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Appeals Court Decision on CFE Lawsuit:

Settling Questions, Raising Others

By Dr. Joan Scheuer

On June 26,^, 2003 New York State’s highest court, the Court of Appeals, announced its decision in the case, Campaign for Fiscal Equity vs. the State of New York. Reversing most of the rulings of the Appellate Division, the Court of Appeals declared that the state deprived pupils in New York City public schools of their constitutional right to a sound basic education. Although the decision recommends far-reaching reform of the existing state school funding system, it stopped short of imposing a statewide remedy, requiring only that the state determine the costs of a sound basic education in New York City and allocate sufficient funds to cover the costs.

The Appeals Court decision, which leaves no practical room for appeal, settles many important issues that have hobbled effective reform of the state’s system of funding public schools. Within New York State, the decision will realign the way responsibility for public education is apportioned. The decision clearly places on state government ultimate responsibility to provide the opportunity for a sound basic education to every child. But the decision does not spell out which branch or agency of government, the legislature, the City of New York, the Governor, the State Education Department or the Board of Regents should be responsible for each of the tasks assigned.

The decision will refocus efforts to revise the present state aid formulas. It leaves unresolved important questions as to how the statewide budget for education should be determined and how the costs of schooling and needs of public school pupils should be evaluated in different regions of the state.

This analysis will highlight the areas of the decision that resolve a number of important questions and will then discuss some of the issues that remain problematic but must be confronted in the months and years ahead.

Here are some issues that have been resolved:

1.A test of adequacy must be met, not equity.

The Campaign for Fiscal Equity (CFE) lawsuit was launched by parents of students in the New York City schools and a coalition of advocates. The case challenged the state’s constitution on grounds of adequacy rather than equity. This approach departed from an earlier legal challenge to the state constitution, Board of Education, Levittown Union Free School District v Nyquist (57 NY2d 27 (1982) that based its claim on the inequities produced by the state’s method of distributing school aid. The new approach made it possible to side-step questions of distributional equity as between the City and other school districts, to shift from an emphasis on state-defined measures of local wealth and need to a more philosophical consideration of the components of educational programming. By grounding its case in terms of the adequacy of resources in their own City schools, the plaintiffs were able to focus chiefly on New York City without presenting an implied challenge to other districts throughout the state.

2.A sound basic education is required under the New York State constitution.

The education clause in New York State’s constitution requires that "The legislature shall provide for the maintenance and support of a system of free common schools wherein all the children of this state may be educated." (NY Const, art XI, Par. 1) For decades debate has raged as to the extent of the state’s obligation under this clause. In an earlier case brought in 1995 to determine the right of the Campaign for Fiscal Equity to bring suit against the state (Campaign for Fiscal Equity, Inc. v State of New York, 86 NY2d 307), the Appeals Court had built on a reference in the Levittown decision and interpreted this clause to mean that, under the constitution, every child was entitled to a sound basic education. In the current case, Judge Kaye and the majority of the court recognized that the State had "obligated itself constitutionally to ensure the availability of a sound basic education to all its children." (Chief Judge Kaye, Majority opinion, p. 2) A sound basic education was then described as one which provided each child with "the basic literacy, calculating and verbal skills to enable children to eventually function productively as civic participants capable of voting and serving on a jury."

3. The state constitution’s education clause implies a high school level of education.

The Court of Appeals confronted the question of the educational standard implied in the New York State constitution’s education clause. The defendants had argued that under the constitution the state was required to provide only a minimal standard of education, that is, no more than an eighth grade level of schooling. This absurd argument put the state in the position of demeaning its own educational standards, embarrassing the Governor, the Board of Regents and educational leaders everywhere in the state. Nevertheless, during the trial, state litigators held to the line. During the same period that the state Commissioner of Education announced that passing rigorous Regents examinations would soon become a statewide requirement for high school graduation, defendants claimed that the existing Regents requirements were merely "aspirational" and did not constitute a standard by which adequacy could be evaluated. The Appellate Court upheld the defendants in this argument, agreeing that the constitutional floor should not be raised as high as the Regents standards, and declared that the state’s obligation under the clause was limited to a minimal standard of education, the equivalent of an eighth grade level.

To find out what people around the state wanted their schools to achieve, CFE undertook a public engagement process, meeting with citizens, parents and business leaders throughout the state. Among the opinions that recurred across the state was the conviction that, while civic participation was a valid goal of education, some preparation for employment should be included as an educational goal. The Appellate Court rejected as "going too far" the argument that the education clause in the state constitution implied that the state assure each child some preparation for employment. In her opinion, Judge Kaye found that in today’s society, the demands of potential employers make a high school level education " all but indispensable" for young jobseekers. The Appeals Court wisely rejected the idea of endorsing a grade-specific level of skills as a constitutional standard. Instead, it found that New York City children should be afforded the opportunity for "a meaningful high school education, one which prepares them to function productively as civic participants." (Majority Opinion , p12)

4. New York City children receive less than a sound basic education.

In the 1995 CFE case, the Court of Appeals outlined the deficiencies in existing practice that plaintiffs would have to demonstrate in order to show that the state had failed in its constitutional obligation. In arguing the current case, plaintiffs offered facts and descriptions of insufficient resources in New York City schools, where the evidence of appalling conditions and poor results could be amply demonstrated. Following the Appeals court outline, or "template," emphasis was moved from the state’s method of distributing state aid to the nature and efficacy of educational inputs such as teacher quality, class size, and library and computer facilities. During the trial, the lower court heard extensive testimony on the quality of teachers in New York City schools, and on the resources available to students. The City plaintiffs, the Appeals Court decided, had met the test. They had demonstrated that there was indeed a deficiency of resources, or "inputs" available to New York City pupils in terms of the inferior quality of teaching in New York City schools, the prevalence of crowded classes, of out-of date books, scarce library books and inadequate computers. Reversing the Appellate Division, the Appeals Court found that the "inputs available to New York City children fell short of those required for a sound basic education and also that deficiencies in inputs directly affected outputs as measured by demonstrable results such as graduation rates and test scores.

5. Money Matters

Is there a demonstrable link between the amount of money spent on schooling and the results of the educational program? The Court of Appeals answered the question, "Does money matter?" with a decisive yes. This question has been debated for decades in the previous New York City challenge to the State, Levittown v. Nyquist and in similar litigation throughout the nation. Experts on both sides of the issue testified in the course of the current CFE trial, offering theoretical evidence, citing academic research and experience in similar litigation in other states. The court rejected defendants’ argument that New York City’s deficiency of resources was unrelated to poor pupil performance, affirming that better teaching quality, smaller class size and adequate books all had a direct effect on student outcomes.

6.Responsibility for poor pupil performance ultimately lies with the state.

Defendants during the trial offered a series of explanations to account for poor pupil performance in the City schools. They argued that demographic factors — recent immigration, poverty, high crime neighborhoods and inadequate parenting accounted for much of the poor performance of New York City students. They suggested that funds allocated to improve schools in the City might better be spent on social services designed to improve socio-economic conditions. The court rejected this blame-the-victim argument. If, indeed, the question is one of competing social benefits, it is then a legislative question and not a judicial issue, Judge Kaye commented, adding: "And, again, we cannot accept the premise that children come to the New York City schools ineducable, unfit to learn."

A second argument that has haunted efforts to channel funds to the New York City schools was deflated in the ruling. The state has criticized the Board of Education’s management of state aid funds, claiming waste and even corruption. It also asserts that over the years the Mayor’s office has siphoned off state aid intended for school use for non-school city purposes. On the grounds that the trial court rejected the arguments on fraud and corruption, and because these claims were not substantiated at the Appellate level, the Court of Appeals made no ruling on them.

As illustrative of mismanagement, the state described the Board of Education’s placement policies for special education students in effect during the trial as excessively wasteful and inefficient. Because of the clear shift in responsibility to the Mayor’s office, the change in the way City funds are now managed, the elimination of the Board of Education and the coming, significant changes in the administration of special education, these state charges have little currency. The Court of Appeals declined to rule on them, but took the occasion to state clearly that both the Board of Education and the City were creatures or agents of the state and it is the state that "remains responsible when the failures of its agents sabotage the measures by which it secures for its citizens their constitutionally-mandated rights".(Majority Opinion, p 37)

The Court majority repeated this position to rebut the claim that the City is partly responsible for under-funding its schools. This criticism has echoed throughout the state, and has been bolstered by data that shows that the City tends to reduce its contribution to education when state aid funds rise. Here, the Appeals court picked up the Appellate court’s finding that the state, rather than the City has ultimate control over the taxes that may be levied by the City and the debts it may incur. Rather than simply call for greater tax effort on the part of the City, both these courts suggest that it is within the state’s legislative power to insist on a more effective way of protecting its own contribution to City schools.

Now, the unresolved issues:

1.The remedy is confined to New York City.

"Challenging as the previous issues are, in complexity they pale by comparison to the final question: remedy" Judge Kaye remarked. (Majority opinion, p.41.) Rather than simply ordering the parties to correct the deficiencies that the court identified, the Appeals Court reached for a more comprehensive remedy. It acknowledged new accountability measures such as the federal No Child Left Behind Act of 2001, the change to Mayoral control of the school system, as well as recent state programs to identify and rectify low-performing (SURR) schools and implement higher learning standards. Nevertheless, the majority of the court confined its remedy to the record as presented that, in many instances, predated recent administrative changes and reform initiatives.

Because the evidence presented at the trial chiefly concerned New York City schools, the majority of the Appeals Court chose to limit its remedy to New York City. The Court majority decided to limit its remedy "to the adequacy of education financing for the New York City public schools, though the state may of course address Statewide issues if it chooses." (Majority Opinion, p.47.)

In a separate, but concurring opinion, Judge George Bundy Smith expressed a preference for a statewide remedy that would include the reform of the present formula, ensuring all the children of the state the opportunity to acquire a high school education. The decision of the majority of the Court of Appeals to confine its remedy to New York City may have simplified the remedy, but seems to leave districts outside the City high and dry. The decision implies that other districts may approach the court through lawsuits with evidence that they suffer deficiencies similar to those presented by plaintiffs in this case. But Judge Kaye comments that this may not be so easy:

Other large cities, rural districts and a few suburban school districts with a high percentage of minority students also are shortchanged in terms of student needs, The decision does not mandate that the legislature address their needs, although the majority of the Court of Appeals expresses the hope that the legislature will undertake reform and notes that it may, if it wishes, revise the state aid formula.

In restricting its remedy to New York City, the majority ruling does not rely on a formula process. Nevertheless, under the Court’s ruling, the City is assured adequate funding for all its schools. The Court rejected the statewide guidelines offered by the trial court, thereby precluding a ruling directing the state to account for differences in regional costs. Instead, it specifically directed the state to study the costs of schooling in New York City, ensuring for the City school district alone, that the effect of high costs will be accounted for.

The majority of the Appeals Court reveals a reluctance to interfere with the legislative process, rather than a readiness to prescribe remedies such as redesign of the aid formulas, greater transparency in budgeting or better laws to ensure maintenance of tax effort in large cities. The majority opinion recounts as "the purpose of State aid to schools," the State Education Department’s goal of maintaining a partnership between the state and the localities that preserves and promotes local control. Judge Kaye’s opinion presents the state’s description of the purposes of state education aid based on each school district’s ability to raise local revenues and the educational needs of it’s students.(P.49) But the Court observes that New York City does not receive an advantageous share of state aid. Why? The answer to this question lies in the "shares system" which is not a system at all, but the code word for the political negotiations which take place at budget time each year. At that time Senate and Assembly leaders, along with the Governor, determine how much of the state budget will be devoted to school aid. Then they compute the available increase in aid over the previous year and apportion 38 percent of the increase to New York City, 11 percent to Long Island districts and the remaining percent of the increase to the rest of the state. The evidence presented to the Court shows that over the years, this allocation has resulted in about 35 percent of all aid being distributed to New York City each year, despite the fact that New York City pupils have extra needs that a distribution based only on enrollment does not begin to take into account.

2. The Shares "System" bears no relation to the needs of New York City pupils:

In Judge Kaye’s words:

3.The Remedy

The Appeals Court majority ruled that the state should ascertain the actual costs of providing a sound basic education in New York City (rather than in districts or regions throughout the state) explaining:

4. How are the costs of the ruling to be met?

Only in the dissenting opinion by Justice Susan P. Read do we find a concern for the costs implied by the decision. The dissenting Judge refers to the record of state aid disbursements in 2002-2003: a record $12.3 billion from the General Fund for public education statewide (Read, Dissenting Opinion, p.13.) She argued that very substantial funds are spent on New York City schools and offers the statistics claiming that New York City with 37 percent of the state’s enrolled pupils was allocated 37 percent of the combined major aid enacted for the 2002-2003 year. Judge Kaye used the same example to illustrate how defendants’ arguments disregard pupil need and other factors such as high cost in justifying the state’s appropriation for New York City. But the decision does not suggest any mechanism for how costs might be met. It does not specify that the legislature revise the aid formula, nor rule out the legislative practice of distribution by shares.

The reception of the decision was greeted with enthusiasm by CFE and its supporters, and by advocates of school finance reform throughout the state. Governor Pataki gamely described the decision as "a positive opportunity for us to focus on education, on the classroom, on the teachers, on the kids and make sure that every single kid gets a good-quality high school education." (The New York Times, June 27, 2003. p.1.) Steve Sanders, Chairman of the Assembly Education Committee, commented: "As we fix the funding system, it will be done not just to benefit New York City students, but to ensure that all students are treated fairly." (The Journal News, June 27, 2003 p.2A). Nevertheless, outside the city there was concern about where the money would come from to meet the mandated costs and whether school districts outside the city would suffer cuts in support if the state were forced to reapportion limited education funds. Elizabeth Lyman of the Citizens’ Budget Commission said, "If they don’t do some reallocation, this is going to cost way more money than the state can afford." And Larry Cummings, head of the Central New York School Boards Association made this response: "It’s simply implausible that upstate legislators would want to get their hands bloodied on this one, just to help New York City." (The Journal News, June 27^th,2003 )

5. Who decides?

The Court has assigned a very big task. But to whom? The opinion reads that "the State need only ascertain the actual costs of providing a sound basic education to every child in the City of New York". The trial court had recommended setting up a commission of experts to fulfill this task on a statewide scale. Anticipating such an outcome, the CFE has already created a panel of academic experts that is hard at work on costing out the educational requirements of every school district in the state. But this decision mentions no commission or panel. Who, or what will represent "the state"? Cost determinations could be made by the Governor, by administrators in the State Education Department, a Regents committee, or a legislative body. There is no requirement for review or representation. Although the case is remanded to the lower court, it is not clear how far that court will go in enforcing the decision.

Conclusion

Uncertainty about thelocus of this decision plus concern about future costs has dampened enthusiasm for the decision in many upstate areas. But under Michael Rebell’s leadership, CFE has made every effort to enlist support for statewide reform. Working with CFE throughout the state are: the New York State School Boards’ Association, the League of Women Voters of New York State, the school boards of Rochester, Buffalo and other major districts. Their task will now be to press the state legislature to translate the Court of Appeals’ decision into comprehensive statewide reform of state aid funding.

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