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School-Finance Laws Are Unconstitutional, N.D. Judge Decrees

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A district judge in North Dakota has ruled that the state's entire school-finance system is inequitable and unconstitutional.

Judge William F. Hodny this month spared no funding mechanism in determining that North Dakota's 20-year-old school-finance statutes violated both the education and equal-protection articles of the state constitution, and thus required a "comprehensive overhaul.''

The North Dakota ruling offered further evidence of the increasing success of court challenges to state school-finance systems across the nation. Just last month, a Missouri judge struck down that state's education-funding methods. (See Education Week, Jan. 27, 1993.)

The disparities in the ability of North Dakota school districts to raise revenues "sounded a warning a long time ago and should have been heeded,'' Judge Hodny wrote.

The all-encompassing decision, which ran to 234 pages and followed a one-month trial last summer, marked a victory for the nine school districts and a host of parents, taxpayers, and students who filed suit more than three years ago.

"We're very, very pleased with the judgment,'' said Lowell L. Jensen, the superintendent for the Bismarck Public School District #1, one of the plaintiffs.

State officials plan to appeal the ruling to the state supreme court within the next six weeks.

"I think the decision goes much farther than the evidence warranted,'' Solicitor General Laurie J. Loveland said last week.

A supreme court ruling in the case could come by early next year. In order to uphold a ruling of unconstitutionality in North Dakota, four of the five justices on the court must agree.

Pressure Is On

In his ruling, Judge Hodny ordered the legislature to establish a new system within six months that would fully comply with the state constitution by the end of four years.

There is "pressure to do something while everyone is in town'' for the biennial legislative session, which ends in mid-April, said Calvin N. Rolfson, who argued the case for the plaintiffs.

A state education department official said his agency would proceed to draft a plan for legislative consideration, as required in the ruling.

To comply with another part of the court order, Gov. Edward T. Schafer, legislative leaders, Superintendent of Public Instruction Wayne G. Sanstead, and lawyers from both sides of the case met last week to discuss their next steps.

Observers said, however, that it remained unclear how much the legislature would accomplish if the district court's ruling is held in abeyance and the state is not obligated to change the system until the supreme court renders a final decision.

'Arbitrarily and Irrationally'

Judge Hodny found that the school-financing system, which relies heavily on local revenues generated by property taxes, "arbitrarily and irrationally denies equal educational opportunities to children in low-wealth districts.''

The system violates the constitutional requirement that the legislature provide for a "uniform system of free public schools throughout the state'' by turning over that obligation to districts having "vastly different'' amounts of taxable wealth, the judge argued.

The court detailed 11 "constitutionally objectionable features'' of the finance system, including disparities in per-pupil revenues resulting from districts' differing taxable wealth; the state-aid formula, which fails to equalize for variations in district wealth; the transportation-aid program; the special-education funding program; state aid for vocational education; and the system of funding school facilities by relying on local sources.

The court found that the plaintiff schools were "no longer capable'' of educating students to the "high degree of intelligence'' required in the constitution.

Among examples of this inability, the court cited reduced curriculum offerings, growing class sizes, outdated textbooks, inadequate or "virtually non-existent'' libraries, outdated facilities, and a paucity of computers.

"These limitations do not provide an educational opportunity under which the students are offered the quality of education mandated by our constitution,'' Judge Hodny wrote.

The current finance system, which dates from 1973, "will never eliminate the revenue and expenditure differences that exist'' among the state's 272 districts, he argued.

Ronald Torgeson, an expert on school finance for the state education department, said one of the main problems was that the system's funding formula had not been updated to account for inflation and other changing factors.

"It broke down from lack of maintenance,'' Mr. Torgeson said, "because, at one time, it did do the job.''

Both the state and local contributions need to be increased in order to help fix the system, he said.

In North Dakota, local property taxes are the major source of funding to districts beyond state aid. But the disparities between the school-funding abilities of districts are not offset or equalized by state financial assistance, according to the court decision.

Paralyzed by Politics

A court mandate has been widely seen in the state as the only means of achieving changes in the system.

Political concerns over increasing state income or sales taxes or requiring a higher minimum local property-tax rate have paralyzed legislative action on the issue for years, analysts suggested.

Powerful agricultural interests in the legislature, for example, have been some of the most outspoken opponents of a larger local property-tax burden, Mr. Torgeson said.

Moreover, state voters in recent years have rejected tax hikes.

Still, the court decision "is certainly a wake-up call to the legislature that it is no longer business as usual,'' said Mr. Rolfson, the plaintiffs' lawyer.

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