Can Taxpayers Challenge the State's School Financing System?


Our preview of the September term of the Illinois Supreme Court continues with Carr v. Koch [pdf].

Plaintiffs have challenged states' school financing systems on constitutional grounds for nearly two generations now. The state Supreme Courts of Montana, New Jersey, Kentucky and Texas all struck down their state systems, while other challenges failed, such as San Antonio School District v. Rodriguez before the United States Supreme Court.

This month, the Supreme Court wades into the second challenge to Illinois' system in Carr. The named plaintiffs in Carr are taxpayers -- one in Homewood-Flossmoor, one in Cairo. They claim that the state's financing system in effect requires school districts with lower property values to impose property taxes at a higher rate than those imposed on similarly situated taxpayers in other areas of the state.

For each school district in the state, the state sets a "Foundation Level," and then estimates what percentage of that level each district could achieve, based on local funds, with no state money at all. State aid is set on a sliding scale, depending on whether the local district can raise relatively little, nearly all, or more than all of the basic "Foundation Level."

The plaintiffs had two problems heading in. First, the Illinois Supreme Court has already upheld the state financing system once, in Committee for Educational Rights v. EdgarThere, the Court held that disparities in local funding were rationally related to the legitimate interest of maintaining local control over education. Second problem: as I mentioned above, the plaintiffs were taxpayers, not students. And the property tax assessment rates were set by the local authorities, who weren't defendants in the action.

The trial court held that both of these problems were fatal to the plaintiffs: Edgar governed, and the taxpayer plaintiffs didn't have standing anyway, since school districts were free to impose any tax rates they wanted (and in fact, Cairo's School District property tax was more than double the one in Homewood-Flossmoor). The Appellate Court affirmed, pointing out that striking down the state system would likely lead to even higher tax rates on the plaintiffs to make up for the loss of state funds. As for Edgar, the plaintiffs argued that the state had moved away from local control by imposing state student performance standards, but the Appellate Court pointed out that the plaintiffs didn't allege that students in their districts had failed to meet those standards.

Carr will be argued at the 9:00 am session of the Court on Tuesday, September 18, 2012. Join us back here later today for a preview of the argument in EMC Mortgage Corp. v. Kemp.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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