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Kentucky Judge Voids Deficient School-Finance System

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A state judge has struck down Kentucky's school-finance system, saying it "bears no rational relationship'' to the state's duty under its constitution to provide "an efficient system of common schools.''

"Kentucky's current school system is one of the most severely deficient in the nation,'' the May 31 ruling charges. "In a sentence, Kentucky's children and youth ... are suffering from an extreme case of educational malnutrition.''

In the long-awaited decision, Judge Ray Corns of the Franklin Circuit Court in Frankfort argued that "disparities in expenditures per student among districts--to the extent that they are caused by variations in local fiscal capacity--are without legitimate educational justification and result in unequal educational opportunities.''

Saying he had no desire to "intrude on the prerogatives of the executive and legislative branches,'' Judge Corns declined to specify what steps the state must take to correct the situation. Instead, he said he would allow the current system to operate "under emergency conditions'' for a "reasonable'' time until a new system is adopted.

In addition, the judge said that by June 15 he would appoint "a small select committee'' to study the issue and produce a master plan that "will serve as a guide'' for the governor and lawmakers. He said he would set a deadline for that report in a subsequent order.

Debra Dawahare, a lawyer for the coalition of school districts that filed the class action, said the ruling represented a "great victory for the schoolchildren of Kentucky.''

Gov. Wallace G. Wilkinson has declined to comment on the decision pending further review, and has not yet decided whether he will file an appeal, according to a spokesman.

State legislators, meanwhile, had mixed reactions to the ruling, with some calling for remedial action and others for an appeal.

"I don't think what Judge Corns said should be disregarded,'' said Senator Mike Maloney, who chairs the Senate appropriations and revenue committee. "But we should get a definitive ruling from the state supreme court.''

Observers said that, as of last week, it appeared unlikely that the legislature would act on the issue during a special session Mr. Wilkinson has promised to call. The Governor has said he would bring lawmakers back to Frankfort to reconsider a package of school-reform bills that they rejected during their regular session.

Suit Filed in 1985

The school-finance suit was filed in November 1985 by the Council for Better Education, which represents 66 of Kentucky's 178 districts. In papers filed with the court, they argued that the wide spending disparities between poor and affluent districts that result under the current system violate students' rights under the state constitution.

The defendants--including the Governor, the state board of education, and members of the General Assembly--responded that most, if not all, of the plaintiffs' financial problems were the result of mismanagement, waste, and poor tax-collection practices.

In addition, they contended that decisions regarding the allocation ofstate school aid were not within the jurisdiction of the state courts.

John Brock, the state superintendent of public instruction, was also named as a defendant, but he had informed Judge Corns that he did not oppose the relief sought by the plaintiffs.

Waste Not a Factor

In his ruling, Judge Corns rejected the defendants' main arguments, holding that "mismanagement and waste in districts ... has not contributed substantially to the property-poor districts' financial dilemmas,'' and that the courts were empowered to review school-finance questions.

In his review of the history of the finance system, the judge noted that its "heart'' is the state's foundation program, under which each district receives a flat grant based on classroom units and average daily attendance.

From the foundation program's enactment in 1954 through the mid-1960's, he noted, districts were required to levy a minimum tax of $1.10 per $100 of assessed value of real property in order to participate in the program. In several districts, assessments were so low, he said, that inorder to raise the required minimum local contribution "it was necessary to have car washes, bake sales, pie suppers, and donkey-ball games.''

In 1965, after a state court had determined in a separate suit that property should be assessed at 100 percent of its fair cash value, the General Assembly passed a law that rolled back tax rates to offset increases in property assessments.

"This action sanctioned the inequities among districts and was an affirmative act against equalization,'' Judge Corns concluded. "The rollback law froze into the basic local revenue source a different tax rate for each district.''

Disparities Said Widened

A year later, lawmakers passed a bill that allowed districts to assess a tax on wages and profits, a utilities gross-receipts tax, or an excise tax on income. But rather than improve the situation, the judge said, "this increased ... the financial disparities among the districts because these permissive taxes favored the affluent districts with greater density of population, factories and other industries, trading centers, and high payrolls.''

Although the legislature created a power-equalization program in 1976 to provide supplemental state aid to property-poor districts, that has not reduced spending disparities significantly because the program has been inadequately funded, the judge wrote.

In the 1985-86 school year, he pointed out, per-pupil expenditures in Kentucky's four poorest districts ranged from $1,767 to $1,872, while per-pupil expenditures in the four richest districts ranged from $2,942 to $4,361.

"Kentucky's current method of school finance invidiously discriminates against a substantial percentage of the state's common-school students on the basis of their place of residence,'' Judge Corns wrote. "This is an unnatural distinction with no reasonable relationship to the state's duty to provide all common-school students with a substantially equal, free public education.''

"[I]t is obvious that the poorer districts generally have fewer revenues per pupil, deficiencies in curricular offerings, and lower achievement-test scores,'' he continued. "A cycle of condition is created which assures and reinforces inequality of educational resources, programs, and results.''

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