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Stateline.org
Published: February 9, 2007

N.D. could solve ed funding feud out of court
By PAULINE VU

Like custody battles in divorces, messy state disputes over school funding regularly land in court. North Dakota is one state trying to break the chain.

North Dakota’s Legislature this session will make or break an experiment by Gov. John Hoeven (R) and key stakeholders in public education to avoid the path that has embroiled 45 states, including North Dakota previously, in school-finance lawsuits that can drag on for years and sow long-lived bad feelings.

In January 2006, a month before the start of a trial that would have pitted the state against nine school districts demanding more taxpayers’ money, Hoeven came up with an alternate solution: he would push for an additional $60 million in school funding in the 2007 legislative session if the districts would hold off on the lawsuit.

The districts agreed. A special Commission on Education Improvement comprising mostly legislators and school district representatives was set up and met regularly to hash out an acceptable funding system. It released its recommendations in August, and now it’s up to the Legislature to follow through – or risk a lawsuit.

If the dispute is resolved without going to court, it would be a novel event in the world of school-funding battles, where acrimonious and drawn-out lawsuits have turned into the most popular path for plaintiffs like school districts, parents and advocates who filed the first such lawsuit more than 30 years ago.

“We felt that reasonable minds could come up with a good plan for the kids,” said Warren Larson, a member of the commission and superintendent of the Williston School District, one of those that sued. “We basically felt that we can accomplish more by working together than by getting in a fight, which is what a lawsuit is. And I believe we have.”

This session the four legislators on the commission – including the chairmen of the House and Senate education committees and the Senate minority leader – introduced a bill to revamp the state’s funding system based on the commission’s formula. Thanks to a budget surplus, the bill would provide an extra $80.5 million of state money -- even more than the $60 million Hoeven proposed -- and ensures that in the first year every school district would see an increase of at least 2 percent. The bill passed out of the Senate Appropriations Committee Feb. 8 and is headed to the full Senate soon.

“People are amazed that we could sit across the table and do this, but we think it’s in the best interests of all involved that we decide as education stakeholders how to best handle the situation and not let the courts decide,” said state Sen. Tim Flakoll (R), the bill’s primary sponsor. “The courts aren’t what our constituents want. They want us to handle it.”

Nationwide, 22 other states currently are enmeshed in lawsuits over how much money they award for education or how they disperse it, according to the National Access Network, which supports increasing funds to schools. Some of the cases have been going on for years, mired in appeals. All but five states have been sued at some point, some more than once.

The effect of the lawsuits is palpable today. In Wyoming, for example, any major education funding change by the Legislature must get court approval first, according to Mike Griffith, a school-finance consultant for the Denver-based Education Commission of the States.

Antipathy from a lawsuit can run deep. Lawmakers in Kansas and New Hampshire have attempted, and failed, to pass constitutional amendments to limit the court’s role in school-funding issues. In South Dakota, school district officials have stopped using their state e-mail addresses to discuss their lawsuit for fear the state could monitor their correspondences, according to The Argus Leader.

“Lawsuits are time-consuming, cost a lot of money, and create a lot of adversarial relationships in states,” Griffith said. “Once you start going through discovery, that’s when you start getting hurt feelings and that’s when your lawyers start attacking the other side.”

If the North Dakota scheme works, it would result in the biggest K-12 funding overhaul in North Dakota history. In addition to the $80.5 million in extra money, the commission has come up with what its members say is a more equitable system to distribute the money.

The current system, which relies on a mix of property taxes and state funding, leaves disparities in per-pupil spending across the state. A large part of the problem is that some school districts are property-tax rich and others are property-tax poor. The state already gives supplemental payments to poor districts, but those districts say it isn’t enough to narrow the gap in the amount each district has to spend on its students.

A complex new formula that takes districts’ property values into account tries to ensure that all North Dakota students receive at least 90 percent of the statewide average in funding per student. The state would give more money to poorer districts and less to richer districts.

Some lawmakers have complained because the formula counts oil tax revenues and out-of-district tuition payments as part of a district’s wealth. Others aren’t happy that their districts are getting smaller increases than others.

Still, Flakoll said he expects the bill to pass thanks to the state’s booming economy, the governor’s support and the “Herculean effort” all parties put into the commission. While lawsuits in other states have yielded court-ordered masters or studies to determine a fair funding system and amount, North Dakota set up its commission and made sure every education group was represented, including the state’s teachers union, school board associations and school administrators.

More importantly, the commission unanimously signed off on its findings.

“That’s what we believe is the real strong point to what we have,” said Larson of the Williston School District. “The key players in education were at the table, they developed this formula, and they all support it.”