Fund students, not buildings
A recent decision illustrates what a wrong-headed direction the 1990s Arizona Supreme Court mandated for school finance.
Last week, Superior Court Judge Dewain Fox found that the state’s method of financing capital needs for district schools was unconstitutional. Although I don’t like the implications of the result, I think the case was rightly decided.
As a Superior Court judge, Fox is bound by precedent. And a 1990s state Supreme Court decision requires the state to prescribe building standards for schools and provide funding sufficient for every school to meet those standards. That’s not happening.
However, the Fox decision also illustrates what a wrong-headed direction the high court mandated for school finance in Arizona.
In the 1990s, Arizona had a hyperactive and liberal state Supreme Court. The precedent that bound Fox features all the elements of hubristic central planning.
Prior to the 1990s decision (actually a series of them), Arizona had a state finance formula that largely equalized per-pupil operating funding among district schools. For large capital expenses, districts could ask voters to approve property-tax backed bonds.
Because of the disparities in what districts could raise from the same property tax rate, the high court held that this approach to capital funding violated the state constitutional provision that the legislature enact laws to “provide for the establishment and maintenance of a general and uniform public school system”.
To an originalist, this conclusion was a head-scratcher. The district bonding approach was established at statehood and remained largely unchanged and unchallenged for over 80 years. Obviously, the drafters of the “general and uniform” language didn’t think the district bonding approach violated what they were charging the legislature with creating. The “system” was to be general and uniform, not that every school in the state had to be, at some level, equal to every other school in the state.
But originalists were scarce on that court. So, after some judicial hemming and hawing, the court ultimately issued the highly prescriptive formula: the state had to establish building standards for district schools and provide funding to ensure that every school in the state met them.
The legislature enacted Students First to comply. Highly detailed building standards were adopted. Schools were given a fortune to bring existing buildings up to the standards. A formula was adopted to provide future funding to keep them in compliance, about which more anon. And an approach was adopted to build new schools that met the standards.
At the time, the high court asserted that there was a relationship between building quality and student learning. Fox repeats the claim in the recent decision. There was minimal evidence of this at the time the 1990s state Supreme Court asserted it. And the experience with Arizona’s charter schools since obliterates the claim.
Charter schools receive no state funding for their buildings, and charter school education takes place in a wide array of settings. I doubt that there is a single charter school building in the state that fully meets all the minute details of the state standards for district schools. Yet, on average, charter students outperform district students on standardized tests.
This decentralized approach to school buildings is also winning out in the marketplace. Charter school enrollment is increasing while district school enrollment is declining.
Nevertheless, the precedent is the precedent. And, amply demonstrated by example after example in Fox’s decision, the state is not providing sufficient funding for all district schools to meet the state’s building standards.
However, there is some missing context in Fox’s decision that, while not legally determinative, is valuable for evaluating the appropriate policy response.
Fox makes much about the decision, in the aughts, to abandon the formula approach to building renewal in favor of a grant approach. The former, in Fox’s account, guaranteed districts would be able to keep existing schools in compliance with the state building standards while the grant approach has not.
Missing is that, at the time, the building renewal formula was widely regarded as a stinker. Even Janet Napolitano, who successfully procured significant increases in education funding during her tenure as governor, declined to fund it. A legal challenge to the switch in approach ultimately failed.
Fox also makes much of the failure of District Additional Assistance funding to keep pace with inflation. However, District Additional Assistance isn’t a capital funding program. Its antecedent was. But DAA is just a per-pupil state grant to districts to be used for whatever they want.
There are three state buckets that distribute funds to schools on a per-pupil basis, largely unrestricted: basic state aid, the education excise tax, and DAA. There used to be a fourth, the increased distribution from the state land trust.
While it was outside of Fox’s legal purview because of the myopic precedent, the most important missing context is that, since the 1990s, inflation-adjusted per-pupil funding to district schools from these largely unrestricted buckets has increased dramatically.
None of this is to deny the reality or the importance of the sorry state of some district school buildings documented in Fox’s decision. However, the success of Arizona’s charter schools demonstrates the folly of the central planning approach to school buildings dictated by the Arizona Supreme Court in the 1990s. Money is fungible. Considering capital funding streams in isolation provides a distorted picture of the overall school finance environment.
Fox did not enjoin the distribution of state funds to schools to compel compliance, as the 1990s state Supreme Court did. In fact, he stayed his decision to provide for the possibility of an appeal. As I say, I find little to fault in Fox’s treatment of the case. He has proceeded judiciously and prudently.
The legislative leadership, the de facto defendant in the case, vows to appeal. However, that’s a bet that the existing Arizona Supreme Court will overturn, or figure out a way to circumnavigate, the 1990s precedent. That could happen. But it’s not the safest bet, nor the best policy response.
All these different buckets in the school finance system create confusion without really accomplishing anything worthwhile, either for students or taxpayers. All school funding should be brought to the state level and converted into a single per-pupil grant to whatever school a student attends. Let schools compete for students based upon how they use the funds. Make the system general and uniform – the same per-pupil grant to every school. But decentralize resource allocation decisions.
I’m as confident as you can be about these things that the current Supreme Court would uphold the constitutionality of such a system, despite it not complying with the hubristic decision of the 1990s court. How could the same per-pupil grant to whatever school a student attends not be regarded as qualifying as a “general and uniform system”?
The current system creates winners and losers among schools based upon factors not related to their ability to attract students. That’s a tough thing to ask the existing high court to bless, particularly given the gross disparities and sorry school conditions documented in the detailed Fox decision.
Reach Robb at robtrobb@gmail.com.