No IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT DIANE PETRELLA, ET AL., Appellants. vs.

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1 Appellate Case: Document: Date Filed: 07/11/2011 Page: 1 No IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT DIANE PETRELLA, ET AL., Appellants. vs. SAM BROWNBACK, GOVERNOR OF KANSAS, IN HIS OFFICIAL CAPACITY, ET AL., Appellees. On Appeal from the United States District Court for the District of Kansas Case No. 2:10-cv JWL-KGG The Honorable John W. Lungstrum, Presiding APPELLEES BRIEF ORAL ARGUMENT REQUESTED

2 Appellate Case: Document: Date Filed: 07/11/2011 Page: 2 Arthur S. Chalmers Gaye B. Tibbets HITE, FANNING & HONEYMAN L.L.P. 100 North Broadway, Suite 950 Wichita, Kansas Telephone: (316) Facsimile: (316) chalmers@hitefanning.com ATTORNEYS FOR APPELLEES BROWNBACK, SCHMIDT & ESTES Jeffrey A. Chanay, Deputy Attorney General, Civil Litigation Division Office of Kansas Attorney General Derek Schmidt 120 SW 10th Avenue, 3rd Floor Topeka, KS Telephone: (785) Facsimile: (785) jeff.chanay@ksag.org ATTORNEYS FOR APPELLEE SCHMIDT Cheryl L. Whelan General Counsel Kansas State Department of Education 120 SE 10th Avenue Topeka, Kansas Telephone: (785) Facsimile: (785) cwhelan@ksde.org ATTORNEYS FOR APPELLEE DEBACKER Mark A. Ferguson Eldon J. Shields Gates, Shields & Ferguson, P.A Quivira; Suite 200 Overland Park, KS Telephone: (913) Facsimile: (913) MarkFerguson@gsflegal.com ATTORNEYS FOR APPELLEES WAUGH, MARTIN, STORM, WILLARD, BACON, CHAPPELL, WIMS-CAMPBELL, SHAVER, CAUBLE & DENNIS i

3 Appellate Case: Document: Date Filed: 07/11/2011 Page: 3 TABLE OF CONTENTS STATEMENT OF THE ISSUES STATEMENT OF THE CASE STATEMENT OF THE FACTS A. Shawnee Mission School District B. SMSD Is Not Shortchanged C. History of Kansas School Finance D. Local Option Budget s Part In Kansas School Finance Scheme E. History of Court Review of LOB SUMMARY OF THE ARGUMENT ARGUMENT A. Court s Standard Of Review Is De Novo B. The District Court Correctly Held Plaintiffs Lacked Standing 1. Plaintiffs Cannot Establish The Defendant State Officials Caused Injury In Fact To Them Or That An Order Directed Toward Them Will Redress Their Alleged Injury 2. Plaintiffs Claim Is Not Redressable Because The Entire SDFQPA Is Invalidated If The Limited Delegation Of Taxing Authority Contained In K.S.A Is Found Unconstitutional a. The plain language of the SQDPA demonstrates that the provisions of the ii

4 Appellate Case: Document: Date Filed: 07/11/2011 Page: 4 statute are not severable. b. K.S.A does not make the provision which limits LOB taxing authority severable i. The enactment of K.S.A in 2006 impliedly repealed K.S.A ii. Even if K.S.A was not impliedly repealed, it does not aid Plaintiffs in their attempt to prove the limitation on LOB tax authority is severable from the SDFQPA c. There is no constitutional trump card to make the LOB Cap severable 3. SDFQPA Is The Sole Source Of School Districts Taxing Authority 4. Plaintiff s New Argument That They Have Standing Even If The LOB Cap Is Not Severable and School Districts Lack Independent Taxing Power Must Be Rejected C. This Court Should Not Address The Merits Of Plaintiffs Constitutional Claim CONCLUSION ORAL ARGUMENT STATEMENT CERTIFICATE OF COMPLIANCE There are no prior or related appeals. iii

5 Appellate Case: Document: Date Filed: 07/11/2011 Page: 5 Cases TABLE OF AUTHORITIES Askew v. Hargrave, U.S. 476 (1971) Board of Educ. Unified School Dist. No. 443 v. Kansas , 36 State Bd. of Education, 266 Kan. 75, 966 P.2d 68 (1998) Bronson v. Swenson, , 25, F.3d 1099 (2007) Citizens for Responsible Government State Political Action Committee v. Davidson, 236 F.3d 1174 (10 th Cir. 2000) Central Branch U.P.R. Co. v. Atchison, T. & S.F.R. Co., Kan. *453 (1882) Coll v. First American Title Ins. Co., No , 2011 U.S. App. LEXIS 8486 (10 th Cir. April 26, 2011) Committee to Save the Rio Hondo v. Lucero, F.3d 445 (10 th Cir. 1996) Day v. Sebelius, F.Supp.2d 1022 (D. Kan. 2005), aff d 500 F.3d 1127 (10 th Cir. 2007) Flemming v. Adams, F.2d 975 (10 th Cir. 1967) Habecker v. Estes Park, F.3d 1217 (10 th Cir. 2008) Harris County Comm rs v. Moore, U. S. 77 (1975) iv

6 Appellate Case: Document: Date Filed: 07/11/2011 Page: 6 Hill v. Kemp, F.3d 1236 (10 th Cir. 2007) Hobart v. Board of Ed. of Unified School Dist. No. 309, Kan. 375, 634 P.2d 1088 (1981) Hormel v. Helvering, U.S. 552 (1941) Levin v. Commerce Energy, Inc., U.S., 130 S.Ct. 2323, 176 L. Ed. 2d 1131 (2010) Lujan v. Defenders of Wildlife, U.S. 555 (1992) Lyons v. Jefferson Bank & Trust, F.2d 716 (10 th Cir. 1993) McDonald v. Kinder-Morgan, Inc., F.3d 992 (10 th Cir. 2002) Montoy v. State, , 30, Kan. 769, 120 P.3d 306 (2005) Montoy v. State, , 30, Kan. 817, 112 P.3d 923 (2005) Montoy v. State, , 30, 32, Kan. 9, 138 P.3d 755 (2006) Munguia v. Unified School Dist. No. 328, , F.3d 1353 (10 th Cir. 1997) NEA-Ft. Scott v. U.S.D. No. 234, Kan. 607, 592 P.2d 463 (1979) Protocols, LLC v. Leavitt, F.3d 1294 (10 th Cir. 2008) Richards v. Etzen, v

7 Appellate Case: Document: Date Filed: 07/11/2011 Page: Kan. 704, 647 P.2d 1331 (1982) Richison v. Ernest Group, Inc., F.3d 1123 (10 th Cir. 2011) San Antonio School District v. Rodriguez, , 10, U.S. 1, reh. denied 411 U.S. 959 (1973) Sedlak v. Dick, Kan. 779, 887 P.2d 1119 (1995) Singleton v. Wulff, , U.S. 106 (1976) State ex rel. Brady v. Ryan, Kan. 208, 225 P (1924) State ex. rel. v. Fadely, Kan. 652, 308 P.2d 537 (1957) State ex rel. v. Board of Education, Kan. 482, 511 P.2d 705 (1973) State ex rel. v Kansas Department of Revenue, , Kan. 412, 856 P.2d 151 (1993) Thompson v. KFB Ins. Co., Kan. 1010, 850 P.2d 773 (1993) Turner v. Public Serv. Co., F.3d 1136 (10 th Cir. 2009) Unified School District No. 229 v. Kansas, , 12, 14, 15, 30, Kan. 232, 885 P.2d 1170 (1994), cert. denied 515 U.S (1995) Unified School District No. 380 v. McMillen, , 27, Kan. 451, 845 P.2d 676 (1993) U.S.D. No. 279 v. Sec. of Kansas Dept. of Human Resources, Kan. 519, 802 P.2d 516 (1990) vi

8 Appellate Case: Document: Date Filed: 07/11/2011 Page: 8 U.S.D. No. 437 v U.S.D. No. 501, Kan. 555, 757 P.2d 314 (1988) U.S.D. 480 v. Epperson, F.2d 1118 (10 th Cir. 1978) Ward v. Utah, F.3d 1263 (10 th Cir. 2003) Women s Emergency Network v. Bush, F.3d 937 (11 th Cir. 2003) Constitutional Provisions Kan. Const., Art.2, Kan. Const., Article , 10, 26, 27 Statutes K.S.A K.S.A (2010 supp) K.S.A et seq , 9 K.S.A (b) , 20, K.S.A , -6412, -6413, -6414, -6414a, -6414b, (2010 supp.) K.S.A (a)(2010 supp.) K.S.A (b)(2010 supp.) K.S.A (c)(2010 supp.) K.S.A vii

9 Appellate Case: Document: Date Filed: 07/11/2011 Page: 9 K.S.A (a) & (b)(2010 supp.) K.S.A (c) & (d)(2010 supp.) K.S.A , 20, 32 K.S.A , -6433d (2010 supp.) K.S.A (b) , 18, 20, 23, 32, 36, 41 K.S.A (j)(1) K.S.A (2010 supp.) K.S.A (a) K.S.A (b) K.S.A , 20, K.S.A K.S.A K.S.A et seq K.S.A a K.S.A (e) K.S.A (2010 supp.) K.S.A K.S.A K.S.A , 41 K.S.A through viii

10 Appellate Case: Document: Date Filed: 07/11/2011 Page: 10 Other Authorities 2006 Kan. Sess. Laws, ch. 197, , Kan. Sess. Laws, ch. 194, G. Strayer & R. Haig, The Financing of Education in the State of New York (1923) Supplemental Note on House Substitute for Senate Bill No.3, p A Wright, Miller, Cooper, Federal Practice and Procedure, 3d ed , p. 395 (West, 2010) ix

11 Appellate Case: Document: Date Filed: 07/11/2011 Page: 11 STATEMENT OF THE ISSUES Whether the district court correctly held Plaintiffs lacked standing because their alleged injury cannot be ameliorated by a favorable decision against these defendants? STATEMENT OF THE CASE The district court found it lacked jurisdiction to decide a constitutional challenge filed by parents and students from a wealthy suburban public school district because they lacked standing to demand the relief they sought, which was to invalidate only part of the state s comprehensive and integrated school finance statutes. The parents and students ( Plaintiffs ) allege a discrete provision of the Kansas public school funding statutes, which grants limited authority to Kansas school districts to levy taxes (Local Option Budget Cap 1 ), is unconstitutional. Before suit, they had unsuccessfully opposed closure of a few of their district s neighborhood schools. Rather than address the matter further with the nonparty school district, Plaintiffs filed this suit. Plaintiffs demand injunctions restraining the defendant state officials, their successors, employees, officers, privies, and agents from enforcing the Local Option Budget Cap and from implementing school closings, 1 K.S.A (b). 1

12 Appellate Case: Document: Date Filed: 07/11/2011 Page: 12 which were planned when they filed suit but, with one exception, have now already occurred. Plaintiffs also ask for a declaration that the State s limitation on its own grant of taxing authority to local school districts violates the Fourteenth Amendment of the United States Constitution. Plaintiffs have emphasized their request is for a surgical remedy: an injunction against the [Local Option Budget] cap. Applnt App., Vol. 1, p. 106; Vol. 6, p In response to Plaintiffs motion for preliminary injunction, the state official defendants filed motions to stay or dismiss and opposition to Plaintiffs preliminary injunction motion. After a hearing on the parties motions, the district court found Plaintiffs alleged injury inability of their district to raise unlimited funds through a local tax would not be redressed by a favorable decision on the merits of their claim. It reasoned: (a) The limit on the local school districts taxing authority, the Local Option Budget Cap, cannot be severed from the Kansas statutory public school financing scheme, meaning the entire scheme must be struck down if Plaintiffs prevail on their claim; (b) Plaintiffs school district does not have any inherent or statutory authority outside the Kansas 2 The district court understood this was the requested remedy and discussed its impact on standing and redressability with counsel for Plaintiffs at the February 14, 2011 hearing on the parties motions. Applnt App. Vol. 7, pp

13 Appellate Case: Document: Date Filed: 07/11/2011 Page: 13 statutory public school funding scheme to impose a local tax to benefit the district; (c) Therefore, Plaintiffs lack standing because their alleged injury cannot be ameliorated by a favorable decision against these defendants. Vol. 7, p (Opinion at ) In summary, Plaintiffs goal was to increase the taxing authority of their school district and keep certain neighborhood schools open. However, had they been successful with their constitutional challenge, they would have eliminated their school district s taxing authority altogether and in the process dismantle the entire school finance system. Instead of resolving their injury, their successful challenge would have made their claimed injury worse. Hence, their claim is not redressable, and they lack standing. STATEMENT OF THE FACTS A. Shawnee Mission School District Shawnee Mission School District ( SMSD ) is located in Johnson County, Kansas, a large, well established and mature district within the greater suburb of metropolitan Kansas City. The district has consistently ranked among the finest school districts in the nation, earning praise locally, regionally and nationally for its commitment to providing excellent educational programs and services. SMSD is and has been consistently ranked among the top 4 percent of school districts nationwide, according to 3

14 Appellate Case: Document: Date Filed: 07/11/2011 Page: 14 Expansion Management magazine. Two SMSD high schools, SM East and SM South, are listed on Newsweek s 2010 America s Best High Schools list, an honor earned by only 6 percent of all public schools in the country. Applnt. App. Vol 5, p As compared to other school districts in the state, SMSD is relatively wealthy. The value of its per pupil appraised property subject to LOB 3 SMSD seniors in the class of 2010 earned more than $39 million in scholarship offers. Twenty-nine students were named 2011 National Merit semifinalists and will go on to compete for scholarships through the National Merit program. In 2010, the College Board named 235 students as Advanced Placement Scholars for their high achievement on three or more AP exams. SMSD high school journalists earned numerous awards from both the Kansas Scholastic Press Association and the National Scholastic Press Association. All five high school journalism programs earned nominations for the coveted Pacemaker award, the highest award in scholastic journalism in The district s students have won honors in competitions sponsored by the National Forensic League, National Scholastic Press Association, Kansas Academic Decathlon, Business Professionals of America, National Skills USA, and the Greater KC Science and Engineering Fair. SMSD students have been named Robert C. Byrd Honors Scholars, Neuharth Journalism Scholars, Presidential Scholarship winners, and Prudential Spirit of Community honorees. Applnt. App. Vol 5, p On college entrance exams, in 2010, SMSD students posted scores that represent a five-year high on both the ACT and SAT. SMSD was one of only two school districts in the Kansas City metro area to have an individual school composite score in excess of 25. On the 2010 Kansas Assessments, 90 percent of the 14,000 Shawnee Mission students tested met or exceeded target performance levels in both reading and math. Applnt. App. Vol 5, p

15 Appellate Case: Document: Date Filed: 07/11/2011 Page: 15 taxation is in approximately the top 15% of the state s 293 school districts. Applnt. App. Vol 4, pp B. SMSD Is Not Shortchanged Complaint that SMSD s receives little general state aid is akin to someone with a job and food on the table complaining that his unemployed neighbor receives more food stamps and unemployment compensation than he does. Characterization of SMSD as a school district in the bottom 5% of all school districts for per pupil state aid for classroom instruction (Applnt. Brief, p. 8, emphasis added) is not helpful without an understanding of the unique terminology of the school finance laws. The School District Finance and Quality Performance Act ( SDFQPA ), K.S.A et seq. provides the Kansas statutory K-12 public school financing scheme. As defined in the act, General State Aid is the state aid referenced by Plaintiffs. This is the money the state sends to local school districts. Not all districts receive state money and the amounts districts receive vary under the following formula: STATE LOCAL GENERAL FINANCIAL Minus EFFORT equals STATE AID AID 5

16 Appellate Case: Document: Date Filed: 07/11/2011 Page: 16 Applnt. App. Vol 6, p State Financial Aid equals Base State Aid Per Pupil (BSAPP) 5, times Adjusted Enrollment. Id., p The State Financial Aid calculation takes into account whether the district serves students who are perceived as more costly to educate. Applnt. App. Vol. 6, pp Adjustments to the district s actual enrollment are made for low enrollment, high enrollment, transportation, vocational education, bilingual education, at-risk pupils, high density at-risk weighting, medium density at-risk weighting, non-proficient at-risk weighting and new school facilities. 7 Plaintiffs stipulated the formulas used to calculate SMSD s funding are applied identically to all other districts. They also stipulated that they do not allege the enrollment weighting factors violate their rights under the United States Constitution. Applnt. App. Vol. 6, p K.S.A (c) (2010 supp.) 5 K.S.A (b) (2010 supp.) 6 K.S.A (a) (2010 supp.). 7 K.S.A , -6412, -6413, -6414, -6414a, -6414b, (2010 supp.). 6

17 Appellate Case: Document: Date Filed: 07/11/2011 Page: 17 Each school district must levy an ad valorum tax of 20 mills. 8 The amount of tax revenue generated from the levy is the district s local effort. Id., p The funds from the local effort are retained by the district up to the amount of its State Financial Aid, with any revenue above that amount transferred to the State treasury for redistribution among other districts. Id. 9 Hence SMSD receives less General State Aid than most other districts for two reasons. First, SMSD has fewer at risk students than many other school districts. This means SMSD s calculation of State Financial Aid is lower than many districts who serve the same number of students who are more in need. As a consequence, SMSD receives less because the State s funding scheme presumes that it needs less to provide additional services to those at-risk students. Secondly, SMSD is able to raise substantial funds through its local effort because of its high property values. This means SMSD is more self-sufficient and the State does not need to provide it with additional funds in order for it to raise sufficient State Financial Aid. Plaintiffs assert SMSD is in the bottom 11% of all school districts in terms of total per pupil funding, citing to historical data from for fiscal 8 K.S.A (a) & (b) (2010 supp.) 9 K.S.A (c) & (d) (2010 supp.) 7

18 Appellate Case: Document: Date Filed: 07/11/2011 Page: 18 years Applnt. Brief, p. 8, n. 3 and Applnt App. Vol. 1, p During those years, SMSD s per student spending ranked 201th among 296 districts, but it was only slightly less than 4% of the state average ($12,174 vs. $12,660). The most recent data shows SMSD s per student spending was $12,613, more than the $12,330 state average, and in the top 57% of all Kansas school districts spending. Applnt. App. Vol 6, p According to KSDE, SMSD spent more money per pupil than all other school districts in Johnson County in Applnt. App. Vol 6, pp Plaintiffs appeal cites to facts that are allegations and that the state defendants controvert. For example, they assert - as undisputed fact - that there are funding disparities and a funding crisis which would be remedied by grant of unlimited taxing power to SMSD. Applnt. Brief at 11-19, 47. Not true, as all defendants and the intervenors challenged Plaintiffs factual statements made in their preliminary injunction motion. Applnt. App. Vol. 4, pp ; Vol. 6, pp ; Moreover, the district court made no findings on Plaintiffs asserted facts in connection with the dismissal of their claim, leaving them all in dispute. See Applnt. App. Vol. 7, pp (Order, p. 2.) 8

19 Appellate Case: Document: Date Filed: 07/11/2011 Page: 19 C. History of Kansas School Finance The United States Constitution does not secure... [a] right to an education; rather the Constitution secures... [a] right to equal treatment where the state has undertaken to provide public education to the persons within its borders. Flemming v. Adams, 377 F.2d 975, (10th Cir. 1967). See also, San Antonio School District v. Rodriguez, 411 U.S. 1, 33-34, 37, reh. denied 411 U.S. 959 (1973) ( Rodriguez ) (rejected an equal protection challenge to state system of financing public schools because education was not a fundamental right, a right explicitly or implicitly guaranteed by the Constitution ). Kansas has undertaken to provide a public education. The history of the state s finance of public education is described in Unified School District No. 229 v. Kansas, 256 Kan. 232, , 885 P.2d 1170 (1994), cert. denied, 515 U.S (1995). See also Kan. Const., Art. 6 and School District Finance and Quality Performance Act ( SDFQPA ), K.S.A et seq. See also, K.S.A (2010 supp.) (capital outlay levy, fund and bonds); K.S.A (2010 supp) (special education). The amendments to the Kansas Constitution of 1966 [Kan. Const., Art. 6], reflect the State attempted to strike a balance between interests in providing local control of the public education with the requirement of 9

20 Appellate Case: Document: Date Filed: 07/11/2011 Page: 20 equitable funding. This effort is not unique. The history of education since the industrial revolution shows a continual struggle between two forces: the desire by members of society to have educational opportunity for all children, and the desire of each family to provide the best education it can afford for its own children. Rodriguez, 411 U.S. 1, (quoting forward to G. Strayer & R. Haig, The Financing of Education in the State of New York (1923)). Kansas has addressed this struggle through its constitution and statutes, both devoted to establishing a means of providing an equitable, minimum statewide educational program without sacrificing the element of local participation. Compare, Rodriguez, 411 U.S. at 46-47, (discussing Texas school finance system and its effort to balance equity in finance with local control). Provision is made for local control, which its advocates argue best affords individual families input into their children s education. The Kansas Constitution provides [l]ocal public schools under the general supervision of the state board of education shall be maintained, developed and operated by locally elected boards... Kan. Const., Art. 6, 5. Under this authority, local boards of education, elected by and accountable to local electors, decide where funds provided will be spent and on all aspects of the K-12 public education, subject only to general 10

21 Appellate Case: Document: Date Filed: 07/11/2011 Page: 21 supervision by the state board of education. 10 Additionally, some discretionary Local Option Budget funding is statutorily delegated to the local boards and their electors, who may, but are not required to, collect ad valorem taxes up to certain amounts for use to meet accreditation requirements, provide programs required by law and improve student performance. Under the Kansas Constitution, school districts exist only as creatures of legislation to operate as political subdivisions of the State. Munguia v. Unified School Dist. No. 328, 125 F.3d 1353, 1356 (10th Cir. 1997). The local board s constitutional duties are not self-executing, but depend upon statutes enacted by the Kansas legislature. Board of Educ. Unified School Dist. No. 443 v. Kansas State Bd. of Education, 266 Kan. 75, 966 P.2d 68 (1998); Unified School District No. 380 v. McMillen, 252 Kan. 451, 446, 845 P.2d 676 (1993). See also Munguia, 125 F.3d at 1356 (school districts have only such power and authority as the state legislature expressly grants or which is conferred by necessary implication); Hobart v. Board of Ed. of Unified School Dist. No. 309, 230 Kan. 375, 384, 634 P.2d 1088 (1981) (any 10 For example, SMSD s board decided to pay its teachers and administrators, on average, near or at the highest in Kansas, providing incentives to attract, and retain employees and valuing teacher/administer compensation over smaller class size. Applnt. App. Vol. 6, pp

22 Appellate Case: Document: Date Filed: 07/11/2011 Page: 22 reasonable doubt as to the existence of the local board s powers should be resolved against its existence). [The Kansas legislature, in enacting the SDFQPA], viewed public education and its funding from a broader perspective. The State of Kansas is viewed as a whole for funding purposes rather than focusing on the legislatively created individual school districts. The education of each similarly situated student is to be equally funded regardless of where he or she resides. Stripped of its variables (local option budget, etc.), the Act provides that the cost of public education as a charge against taxable property will be at a uniform mill rate across the state. Thus, the cost of public education as a charge against taxable property no longer depends on where the property is located or the assessed valuation of other property in the district. Unified School District No. 229, 256 Kan. at 272. This broader perspective addresses the Kansas Supreme Court s instruction that, for the act to pass Kan. Const., Art. 6, 1 & 6 muster, [t]he equity with which the funds are distributed and the actual costs of education, including appropriate levels of administrative costs, are critical factors... Montoy v. State, 278 Kan. 769, 775, 120 P.3d 306 (2005). D. Local Option Budget s Part In Kansas School Finance Scheme The SDFQPA provides that, in addition to State Financial Aid funding, a school district board may approve Local Option Budget (LOB) spending in any amount up to 30.0 percent (and an additional 1.0 percent, subject to approval of the voters) of its State Financial Aid in the current 12

23 Appellate Case: Document: Date Filed: 07/11/2011 Page: 23 school year or as calculated with a $4433 base state aid per pupil. K.S.A , -6433d (2010 supp.) After the local option budget is authorized, the school board must determine, every school year, whether to levy an ad valorem tax on the taxable property of the district and the amount to levy. The revenue from this tax is utilized to fund the district s local option budget. K.S.A (a). The tax proceeds levied by the school board must be deposited in the district s supplemental general fund which the district is required to establish upon adopting a local option budget. K.S.A (b); K.S.A (j)(1). These tax proceeds remain within the school district and never are submitted to the state. See K.S.A , K.S.A The KSBE board members and the other defendant state officials do not have enforcement ability regarding the collection or use of the LOB funds. See K.S.A , K.S.A ; U.S.D. No. 437 v U.S.D. No. 501, 243 Kan. 555, 757 P.2d 314 (1988); State ex rel. v Kansas Department of Revenue, 253 Kan. 412, 856 P.2d 151 (1993). Another important aspect of the LOB is that the State provides assistance (supplemental state aid) to districts with relatively low assessed valuations per student to help fund districts LOBs. K.S.A (2010 supp.). This supplemental state aid recognizes that due to varying tax bases 13

24 Appellate Case: Document: Date Filed: 07/11/2011 Page: 24 in individual school districts, a 1 mill tax levied by one school district may generate a very different amount than a 1 mill tax levy in another district. Essentially each district s assessed valuation per-pupil is ranked high to low, and a certain assessed valuation is established as the standard. Districts with assessed valuation above the standard receive no supplemental aid from the State, while those below the standard receive aid to make up the difference between what a mill generates in their district and what a mill generates at the standard level. Id. E. History of Court Review of LOB The legislature enacted the original SDFQPA in It limited each local school district s operating budget in the first year to 10%, even if the school had excess funds available through LOB. Unified School District No. 229, 256 Kan. at 246. After the first year, the school district could adopt a LOB in an amount that could not exceed 25 percent of its financial aid. Id. In 1994, in response to a challenge to the limited LOB, the Kansas Supreme Court rejected all arguments that limitations on the LOB violated the Kansas Constitution, reminding the school districts that it was the job of the State, not the local districts, to determine what was suitable financing for a particular district. Unified School District No. 229, 256 Kan. at

25 Appellate Case: Document: Date Filed: 07/11/2011 Page: 25 Kansas school districts have no inherent power of taxation and never have had. They have always been funded through legislation. Id. The limitation on the amount of LOB also survived equal protection challenges. The Kansas Supreme Court noted that there was no fundamental right to education and that no suspect classes were involved, so that a limitation on the amount of LOB a district could spend need only bear a rational basis to a legitimate legislative purpose. Id. at 263. When discussing the limit the legislature placed on the funds that could be raised by the LOB, the Kansas Supreme Court said: The funding of education is a complex, constantly evolving process. The legislature would be derelict in its constitutional duty if it just gave each school district a blank check each year. Reliance solely on local property tax levies would be disastrous for the smaller or poorer districts which have depended on state aid for many years. Rules have to be made and lines drawn in providing suitable financing. The drawing of these lines lies at the very heart of the legislative process and the compromises inherent in the process. Id. at 265. (emphasis added.) However circumstances changed and, in 2005, the Kansas Supreme Court affirmed a finding that the then SDFQPA violated the Kansas Constitution, including the LOB provision then in force. Montoy v. State, 278 Kan. 769, 120 P.2d 306 (2005) (Montoy II). 15

26 Appellate Case: Document: Date Filed: 07/11/2011 Page: 26 The legislature passed a school funding formula known as HB 2247 in its first attempt to respond to Montoy II. In Montoy v. State, 279 Kan. 817, 112 P.3d 923 (2005) (Montoy III), the Kansas Supreme Court held HB 2247 inadequate. It noted, the critical factors for the legislature to consider in achieving a suitable formula for financing education were equity with which the funds are distributed and the actual costs of education, including appropriate levels of administrative costs. Id. at 817 (quoting Montoy II). The Kansas Supreme Court specifically addressed LOBs. It noted HB 2247 increased reliance on LOB funding and thereby improperly exacerbate[d] the wealth-based disparities between districts. Id. at 834. The court reasoned: Districts with high assessed property values can reach the maximum LOB revenues of the district prescribed percentage of the amount of state financial aid determined for the district in the school year (K.S.A [a][1], amended by S.B. 43, sec. 17) with far less tax effort than those districts with lower assessed property values and lower median family incomes. Thus, the wealthier districts will be able to generate more funds for elements of a constitutionally adequate education that the State has failed to fund. The legislature next responded with the present SDFQPA, including LOB codified in K.S.A In Montoy v. State, 282 Kan. 9, 138 P.3d 755 (2006) (Montoy IV), the Kansas Supreme Court found the adjustments in the current law satisfied its orders that the State bring its school finance 16

27 Appellate Case: Document: Date Filed: 07/11/2011 Page: 27 statutes into compliance with Kansas constitutional obligations. The court wrote: The school finance formula provided a feature designed to equalize the ability of districts with lower property wealth to raise money through the use of the LOB. The formula was designed so that districts with an assessed valuation per pupil (AVPP) below the 75th percentile would receive supplemental aid in an amount designed to bring them up to par with the district at the 75th percentile of AVPP. Under this formula, districts with an AVPP above the 75th percentile would not receive supplemental state aid. K.S.A The legislature has increased equalization in two ways. First, it increased the LOB equalization threshold from the 75th percentile to the 81.2 percentile of AVPP. K.S.A Supp (a). Accordingly, districts with an assessed valuation per pupil below the 81.2 percentile would receive supplemental aid on the LOBs in an amount designed to bring those districts up to par with the districts at the 81.2 percentile of AVPP. Second, the 25 percent LOB cap on supplemental general state aid was eliminated. See S.B. 3, sec. 12(b). S.B. 549 did not change the AVPP threshold and did not impose a limit on equalization supplemental aid. S.B. 549 further requires that such supplemental state aid be used to meet accreditation requirements, provide programs required by law, and improve student performance. S.B. 549, sec. 20(e)(1). Id. at The court specifically concluded the legislature had appropriately responded to its concerns about wealth-based disparities inherent in the LOB by increasing the equalizing LOB state aid AVPP percentile. Id. at

28 Appellate Case: Document: Date Filed: 07/11/2011 Page: 28 SUMMARY OF THE ARGUMENT The district court correctly held Plaintiffs failed to meet their burden to establish they had standing to challenge the constitutionality of K.S.A (b) s limitation on school districts authority to raise local taxes. Plaintiffs consistently advocated that the district court address only the limitation on the LOB and not the constitutionality of the entire SDFQPA. It was the Plaintiffs prayer for a surgical removal of the limitation on SMSD s tax authority that ultimately made their claim unredressable. Applnt. App. Vol. 7, p. 2339, n. 4 and (Opinion at p. 11, n. 4 and p. 13) Plaintiffs could not satisfy their burden to demonstrate standing because their lawsuit presented a problem that would not be redressed even if the district court ruled in their favor. Kansas school districts do not have authority to levy taxes outside of the authority granted them in the SDFQPA, so striking down the SDFQPA strikes down all school district funding. The SDFQPA explicitly provides that if any part of the Act is found unconstitutional, the entire act should be held invalid. K.S.A (b). Consequently, if Plaintiffs were successful in convincing the court that the limitation on LOB funding was unconstitutional, the entire Act would be invalid. The problem they brought before the court that their children s 18

29 Appellate Case: Document: Date Filed: 07/11/2011 Page: 29 school district does not have access to enough money could not be resolved by judgment in their favor. Instead, their problem would be exacerbated because instead of having limited access to taxing authority, SMSD would have no access to any taxing authority at all. Plaintiffs appeal is based on tortured constructions of Kansas statutes. First, they deny the plain language of the SDFQPA s non-severability provision. The Act states: Except for the provisions of K.S.A [not applicable here] the provisions of the school district finance and quality performance act are not severable. Except for the provisions of K.S.A , if any provision of that act is stayed or is held to be invalid or unconstitutional, it shall be presumed conclusively that the legislature would not have enacted the remainder of such act without such stayed, invalid or unconstitutional provision. K.S.A (b). Plaintiffs suggestion that the Court should make an end run around the express intent of the legislature and ignore the nonseverability provision because the provision is not necessary to accomplish the purposes of the SDFQPA is untenable. The Court cannot do what it thinks best rather than what the legislation says when the legislature has clearly spoken. To avoid the legislature s intent, Plaintiffs turn to K.S.A , which was enacted before the above severability provision and exempts from severability the provisions relating to declining enrollment and the 19

30 Appellate Case: Document: Date Filed: 07/11/2011 Page: 30 increase in supplemental state aid attributable to the increase in the state prescribed percentage under K.S.A They suggest that this statute allows the Court to find K.S.A (b) unconstitutional and exempt it from severability. There are two flaws in the Plaintiffs reliance on K.S.A First, the enactment of K.S.A (b) impliedly repealed any inconsistent provisions in the prior severability statute. Second, even if K.S.A was not repealed, it does not exempt the provision challenged by Plaintiffs. Instead, it says that a discrete part of K.S.A the increase in the state s grant of supplemental LOB aid when the LOB percentage increases is all that is exempt. The district court deftly disposed of Plaintiffs argument that if they do not have a constitutional right to sever the LOB Cap, the constitutionality of the SDFQPA evades review. As the district court noted, the SDFQPA as a whole can be challenged. Rather, Plaintiffs suit is not redressable because their desired remedy striking only the LOB Cap is not redressable. Applnt. App. Vol. 7, p. 2339, n. 4 and (Opinion at p. 11, n.4 and p. 13.) Plaintiffs never suggested to the district court, but now maintain if the SDFQPA is found unconstitutional, the Kansas legislature would step in and 20

31 Appellate Case: Document: Date Filed: 07/11/2011 Page: 31 pass new legislation providing taxing authority to local school districts. This Court does not consider arguments raised for the first time in an appeal. Moreover, Plaintiffs suggestion ignores the State is not a party, so no order that stems from Plaintiffs claim can require funding. Prospective injunctions against the defendant state officials cannot reopen schools or provide the unlimited taxing authority that Plaintiffs demand. Plaintiffs contend that the legislature has granted SMSD taxing authority in other statutes which they assert is available if the LOB Cap is excised. The only support offered for this is citation to very general language of a hodgepodge of statutes that award school districts power to transact business or be considered similar to a municipality or to increase the amount of taxes they are allowed to levy. None of the statutes delegate any taxing authority to any school district. The only source for that authority is the SDFQPA. The district court wrote a well reasoned opinion and that opinion should be affirmed. If it is not, the case should be remanded. The district court explicitly held that it did not reach other issues raised by the defendants in their motions to dismiss or the merits of Plaintiffs claim. If this Court finds Plaintiffs have standing this Court should not grant relief as 21

32 Appellate Case: Document: Date Filed: 07/11/2011 Page: 32 they suggest. Instead, the case should be remanded back to the district court for further rulings. ARGUMENT A. Court s Standard Of Review Is De Novo This Court s review of the district court s conclusion that Plaintiffs failed to demonstrate standing is de novo. Bronson v. Swenson, 500 F.3d 1099, 1106 (2007). B. The District Court Correctly Held Plaintiffs Lacked Standing In order to maintain a claim in federal court, a litigant bears the burden of demonstrating standing to adjudicate there. Standing is composed of three elements; injury in fact an invasion of a legally protected right that is concrete and particularized and actual or imminent; causation that the injury is fairly traceable to the challenged action of the court; and redressability that it is likely that the injury will be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, (1992); Coll v. First American Title Ins. Co., No , 2011 U.S. App. LEXIS 8486, *35 (10 th Cir. April 26, 2011). 22

33 Appellate Case: Document: Date Filed: 07/11/2011 Page: Plaintiffs Cannot Establish The Defendant State Officials Caused Injury In Fact To Them Or That An Order Directed Toward Them Will Redress Their Alleged Injury. Though the district court dismissed the plaintiffs claim because they were unable to demonstrate redressability, their claim was inadequate as to the other standing components as well. Plaintiffs chief complaints are SMSD closed some neighborhood schools that Plaintiffs wanted open and that the class sizes at SMSD are increasing. Applnt. App. Vol 1, p. 54, 57-59, 61, In this connection, Plaintiffs contend they are prevented from raising more money for their school district by the operation of K.S.A (b). Plaintiffs have not sued SMSD, so the Court cannot order SMSD to re-open the schools or to reduce class size even if more funds came available. Plaintiffs have not sued the State, so the Court cannot require the State to grant SMSD the right to raise its taxes. Plaintiffs have not sued the election commissioner in their county, so the Court cannot require the county to implement an election to raise the school district s taxes. Plaintiffs have not even sued the SMSD school board so the Court cannot require that board to shift funding priorities to those emphasized by the Plaintiffs. Importantly, Plaintiffs do not allege that any action by the state officials they have sued directly harmed them. When a litigant is not 23

34 Appellate Case: Document: Date Filed: 07/11/2011 Page: 34 himself or herself the subject of government action or inaction, standing is not precluded, but is ordinarily substantially more difficult to establish. Lujan, 504 U.S. at 562. The defendant state officials are the Governor, State Treasurer, Attorney General, Commissioner of the Kansas State Department of Education and individual members of the State s Board of Education. Plaintiffs speculative and conclusory allegations rely on the theory that an order, which states these defendants will not enforce the limitation on SMSD s LOB authority, will result in SMSD asking for an election, then the choice by the Johnson county election office to hold an election, then a choice by voters in their school district to increase taxes, then enhanced revenue, followed by a decision by SMSD s board to reopen some neighborhood schools or to reduce class size or to otherwise spend its money in ways that will please Plaintiffs. Because Plaintiffs claim is that these state officials have the authority to take action that will lead to further action by independent actors not before the Court (i.e., SMSD and the election clerk and SMSD voters), Plaintiffs have the obligation to adduce facts showing that those choices have been or will be made in such manner as to produce causation and to permit redressibility of injury. Lujan, 504 U.S. at

35 Appellate Case: Document: Date Filed: 07/11/2011 Page: 35 Plaintiffs have not met their burden to demonstrate that the defendant officials have the authority to enforce K.S.A and that even if these officials were ordered not to enforce the limitation on taxation, that the injury about which Plaintiffs complain will be remedied. There is no evidence in the record to support that the defendant officials have any role in enforcing the LOB cap. Plaintiffs have not and cannot establish that these state officials in their official capacities are charged with enforcing the challenged statute. Rather, Plaintiffs injury, if there is one, is caused by the operation of the statute, and there is no nexus between these defendants past or possible future conduct and the Plaintiffs unhappiness with the school closing choices of their school district. In Bronson, the litigants sued a clerk of the court for refusing to issue them a marriage license, claiming that if a license had issued, they would have been insulated against criminal prosecution for polygamy. The Court found that there was an insufficient showing of standing because the litigants could not demonstrate that any action or inaction by the clerk inflicted injury on them because the clerk did not have the authority or responsibility to enforce laws against polygamy. The only thing she could do was issue a marriage license. Bronson, 500 F.3d at

36 Appellate Case: Document: Date Filed: 07/11/2011 Page: 36 Here the State s funds can only be spent when a specific appropriation is made by the legislature. Kan. Const., Art. 2, 24. State ex. rel. v. Fadely, 180 Kan. 652, 661, 308 P.2d 537 (1957). The responsibility for the administration and assessment of the LOB tax laws is with nonparties--the local school district, and the State s Director of Property Valuation. State ex.rel. v. Kansas Dept. of Revenue, 253 Kan. at 412, Syl. 3 & 4, 418; K.S.A and K.S.A The Governor is not directly involved in the enforcement of K.S.A In Kansas, the Governor has general responsibility as the head of the executive branch, but this does not provide the requisite connection to the enforcement of all Kansas statutes to provide standing to name him as a party when a statute is challenged. Day v. Sebelius, 376 F.Supp.2d 1022, 1031 (D.Kan. 2005), aff d 500 F.3d 1127 (10 th Cir. 2007); Women s Emergency Network v. Bush, 323 F.3d 937, (11 th Cir. 2003). Likewise, the State Treasurer does not assess or levy LOB taxes. Those taxes are collected locally and never become a part of the State s coffers. The Attorney General does not have any responsibility for the implementation of school finance laws either. The KSBE is an elected ten member body mandated by Article 6, 2 and organized under Article 6, 3(a) of the Kansas Constitution. The KSBE 26

37 Appellate Case: Document: Date Filed: 07/11/2011 Page: 37 has general supervision over public schools. There is neither constitutional, nor statutory authority that mandates the KSBE be involved in school finance. The KSBE has no authority to levy taxes, prescribe funding formulas or raise funds. Its mission is to promote the quality of education through statewide school accreditation and teacher certification and licensure. U.S.D. No. 279 v. Sec. of Kansas Dept. of Human Resources, 247 Kan. 519 (1990); NEA-Ft. Scott v. U.S.D. No. 234, 225 Kan. 607, 802 P.2d 516 (1979). See also, K.S.A The Commissioner of Education is an appointed executive officer who serves at the pleasure of the KSBE, pursuant to Kan. Const., Art. 6, 4 and K.S.A The KDBE is established by K.S.A et seq. It operates under the Commissioner s administrative supervision. The role of the KSBE and its Commissioner is a statutory conduit for receipt and distribution of the funds allocated by the legislature to school districts. K.S.A They do not control local school districts. State ex rel. v. Board of Education, 212 Kan. 482, 492, Syl. 10, 592 P.2d 463 (1973) ( supervision means something more than to advise but something less than to control ); See also, U.S.D. No. 380, 252 Kan. at 460. LOB funds are not funds that are distributed by the State, the KSBE or its commissioner. 27