Issues Regarding State Funding of Schools

Litigation Challenging the Constitutionality of the State's Education Funding Scheme

Background on the matter, including the nature of the briefs filed on June 30 and an overview of future proceedings, is provided below.

On November 21, 2014, Ketchikan Superior Court Judge William B. Carey ruled in favor of the Ketchikan Gateway Borough and the four private-party plaintiffs, declaring that the Required Local Contribution (RLC) for schools is an unconstitutional dedicated State tax. The Fairbanks North Star Borough participated as amicus, siding with the Ketchikan Gateway Borough.

The RLC, totaling $235,572,619 in FY 2016, is imposed by the State of Alaska on 34 of Alaska’s 145 municipal governments – those that are mandated by the State to establish and operate school districts in fulfillment of the State’s constitutional duties under Article VII, Section 1. The imposition of the RLC on those 34 municipal governments is made without regard to their financial capacity. In contrast, the 19 State educational service areas operated in the unorganized borough (REAAs) are exempt from the RLC, also without regard to their financial capacity. Prior studies commissioned by the Borough Assembly have demonstrated that some of the 34 municipal governments that operate schools are among the more fiscally distressed communities in Alaska, while some of the 19 REAAs have resources that would be the envy of most organized boroughs.

While Judge Carey ruled in favor of the Borough on the main issue – that the RLC is an unconstitutional dedicated State tax – he did not agree with the Borough and the private-party plaintiffs that, in addition to being an illegal State tax, the RLC violated the Appropriations Clause and the Governor’s Veto Clause of the Constitution of the State of Alaska. Neither did Judge Carey order that the State refund to the Borough $4,198,727 in FY 2014 RLC payments and any subsequent RLC payments by the Borough.

State Appealed Unconstitutional Dedicated Tax Issue.

The State of Alaska appealed Judge Carey’s ruling that the RLC is an unconstitutional dedicated State tax.

Five entities were allowed to participate as Amici siding with the State of Alaska. These were NEA-Alaska, Association of Alaska School Boards, Alaska Council of School Administrators, Alaska Superintendents Association, and Citizens for the Educational Advancement of Alaska’s Children (CEAAC). CEAAC’s core support comes from 18 school districts – 11 of which are REAAs -- as well as NEA-Alaska, Cook Inlet Tribal Council, and three individuals. In mid-April of this year, CEAAC announced that it was changing its name to “Coalition for Education Equity.”

On May 12, 2015, the State filed with the Supreme Court its Opening Brief appealing Judge Carey’s ruling that the RLC violated the Anti-Dedicated Funds Clause of the Constitution. At the same time, the Association of Alaska School Boards, Alaska Council of School Administrators & Alaska Superintendents Association filed one brief jointly as Amici. NEA-Alaska and CEAAC also filed separate briefs as Amici siding with the State on May 12.

On June 30, the Borough and private-party plaintiffs filed their brief advancing the position that the RLC is an unconstitutional dedicated State tax. On June 30, the Fairbanks North Star Borough filed its brief as Amicus on that same issue – the RLC is an unconstitutional dedicated State tax. By July 28, the State will file a Reply Brief addressing the Borough’s June 30 brief. The State’s brief will, of course, advance the argument that the RLC is not a dedicated State tax.

Borough Cross-Appealed Denial of Refund, and Constitutional Issues Regarding Appropriations Clause and Governor’s Veto Clause. Appeal and Cross-Appeal Follow Identical Schedules.

The Borough and private-party plaintiffs filed a cross-appeal on the issues concerning the refund of the FY 2014 RLC payment, the Appropriations Clause, and the Governor’s Veto Clause.

On May 12, the Borough and the private-party plaintiffs filed with the Supreme Court their Opening Brief appealing Judge Carey’s rulings that the RLC did not violate the Appropriations Clause and the Governor’s Veto Clause, and that the Borough is not entitled to a refund of the RLC.

On June 30, the State filed its brief on the three issues appealed by the Borough and the private-party plaintiffs, arguing that the RLC does not violate the Appropriations Clause or the Governor’s Veto Clause, and that the Borough is not entitled to a refund of its FY 2014 and subsequent RLC payments.

By July 28, the Borough will file a Reply Brief addressing the State’s June 30 brief. In its Reply Brief, the Borough will further advance the position that the RLC violates the Appropriations Clause and Governor’s Veto Clause, and that the Borough is entitled to a refund of its FY 2014 and subsequent RLC payments.

Oral Argument Before the Supreme Court in Eleven Weeks

Oral argument before the Supreme Court is expected to occur during the week of September 14, 2015.