Arizona Supreme Court affirms ruling in favor of CCUSD93

Proposition 301 is a referendum measure protected from legislative changes by the VPA
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CCUSD93 – Last week, the Arizona Supreme Court affirmed the court of appeals ruling in favor of Cave Creek Unified School District, Casa Grande Elementary School District, Crane Elementary School District, Palominas Elementary School District, Yuma Union High School District (Cave Creek), the Arizona teachers and school board associations and others against Arizona State Treasurer Doug Ducey.

tim hoganAttorney Tim Hogan (l), executive director, Center for Law in the Public Interest along with Attorney Donald Peters of LaSota & Peters, represented the plaintiffs in a case that challenged the state’s interpretation of statute with regard to Proposition 301, incorporated into A.R.S. §15-901.01, intended to protect schools from the effect of inflation.

Section 15-901.01 requires that, for fiscal year 2006-07 and each fiscal year thereafter, “the Legislature shall increase the base level or other components of the revenue control limit by a minimum growth rate of either two percent or the change in the GDP price deflator … whichever is less, except that the base level shall never be reduced below the base level established for fiscal year 2001-2002.”

However, following oral arguments in February 2011, Maricopa County Superior Court Judge J. Kenneth Magnum denied the plaintiffs motion for injunctive relief and granted the state’s motion to dismiss.

Although he said the plaintiffs clearly had standing to bring the complaint, Magnum said he was unconvinced they met the legal prerequisites for recovery.

He stated, while Proposition 301 states the intention of the voters of Arizona is for an appropriation to be made to protect schools from the effects of inflation, the Proposition by itself is not self executing.

He went on to say, “Moreover, as a method of lawmaking, the voters cannot require the legislature to enact a law that provides for that appropriation. For example, the Supreme Court stated the following: ‘A promise to make an appropriation is not an appropriation ... The utmost that can be claimed for the act under consideration is that it pledges the good faith of the state to the making of an appropriation (Millett v. Frohmiller)’” a 1948 case noting statute that authorized an agency to employ persons did not itself constitute an appropriation. “The employment statutes may obligate the state to make certain payments, but they do not set aside any sum of money from the public revenue and thus cannot be regarded as making an appropriation.”

The court of appeals disagreed and remanded the case with an award of reasonable attorneys’ fees.

Proposition 301, which voters passed in 2000, was a referendum measure that provided “automatic inflation adjustments in the state aid to education base level or other components of a school district’s revenue control limit.”

The “revenue control limit” is a formula component used to set funding for school districts.
In this instance, it had two pieces, the base revenue control limit and the transportation revenue control limit.

While the legislature adjusted for inflation both the base and transportation revenue control limits for years, in the FY 2010-2011 budget bill, HB 2008 had an inflation adjustment for the transportation support level component only.

Plaintiffs sued the state, asserting A.R.S. §15-901.01 fell under and violated the Voter Protection Act (VPA), which requires the legislature to increase for inflation every year both the base revenue control limit and other components of the revenue control limit.

The issue before the court was whether the legislature’s deviation from the funding mandate in A.R.S. §15-901.01, by increasing only the transportation support level in HB 2008, impermissibly repealed, amended or superseded the statute in violation of the VPA.

The intent of the VPA was to limit changes to voter-approved laws, including referendum measures.

During oral arguments, the state conceded HB 2008 violated the VPA by effectively repealing, amending or superseding §15-901.01.

In affirming the court of appeals’ opinion and remanding the case to the superior court for entry of a declaratory judgment in favor of Cave Creek along with the award of attorneys’ fees, the court noted its analysis and conclusion was consistent with a 2001 Attorney General advisory opinion that addressed the issue and concluded Proposition 301 is a referendum measure protected from legislative changes by the VPA.

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