VOL. 17 ISSUE NO. 37   |  SEPTEMBER 14 – 20, 2011


Goldwater Institute wins victory for taxpayers against CCUSD

‘In practical terms, this ruling means that governments must abide by the rule of law and contracts, respecting voter rights’

Darcy Olsen

CCUSD – On Thursday morning, Maricopa County Superior Judge Eileen Willett issued a ruling granting summary judgment in favor of plaintiffs in Friedman v. Cave Creek Unified School District, finding 2010 Ariz. Sess. Laws 332 § 34 (Section 34) unconstitutional as a matter of law, and constitutes a special law, in violation of the Arizona Constitution.

The lawsuit was brought by the Goldwater Institute on behalf of district taxpayer Jayne Friedman, whose property tax dollars are being used to pay back bonds approved by voters in 2000 for projects specified in the publicity pamphlet.

Sen. Nancy Barto, R-Dist. 7, introduced a floor amendment (Section 34) to the omnibus budget bill in 2010, while still a member of the House of Representatives, which read, “… when nine years or more have passed since an election that authorized a school district to issue bonds, the school district may choose to use the proceeds of any bonds authorized at that election for any necessary capital improvement, provided the school district’s governing board votes to authorize the proposed use of the bond proceeds prior to June 30, 2013.”

Willett stated Section 34 “essentially abrogates the voters’ rights existing at the time of their bond vote, and by doing so, strikes a blow to the election process and violates both the Arizona and Federal Constitution under the contract clause by retroactively impairing the reasonable expectations of the body politic within the district.”

Agreeing with plaintiffs’ Attorney Christina Kohn, who, during oral arguments asserted the 2000 Bond Election formed a contract between CCUSD and the people, with terms expressly stated in the Publicity Pamphlet, Willett said, “Section 34 impermissibly relieves the district of its obligation to the detriment of the people. No significant, legitimate public purpose exists which justifies the government’s retroactive taking.”

Because CCUSD still owes approximately $17.9 million on the bonds in question, district taxpayers can expect to be assessed an additional 13 years of taxes levied on their property, while $13 million of those proceeds remain unspent.

The law in effect at the time voters passed the bond measure in November 2000, and before Section 34 became law, (A.R.S. § 15-1024(B)(1) mandated all unspent bond money be used to pay down the bond debt.

Voters relied upon that condition, which was also stated in the Nov. 7, 2000 Publicity Pamphlet, when casting their ballots.

Additionally, A.R.S. § 15-491(J) expressly prohibits “the use of bond proceeds for any purpose other than the proposed capital improvements listed in the publicity pamphlet,” with the exception that up to 10 percent of the bond proceeds may be used on cost overruns or other general capital expenses, which Willett noted was not applicable to this case.

Goldwater Institute President and CEO Darcy Olsen, upon receiving word from the court that Section 34, allowing school districts to spend bond money on projects voters did not approve, violates both the Arizona and U.S. Constitutions, declared the ruling “another courtroom victory for taxpayers.”

Olsen stated, “In practical terms, this ruling means that governments must abide by the rule of law and contracts, respecting voter rights. It also means the legislature cannot pass laws to carve out exceptions to the rule of law.”

Friedman said she never had a doubt about the integrity of their argument and said, “I can only hope district taxpayers, now that CCUSD has clearly demonstrated it is not a good steward of their hard earned money, will vote in opposition to the upcoming override election.”

Rich Bail, who joined Friedman as a plaintiff in the suit, said, “I am pleased with Judge Willett’s decision. For too long, CCUSD has mismanaged bond money and built schools it did not need. Perhaps this decision will give them a reason to reevaluate their management practices and provide greater financial responsibility for all district residents and taxpayers.”

Neither Barto nor the district responded immediately to requests for comments on Willett’s decision.

The district has also not stated whether it plans to appeal the ruling and, if so, how it would be funded.