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Judge in Missouri Strikes the State's Finance Formula

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A Missouri judge has declared the state's school-finance system unconstitutional, charging that it is "overly complex'' and frequently "irrational,'' and he has given state lawmakers until 90 days after the close of the current legislative session to rewrite it.

Circuit Judge Byron L. Kinder ruled this month that inequities in the foundation formula used to distribute state aid to school districts have produced "one of the most disparate situations of any state.''

Almost since its adoption in the late 1970's, the formula has been massively underfunded by the legislature, provoking a reliance on local property taxes to build and maintain educational facilities, Judge Kinder contended.

Reliance on local revenues, in turn, has produced a statewide system of schools that ranges "from the golden to the God-awful,'' he wrote.

The judge also noted that per-pupil spending among the state's roughly 540 school districts ranges from $2,653 to $9,750.

"Those disparities are not because of differing student needs, but instead are associated with local property wealth or are simply irrational,'' he wrote. "The present system of financing the public schools of Missouri does not pass constitutional muster.''

The ruling addressed issues raised in four separate suits filed over a period of years by coalitions of districts, which were subsequently consolidated into a single case.

Judge Kinder's ruling is open to appeal to the state supreme court by several districts that requested the opportunity to intervene in the case as defendants. The other defendants are listed as former Gov. John Ashcroft, the legislature, and the state department of elementary and secondary education.

Supporters of the existing formula argued, in essence, that funding levels do not necessarily affect the quality of education. But in his opinion, Judge Kinder indicated that the defendants had failed to present a convincing case and suggested that the district interveners were mostly interested in protecting their status under the existing formula.

"[T]hey would have no interest in this litigation ... if it were not for the purpose of preserving the larger amount of school funds,'' he wrote.

An 'Archaic' System

Judge Kinder also clearly intended the ruling to spur the legislature into enacting a new formula in its current session.

"Hopefully ... the findings and conclusions herein will be of some assistance as the General Assembly faces its tasks of addressing the system of school funding,'' he wrote in a footnote to the opinion.

But Judge Kinder also cautioned that any act by lawmakers to revise the formula must address the system in its entirety, rather than attempting "quick fixes.''

"A 'cure' of the constitutional infirmities of the foundation formula is not to be found by a change of only a single element ... by further 'refinement' or 'tinkering' with an already overly complex formula to make it more complex,'' he wrote.

Officials at the state education department said they were pleased at the ruling, which they predicted could end several years of legislative deadlock over the issue.

"Judge Kinder's decision is wholly consistent with what we have been saying for the last several years,'' said Deputy Commissioner of Education Joel D. Denney. "That is that Missouri's system of school finance is archaic and inadequate.''

One particularly controversial aspect of the finance system struck down by Judge Kinder is known as the "prior-year constraint'' restriction. Critics contend that the provision effectively penalizes districts experiencing a growth in enrollment by capping increases in state aid while maintaining funding levels for districts where enrollment is declining.

Prior-Year Constraint

The prior-year-constraint provision adds a new element not found in cases in New Jersey, Texas, and other states in which courts have declared school-finance formulas unconstitutional, according to John Augenblick, a Denver-based school-finance expert who testified on the issue on behalf of the plaintiffs.

One group of 35 districts involved in the case specifically set out to challenge the prior-year constraint.

"We sued on a very focused issue,'' said Gail F. Williams, the superintendent of one of the districts, Lee's Summit School District R-7. "We were not being paid for growth.''

Ms. Williams said the 10,000-student district, in suburban Kansas City, has added roughly 1,800 students to its rolls in the last five years. Because of the prior-year constraint, however, its allocation of state aid has not kept pace.

At the same time, she added, the local commercial and industrial tax base has failed to grow as fast as residential development.

Mr. Augenblick also noted that there was an inherent weakness in the provision because it built on an allocation of funding that was established when the formula went into effect in the late 1970's.

"Some people in Missouri thought it was fair,'' he said. "But all it did was build on the money that was distributed the year before.''

Mr. Augenblick said the prior-year-constraint provision may be considered important by finance lawyers in other states who are weighing challenges to funding formulas.

"The prior-year constraint is a peculiar little piece [to the Missouri formula],'' he said. "But what lawyers in other states are doing is looking at each new piece that comes and deciding whether it's applicable.''

Legislative Remedies

Analysts pointed out that Judge Kinder's ruling comes at a time of severe fiscal stress for many Missouri districts. Inequities in the foundation formula and sluggish economic growth have left a significant percentage of districts, both small and large, teetering on the edge of bankruptcy, according to the state department.

As a result, the department for the first time this fall exercised power granted by the legislature last year to take control of a failing district and consolidate it with a financially solvent neighbor.

Despite the problems, lawmakers in recent sessions have been unable to reach agreement on finance changes. And state voters in 1991 rejected an initiative providing a tax increase for education and calling for changes in the foundation formula.

In the first days of the current session, however, legislative leaders appointed a task force to revise the formula. And Gov. Mel Carnahan in his State of the State Address challenged lawmakers to act.

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