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North Dakota School Districts Take Funding Dispute to Court

Posted on: Monday, 26 September 2005, 18:00 CDT

By Ryan Bakken, Grand Forks Herald, N.D.

Sep. 25--It's not just North Dakota's property poor school districts that feel they are being wronged. The property-rich districts also may be bringing their beef to court.

Property-poor school districts in North Dakota are suing the state, claiming they're being shortchanged in state aid. Grafton, Devils Lake, Thompson, Larimore and Hatton are among the nine school districts seeking more money through the courts. The lawsuit has been in the works for two years and is scheduled for trial in February.

In the past month, property-rich school districts have been talking about their own lawsuit, claiming they, too, are being treated unfairly.

Elroy Burkle, superintendent of schools at Munich and Starkweather, and Keith Arneson, superintendent of Edmore and Adams, are soliciting support from other school districts to join them in a lawsuit. Burkle said he's received interest from eight other school districts, including Bisbee-Egeland and Leeds.

"Current law is really hurting rural schools that are experiencing declining enrollment," Burkle said. "It's the Robin Hood approach. You're robbing from the perceived rich and giving to the perceived poor."

The two views are not only opposite, but linked.

Property-rich school districts have a high taxable valuation per pupil. Those districts are affected by what's called a "mill deduct." The effect of mill deduct is a redistribution of money, the property-poor districts getting money and rich districts contributing money.

Mill deduct was put in place by legislators as an attempt to address the property-poor districts' argument. But those districts have found that piece of the formula to be woefully inadequate. Meanwhile, the property-rich districts feel they're surrendering too much.

So, who's correct? Maybe both sides, they say.

Burkle said his schools are absorbing the one-two punch of declining enrollment and the ever-increasing redistribution of money. Fewer students mean less foundation aid and the mill deduct will now increase by three mills each year.

Because of the mill deduct, Munich lost $112,000 and Starkweather $96,000 last school year and will sacrifice more this year.

"My opinion is that you should set a bar and then bring school districts up to that bar. You shouldn't bring others down to that bar," Burkle said.

"You can't focus on wealth per child. When you take tax value divided by the number of students, that number is eschewed because of our lower enrollment. It doesn't mean students here have more education opportunities or enhancements."

Burkle said both Starkweather and Munich will deficit-spend for the third straight year. Both also have raised their property taxes.

Arneson said the way to be heard is with a lawsuit. "If we don't do anything, we're going to lose," he said. "If we allow the current funding formula to continue, we'll lose."

Burkle said another lawsuit wouldn't be in competition with the other lawsuit. But Ron Stahlecker, superintendent for Larimore and Thompson, said he thinks the property-rich districts are making the exact opposite argument.

"Still, I see their point," he said. "I can't object to either their point or ours."

But Stahlecker said that a separate lawsuit will divide school districts when they need to be united. He said property-rich districts should have signed on to their lawsuit to address the big picture and not specific portions of the formula.

"I think it hurts the whole purpose of what we're trying to do," Stahlecker said. "As education leaders, we should be working together.

"Together we can remain strong and accomplish something. Divided, we'll probably both fail."

Because most property-rich districts are among the state's smallest schools for enrollment, they will be hard-pressed to pay for a lawsuit, Stahlecker said. The property-poor districts' lawsuit costs have reached $450,000.

Devils Lake Superintendent Steve Swiontek said he doesn't believe the two separate groups are making contrasting arguments.

"I think we have more in common than not in common," he said. "They believe and we believe that North Dakota public education is not adequately funded."

School superintendents statewide want to get away from property taxes being used to fund education. There are too many conflicting arguments about property values and ability to pay, they say.

"We have one common point and that would be adequacy," Arneson said. "We don't feel that the state has funded adequately per student."

The state Department of Public Instruction has shown support for the property-poor districts' lawsuit. Its position is that the state constitution says that education dollars should be roughly equal so that the quality of education can be roughly equal.

"The contemplated lawsuit fits in with the general concerns reflected in the other lawsuit," DPI's Tom Decker said. "If its argument is opposite, it doesn't seem like it has much of a chance of succeeding. If it's another version of the funding formula, then it has possibilities."

Decker said the mill deduct is the only "meaningful" equalization tool in the current formula.

"What's wrong with the property tax as a source of funding is that it's unequal," Decker said. "That doesn't necessarily mean we have to get away completely from it. But we need to make the property tax uniform across the state.

"If the lawsuit under consideration leads to a broader discussion, then it will be beneficial."

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Copyright (c) 2005, Grand Forks Herald, N.D.

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Source: Grand Forks Herald (Grand Forks, N.D.)

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