8 8 1 4 (b) , as amended by section 6 3 of 2 0 15 House

Substitute for Senate Bill No . 7 , prior to its

repeal . "

W e b e l i eve tha t the l e g i s l ature would not have

i n t ended the s tatu t e s providing for a c ap i t a l out l a y

l ev y and f o r i t s s upp lement a t i o n tha t pre - exi s t ed the

p a s s a g e o f § 5 4 o f House Sub s t i tute for S B 4 or § 63 o f

H o u s e S ub s t itute f o r SB7 , a s amended b y S enat e

S ub s t i tute f o r HB2 3 5 3 , to be r ep e a l e d i f the s e 2 0 1 5

l e gi s l a t ive enactment s were t o b e found unconst itu-

t i ona l . Thus , the e f fe c t t o b e g iven our " cur e " he r e

i s t o r e instate K . S . A . 7 2 - 8 8 0 1 e t s e q . a s the s e

s t atut e s ex i s ted p r i o r t o Janua r y 1 , 2 0 1 5 . The

r e ena c tment o f K . S . A . 7 2 - 8 8 0 1 in § 7 9 of House

S ub s t i tute for SB7 ha s been s t ru c k as we l l , s ince ,

6 7

glven o u r a c t i ons , i t c ould be s e e n a s a novat i on in

aut h o r i t y , yet , if l e f t to s t and a l one without the

me a n s to s uppl ement c a p i t a l out l a y funds for l e s s

we a l thy d i s t r i ct s , it would be unc on s t i tut i ona l .

Our cure a l s o lS a l s o c o n s i s t e nt w i th the i nt ent

exp r e s s e d in § 4 and § 6 ( a ) ( 3 ) o f the Cl a s s A c t a s

emb e dded i n § 4 - § 2 2 o f Hous e Sub s t i tute for S B 7 .

Our s t r i k i ng a l l ows the ope rat i o n o f § § 4 - 2 2 o f Hou s e

Sub s t i tut e f o r S B 7 t o p r o c e e d , but w i t h t h e bl o c k g rant

funds f o r FY2 0 1 6 and FY2 0 1 7 to inc lude capital out l a y

s t a t e a i d a s c a l cu l a t e d by K . S . A . 7 2 - 8 8 0 1 e t s e q . , as

it e x i s t e d p r i o r t o January 1 , 2 0 1 5 , to b e pa r t o f the

b l o c k g r a n t concept , but not f r o z e n i n amount f o r

FY2 0 1 6 a n d FY2 0 1 7 b a s e d on FY2 0 1 5 e nt i t l ement s . We

r e c ogni z e the need f o r the exe r c i s e o f addition a l

app ropr i a t i o n autho r i t y f r om t h e l e g i s l ature f o r FY2 0 1 6

and FY2 0 1 7 amount s due , but r e l y o n e a ch l e gi s l ator ' s

s o l emn o a t h o f o f f i ce a nd r e sp e ct f o r our

con s t i tut i onal form of gove rnment to p rovide s u ch

aut h o r i t y .

6 8

Howeve r , for FY2 0 1 5 , the Kan s a s S t ate Board o f

E ducat i o n i s hereby d i re c t e d t o imme d i at e l y , and b e fore

Ju l y 1 , 2 0 1 5 , cert i fy any b a lance of cap i t a l out l a y

s t a t e a i d due for FY2 0 1 5 a s dire cted b y K . S . A . 2 0 1 4

S upp . 7 2 - 8 8 1 4 ( c ) , and immediate l y , and b e fore Jul y 1 ,

2 0 1 5 , c e rt i f y the ent i t l ement s o f e a c h s chool d i s t r ict

s o ent i t l ed pursuant to K . S . A . 2 0 1 4 S upp . 7 2 - 8 8 1 4 ( d ) .

T h e Kan s a s S e cretary o f Admini s t rat i o n s h a l l forthwi th

h onor such c e rt i f i ca t i on s and encumb r an c e s by c omp l ying

w i t h K . S . A . 2 0 1 4 Supp . 7 2 - 8 8 1 4 ( c ) , K . S . A . 2 0 1 4 Supp .

7 2 - 8 8 1 4 ( d ) , a nd § 7 ( j ) o f 2 0 1 4 S enat e Sub s t itut e f o r

H o u s e B i l l No . 2 5 0 6 and ma ke such t r a n s f e r and payments

c on s i s t e nt w i th the c e rt i f i cations , whi ch the T r e a surer

o f the S t ate of Kans a s s ha l l f o r thwi t h honor . The

K a n s as S t at e Department o f Educ a t i on and any o f f i c i a l

t h e r e o f , the Kan s a s Depa r tment o f Admini s t rat i o n , i t s

S e creta r y o f Admini s t rat i on and any o f f i c i a l o r

emp l oyee the r eo f , the T r e a s ur e r o f t h e S t ate o f Kans a s ,

and any o the r exe cut ive o f f i c i a l o f the St ate o f Kan s a s

a r e enj o ined from i s s uing , fo l l owing , o r hono r i ng any

6 9

o t h e r d i r e ctive , practi ce , o r po l i cy i n re gard to the s e

Orders that wou l d , whe ther d i r e ct l y o r indire c t l y , a c t

t o h i nde r , de l a y , o f f s e t , c omp r omi s e , dilute , o r

d imi n i s h the e f fect o r t ime l y a c c ompl i shment o f the s e

Orders , inc luding the , o r an , exerci s e o f autho r i t y

g r a n t e d , i f any the r e be , b y § 2 o f 2 0 1 5 S enate

S ub s t i tute for HB2 l 3 5 .

No twith s t anding , upon any f a i lure or de fect in

c omp l i an c e with the s e Orders , and not a s an excu s e for

a n y s u ch f a i l ur e o r de f e ct or I n sub s t i tute for

c omp l i ance with such Orders , our ent r y of j udgment

h e r e i n s h a l l ope r a t e t o c e r t i fy such s ums due and the

uni f i e d s choo l d i s t r i c t r e c ip i ent s the re o f as

i de n t i f i e d in E xhib it 7 0 1 , S e ct i on 3 and Exhibi t 7 0 2 ,

s uch a s t o encumbe r such funds f o r FY2 0 l 5 .

I n r e gard t o supp l ement a l gene r a l s t a t e a i d ( LOB

e qu a l i z a t i on ) , we f ind the mo s t approp r i a t e , l e a s t

d i s rupt ive , remedy f o r the continuing consti tut i ona l

v i o l at i on o f e quity princ i p l e s I n the funding o f

s upp l ement a l g e ne r a l s t at e a id l S t o s t r i ke from § 3 8

7 0

o f H o u s e Sub s titute f o r S B 7 the l anguage indicated a s

f o l l ow s b y i t s l in i ng through :

" S ec . 3 8 . K . S . A . 2 0 1 4 Supp . 7 2 - 6 4 3 4 i s h e reby amende d t o read a s f o l l ow s : 7 2 - 6 4 3 4 . ( a ) For s ch o o l yea r 2 0 1 4 -2 0 1 5 , each d i s t r i ct that has adopted a l o c a l opt i o n budget i s e l i gib l e f o r ent i t l eme nt t o a n amount o f s upp l ement a l g e n e r a l s t ate a i d . Except a s p r ovide d b y K . S . A . 2 0 1 4 Supp . 7 2 - 6 4 3 4b , and amendme nts theret o , e n t i t l ement o f a di s t r i ct t o s upp l ement al g e n e r a l s t ate a i d sha l l be de t e rmine d by t h e s t a t e boa rd a s p r ovided i n this s ub s e c t ion . The s t a t e board s ha l l :

( 1 ) Determine the amount o f the a s s e s s ed v a l uation per pup i l i n the p r e ceding s choo l y e a r o f e a ch d i s t r i ct i n the s t a t e ;

( 2 ) rank the di s t r i c t s from l ow t o high on the ba s i s of the amoun t s o f a s s e s s e d valua t i on p e r pupi l det e rmin e d unde r s ub s e c t i on (a ) ( 1 ) ;

( 3 ) i dent i fy the amount o f the a s s e s s e d v a l uation p e r pup i l l o ca t e d a t the 8 1 . 2 p e r cent i l e o f the amounts ranked unde r s ub s e c t i on (a ) ( 2 ) ;

( 4 ) divide the a s s e s s e d valuation per pup i l of the d i s t r i ct a s de t e rm i n ed un der

s ub s e c t i on (a ) ( 1 ) by the amount i dent i fied unde r s ub s e c t i on (a ) ( 3 ) ;

(5) (A) i f th e quo t i en t ob t a i n ed un der

s ub s e c t i on (a ) ( 4 ) i s l es s than o n e r s ub tra c t

t h e qu o t i en t ob t a i n ed unde r s ubs e c t i on (a ) ( 4 )

from one r a n d m u l t ip l y s u ch di fferen ce by th e

am o un t o f the l o c a l op t i on b udge t o f the s ch o o l

di s t ri c t ; o r

7 1

(B) i f the qu o t i en t ob t a i n ed under

s ub s e c t i on (a ) ( 4 ) equ a l s or exceeds on e r t h e

s ch o o l di s tri c t s h a l l n o t be en t i t l ed to

r e ce i ve s uppl em en t a l gen era l s ta t e a i d ; rrrre

( 6) determine the amoun t of suppl emen tal

general state aid for each school dis trict

c l i gibl e to receive sueh s t a t e a i d as fol l OffS :

. (A) For those school dis tri c ts ranked in

the l owes t quin t i l e o f those school

dis tricts el i gibl e to receive

supplemen tal general state a i d under

subsection (a ) (5) r mul tiply the

product cal cula ted under subscction

(a) (5) (A) by 9 7 %;

(B) for thosc school di s tri c ts ranked in

the sccond l Of,Tes t quin ti l e of those

school dis tri cts el i gibl c to recei vc

supplcmen tal general sta te a i d under

subsecti on (a ) (5) r mul tiply the

product cal cula tcd under subsccti on

(a) (5) (A) by 95 %;

(C) for those school dis tri c ts ranked in

the third l OfJes t quin til e of those

school distri cts eli gibl c to recci ve

supplemen tal general sta te a id under

subsecti on (a ) (5) r mul tiply the

product cal cula ted under subsecti on

(a) (5) (A) by 92 %;

(B) for those school dis tri c ts ranked in

the second h i ��es t quin tile of those

school dis tri cts el i gible to receive

suppl emen tal general s ta t e a i d under

subsection (a ) (5) r mul tiply the produc t

cal cula ted under subse�

7 2

(a) (5) (lU by 82 %; and

(E) for those school districts ranked in

the hi�qest quintile of those school districts

eli gible to receive supplemen tal general s ta te

aid under subsection (a) (5) r mul tiply the

product cal cula ted under subsection

(a) (5) (lU by 72 % .

( b ) I f t he amount o f app r op r i at i ons f o r s upp l eme nt a l gene r a l s t a t e � i d i s l e s s than the amount e a ch d i s t r i c t i s ent i t l e d to r e ceive for the s cho o l year , the s t at e b o a rd sha l l pr o r ate the amount approp r i a t e d among the di s t r i ct s In p roportion to the amount e a ch d i s t r i c t is ent i t led to r e c e ive .

( c ) The s ta t e b o a r d sha l l p r e s c r ibe the dat e s up on which the di s t r ibut i o n of payments o f s upp l ement a l gene r a l s t a t e a i d to s cho o l d i s t r i ct s sha l l b e due . Payments o f s upp l emen t a l genera l s t a t e a i d sha l l b e d i s t r ibut ed to d i s t r i c t s o n the date s p r e s c r ib ed b y the s t a t e b o a rd . The s t ate b o a rd sha l l c e rt i fy to the di r e c t o r of account s and rep o r t s the amount due e a ch d i s t r i ct , and the director of account s and report s shal l draw a w a r rant on the s t a t e t r e a su r e r payab l e to the t r e a s ure r o f the di s t r i ct . Upo n r e c e ipt o f the warrant , the t r e a s u r e r of the di s t r i ct s ha l l cr edit the amount the r e o f t o the s upp l eme nt a l gene r a l fund o f the d i s t r i ct to be u s e d for the purpo s e s o f s uch fund .

( d ) I f any amount o f s upp l eme nt a l gen e r a l s t a t e a i d that i s due t o b e p a i d dur ing the month of June o f a s cho o l year purs uant to the o th e r p r ovi s i ons of thi s s e ct i on is not p a i d on or b e fo r e June 3 0 o f s uch s ch o o l ye a r , then s uch payment sha l l be p a i d on o r a f t e r the

7 3

e n s u ing Jul y 1 , as s o o n a s mone ys a r e ava i l abl e t he r e for . Any payment o f supp l ement a l gene r a l s t a t e a i d that i s due t o be p a i d dur i ng the month of June o f a s ch o o l y e a r and that is p a i d t o s cho o l di s t r i c t s on o r a ft e r t h e e n s uing Jul y 1 sha l l be re corded and a c co unt e d for by s ch o o l di s t r i c t s as a r e ce ipt for the s ch o o l year e nding on the p r e ceding June 3 0 .

( e ) ( 1 ) Except a s p r ovided by p a r a graph ( 2 ) , moneys r e c e ived a s s uppl ement a l gene r a l s t a t e aid sha l l be u s e d t o me e t the r e qui rements under the s cho o l p e r f o rmance a c c r editation s ys t em a dopt e d by the s t ate b o a r d , to provide p r o g r ams and s e rv i c e s r e qu i red by l aw and t o imp r ove s tudent p e r f o rmance .

( 2 ) Amount s o f supp l eme nt a l gene r a l s t a t e a id attributab l e t o any p e r centage over 2 5 % o f s t a t e finan c i a l a i d de t e rmi ned f o r the cur r ent s ch o o l year may be tra n s f e r red t o the cap i t a l imp r ovements fund o f t h e di s t r i ct a n d the c ap i t a l out l a y fund o f the d i s t r i ct i f such t r a n s fer s are s p e c i f i e d in the r e s o l u t i on a ut h o r i z ing the adopt i on o f a l o c a l option budget in exce s s o f 2 5 % .

( f ) Fo r the purpo s e s o f det e rmining the t o t a l amount of s t ate moneys p a i d t o s cho o l d i s t r i ct s , a l l moneys approp r i a t e d a s s up p l ement a l gene r a l s t ate a i d sha l l b e de emed t o b e state moneys f o r e ducati o n a l and supp ort s e rv i c e s for s cho o l d i s t r i c t s .

(g) For s ch o o l yea r 2 0 l 4 -2 0 1 5 r for th o s e

s ch oo l di s tri c t s wh o s e t o t a l a s s e ss e d va l ua t i on

for s ch o ol yea r 2 0 1 5 -2 0 1 6 i s l es s tha n s u ch

di s t r i c t r s t o t a l a s s e s sed va l ua t i on for s ch oo l

yea r 2 0 1 4 -2 0 1 5 r a n d th e di fferen ce i n t o t a l

74

a s s e s s ed va l u a t i on be t ween s ch oo l yea r 2 0 1 4 -

2 0 1 5 a n d s ch o o l yea r 2 0 1 5 - 2 0 1 6 i s an amoun t

t h a t i s grea t e r th a n 2 5 % o f th e t o t a l a s s e s s ed

va l ua t i on of s u ch di s t ri c t for s ch o o l yea r

2 0 1 4 -2 0 1 5 r a n d s u ch redu c t i on i n t o ta l a s s e s s ed

va l ua t i on i s the di re c t res u l t o f the

c l a s s i fi ca t i on of tan gibl e pers on a l proper ty

w i t h i n s u ch di s t ri c t for prop e r ty tax purp o s e s

p u r s u a n t t o K. S . A . 2 0 1 4 S upp . 7 9 - 5 0 7 r and

a m e n dm en t s th ere t o r t h e a s s e s s e d va l u a tion per

p up i l for purp o s e s of de t e rm i n i n g s upp l emen t a l

gen era l s ta t e a i d sha l l b e ba s e d o n s u ch s ch ool

di s tri c t r s t o t a l a s s e s s ed va l ua t i on for s ch o o l

yea r 2 0 1 5 - 2 0 1 6 . a

Acc o rding ly, S e c t i on 3 8 ( a ) ( 6 ) o f 2 0 1 5 Hous e

Sub s t i t u t e for SB7 i s he l d t o b e nul l and vo i d .

Furthe r , S e ct i on 7 ( a ) ( 6 ) o f 2 0 1 5 S enate S ub s t i tut e for

Hou s e B i l l No . 2 3 5 3 , whi c h amended House S ub s t i tute for

S B 7 , § 3 8 , and whi c h text of s a id S e ct ion 7 ( a ) ( 6 )

rep e a t s that o f S e c t i o n 3 8 ( a ) ( 6 ) o f Hous e Sub s t i tute

for S B 7 , is held t o be nu l l and vo i d and we ,

a c c o r d i n g l y , s t r i ke i t f r om S e na t e Sub s t i tute f o r

HB2 3 5 3 .

Fu r t he r , we f ind that in the e vent that FY2 0 1 5

supp l emental gene r a l s t a t e a i d yet due a s cal culated

from t h e above formu l a , a ft e r the exc i s e of i t s

uncon s t i tu t i onal p rovi s i on s , lS n o t p a i d I n FY2 0 1 5 to a

7 5

U S D s o e nt i t l ed , then the Kans a s S t a t e Board o f

E du c a t i o n i s enj oined t o d i s t r ibute a l i ke sum a s s oon

a s p o s s i b l e on o r a ft e r Jul y 1 , 2 0 1 5 from FY 2 0 1 6

revenue s ava i l ab l e for supp l emental g e n e r a l s t a t e a i d .

Such di s t ribut ion sha l l be credited pur suant t o § 3 8 ( d )

o f Hou s e Sub s t itute f o r S B 7 , a s ame nded b y § 7 o f

S e na t e S ub s t i tute f o r HB 2 3 5 3 , a s a FY2 0 1 5 receipt .

Whether p a i d o r unpaid , such s um the r e due sha l l ,

neve rthe l e s s , s t and a s r e c e ived in FY2 0 1 5 a l ong with

t h e p r i o r rece ipt s of s uch funds in FY2 0 1 5 for the

purp o s e s of § 6 ( a ) of Hou s e Sub s t it u t e for SB7 .

S upp l emen t a l general s t a t e a i d f o r FY2 0 1 6 and f o r

FY2 0 1 7 s ha l l conform t o that c o r r e c t e d sum due f o r

FY2 0 l 5 . Again , we r e c o gni z e that a n increase i n FY2 0 1 6

and FY2 0 1 7 funds wi l l b e r e qu i r e d , and , a g a i n , we r e l y

o n o u r L e gi s l a t o r s ' c o n s t i tut i onal o a t h o f o f f i c e t o d o

s o .

We f i nd thi s remed y re g a rding s upp l emental g e n e r a l

s t a t e a i d app r op r i a t e , b o t h be cause it l S

c o n s t itutiona l l y nec e s s a ry and becau s e it l S the l e a s t

7 6

d i s rupt i ve and mo s t c omp a t i b l e with § § 4 - 2 2 ( CLAS S ACT )

g o i ng f o rward , glven we a r e s t aying any r emedy in

r e f e r e n c e to § § 4 - 2 2 o f that A c t . An a l t e rnat ive wou l d

h ave b e e n to s t r i ke a l l o f § 3 8 a n d t h e repeal ing

c l au s e in § 8 1 , t o -wit : " . K . S . A . 7 2 - 6 4 3 4 , a s

amended b y S e ct i on 3 8 o f t h i s act . " However ,

un l i ke House Sub s t itute f o r S B 7 ' s prov i s i ons re lating

t o c a p i t a l out l a y as previ ous l y d i s cu s s e d , LOB

autho r i t y , un l i ke cap i t a l out l a y autho r i t y , would not

c o nt i nue independent l y out s id e o f Hou s e Sub s titut e f o r

S B 7 ' s r e s t r i c t i on s . Furth e r , modi fyi ng , a s we did,

S e ct i o n 3 8 , and as it wa s amende d , p r e s e rves the forme r

§ 3 8 ( g ) , now § 7 ( g ) o f S enate Sub s t i tute for HB2 3 5 3 ,

whi c h we were unab le to do with a s imi l a r section

r e l a t i n g to cap i t a l out l a y .

Furthe r , for r e a s ons d i s cus s e d e a r l i e r , whi l e we

b e l i ev e the b l o c k grant f o rma t u s e d in S B 7 is

unco n s t i tut i o na l , we find our cur e s f o r § 3 8 ' s and §

6 3 ' s i n e quit i e s and the t emp o r a r y re s t r a i ning o rde r s

i s s u e d mit i ga t e t h e urgency f o r g i v i n g a n y imme diate

7 7

e f fe ct t o , or reme d y in regard t o , our rul ing i n re gard

t o § § 4 - 2 2 o f House Sub s t i tute f o r S B 7 , a s amended ,

pending Kans as Sup r eme Court r ev i ew . We do find , and

emp h a s i z e , that because o f the ove r a l l cons titut ional

inadequ a c y o f funding t o the K- 1 2 s ch o o l s ystem -

whe r e , a s fri end o f the court U S D 5 1 2 a s s e rts , eve n the

r e s our c e - r i ch may f i nd thems e lv e s revenue poor in t e rms

o f ful f i l l ing the i r a sp i ra t i o n s - the inequi t i e s in

cap i t a l outlay s t a t e a i d and LOB e qua l i z at i on funding

are g re a t l y exacerbat e d . Furthe r , the fai lure o f H ou s e

Sub s t it u t e f o r S B 7 , a s ame nde d , t o p r ovide LOB

e qu a l i z a t ion a i d ab ove that r e c e ived in FY2 0 1 5 for

othe rwi s e e l igible d i s t r ict s who might t a k e the l a s t

opp o rtun i t y given them b y i t s § 1 2 autho r i z at i o n t o

r a i s e t h e i r LOB l e v y pe rcentage me re l y enhance s the

opp o rtuni t y for inc r e a s ing exi s t ing wea lth ba s e d

d i s p a r i t i e s . T hus , s t a ying our ru l i ngs h e re -

i n c luding our t emp o rary r e s t r a i ning o rde r rega rding the

p a r amet e r s for di s t r ibuting g e ne r a l s t ate a id a s

de f i ne d i n § 6 o f Hous e Sub s t i tute f o r SB7 - s uch a s t o

7 8

a l l ow any S t ate a c t i o n to p r o c e e d tha t otherwi s e would

r e s u l t i n even l e s s e quitab l e funding o f a ny K- 1 2

f i nanc ing component , p a rt i cul a r l y , i n FY2 0 1 5 , wou l d , In

our Vl ew , invoke imme diate , mo s t l i k e l y i r reve r s ib l e ,

h a rm t o the K- 1 2 s cho o l s ys tem and i t s student s .

We s t rongly f e e l that , other than by our own order

or an o rder of the Kan s a s Sup r eme Court , s hould any o f

the reme d i e s o r orde r s we have e nt e r e d i n li eu o f

s e t t i n g a s i de §§ 4 - 2 2 o f Hous e S ub s t i tute for S B 7 f a i l

o f imp l ement ation o r n o t be a ccommodat ed otherw i s e

s uch a s through the extraordi n a r y re l i e f fund o r

approp r i a t i o n - and whethe r from a n e r ro r by u s i n

the i r e f f i c a c y , a fai lure i n tho s e s ub j e c t to the

o rde r s to act or c omp l y , o r I n the imp lementat i o n o f

any o r de r , o r a de lay i n fina l r e s o l u t ion o f th i s c a s e

s uch that a n y Orde r entered b y u s , p a r t i cularly i n

r e g a r d t o t h e flat di s t r ibut i on o f funds , can n o

l onger a c c omp l i sh i t s purp o s e - we f i nd that the

f o l lowing a l t e rnat ive o r de r , whi ch we stay, sha l l

app l y . I f the court b e f o r e which thi s matter i s then

7 9

p e nding f inds s u ch i s the c a s e , then o u r s t ay s hou l d ,

ab s e nt g o od cau s e t o the contra r y , b e l i ft e d .

that § § 4 - 2 2 , a s we l l a s § § 3 8 and 63 o f

2 0 1 5 Hou s e S ub s t i tut e f o r S enate B i l l No . 7 , as

ame nded by 2 0 1 5 Senate S ub s t i tute f o r HB2 3 5 3 ,

a r e s t ruck a s uncon s t i tutional and nu l l and

voi d ;

that such p rovl s l o n s and o the r s e ct ions In

e it h e r noted enactment , other than

app r opr i at i ons , that dep end upo n o r ma ke

r e f e rence t o §§ 4 - 2 2 or § 3 8 o r § 6 3 would not

have been enacted, amended, o r rep e a l e d had it

been exp e c t e d t hat § § 4 - 2 2 and § 3 8 and § 6 3

woul d b e d e c l a r e d unc o n s t i tutiona l ;

that any r emaining app r op r i a t e d funds , yet

undi s t r ibut e d , sha l l be di s t r ibut e d pursuant t o

the S cho o l D i s t r i ct Finance and Qua l i t y

P e r f o rmance Act , K . S . A . 7 2 - 6 4 0 5 e t s e q . , and

K . S . A . 7 2 - 8 8 0 1 et s e q . as they e x i s t ed on

January 1 , 2 0 1 5 ;

8 0

a l l s e ctions o f 2 0 1 5 Hou s e Sub s t i tut e f o r

S en a t e Bi l l No . 7 are s t ruc k , e x c ept a s

f o l l ows : S e c t i o n s 1 , 2 , 3 , 2 8 , 3 4 , 3 6 , 5 8 , 5 9 ,

6 8 , 7 2 , 7 7 , and except a s fo l l ows :

S e ct i ons 2 9 , 3 7 , 6 0 , 7 3 , and 7 4 o f 2 0 1 5

Hou s e Sub s t itute f o r S B 7 sha l l r emai n , a l t e r e d

a s f o l lows : s t ruc k f r om § 2 9 i s " unde r the

c l a s s room l e arning a s s ur lng s tudent s ucce s s

a c t , s e c t i on 4 e t s e q . r and amendment s

t h e r e t o " ; in § 3 7 the phra s e " c l a s s r o om

l e a rning a s sur i ng s tudent s u c c e s s act , s e ct i on

4 e t s e q . r and amendme n t s the ret o " s h a l l b e

c o n s t rued t o r e f e r t o t h e p r e - ex i s t i n g law ,

i . e . , the s cho o l di s t r i ct f i nance and qua l i t y

pe r fo rmance act ; s t r i k i n g f r om § 6 0 : " for the

purp o s e of the c l a s s r o om l e a rning as s uring

s t udent succe s s a c t , s e ct i on 4 , et s e q . and

amendment s the r e t o " ; a nd f i nding § 7 3 and § 7 4

sha l l rema i n excep t t h e t e rm " S e c t i o n 1 1 " s ha l l

b e c o n s t rued t o re fer t o K . S . A . 7 2 - 6 4 3 1 ;

8 1

s t ruc k from § 8 1 o f 2 0 1 5 H o u s e Sub stitut e

f o r S e nate B i l l No . 7 i s a l l t h e r e i n b ut the

f o l l owing :

" Fr om and a ft e r Jul y 1 , 2 0 1 5 , K . S . A . . 7 2 - 8 3 0 9 , . 7 9 - 5 1 0 5 . . 7 2 -

9 7 8 , 7 2 - 1 0 4 6b , 7 2 - 3 7 1 1 , . 7 2 -3 7 1 5 , 7 2 - 3 7 1 6 , 7 2 - 5 3 3 3b . . 7 2 - 8 3 0 2 , 7 2 - 8 3 1 6 . . 7 4 - 3 2 , 1 4 1 . . 7 5 - 2 3 1 9 , 7 9 - 2 0 9x , 7 9 - 2 1 3 . . a r e hereby r e p e a l e d . " ;

s t ruc k from 2 0 1 5 S enat e Sub st itute fo r

HB 2 3 5 3 i s the f o l l owing : S e cti o n s 3 , 4 , 7 , 8 ,

a nd 1 4 ;

s t ruc k from 2 0 1 5 S enat e Sub st i tut e for

HB2 3 5 3 § 5 is the f o l l owing lan guage " unde r the

c l a s s r o om learning a s s u r ing student s ucce s s

a c t , s e c t i on 4 o f 2 0 1 5 Hou s e S ub s t itute f o r

S en a t e B i l l No . 7 e t s e q . , and amendments

the r e to " ;

s t ru c k from 2 0 1 5 S enate Sub s t itute for

HB2 3 5 3 § 1 5 is the language l i ned through a s

f o l l ows :

" . 7 2 6 4 3 4 , as amended by section

7 of this aet , 7 2 8 8 1 4 , as amended by

8 2

section 8 of this act , and Seetion

5 and 6 of 2 0 1 5 House Substitute for

Senate Bill No . 7 . . ff ; and

s t ruck from 2 0 1 5 Hou s e Sub s t i tute for S enate

B i l l No . 1 1 2 is § 2 0 ( c ) .

ENTRY O F JUDGMENT

A c c o r ding l y , j udgment i s ent e re d In a c cordance with

t h e f o r e g o ing Mem ora n dum Opi n i on a n d Order . Our

Opi n i on s o f December 3 0 , 2 0 1 4 and Ma rch 1 1 , 2 0 1 5 are

h e r eb y modi f i e d and s upplemented accordi n g l y . The

M o t i o n s to Di smi s s f i l ed by the Kan s a s S e c ret ary of

Admi n i s t ration and the Kan s a s State T re a s urer are

ove r r u l e d . However , Jim C l a r k ' s mo t i on t o di smi s s him

i n hi s p e r s ona l capacity i s s u s t a ined e f fe ctive Jul y 1 ,

2 0 1 5 .

The Kans a s State Board o f E du cat i on i s he reby

j o i ne d as a p a rt y for the purp o s e of r emedy, whi ch lS

t o b e a c c omp l i shed by our e l e ctronic d e l i very o f a copy

o f thi s Mem ora n dum Opi n i on and Order and En t ry o f

Judgm en t o n the S t ate ' s c o uns e l , inc ludi n g the Att o rney

G e ne r a l o r an As s i s tant At t o r ne y Genera l . The

8 3

P laintiffs may make further service of a copy o f this

Opinion and Order and Entry of Judgmen t as Plaintiffs

deem necessary to assure its effectiveness.

This Memorandum Opinion and Order and Ent ry of

J udgme n t shall be effective when filed wit h the Clerk

of this Court and shal l stand as t he Court ' s Entry o f

Judgmen t and the Order o f t his Court for t he purpose of

enforcin g the orders of this Court here made . No

further j ournal entry is required.

� I T I S SO ORDERE D by this Pane l , this � da; of

• June , 2 0 1 5 .

•

Judge of the District Court

Panel Member

Robert J . Fleming

Judge of the District Court ,

Panel Member

Jack L . Burr

8 4

c c : Alan Rup e

D i s t r i ct Cou rt Judge Retired, Pane l Memb e r

Je s s ica L . S kl a dz i en John S . Robb Arthur Chalme r s Gaye B . Tibbe t s Je rry D . Hawkins Ra che l E. L oma s S t ephen R . McAl l i s t e r Je f fr e y A . Chanay M . J . Wi l loughb y D e r e k S chmi dt S t eve Phi l l ip s P h i lip R . M i c h a e l Daniel J . C a r r o l

8 5

Member

o atrict Court Judge Ret i red . .Member

----- . . . _ . _ ..... .