IN THE COURT OF COMMON PLEAS, FRANKLIN COUNTY, OHIO
TEACHERS, et al. ]
vs.
] JUDGE MCGRATH ]
EDUCATION, et al. ]
]
Defendants.
DECISION DISMISSING COUNTS FOUR, FIVE, SIX AND SEVEN OF
PLAINTIFFS’ THIRD AMENDED COMPLAINT
Rendered this ___ day of April, 2003
McGRATH, JUDGE
This action is a challenge to Ohio’s system of community schools
established by Revised Code Chapter 3314 in 1997. “Community schools”
;, typically called “charter schools” in other states, are
state-funded public schools run by private entities that provide an alternative
to traditional public education.
The Plaintiffs include the Ohio Federation of Teachers, the Ohio Congress of
Parents and Teachers, the Ohio School Boards Association, other education
associations and teachers’ unions, certain parents of children in public
schools, taxpayers, school district boards of education, and residents of
various school districts.
The Defendants include the State of Ohio Board of Education, the Superintendent
of Public Instruction, Dr. Susan Tave Zelman, the Ohio Department of
Education, various community schools, parents of children attending community
schools, and White Hat Management, L.L.C.
Plaintiffs have requested declaratory and injunctive relief and writs of
mandamus. Plaintiffs have raised constitutional challenges to various aspects
of the Community Schools program. Plaintiffs have sought declaratory judgments
that the State has failed to enforce statutes regulating community schools.
Plaintiffs have sought writs of mandamus to compel enforcement of sponsorship
contracts for community schools. Plaintiffs have also sought declaratory
judgments and writs of mandamus based on allegations that certain sponsorship
contracts are in violation of statutes and that certain community schools are
not operating in compliance with statutes.
I. PROCEDURAL HISTORY
A.
Background
This action was filed on May 14, 2001.
On June 29, 2001, Plaintiffs filed a First Amended Complaint, adding the Ohio
Department of Education (“ODE”), the Electronic Classroom of Tomorrow
(“eCOT”), and its Board of Directors as defendants. Plaintiffs
voluntarily dismissed without prejudice their claims against Lucas County
Educational Service Center.
On July 20, 2001, White Hat Management, LLC (“White Hat”) moved to
intervene as a defendant. That same day, Plaintiffs filed a Second Amended
Complaint. The Court granted White Hat’s motion to intervene on August
23, 2001.
On December 10, 2001, a group of community schools and parents of children
attending community schools (the “Community School Defendants”) moved
to intervene. The Community School Defendants’ motion was granted on
January 29, 2002.
Plaintiffs filed a motion for leave to file a Third Amended Complaint on March
7, 2002, adding as defendants the University of Toledo Charter School Council,
the Alternative Education Academy and its Board of Directors, and WHDL, LLC.
The Court granted Plaintiffs leave to file the Third Amended Complaint, which
was filed on April 24, 2002.
B.
Procedure for Addressing Plaintiffs’ Claims
On November 9, 2001, the Court conducted a status conference in this matter.
Because of the large number of claims and parties and the likelihood of
voluminous, time-consuming discovery, there was a discussion of the order in
which the issues raised by the Third Amended Complaint would be addressed by
the Court. As agreed by counsel, the Court indicated that it would address
legal issues first, including the facial constitutional challenges to R.C.
Chapter 3314. In the second stage of the proceedings, the Court would address
claims of the Third Amended Complaint that involve factual issues, including
the implementation of R.C. Chapter 3314, compliance with statutes, and
compliance with sponsorship contracts. Addressing the issues in this order
reduces the burden on the litigants by deferring discovery until after the
Court’s decision on issues of law, potentially narrowing the issues to be
litigated.
In accordance with this schedule, the Court directed the parties to file any
motions addressing the legal issues prior to discovery. On May 20, 2002,
Plaintiffs filed Motions for Partial Summary Judgment on Counts Four, Five,
Seven, Eight, Nine and Ten. On the same date, the State of Ohio, Board of
Education, Ohio Department of Education and Susan Tave Zellman (the “State
Defendants”) filed a Motion to Dismiss the Third Amended Complaint and/or
for Summary Judgment. On the same date, the Community School Defendants filed
a Motion for Judgment on the Pleadings on Counts Three, Four, Five, Six,
Seven, and Eight. On May 28, 2002, White Hat filed a Motion for Judgment on
the Pleadings. On June 19, 2002, Defendant University of Toledo Charter School
Council filed a Motion for Judgment on the Pleadings. On July 22, 2002,
Additional Community School Defendants filed a Motion to Join Community School
Defendants’ Motion for Judgment on the Pleadings on Counts Three, Four,
Five, Six, Seven, and Eight. On November 29, 2002, the Community School
Defendants filed a Motion for Judgment on the Pleadings, or, alternatively, for
Dismissal under Civil Rule 21.
C. Scope of this Decision
In accordance with the schedule discussed above, this Court’s decision
will address only the legal issues that can be resolved based on the pleadings,
prior to discovery. The Court has identified Counts Four, Five, Six, and
Seven as claims that can be resolved in this manner based on the pleadings and
motions filed by the parties.
Count Four is a facial challenge to R.C. Chapter 3314 based on Article VI,
Section 3 and Article XII, Section 5 of the Ohio Constitution. Counts Five and
Six allege that the community schools program is in violation of the
requirement in Article VI, Section 2 of the Ohio Constitution of a “
thorough and efficient system of common schools” as construed in
DeRolph v. State of Ohio
(2002), 97 Ohio St. 3d 434. Count Seven is a facial constitutional challenge
to R.C. 3314.08(J), 3318.50, and 3318.52 based on Article VIII, Sections 4 and
5 of the Ohio Constitution.
The remaining counts of the Third Amended Complaint are not addressed at this
time because they raise factual issues that can be the subject of discovery.
Counts One and Two seek declaratory judgments that the State Defendants have
allowed certain community schools to exist in violation of statutory
requirements. Count Three seeks a writ of mandamus to compel enforcement
and/or termination of certain sponsorship contracts that Plaintiffs allege were
breached. Counts Eight and Ten allege that the sponsorship contracts for, and
operation of, eCOT, and the Alternative Education Academy, respectively,
violate statutes and that the sponsorship contracts have been breached. Count
Nine alleges that certain community schools have failed to employ teachers and
other personnel in compliance with statutes.
The discussion below is therefore limited to matters pertinent to Counts Four
through Seven of the Third Amended Complaint.
II.
OVERVIEW OF R.C. CHAPTER 3314 AND OHIO’S COMMUNITY SCHOOLS PROGRAM
In 1997, the Ohio General Assembly enacted the Community School Law, R.C.
Chapter 3314. The General Assembly noted that “the establishment of
independent community schools throughout the state has potential desirable
effects, including providing parents a choice of academic environments for
their children and providing the education community with the opportunity to
establish limited educational programs in a deregulated setting.”
(History, R.C. 3314.01).
Pursuant to R.C. 3314.01(B), a community school is “a public school,
independent of any school district, and is part of the state’s program of
education.” Community schools are state funded, R.C. 3314.08(D), and run
by private individuals. R.C. 3314.02(B). Each community school must be
established as a nonprofit corporation, R.C. 3314.03(A)(1), cannot charge
tuition, and is nonsectarian. R.C. 3314.03(A)(11)(c).
Community schools are exempt from certain state laws and regulations. R.C.
3314.04. Each community school is governed by a contract between its sponsor
and the governing authority of the school. R.C. 3314.03. Sponsors must be
public entities such as a local board of education, the state board of
education, an educational service center, a board of trustees of a state
university, etc. R.C. 3314.02(C)(1). The sponsorship contract must set forth
the community school’s educational program, academic goals and method of
measurement (including the statewide achievement tests), performance standards,
admission standards, requirements and procedures for financial audits,
facilities to be used, qualifications of teachers, etc. R.C. 3314.03(A).
Under newly enacted R.C. 3314.015, the Department of Education is responsible
for the oversight of sponsors of community schools, and the superintendent of
public instruction is required to issue an annual report card for each
community school reflecting the academic and financial performance of the
school.
The contracts between the sponsors and governing authorities of community
schools may have a term of up to five years. R.C. 3314.03(A)(13). Parents are
free to withdraw their students if they choose. If a school has not made
progress in achieving the objectives in its sponsorship contract, the contract
may not be renewed, or, if the school fails to fulfill the basic requirements
of the contract during its term, the sponsor may terminate the contract. R.C.
3314.07. III.
FINDINGS AND CONCLUSIONS
The parties have filed motions to dismiss and for judgment on the pleadings on
Counts Four through Seven of the Third Amended Complaint.
To grant a motion for judgment on the pleadings, it must appear beyond doubt
that Plaintiffs can prove no set of facts warranting the relief they seek,
after construing all material factual allegations in the Complaint and all
reasonable inferences therefrom in their favor.
State ex. rel. Brantley v. Ghee (1988), 83 Ohio St. 3d 521, 522-523.
A.
Count Four of the Third Amended Complaint
Count Four is a facial challenge to the constitutionality of R.C. Chapter 3314
based on Article VI, Section 3 and Article XII, Section 5 of the Ohio
Constitution. 1.
Challenge Based on Article VI, Section 3 – Powers of Local School Boards
Article VI, Section 3 of the Ohio Constitution provides as follows:
Provision shall be made by law for the organization, administration, and
control of the public school system of the state supported by public funds:
provided, that each school district embraced wholly or in part within any city
shall have the power by referendum vote to determine for itself the number of
members and the organization of the district board of education, and provision
shall be made by law for the exercise of this power by such school districts.
The Third Amended Complaint alleges that through Article VI, Section 3 of the
Ohio Constitution, Ohio’s citizens reserved to themselves the power to
exercise local authority over public education conducted within each local
school district by the election of school boards to own and operate local
public schools. (Third Amended Complaint, ¶ 89). Count Four alleges that
in violation of these constitutional provisions, R.C. Chapter 3314 “has
usurped this constitutional right of local educational self-determination by
allowing the creation of privately owned ‘community schools’ not
authorized or governed by locally elected school boards to either locate in or
solicit public school students from school districts throughout the state.”
; (Id., ¶90).
R.C. 3314.01(B) provides that a community school is “a public school,
independent of any school district, and is part of the state’s program of
education.” Plaintiffs argue that this is a constitutionally
impermissible infringement on the power of local school districts.
It should be noted at the outset that all legislative enactments enjoy a strong
presumption of constitutionality.
Austintown Township Board of Trustees v. Tracy
(1996), 76 Ohio St. 3d 353. A court must apply all presumptions and rules of
construction so as to uphold a statute as constitutional, and any doubts must
be resolved in favor of the statute. State ex rel. Dickman v. Defenbacher
(1955), 164 Ohio St. 142. “[A] court has nothing to do with the policy
or wisdom of a statute. That is the exclusive concern of the legislative
branch of the government.” Brady v. Safety-Kleen Corp.
(1991), 61 Ohio St. 3d 624, 632.
Ohio courts have held that the General Assembly has broad authority to organize
the State’s public school system as it believes necessary. In
State ex rel. Core v. Green
(1953), 160 Ohio St. 175, the Ohio Supreme Court noted that “The General
Assembly has the power to provide for the creation of school districts, for
changes and modifications thereof and for the methods by which changes and
modifications may be accomplished….” Id
., syl. 2. Similarly, in
State ex. rel. Bishop v. Bd. of Educ. Of Mt. Orab Village School Dist
. (1942), 139 Ohio St. 427, 441, the Court stated that “Clearly, the
General Assembly possesses the power to prescribe the system of education which
shall prevail throughout the state … and in pursuance of such authority
[the General Assembly] may direct those agencies created by it, viz
, the various boards of education”, as it sees fit.
In Spivey v. State of Ohio
(N.D. Ohio 1998), 999 F. Supp. 987, 991, an Ohio federal court rejected a
constitutional challenge to a statute vesting significant powers in the mayor
to control the local Cleveland City School District Board of Education and
creating a new classification of school district known as a “municipal
school district.” The court recognized the General Assembly’s
authority to provide for the creation of and modification of local school
districts. Id
. at 997. The court rejected the notion that local voters were required to
“preapprove any changes in the school board.” Id
. at 997-998.
A local board of education “is a mere instrumentality of the state to
accomplish its purpose in carrying forward a system of common schools
throughout the state.”
Shaw v. Bd. of Educ. of City Sch. Dist. of Columbus
, 17 Ohio L. Abs. 588, at pg. 5 (Franklin Co. App 1934), citing
Bd. of Educ. of Cincinnati v. Volk
(1905), 72 Ohio St. 469, 485. “Boards of education have only such powers
as are conferred by statute,”
Bd. of Educ. of Marion Local Sch. Dist. v. Board of Educ. of Marion County
(1958), 167 Ohio St. 543, 545; see also Lopez v. Williams
(S.D. Ohio 1973), 372 F. Supp. 1279, 1293 (“It is well-recognized in Ohio
that boards of education are purely creatures of statute whose powers and
duties are limited by the Legislature.”).
The above authority plainly establishes the General Assembly’s power to
create and modify school districts as it believes necessary, without the
approval of local school districts. Courts have repeatedly held that local
school districts have only such powers as prescribed by the General Assembly.
Article VI, Section 3 of the Ohio Constitution does not specify powers of local
school districts that could have been “usurped”, as Plaintiffs
allege, by R.C. Chapter 3314, or derogate the plenary authority of the
Legislature. Rather, the narrow language of Article VI, Section 3 merely gives
the residents of local school districts the power to decide “by
referendum vote … the number of members and the organization of the
district board of education….”
For these reasons, Plaintiffs’ challenge to the constitutionality of R.C.
Chapter 3314 based on Article VI, Section 3 of the Ohio Constitution is
unavailing. 2.
Challenge Based on Article XII, Section 5 – Application of Local Taxes
Article XII, Section 5 of the Ohio Constitution provides as follows:
No tax shall be levied, except in pursuance of law; and every law imposing a
tax, shall state, distinctly, the object of the same, to which only, it shall
be applied.
The Third Amended Complaint alleges that “The methods of funding community
schools approved by the General Assembly has the effect of diverting funds
raised by local tax levies and the sale of state bonds for purposes not stated
in the levies or constitutional amendments approved by voters, in violation of
Article XII, Section 5 of the Ohio Constitution.” (Third Amended
Complaint, ¶91). Plaintiffs further allege that “By allowing the
diversion of locally levied tax funds to community schools in city school
districts without the consent of the city school board, Chapter 3314 violates
Article VI, Section 3 of the Ohio Constitution.” (Id
., ¶92).
The purpose of Article XII, Section 5 is to prevent taxes that have been levied
for a particular purpose from being used for purposes not intended by the
voters. In re Petition of Transfer of Funds by Perry Township
(1988), 52 Ohio App. 3d 1 (holding that proceeds from a special tax levy for
fire protection could not be transferred to the township’s general revenue
fund).
Plaintiffs cannot demonstrate a violation of Article XII, Section 5 because tax
dollars financing community schools come entirely from the state; no local tax
moneys are used to fund community schools. R.C. 3314.08(D) provides that the
state Department of Education “shall annually pay to a community
school” amounts to fund the school.
To understand the funding of community schools, a basic understanding of the
State’s funding formula is necessary. The State’s funding formula
guarantees that every child attending a public school will be funded at a basic
minimum level, commonly known as the base “formula amount.” R.C.
3317.02. Of the total base cost funding, a school district must contribute a
local share paid by local tax dollars based upon property values. R.C.
3317.022. Once the local share has been determined, it is subtracted from the
district’s total base cost funding, and the State is responsible for
paying the remainder.
From the State’s payment to a local school district, several deductions
may be made, including deductions for open enrollment, R.C. 3313.981, and
community schools. For each student that opts to attend a community school,
the state deducts the base formula amount from the state tax dollars
awarded to the district. See
R.C. 3314.08(C) (“From the payments made to a city, exempted village, or
local school district under Chapter 3317 …, the department of education
shall annually subtract all of the following ….”). Those deducted
state tax dollars
are in turn awarded to the appropriate community school.
The tax dollars financing community schools come directly from the State, not
local tax levies. R.C. 3314.08(D) confirms that payments to community schools
come directly from the Department of Education.
Plaintiffs’ Third Amended Complaint states: “For each student
attending a community school sponsored by the State Board,
the amount appropriated by the state to the student’s local school
district is reduced
on average by about $5,000 per child.” (emphasis added; Third Amended
Complaint, ¶37). Plaintiffs argue that as a result of the deduction from
state tax dollars, “the district must rely to a greater extent on local
property taxes than it would without the community school deduction.”
(Plaintiffs’ Motion for Partial Summary Judgment, pg. 19). This does not
show diversion of local property taxes.
As set forth above, Plaintiffs cannot show a diversion of local tax levies to
community schools in violation of Article XII, Section 5.
For the foregoing reasons, Defendants are entitled to judgment in their favor
as a matter of law on Count Four of the Third Amended Complaint.
B.
Counts Five and Six of the Third Amended Complaint
Counts Five and Six of the Third Amended Complaint allege that the community
schools program is in violation of Article VI, Section 2 of the Ohio
Constitution.
Article VI, Section 2 provides as follows:
The general assembly shall make such provisions, by taxation or otherwise, as,
with the income arising from the school trust fund, will secure a thorough and
efficient system of common schools throughout the state ….
Count Five of the Third Amended Complaint alleges: “The constitutional
requirement of a ‘thorough and efficient system of common schools
guarantees to Ohio’s taxpayers, parents, and students a system of schools
with common standards and sufficient resources to assure that all students are
provided adequate educational opportunities.’
DeRolph v. State of Ohio
(2000), 89 Ohio St. 3d 1, 10.” (Third Amended Complaint, ¶97).
Plaintiffs further allege: “Article VI, Section 2 of the Ohio
Constitution has been interpreted to require that ‘strict, statewide
academic guidelines must be developed and rigorously followed throughout all of
Ohio’s public school districts.’ DeRolph v. State of Ohio
(2000), 89 Ohio St. 3d 1, 37.” (Third Amended Complaint, ¶99).
Plaintiffs allege that community schools are not part of a “thorough and
efficient system of common schools” in accordance with DeRolph,
supra,
because they have been allowed to operate with different and diminished
standards. Plaintiffs allege that the establishment and funding of community
schools through R.C Chapter 3314 violate Article VI, Section 2.
Count Six of the Third Amended Complaint alleges: “The funding method
utilized by the State Defendants-Respondents to support community schools
deprives certain city school districts of the funds required to operate a
thorough and efficient system of public schools.” (Third Amended
Complaint, ¶105). Plaintiffs allege: “On its face and as
implemented by the State Defendants-Respondents, Chapter 3314 violates Article
VI, Section 2 of the Ohio Constitution.” (Id., ¶106).
Counts Five and Six base their allegations of violations of Article VI, Section
2 of the Ohio Constitution on the decisions of the Ohio Supreme Court in the
DeRolph litigation.
In the DeRolph
decisions, the Ohio Supreme Court examined whether the State’s entire
public school system is constitutionally “thorough and efficient” in
accordance with Article VI, Section 2. Community schools are one part of the
State’s public school system reviewed in detail by the Supreme Court.
Pursuant to R.C. 3314.01(B), community schools are public schools and are part
of the state’s program of education. The DeRolph
plaintiffs specifically argued that “[c]harter schools make the problems
worse” by taking money from local school districts” and that this
“unproven and essentially unregulated experiment” weakened large city
school districts.” (Plaintiffs’ June 18, 2001 brief in DeRolph
, p. 23).
On December 11, 2002, the Ohio Supreme Court issued its decision in
DeRolph v. State of Ohio (2002), 97 Ohio St. 3d 434 (“DeRolph IV
”), again finding that Ohio’s public school system violates the
mandate in Article VI, Section 2 of a “thorough and efficient system of
common schools.” The Court stated as follows:
To date, the principal legislative response to DeRolph I and
DeRolph II
has been to increase funding, which has benefited many schoolchildren.
However, the General Assembly has not focused on the core constitutional
directive of DeRolph I
: ‘a complete systematic overhaul’ of the school-funding system.
Today we reiterate that that is what is needed, not further nibbling at the
edges.
Accordingly, we direct the General Assembly to enact a school-funding scheme
that is thorough and efficient, as explained in DeRolph I,
DeRolph II, and the accompanying concurrences.
(emphasis added) 97 Ohio St. 3d at 435.
Under the doctrine of
res judicata
, “parties are precluded from relitigating an issue of law or fact which
was necessarily decided in a previous final judgment.”
City of Canton, Ohio v. Maynard (6th
Cir. 1985), 766 F.2d 236, 238; See also
National Amusements, Inc. v. Springdale (1990), 53 Ohio St. 3d 60, 62.
While Ohio law typically requires mutuality of parties for collateral estoppel
to apply, the Ohio Supreme Court has created an exception to this requirement
in matters of general and public interest. In
Stromberg v. Board of Education
(1980), 64 Ohio St. 2d 98, the Court upheld the dismissal of a private
taxpayer’s challenge to the dissolution of the Bratenahl school district.
In the trial court, the State and Cleveland Boards of Education had filed
motions to dismiss based upon an earlier decision of the Ohio Supreme Court
holding that the Bratenahl district had, in fact, been dissolved in 1970.
Id
. at 99. Finding that the previous action had resolved the matter, the Supreme
Court held that the issue could not be relitigated and upheld the granting of
defendants’ motions to dismiss. Id
. at 100-101. The Court stated:
[A] judgment for or against a governmental body … is binding and
conclusive as res judicata
on all residents, citizens and taxpayers with respect to matters adjudicated
which are of general and public interest.
Id. at 101.
In Counts Five and Six of the Third Amended Complaint, Plaintiffs complain
about whether one facet of the State’s system of public education,
community schools, is in violation of the “thorough and efficient”
clause. DeRolph IV
resolves whether the entire public school system, of which community schools
are one part, is constitutionally thorough and efficient.
In DeRolph IV
, the Ohio Supreme Court determined the remedy after finding that the public
school system violates Article VI, Section 2. The Court stated: “we
direct the General Assembly to enact a school-funding scheme that is thorough
and efficient, as explained in DeRolph I, DeRolph II
, and the accompanying concurrences.” 97 Ohio St. 3d at 435. Given that
the Supreme Court has already determined the remedy for the violation of
Article VI, Section 2, this Court’s role is not to supply further
direction to the General Assembly or somehow supplement the order of the Ohio
Supreme Court.
For the foregoing reasons, Counts Five and Six of the Third Amended Complaint
must be dismissed. C.
Count Seven of the Third Amended Complaint
Count Seven of the Third Amended Complaint alleges that the statutory
allowance of borrowing by community schools, R.C. 3314.08(J) and the extension
of loan guarantees to community schools, R.C. 3318.50 and 3318.52, violate
Article VIII, Sections 4 and 5 of the Ohio Constitution.
Article VIII, Section 4 of the Ohio Constitution provides as follows:
The credit of the state shall not, in any manner, be given or loaned to, or in
aid of, any individual association or corporation whatever; nor shall the state
ever hereafter become a joint owner, or stockholder, in any company or
association in this state, or elsewhere, formed for any purpose whatever.
Article VIII, Section 5 of the Ohio Constitution provides as follows:
The state shall never assume the debts of any county, city, town or township,
or of any corporation whatever, unless such debt shall have been created to
repel invasion, suppress insurrection, or defend the state in war.
R.C. 3314.08(J) allows community schools to borrow money in anticipation of
receipt of revenue from the state.
R.C. 3318.50 and 3318.52 establish a loan guarantee fund to be administered by
the Ohio School Facilities Commission, to be available to community schools for
buildings and other facilities.
In Count Seven, Plaintiffs allege that community schools are “individual
associations or corporations” under Article VIII, Section 4. (Third
Amended Complaint, ¶109). Plaintiffs allege that the guarantee of loans
and funding to community schools constitute an unconstitutional “giving
and/or loaning of the state’s credit, or the provision of such credit in
aid of an individual association or corporation.” (Id
., ¶114). Plaintiffs further allege that the funding and loan guarantees
make the state “de facto
, a joint owner in the private corporate entities established to operate and/or
manage community schools sponsored by the State Board.” (Id
., ¶115).
The Ohio Supreme Court has held that Article VIII, Section 4 “does not
prohibit the giving or loaning of the state’s credit to or in aid of a
public organization created for a public purpose.”
State ex rel. Speeth v. Carney (1955), 163 Ohio St. 159, 175.
Pursuant to R.C. 3314.01(B), community schools are public schools and are part
of the state’s program of education. Plainly, educating Ohio’s
children is a public purpose.
Plaintiffs argue that the state’s credit nevertheless cannot be extended
to community schools because they are run by private individuals and
established as nonprofit corporations. However, the Ohio Supreme Court has
held that Article VIII, Section 4 also does not prohibit appropriation of
public funds to a private entity for a public purpose. In
State ex rel. Dickman v. Defenbacher
(1955), 164 Ohio St. 142, 151, the Court stated that “the appropriation
of public money to a private corporation to be expended for a public purpose is
a valid act of the legislative body.” In that case, the Court upheld
appropriations to private veterans organizations for the public purpose of
aiding veterans and promoting patriotism. See also
State ex. rel. Tomino v. Brown
(1989), 47 Ohio St. 3d 119, 122 (“Historically, Sections 4 and 6 of
Article VIII have not been applied to programs undertaken for public
welfare.”)
Plaintiffs further allege that the statutory funding and loan guarantees make
the state “de facto
, a joint owner in the private corporate entities established to operate and/or
manage community schools.” (Id., ¶115).
R.C. 3314.01(B) provides that a community school may “contract for any
services necessary for the operation of the school.” As nonprofit
corporations, the schools may make “payment of reasonable compensation for
services rendered” to private companies, including management companies.
R.C. 1702.01(C).
State funding for community schools goes directly to the community schools.
R.C. 3314.08(D). While Plaintiffs allege that community schools pay private
companies for management or other services, public entities routinely use
public funds to purchase services from private companies. This practice is so
widespread that only a few examples will suffice. See, e.g.
, R.C. 9.06 (contracts for private operation of correctional facilities);
Northwestern Ohio Building & Construction Trades Council v. Conrad
(2001), 92 Ohio St. 3d 282 (private managed care organizations contract to
provide medical services for the Ohio Bureau of Workers Compensation).
In Perkins v. Stockert
(1975), 45 Ohio App. 2d 211, the court rejected a constitutional challenge to
a statute creating and funding “community authorities” for
development of local communities with the assistance of private efforts. The
court stated: “The determination of what constitutes a public purpose is
primarily a legislative function. … The fact that private individuals
may, and probably will, derive an income or profit is not significant in the
determination of what constitutes a public purpose.” Id
. at 218.
For these reasons, Defendants are entitled to judgment in their favor as a
matter of law on Count Seven of the Third Amended Complaint.
IV. CONCLUSION
For the foregoing reasons, the Court concludes that, as to Counts Four, Five,
Six and Seven of the Third Amended Complaint, it appears beyond doubt that
Plaintiffs can prove no set of facts warranting the relief they seek, after
construing all material factual allegations in the Complaint and all reasonable
inferences therefrom in their favor, and Defendants are entitled to judgment
as a matter of law.
In accordance with this Decision, the following motions are granted, in part,
to the extent that they relate to Counts Four, Five, Six, and Seven of the
Third Amended Complaint: the State Defendants’ Motion to Dismiss and/or
for Summary Judgment filed on May 20, 2002; the Community School
Defendants’ Motion for Judgment on the Pleadings on Counts Three, Four,
Five, Six, Seven, and Eight filed on May 20, 2002; White Hat’s Motion for
Judgment on the Pleadings filed on May 28, 2002; University of Toledo Charter
School Council’s Motion for Judgment on the Pleadings filed on June 19,
2002; Additional Community School Defendants’ Motion for Judgment on the
Pleadings filed on July 22, 2002; and Community School Defendants’ Motion
for Judgment on the Pleadings filed on November 29, 2002.
As set forth above, the remaining counts of the Third Amended Complaint raise
factual issues that can be the subject of discovery. Accordingly,
Defendants’ motions for judgment on the pleadings referenced above are
denied to the extent that they relate to the remaining counts of the Third
Amended Complaint.
To the extent that they relate to Counts Four, Five, Six, and Seven of the
Third Amended Complaint, Plaintiffs’ Motions for Partial Summary Judgment
filed on May 20, 2002, are denied.
The Court will establish a new deadline for the filing of any motions for
summary judgment relating to the remaining counts of the Third Amended
Complaint after the completion of discovery.
Pursuant to Local Rule 25.01, counsel shall prepare and submit a journal entry
reflecting this Decision.
__________________________________
PATRICK M. McGRATH, JUDGE
Copies to:
Donald J. Mooney, Jr., Counsel for Plaintiffs
Jim Petro, Attorney General of Ohio
Roger F. Carroll
James G. Tassie
Counsel for State Defendants
Fordham E. Huffman
Chad A. Readler
Counsel for Community School Defendants
J. Craig Wright
Charles R. Saxbe
Counsel for Defendant White Hat Management, LLC
1