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Arizona Finance System Is Ruled Unconstitutional

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Arizona's use of property taxes to pay for public education is unconstitutional because it produces "enormous disparities'' in the ability of school districts to build new schools, maintain existing buildings, and purchase equipment, the state supreme court has ruled.

The 3-to-2 decision, handed down late last month, declared the finance formula in conflict with the state government's constitutional requirement to maintain a "general and uniform'' system of public schools. It reversed an earlier superior court ruling.

Writing for the majority in the case, Justice Frederick J. Martone found that vast disparities in the quality of facilities available to students in rich and poor districts are a direct result of the way in which the existing system uses property taxes to finance education.

"The quality of a district's capital facilities is directly proportional to the value of real property within the district,'' he wrote.

He added that there is nothing inherently unconstitutional in using property taxes to pay for public education or in creating a system of local school districts to administer the funds.

"But if together they produce a public school system that cannot be said to be general and uniform throughout the state, then the laws chosen by the legislature to implement its constitutional obligation ... fail in their purpose,'' he wrote.

The court declined to spell out specific remedies, but directed the legislature to correct within a "reasonable'' time inequities in the complex finance system.

The decision adds Arizona to a growing list of states whose courts have directed legislatures to remedy fiscal inequities.

Timothy M. Hogan, a lawyer for the Arizona Center for Law in the Public Interest, which brought the suit on behalf of three poor school districts and several parents, said that the tactic of focusing on the relative quality of school facilities allowed the plaintiffs to present photographs and other dramatic evidence of inequities.

'Gross' Disparities

"We were fairly successful in positioning this case in the way we set out to do,'' he said. "The facts are terrible for the state here. The disparities are gross, they're unfair, and they're just getting worse.''

The court noted, for example, that the assessed value of land within the Ruth Fisher Elementary School District in Phoenix approaches $2 billion simply because a nuclear-power plant is located there. The high property value yields a per-pupil assessed valuation of $5.8 million per student.

In contrast, the San Carlos Unified District in Gila County has an assessed valuation of $749 per pupil because only 4 percent of its land is available for commercial or individual use.

The court also noted disparities in residential-property values, citing the Roosevelt Elementary School District, a plaintiff in the suit that is located in a largely poor section of Phoenix. The value of its residential property is roughly $195 million.

Elsewhere in Phoenix, in the Madison Elementary School District, residential real estate is valued at $526 million.

Given Roosevelt's larger student body, this means Roosevelt has a per-pupil assessed valuation of $18,293, compared with Madison's $130,778.

However, Vice Chief Justice James Moeller argued in a dissenting opinion that the plaintiffs in the suit "neither pled nor proved that the present school system fails to provide children an 'adequate' education.''

He added that while the finance system is far from perfect, the majority was not specific enough about which aspects must be revised.

"If I were in the executive or legislative branch ... and charged with the responsibility of fixing the allegedly broken system, I would have no idea where to begin,'' Justice Moeller wrote.

Officials of the state education department have acknowledged that fiscal disparities result in unequal educational opportunity.

State Response Uncertain

But C. Diane Bishop, the superintendent of public instruction, stressed in an interview that only the legislature has the power to address the inequities and has consistently failed to do so.

She noted that she and Gov. Fife Symington had proposed establishing a school-facilities fund but that there was no support for it in the legislature.

In a special session this year, lawmakers did, however, approve a $1 million capital-needs-assessment program to determine by next year what must be done to close the gap between rich and poor districts.

Ms. Bishop added that, in her opinion, the court was unclear about whether it was addressing only the inadequacy of capital budgets in its ruling or the entire school-finance system, which includes separate mechanisms to allot state money for capital improvements and operating expenses.

She said she will ask the state attorney general to request clarification from the court.

"We would rather have to deal with the capital issue. Then, long-term, you can deal with the whole [formula],'' Ms. Bishop said. "If you take on the whole thing at once, our feeling is that you're going to get bogged down'' in the legislature.

But Mr. Hogan sees no ambiguity. "I don't think there's any doubt that the opinion invalidates the entire statutory scheme,'' he said.

With the legislature having already held one special session this year, and elections looming, the Governor has no plans to call a special session. Thus, lawmakers will not take up the finance issue until next year. Mr. Symington said last week that he will resubmit the proposal for a facilities fund.

Ohio Appeal Planned

In Ohio, meanwhile, leaders have split about whether the state should appeal last month's court ruling that struck down the school-finance system. (See Education Week, July 13, 1994.)

Gov. George V. Voinovich plans to appeal the decision. Its prescriptions for equalizing funding would rob local districts of control and require a massive tax hike, said Mike Dawson, the Governor's press secretary.

But some lawmakers think the state should accept the decision.

An effort by State Sen. Robert W. Ney to block the Governor's action failed recently when a state agency ruled that competitive-bidding rules could be waived in hiring a lawyer to handle the appeal.

The state school board has voted not to join the appeal.

Staff Writer Drew Lindsay contributed to this report.

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