Last Friday, I joined with William Mitchell student Nathen Berg to offer testimony on behalf of the Center for Negotiation and Justice to the Minnesota Education Finance Working Group. The Center is led by adjunct professor Jim Hilbert. The thrust of our testimony was to urge the Governor's Working Group to incorporate the requirements of Minnesota's Constitution in school funding reform. Here is the testimony that we delivered.
Testimony of the Center for Negotiation and Justice
William Mitchell College of Law
Education Finance Working Group
October 5, 2012
The Center for Negotiation and Justice at William Mitchell College of Law has been working to develop an analysis of the State of Minnesota’s constitutional requirements with respect to public education. For the last two years, Center faculty, students and advisers have met with representatives of school districts, parents, community groups and school organizations to promote dialog on how Minnesota might adjust its school finance system to meet its requirements under the State Constitution. Based on those discussions and other analysis, we think that it is likely Minnesota will face a constitutional challenge to the current funding system in the near future.
We respectfully request that you review our written testimony and take the following steps:
· Recommend that the Governor restart the process to identify the true cost of delivering mandated education services and to recommend that these costs play an integral part in the Governor’s budget recommendations as well as legislative action.
· Confront recent court decisions from across the country, specifically the Lobato and McCleary decisions discussed herein, that hold that the Constitution requires that education finance must be based on the true cost of delivering mandated educational services.
· Make it clear in your report that the cost of delivering the services mandated by the legislature is likely several billions of dollars greater than the current funding provided.
· Consider giving the Center an opportunity to visit with your working group, or a subcommittee of your working group, so that we might make a more detailed presentation focusing on the ways in which Minnesota could begin to adopt a constitutionally compliant school finance system.
In our discussions with educational leaders in the last two years, we find that there appears to be widespread consensus that the current school funding system is failing. It is our sense that to avoid constitutional challenge, prompt action is required. It is for that very reason that we hope to inspire consideration of the latest constitutional approaches to state education finance. We understand that your mission is time-limited, but if time permits, we’d be willing to share the results of our analysis to the working group at a more formal presentation.
We summarize this testimony as follows:
Based on both Minnesota Supreme Court precedent and recent cases from other states, the current Minnesota funding system is constitutionally deficient, and any reform proposal should urge the Minnesota legislature to take prompt action to comply with state constitutional requirements.
Since 1993, the year in which the Minnesota Supreme Court declared that Minnesota schoolchildren have a fundamental right to an adequate education, Minnesota has transitioned from a seat-based education system, requiring only delivery of instruction, to a proficiency-based education system, requiring that all students must be educated to proficiency in math, science, reading and writing. This shift requires that the state develop a cost-correlated school finance system. Your report should urge the legislature to adopt a cost-correlated school finance system, that is, to adopt a budgetary process that begins by determining the reasonable cost of delivering state mandated education services, and to assure that every district receives sufficient funding to deliver the services required of that district.
Your predecessor, the 2004 School Finance Reform Task Force, called upon the state to implement such a system, recommending a rationally determined, learning-linked, student-oriented and cost-based funding mechanism. This working group should reaffirm that recommendation, and it should promote compliance with the Minnesota Constitution by urging the Governor to complete the work of the 2004 Task Force and now finally make transparent the actual cost of delivering mandated education services.
In this submission, we begin by discussing Minnesota’s primary case with respect to Minnesota’s educational obligations under the state constitution, Skeen v. State 505 N.W.2d 299 (Minn. 1993). Skeen joins a long line of constitutional cases from other states establishing a fundamental right to an “adequate” education. Before proficiency mandates, plaintiffs in these types of cases asked the courts to decide what an “adequate” education means. Many of the leading cases include detailed articulation of the minimum requirements of a 21st century education. See, e.g., Rose v. Council for Better Educ., Inc., 790 S.W.2d 186 (Ky. 1989); Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, 990 A.2d 206 (2010). In many of these “adequacy” cases, the courts ultimately required the legislature to provide sufficient funds to deliver that judicially required education.
This adequacy approach shifted to the judiciary a primary responsibility to manage critical aspects of state education policy. However, the most recent State Supreme Court decision on these issues, McCleary v. State, a Washington State Supreme Court decision takes a different approach, one that recognizes the transition to a state mandated proficiency system for public education. Under a proficiency-based system, the state legislature sets expectations for student performance, not the courts, and setting those standards is accomplished by state legislation or regulatory standards. Thus, the Court does not need to define an adequate education, because the legislature assumes its responsibility to set educational standards.
The Court’s job, under this new approach, is to assure that the legislature does not abdicate its constitutional responsibility to credibly determine the cost of state mandated services, and then to fund the mandated services. A legislature cannot meet that responsibility when it refuses to derive those costs in a responsible manner, and the legislature needs the Governor’s executive leadership to get that job done. As described more fully below, the McCleary case holds that the legislature has a responsibility to correlate the funds provided to school districts with the actual cost of state-mandated education services. Under this approach, the legislature no longer determines school funding by adjusting funding to political pressure from competing interests, but rather determines funding based upon data through a rational fact-based process. We think that the McCleary approach has great merit and represents a sea-change in how courts from across the country (including Minnesota) will evaluate state educational finance. It establishes that true school finance reform begins with a systemic approach to determining the cost of state mandated educational services.
The Constitutional Landscape for Education in Minnesota
Minnesota’s Constitution states:
“it is the duty of the legislature to establish a general and uniform system of public schools . . . . The legislature shall make such provisions by taxation or otherwise as will secure a thorough and efficient system of public schools throughout the state.” Minn. Const., art. XIII, § 1.
In Skeen, the Minnesota Supreme Court issued its groundbreaking decision that this education clause creates a fundamental right which is enforceable by the courts. The Court wrote:
[W]e hold that education is a fundamental right under the state constitution, not only because of its overall importance to the state but also because of the explicit language used to describe this constitutional mandate. While a fundamental right cannot be found absent constitutional mandate the Education Clause is a mandate, not simply a grant of power. Skeen at 319. (emphasis added and cites omitted).
Importantly, Skeen was decided at a time when Minnesota’s state education standards did not require that local school districts must educate all students to a state determined level of proficiency. The plaintiffs in Skeen actually conceded to the Court that the plaintiff school districts were already adequately delivering all state mandated services and that all of their students were receiving an adequate education. The school districts in Skeen were claiming, instead, that their lower property tax base made it more difficult for them to fund so-called “excess levies.”
The Skeen plaintiffs chose not to contend that funding deficiencies interfered with students’ fundamental rights to receive state mandated services because Minnesota imposed no proficiency outcomes on local districts. At that time, Minnesota’s was a “seat-based” system that merely mandated that school districts deliver to students a minimum number of hours of specified courses. A seat-based system does not force a school to spend more money on students with educational disadvantages. A school can provide lower level courses on a lower level track to students who are behind, and higher level courses to higher level students who are at an average level or ahead. In a seat-based system, a school district can adjust its programs, class sizes, and course offerings to the amount of funding the state provides. Under a seat-based system, a school district with a higher percentage of students with educational disadvantages could avoid the additional cost of educating disadvantaged students by simply refusing to close the educational gap.
Thus, the Skeen Court was confronting a challenge to the uniformity of the property taxation system which the plaintiffs admitted did not interfere with students’ fundamental rights to an education. That is why the Minnesota Supreme Court refused to strike down the “excess levy” system that existed in 1993. Although the mil rate imposed in some districts was higher than others, in order to achieve the same excess levy revenues, the education clause was not violated, because according to the plaintiffs, all of the plaintiff districts nonetheless had enough resources to meet state requirements.
During and after the Skeen litigation, Minnesota began the transition to a proficiency-based educational system which mandates actual delivery of minimum level of educational proficiency to all students. Arthur Levine of Columbia Teachers College recently described this transition as moving from a system that provides teaching to a system that provides learning. Once Minnesota shifted to the minimum proficiency model, the cost of education for each student varied dramatically, based on the level of literacy, language barriers, home support for learning, disabilities, and for transferring students, the level of their preparation in previous schools. Moreover, because the State was now mandating a higher quality education for all students, the total resources provided to all districts should have risen to compensate for that requirement. Nonetheless, the State never attempted to derive the additional cost of meeting the new and higher standards.
Meeting the goal of proficiency simply costs more for some students than others, and high cost students are concentrated in some school districts and not in others. While Minnesota has made modest efforts in providing compensatory funding, those efforts are not based on evidence that the compensatory funding is sufficient to make up the differential cost disadvantage; they are based on political pressure. In special education alone, based on our conversations and other analysis, there is a $700 million deficiency in the funding as compared to the cost, and the differential is distributed unequally among districts in a way that is not rationally related to any legitimate end.
Since Skeen in 1993, no one has yet brought forward a claim to the courts asserting that Minnesota’s current funding system fails the so-called “rational basis test”, nor has a citizen yet brought a claim alleging that state’s system interferes with the fundamental right to a state mandated basic education, but it is our view that under current circumstances, both of those claims would likely be successful.
Recent Cases from Across the Country
That brings us to the recent Washington State Supreme Court decision in McCleary v. State, 173 Wash.2d 477 (2012), a case that addresses the state’s constitutional obligation under a proficiency-based education system. We have chosen to focus on McCleary because it addresses circumstances in the State of Washington that are quite similar to the current circumstances in Minnesota. As the McCleary decision explains, in 1992, the Washington legislature “took its first major step toward adopting a performance-based education system.” In the ensuing years, the State of Washington added and strengthened the proficiencies required of all students, cementing Washington’s transition from a “seat-based” education system to a “proficiency-based” system. By 2005, an official state study recognized that although the requirements for students had dramatically changed, still the legislature was funding public education based on its old funding formula, subject only to minor tinkering that had not been based on genuine examination of costs.
Despite this radical change in educational objectives, the State legislature failed to reform funding to recognize the cost-implications of this change in mission. The Court explained:
“[D]espite the shift to a performance based system more than a decade earlier, the funding model for K-12 education has not been updated to reflect the new expectations and has not addressed the question of how to use resources most effectively in order to improve student outcomes. (citations omitted). McCleary at 501.
In response to plaintiffs challenge to the legislature’s failure to fund appropriately, the Washington Supreme Court held that state legislation defining the proficiencies which school districts were required to deliver “together define a basic education—the substance of the constitutionally required education” under the State’s Constitution. McCleary at 523.
In fulfilling its duty, the Washington Supreme Court held that the legislature has a responsibility to provide local school districts with sufficient reliable funding sources to deliver the education required.
The legislature’s duty to make ample provision for funding the basic education program includes the requirement that funding be accomplished by means of dependable and regular tax sources. McClearyat 526.
The Court rejected voter approved excess levies as an appropriate funding source to meet the State’s constitutional responsibility noting that in a prior case “we rejected special excess levies as dependable and regular not only because they are subject to the whim of the electorate, but alsobecause they are too variable insofar as levies depend on the assessed valuation of taxable real property at the local level.” McCleary at 528. The delegation to local referendum of the decision whether to meet the state's constitutional obligation to provide a uniform basic education is generally held to be unconstitutional. See, e.g., Rose v. Council for Better Educ., Inc., 790 S.W.2d 186 (Ky. 1989); Montoy v. State, 112 P.32 923 (Kansas 2005); Helena Elementary School Dist. No. 1 v. State, 769 P.2d 684 (1989). See also Horton v. Meskill, 376 A.2d 359 (Conn. 1977).
The legislature cannot do its job, the Court held, if it ignores the true cost of providing mandated services. Accordingly, the Washington Supreme Court found that the legislature has a duty to “correlate” the revenues provide to the actual cost of state mandates:
The trial court concluded that the State has failed to adequately fund the “education” required by article IX, section 1. Substantial evidence supports this conclusion. The evidence at trial showed that the State’s now-abandoned basic education funding formulas did not correlate to the real cost of amply providing students with the constitutionally required “education.” As a result, the State has consistently failed to provide adequate funding for the program of basic education,including funding for essential operational costs such as utilities and transportation. To fill this gap in funding, local districts have been forced to turn increasingly to excess levies, placing them on the same unstable financial foundation as the schools in Seattle School District.
McCleary at 529 (emphasis added).
The parallel between Washington and Minnesota is striking. The legislature in Washington had done exactly what Minnesota’s legislature has done –allocated funding based upon the historical basic formula with minor adjustments that reflect primarily political and state tax revenue considerations:
The basic education funding formulas examined by the trial court did notcorrelate to the level of resources needed to provide all students with an opportunity to meet the State’s education standards. This disconnect had its genesis in the legislature’s failure to update the funding formulas after the State transitioned from a seat-based education system to a performance-based system in 1992. The legislature continued to fund schools using the formulas adopted in the Basic Education Act—formulas that were based on a snapshot of actual staffing levels and school district expenditures in the mid-1970s, not the level of resources needed to allow students to meet the new performance-based standards.
McCleary at 530.
The Court ordered
“The legislature must develop a basic education program geared towarddelivering the constitutionally required education, and it must fully fund that program through regular and dependable tax sources.” McCleary at 546-47.
Just three weeks before the McCleary decision, a state court in Colorado arrived at a similar conclusion. Lobato v. State, slip op. Case No. 2005CV4794. In the Lobato decision, the District Court again pointed out that Colorado’s legislature had carefully specified educational outcomes which must be attained, but had never engaged in a rational fact-based process to adjust state funding to the new more demanding educational tasks. The Court explained:
Although the standards-based education system intentionally established standards of educational achievement and a method to measure accomplishment of those standards, the finance system has never been adjusted to address the costs of meeting those standards. Although one of the primary purposes of standards-based education was to provide objective measures of achievement that could be costed-out and funded, the two systems have remained out of touch and actually diverging, with no meaningful effort to analyze and align funding levels with educational costs. Lobato at 181.
The change to standards-based education represents a massive change in mission that requires the legislature to address the cost of those changes head-on:
In recent years, new educational goals linked to school readiness and postsecondary and workforce readiness were mandated, and measurements of school and school district performance with sanctions for failures have been implemented as part of educational accountability. Again, these changes in the education system have added and will continue to add significantly to the costs of education, but the finance system has been completely unresponsive. As a result, there is not enough money in the system to permit school districts across the State to properly implement standards-based education and to meet the requirements of state law and regulation . . . . The problem has been compounded by the fact that during this same time Colorado and virtually every school district have experienced significant demographic changes, particularly in the number and concentrations of English language learners, ethnic minorities, and children of poverty. The number of children with severely disabling conditions has also grown. There are now significantly larger percentages of students with more expensive educational needs. The educational achievement requirements for these students are the same as for general education students, but the cost to achieve proficiency and growth requirements among these students is much higher . . . . Once again, the State has not attempted to quantify and fund the costs of providing educational services to these and similarly situated students with special needs. Lobato at 181-82.
The McCleary and Lobato decisions tie directly to the work of the 2004 School Finance Reform Task Force which recognized that Minnesota’s school funding formula must be:
a rationally determined, learning-linked, student-oriented and cost-based Instructional Services Allocation. (See Inve$ting in our Future, Seeking a fair, understandable and accountable, twenty-first century education finance system for Minnesota, Recommendation #1).
The Task Force’s recommendation represents a bipartisan recognition that ignoring the actual cost of meeting state requirements makes meaningful reform impossible. A Pioneer Press article in 2004 reported on the work of the Task Force:
The governor's task force is recommending a funding formula based on the actual cost of providing a student with an education sufficient to meet state standards. But the proposal stops short of setting that cost. Schools would still get additional funding help for certain challenges, such as poverty and students who are learning to speak English. Similar panels have had limited results in recent years trying to improve and simplify the state's K-12 funding system. Former state senator and task force member Duane Benson said legislators typically look only at how such changes would affect their local schools. Benson said he's optimistic lawmakers will look hard at this proposal and adopt most of it. "When change comes, sometimes it's a little scary. This can be a little bit scary, but I think doing nothing can be more scary," Benson said.
In fact, the Task Force was on the brink of making public the fact that Minnesota’s education budget was then approximately $2 billion short of meeting mandated education services when the 2004 Task Force was summarily terminated by Governor Pawlenty. As a result, for another eight years, four bieniums, Minnesota made no effort to develop a “rationally determined, learning-linked, student-oriented cost-based funding formula.”
Eight years after the task force correctly pointed out that the education finance system must be “rationally determined” and “cost-based,” still neither the Governor nor the legislature have made an effort to develop the cost data necessary to establish an appropriate funding strategy.
Thank you for considering our testimony on the importance of addressing constitutional requirements in your efforts to reform Minnesota’s education finance system. Your efforts will fail if you merely advocate that the legislature add money or move it from one place to another. A reformed system should be based on the actual cost of providing state mandated educational services. The governor’s budget should be founded on cost data. When the governor delivers his budget, he should make transparent to the legislature what it actually costs to deliver the programs that his budget and state law mandates. Any other approach is not rational, is not constitutionally sound and will simply perpetuate the flaws in the current system.
 The Center for Negotiation and Justice at William Mitchell College of Law develops coursework and provides community advocacy to explore, develop, and advance the connection between principled negotiation and social justice advocacy, combining these two critical disciplines into a focused study and practice using negotiation as a means of promoting social justice. The executive director, Jim Hilbert, was one of the plaintiffs’ lawyers on the 1995 adequacy case, Minneapolis NAACP v. State of Minnesota et al. For more information on the Center, please visit http://web.wmitchell.edu/negotiation-justice/.
 Test scores, graduation rates, and disparities in student achievement along racial and socioeconomic lines also confirm that the system is broken.
 (See Inve$ting in our Future, Seeking a fair, understandable and accountable, twenty-first century education finance system for Minnesota, Recommendation #1).
 The Court explained:
In this case, the plaintiffs concede that they continue to receive an adequate education, thereby satisfying the fundamental right to a general and adequate system of education. With respect to uniformity, the funding system in question provides the same amount of funding for each student. The equalization process the state uses to arrive at the basic revenue figure meets, if not exceeds, the constitutional requirements of a "general and uniform" system of public schools. Because the present system provides uniform funding to each student in the state in an amount sufficient to generate an adequate level of education which meets all state standards, the state has satisfied its constitutionally-imposed duty of creating a "general and uniform system of education." Therefore, the state's present system of education withstands strict scrutiny analysis.
Skeen at 315.
 He describes this as “the most profound change in American education in modern times.” — the shift in focus from teaching to learning. When education systems concentrate on teaching, the emphasis is on the process of instruction, measured in the length of time students are exposed to teaching. (Think, for instance, of the 180-day school year.) Time is the constant; all students are expected to learn the same amount of information in the same period of time. In contrast, when the focus is on learning, the emphasis shifts to how much the student has mastered rather than how long the student has been taught. There is a shift in concern from the process of education to the outcomes of education, from coverage of a subject to learning the subject matter. Time becomes variable; learning is the constant.” Arthur Levine, Better Schools through Smarter Testing, Los Angeles Times, August 3, 2012.
 The Court recognized the legislature’s authority to redefine basic education, but warned that in so doing, it must exercise its authority within constitutionally prescribed bounds, any reduction of programs or offerings from the basic education program must be accompanied by an educational policy rationale. That is, the legislature may not eliminate an offering from the basic
education program for reasons unrelated to educational policy, such as fiscal crisis or mere expediency. Rather, the legislature must show that a program it once considered central to providing basic education no longer serves the same educational purpose or should be replaced with a superior program or offering.
 The Court continued: “We agree with the trial court’s conclusion that the legislature’s definition of full funding amounts to little more than a tautology. If the State’s funding formulas provide only a portion of what it actually costs a school to pay its teachers, get kids to school, and keep the lights on, then the legislature cannot maintain that it is fully funding basic education through its funding formulas. Even assuming the funding formulas represented the actual costs of the basic education program when the legislature adopted them in the 1970s, the same is simply not true today.” Id.