Finance Column

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One of the most widely watched and hard-fought school-finance suits was resolved this summer when New York State's highest court upheld the state's system of paying for public education.

The New York State Court of Appeals, in a June 23 ruling overturning three lower state courts, acknowledged that school districts' heavy reliance on local property taxes puts poor districts at a disadvantage, but found that the inequities do not violate the state or federal constitutions.

According to many political observers, the decision reduces the chances that the state legislature will voluntarily equalize school spending, as Gov. Hugh L. Carey and others have urged.

The suit, Levittown v. Nyquist, was instigated in 1974 by 26 suburban and rural school districts. They were joined as plaintiffs by the cities of New York, Rochester, Buffalo, and Syracuse.

The suit charged, among other things, that property-tax rates in low-wealth districts are commonly 50 percent higher than those in wealthier districts but yield much less money per pupil. It further charged that methods of apportioning state aid actually exacerbate the spending disparities between rich and poor districts. The state now pays less than 40 percent of the average district's costs.

Three lower courts--most recently, the appellate division last October--upheld the plaintiffs' position.

But the Court of Appeals ruled that "any legislative attempt to make uniform and undeviating the educational opportunities offered by several hundred school districts" would undermine local control of schools. The high court also found that education is not a fundamental right under the U.S. and New York constitutions, and that the current system of supporting schools primarily through property taxes has a "rational basis."

The decision was viewed in some quarters as a severe setback for the finance-reform movement that has, through litigation and legislation, altered school-finance formulas in more than half the states.

But David Long, a Washington lawyer who has worked on behalf of the plaintiffs in school-finance suits in New York and numerous other states, said it is "impossible to predict" the national impact of the Levittown decision. The New York high court, he asserted, is less influential among jurists outside the state than it used to be. "I think state supreme courts are more independent than they've ever been," he said.

The decision may, however, reflect a reluctance on the court's part ''to impose any more financial burdens" on a state that is already in fiscal trouble, Mr. Long added.

A key theory in the suit was "municipal overburden"--the notion that large cities, because of their high social-services costs, cannot afford to pay as much for public schools as suburban and rural districts can. A finance suit pending before Maryland's highest court makes a similar claim.

Despite the New York court's adverse decision, Mr. Long predicted, the theory of municipal overburden "will survive as part of the policy debate."

Missouri voters soundly defeated a proposed constitutional amendment that would have made it easier for school boards to win property-tax increases.

Amendment 4, approved by the legislature last spring and submitted to voters on Aug. 3, would have allowed school boards to levy taxes of up to $5.25 per $100 of assessed valuation with the approval of a simple majority of the district's voters.

Currently, any levy increase above $3.75 needs the endorsement of two-thirds of the voters--and that's the way it will remain.

The amendment was supported by Gov. Christopher Bond, most major education groups, and local school officials.

A spokesman for the Missouri-National Education Association said that the teachers' group was considering other ways to raise money for schools.

West Virginia's attorney general has asked the state Supreme Court of Appeals to prohibit enforcement of sweeping school-finance and educational reforms ordered last spring by a trial judge.

The state's petition claims that Special Judge Arthur M. Recht overstepped his authority in ordering changes in the state's tax structure, improvements in school facilities and curricula, and the appointment of a special commissioner to develop a master plan for putting the reforms into effect. It also charges that the judge's ruling violates the principle of separation of powers by intruding on matters normally in the province of the legislature.

The petition was filed on behalf of the state tax commissioner and some other state officials who are defendants in the case; the state board of education, however, is not a party to the challenge.

"We feel that these questions are political questions," said Silas B. Taylor, assistant attorney general. "For example, how much money you spend on schools is a political question."

The petition, Mr. Taylor said, is a preliminary request; a full appeal is planned later. Oral arguments on the petition are scheduled for mid-September.

By a 4-to-2 vote, the Colorado Supreme Court refused in early August to reconsider its decision upholding the state's system of financing public education.

The plaintiffs in the case were required to ask that the state court reconsider their case before petitioning for a review by the U.S. Supreme Court, an option they are now considering.

By the same majority, the state Supreme Court upheld the state's finance system in May, reversing a 1979 district-court ruling that the system violated the equal-protection guarantees of both the state and federal constitutions and a section in the Colorado constitution calling for "a thorough and uniform system of free public schools."

But one concurring judge warned that the decision "should not be interpreted as an approval" of the plan, which "barely meet[s] constitutional standards."

The case, brought on behalf of schoolchildren from 16 Colorado districts, was first heard in 1978. The plaintiffs said the system left poorer districts at an educational disadvantage.

They argued, and the district court agreed, that the system allows districts with high property values to raise more revenue for education than poorer districts.

Responding to the perception that the school-finance system has become overly complex, the Florida legislature this summer appointed a 17-member commission to study the program and make recommendations to the 1983 legislature.

The Florida Education Finance Program has been in existence since 1972, when the legislature established a "relatively simple" formula, according to a spokesman for the education department. Since then, however, numerous amendments have made the program far more complicated. The task force, composed of legislators, educators, and members of the public, will consider ways to simplify the program. They will look at areas such as the differing needs of urban and rural districts and the system for allocating funds for special purposes.

The current system is also the subject of a court challenge filed in early 1982 by the Palm Beach County school district.

Vol. 01, Issue 40

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