Education Funding

Supreme Court Backs Ed. Dept.’s Interpretation of Impact Aid Act

By Mark Walsh — April 24, 2007 4 min read
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The U.S. Supreme Court last week upheld the secretary of education’s method for calculating when states may offset federal impact aid to school districts that educate children living on federal land or near federal installations.

Ruling 5-4 in a case brought by two New Mexico districts, the justices said the Impact Aid Act could be interpreted as allowing the secretary’s way of determining when a state has an equalized school funding system. Under the statute, states with equalized funding systems may offset a portion of the amount that districts receive in federal impact aid.

Read the April 17 decision in the Zuni Public School District No. 89 v. Department of Education case, posted by the U.S. Supreme Court.

For his majority opinion in Zuni Public School District No. 89 v. Department of Education (Case No. 05-1508), Justice Stephen G. Breyer consulted mathematics and statistics volumes, among other sources, to reach his conclusions about the “disparity” calculation at the center of the dispute.

The federal statute calls on the secretary to rank school districts in a given state by wealth and allow that state to offset the impact aid to districts only when the disparity between its wealthiest and poorest districts in per-pupil spending is 25 percent or less. Under the law, however, the top and bottom 5 percent of districts are eliminated from the calculation.

Long in Use

The Supreme Court upheld the method long used by the federal Department of Education, which, instead of simply disregarding the top and bottom 5 percent of districts by the number of districts alone, takes student-enrollment figures into account. That approach can alter the ultimate result of the equalization provision.

In New Mexico, the federal formula disregarded 23 of 89 districts in the disparity calculation, and under that method, the state passed the equalized-spending test.

The two school systems that sued, the 1,585-student Zuni district and the 13,000-student Gallup-McKinley County district, received $8.1 million and $26.8 million, respectively, in federal impact aid in fiscal 2006. Indian-reservation land is located within both districts.

District officials argued that under a proper application of the impact-aid law, the secretary would have eliminated only 10 districts from the state’s list, and the resulting disparity in per-pupil spending for the remaining districts would have exceeded 25 percent. As a result, New Mexico would not have been able to offset any of the districts’ federal aid.

Statute’s ‘Plain Language’

In his opinion for the court, Justice Breyer said the history of the Impact Aid Act supports the secretary’s method.

“The history and purpose of the disregard instruction indicate that the secretary’s calculation formula is a reasonable method that carries out Congress’ likely intent” when it added the language to the law in 1994, Justice Breyer said.

Joining his opinion were Justices John Paul Stevens, Anthony M. Kennedy, Ruth Bader Ginsburg, and Samuel A. Alito Jr.

Justice Breyer noted that under the districts’ proposed method, the 10 school districts that New Mexico would eliminate from the calculation would account for only 1.8 percent of the state’s students.

“To eliminate only those districts, instead of eliminating districts that together account for 10 percent of the state’s pupils, risks resting the ‘disregard’ calculation upon a few particularly extreme noncharacteristic districts,” Justice Breyer said, which would be “contrary to the statute’s intent.”

Justice Antonin Scalia issued a strongly worded dissent that was joined in full by Chief Justice John G. Roberts Jr. and Justice Clarence Thomas, and in part by Justice David H. Souter.

Justice Scalia said the majority was reaching beyond the text of the federal law, and he derided Justice Breyer’s analysis of various mathematical or statistical methods.

“This case is not a scary math problem,” Justice Scalia said. “The plain language of the federal impact-aid statute clearly and unambiguously forecloses the secretary of education’s preferred methodology for determining whether a state’s school funding system is equalized.”

Leigh M. Manasevit, a Washington lawyer who argued the case for the state of New Mexico, said the decision allows the state to continue to offset a portion of federal impact aid. The state was on the same side as the federal Education Department in the case.

“The state’s system is designed to pay virtually all of the costs of the school districts,” Mr. Manasevit said.

Under the method proposed by the Zuni and Gallup-McKinley districts, the calculation would have varied widely from one year to the next, he said.

“Under the secretary’s method, you don’t have drastic changes year to year,” Mr. Manasevit said.

John B. Forkenbrock, the executive director of the National Association of Federally Impacted Schools, based in Washington, said his group had hoped the high court would endorse the New Mexico school districts’ method.

“But we don’t disagree that the law could be interpreted the way” the court’s majority did, he said.

He pointed out that New Mexico is one of only three states—Alaska and Kansas are the others—that are certified by the federal Education Department as having an equalized school funding system under the terms of the Impact Aid Act. Some other states might qualify and might seek such certification now that the case over the methodology has reached a conclusion, he said.

“The concept of equalization is certainly not a bad thing if a state is truly trying to equalize its schools,” Mr. Forkenbrock said.

A version of this article appeared in the April 25, 2007 edition of Education Week as Supreme Court Backs Ed. Dept.’s Interpretation of Impact Aid Act

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