January 28, 2005
CONSTITUTIONALITY OF ECS MINIMUM GRANTS
By: Judith Lohman, Chief Analyst
You asked if it would be constitutional for the state to mandate a $1,000 per student minimum grant as part of the Education Cost Sharing (ECS) formula.
The Office of Legislative Research is not authorized to give legal opinions and this report should not be considered one. Unless otherwise noted, the cost estimates in this report were provided by Alan Shepard of the Office of Fiscal Analysis.
There is no “bright line” separating a constitutional state education financing plan from an unconstitutional one. A court would make a judgment on the issue based on the principles and guidelines set out in two Connecticut Supreme Court decisions in the case of Horton v. Meskill. The first of those rulings, issued in 1977, set out the state's basic obligation to distribute state education aid to compensate for disparities in towns' property wealth and taxing ability to fund education in order to provide students in the state's public schools with a substantially equal educational opportunity regardless of the town where they live.
The second ruling, issued in 1985, established a three-part test for determining whether any particular method of distributing state education aid meets the constitutional requirements of the 1977 ruling. That test requires a plaintiff to make an initial showing that education funding disparities among towns are significant enough to be unconstitutional. The state can overcome such a showing only by proving that any disparities are the result of a legitimate state interest and that, in any case, they are not so great as to be unconstitutional.
The ECS formula already has a minimum grant, which would be $355 per student if the formula were fully funded. Both the current minimum and the proposed increase could be open to challenge under Horton based on the disequalizing effect such minimums have and the fact that the towns benefiting from the minimum are the state's wealthiest. In addition, a court might not support additional expenditures to increase the minimum grant while (1) the ECS formula is not fully funded and (2) the foundation level has been frozen since 1999 and is moreover very low compared to actual per-pupil spending in the state.
HORTON V. MESKILL RULINGS
The Connecticut Supreme Court first enunciated the state's constitutional obligation with regard to education in Horton v. Meskill (172 Conn. 615 (1977)). In this ruling, known as Horton I, the Court held that the state was required to assure all Connecticut public school students “a substantially equal educational opportunity.” To implement this responsibility, the Court ruled that the state was obliged to “allocate governmental support to education so that state funds, instead of equally benefiting all towns by way of a flat grant, would offset the demonstrated significant disparities in the financial ability of local communities to finance local education.” (Id., 649)
The Connecticut Supreme Court issued a second ruling in the Horton case in 1985 (Horton II, 195 Conn. 24 (1985)). In that ruling, the Court found that, because the right to an education is so basic and fundamental, state education financing legislation is subject to “strict scrutiny” (the highest level of court review). The Court also established the following three-part test for determining the constitutionality of state education funding distribution. First, plaintiffs must make an initial showing that the expenditure disparities are significant enough to jeopardize students' fundamental right to education. If the initial showing is successful, in order for the distribution formula to survive, the state must prove that any disparities are (1) the result of a legitimate state policy and (2) not so great as to be unconstitutional (Horton II, p. 39).
“In other words,” the Court said, “to satisfy the mandate of Horton I, a school financing plan must, as a whole, further the policy of providing significant equalizing support to local education. However, no such plan will be constitutional if the remaining level of disparity continues to emasculate the goal of substantial equality.” (Id., 38, emphasis added; citations omitted).
CONNECTICUT LITIGATION ADDRESSING MINIMUM GRANTS
The court rulings indicate that, to pass constitutional muster, state school financing plans must advance a legitimate state policy and not lead to an unconstitutionally large disparity in educational opportunity based on town property wealth. The Horton II ruling also requires school financing plans to be judged “as a whole.”
The litigation history of minimum grants has so far been inconclusive. In 1984, when the Horton plaintiffs challenged various changes and amendments to the state's education funding formula, the Superior Court ruled that a $250 per-student minimum grant, among other things, was unconstitutional. The Connecticut Supreme Court overturned this part of Superior Court decision in Horton II because the judge had applied the wrong legal test in making his determination. The Supreme Court remanded the case to the Superior Court for further proceedings but there were none because the General Assembly later completely revised the state's education funding formula. (See the attached OLR Report, 95-R-0898 for a timeline of education funding law changes and court cases from 1974 through 1988.)
Many aspects of education funding, including a stop-loss provision that limited annual decreases in ECS grants to towns, were challenged by the Johnson v. Rowland case, first filed in 1998. But no rulings have been issued in the Johnson case and it now appears to be in abeyance following the withdrawal of most of the plaintiffs.
ISSUES RAISED BY MINIMUM GRANTS
Minimum per-student grants in the ECS formula raise several Horton-related issues.
Overall ECS Funding
In FY 2005, as in prior fiscal years, the state has not fully funded the ECS formula, meaning that many towns currently receive less than their full entitlement. Fully funding the grants using the current formula would require the state to appropriate an additional $97 million. In such circumstances, a court might find that minimum grants exacerbate the disequalizing effects of lack of full funding.
A key component of the ECS formula is the foundation amount, which is the level of per-student spending that state aid is supposed to help towns achieve. The foundation is currently $5,891 per student. It has been frozen since 1999 and is significantly below the average per-pupil expenditure for the state, which exceeded $10,100 for the 2003-04 school year, according to the State Department of Education. Increasing the foundation amount increases ECS grants for all towns. A court might find that additional state appropriations should be used to increase the foundation, thus helping all towns in proportion to their relative wealth.
Share of Total Funding Devoted to Minimum Grants
The current ECS formula already incorporates a minimum grant equal to 6% of the foundation, or $355 per student if the formula were fully funded. This minimum grant, which has been the same since 1999 and has not been specifically challenged in court, costs $48.6 million annually, or 3.1% of state's $1,560,935,315 FY 2005 ECS appropriation.
If the formula were fully funded and the minimum grant were increased to $1,000 per student, the total ECS appropriation would increase to $1,741,935,315. The higher minimum grant would cost $84 million or just over 4.8% of the total, a 55% increase in the share of the state appropriation allocated to minimum grants.
Under the current law, 45 towns receive the minimum grant. Under the $1,000 per-student minimum, 49 towns or nearly 29% of all towns would receive the same, per-pupil grant. Horton I found it unconstitutional for the state to distribute education aid through flat per-student grants to all towns. Although neither the current nor the proposed minimum results in all 169 town receiving a flat grant, the relatively large number of towns receiving minimum grants (45 under current law and 49 under the proposal) raises two concerns. First, the towns that benefit are the state's wealthiest and second, giving every town in such a large group the same per-student grant ignores the wealth disparities among them. Both of these results appear to run counter to the principles of Horton I.
One way to avoid the disequalizing effects of minimum per-student grants would be to raise the foundation high enough so that no town's ECS grant fell below the per-student minimum. But to generate a grant of at least $1,000 per student for every town through that method would require a foundation level of $16,666 per student.