School districts file suit against state to fix crumbling buildings

School districts, education groups and taxpayers filed suit Monday to force lawmakers to pay for school maintenance and construction they have neglected for years.

Plaintiffs gathered on the steps of Glendale Landmark Elementary School with their lawyer, Tim Hogan of the Arizona Center for Law in the Public Interest, to announce the long-awaited suit revolving around an Arizona Supreme Court ruling they contend has been ignored by the Legislature.

The lawsuit contends the state has failed to provide the money needed to ensure public school buildings, facilities and equipment meet minimum standards, and that failure has forced school districts to divert other resources to address those needs or allow them to persist.

“I think it’s outrageous that we have Supreme Court decisions – three Supreme Court decisions from 1994 through 1998 – that very clearly spell out what the state’s responsibility is for funding school buildings and facilities,” Hogan said, referring to his state Supreme Court win over the same issue.

He said the state is in the same position as in 1991 when he filed the initial lawsuit.

“We’ve got a system that is almost wholly reliant on the tax base and voters’ willingness to access it. That’s an unfair system. It’s unfair to schools. It’s unfair to students. And it’s unfair to taxpayers,” Hogan said.

Two decades ago, Hogan successfully argued that relying on districts’ taxpayer dollars to cover school-maintenance costs, particularly in low-income areas, was unconstitutional. A settlement in 1998 included a one-time payout of $1.3 billion to get buildings to state standards, with an additional $200 million a year earmarked for soft capital expenses, like textbooks and buses.

But since that agreement, Hogan said money to fund the building renewal formula and soft capital funding has been cut year after year, leaving school districts to make up the difference through bonding or out of their management and operations funds.

Essentially, Hogan said, there is no longer any dedicated capital funding.

And to his knowledge, no lawmaker has made an attempt to effectively head off this renewed legal battle, which has been promised since 2015.

“They affirmatively repealed the funding, so it’s not like they don’t know what course they set out on,” he said.

Gov. Doug Ducey was among those who appeared unwilling to discuss other options.

Hogan said he met with the governor’s representatives last summer to discuss solutions to school districts’ capital needs, but the coalition of districts and education groups was told to take their proposals to Ducey’s Classrooms First Initiative Council.

“We didn’t see that as a very meaningful opportunity to get the kind of reform that’s required here,” Hogan said following Monday’s press conference.

He said the governor needs to “show some leadership” on the issue and direct legislators to find an ongoing solution.

Ducey’s own budget proposals in years past have never fully funded construction and repair needs. Even with an improving economy, the governor has proposed to earmark $17 million for capital needs in fiscal-year 2018.

Hogan called the proposal “trivial.”

“When you talk about $17 million as being a serious effort to address that problem,” he said, “it’s just not the case.”

Hogan put annual obligations at close to $300 million a year, with lost funding now at about $2 billion altogether.

Gov. Doug Ducey defended his budget proposal.

The governor said the state was running a $1 billion a year deficit when he took office in January 2015. He said the state is doing the best it can to fund not only education but all its needs.

Similarly, Hogan did not consider state Superintendent of Public Instruction Diane Douglas’ call for an extension and expansion of Proposition 301 to be an effective answer.

“My interpretation of her plan is that it’s $100 million, and that’s it – it basically disappears after that,” Hogan said of the expansion Douglas championed last week. “It’ll take care of a few problems, but it doesn’t solve anything on an ongoing basis.”

The building behind the plaintiffs stood as a testament to their message.

Associate Superintendent for Glendale Elementary School District Mike Barragan said the school was a “symptom of the issues,” where cracks in the media center’s inner walls were easily spotted.

The building does not pose a safety threat, he said, but such issues are ongoing and costly.

Other buildings have been far worse off.

Barragan said two of his district’s schools had to be closed at the beginning of the school year to address “structural deficiencies.”

The cost of those repairs was estimated to be $2.5 million, which was asked of and approved by the School Facilities Board – which is named as a defendant in the coalition’s case. The project was finished ahead of schedule and under budget, Barragan said, but the possibility of other schools to follow remains.

“We have to stop ignoring over one million students who have chosen to attend public schools,” he said. “When you don’t fund $2 billion in capital funding statewide, there are unintended consequences.”

In other districts, like Associate Superintendent John Scholl’s Chino Valley Unified School District, costly price tags on items like buses and textbooks are piling up fast, and local voters have so far been unwilling to accept bonding initiatives.

“We just don’t have the capital to function as a school district,” Scholl said, indicating transportation needs are approaching a critical point that could impact getting the district’s students to school.

The lawsuit does not include a specific dollar figure remedy, instead seeking sufficient funding through compliance with the state Constitution. According to court documents, the state is constitutionally obligated to “establish and maintain a general and uniform public school system” and to “insure proper maintenance of all educational institutions” without relying on taxpayers within individual districts.

Hogan said the Legislature could provide the necessary funding in a number of ways. Most notably in his mind, lawmakers could end or reverse a slew of tax cuts implemented over the years.

He noted that the Republican-controlled legislature in 2011 cut corporate tax rates by close to 30 percent and set up a system under which some multi-state corporations owe no taxes at all.

These were approved even while the state was running a deficit. And while Ducey was not governor at the time, he has made no effort to delay their implementation.

The net result is that corporate tax collections, which were $663 million in 2015, will drop to $263 million by 2020.

Hogan rejected Ducey’s contention the state is putting as much money into K-12 education at is possible. More to the point, Hogan said the Supreme Court made it clear in its prior rulings that capital funding isn’t a discretionary item that lawmakers can fund only when they say they have sufficient dollars.

“And if you need to generate additional revenue to comply with the constitution, then that’s what you need to do,” he said.

Hogan conceded the Supreme Court does not have the power to order lawmakers either to raise taxes or rescind prior tax cuts. But he said justices do have a way to enforce their orders if they conclude lawmakers are not following the constitution.

That’s what happened in 1998.

Hogan said he asked for – and the justices finally set – a deadline, giving lawmakers 60 days to bring the school finance system into compliance with what the constitution requires. More to the point, the justices told lawmakers unless they come up with an acceptable plan, they would block the state treasurer from distributing funds to schools, effectively shutting them down.

It worked: Lawmakers enacted formulas for ensuring new schools were built when needed and providing a regular flow of dollars for maintenance — the formulas they have since repealed and refused to fund.

“And if that’s really what legislators and the state want, I suppose that’s what the courts would have to go through again,” Hogan said.

Ducey said questions about that $400 million a year in tax cuts are missing the point.

“The state is also one of the fastest growing states in the country,” he said.

“We’ve got net in-migration, we’re standing in the fastest-growing county in the country,” Ducey continued. “So we’ve got a lot of positives going for us.”

And he said the final budget, expected to be adopted this week, will be “a home run for education,” even if it has nowhere close to the amount the schools contend the state is required to provide.

Ducey also insisted the $400 million in annual tax cuts was not a mistake.

The governor said he met with CEOs and business owners who were in Arizona for the Super Bowl, the NCAA Final Four and other sports events.

“One of the major questions they all have is about the economic attractiveness: What is the tax burden that we have, what are our regulatory burden that we have,” the governor said. “These are all things that are important in growing the state and growing the state’s economy so we can invest in education, we can grow the state’s economy, we can bring people to the state of Arizona.”

Conversely, the governor said he’s heard no concern about Arizona being near the bottom of all states in per-student funding.

“I happen to know some people in the business community,” he said. “And I would say the business community shares my commitment to K-12 education.”