IN THE COURT OF COMMON PLEAS, FRANKLIN COUNTY, OHIO
OHIO STATE FEDERATION OF ]
TEACHERS, et al. ]
]
] CASE NO. 01CVH-05-4457
Plaintiffs, ]
vs. ] JUDGE MCGRATH
]
]
STATE OF OHIO BOARD OF ]
EDUCATION, et al. ]
]
Defendants.
DECISION DISMISSING COUNTS FOUR, FIVE, SIX AND SEVE
N OF
PLAINTIFFS’ THIRD AMENDED COMPLAINT
Rendered this ___ day of April, 2003
McGRATH, JUDGE
This action is a challenge to Ohio’s system of comm
unity schools established by
Revised Code Chapter 3314 in 1997. “Community scho
ols”, 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 Teac
hers, the Ohio Congress of
Parents and Teachers, the Ohio School Boards Associ
ation, other education associations and
teachers’ unions, certain parents of children in pu
blic schools, taxpayers, school district
boards of education, and residents of various schoo
l 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
2
community schools, parents of children attending co
mmunity schools, and White Hat
Management, L.L.C.
Plaintiffs have requested declaratory and injuncti
ve 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 o
n allegations that certain sponsorship
contracts are in violation of statutes and that cer
tain 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 v
oluntarily dismissed without prejudice their
claims against Lucas County Educational Service Cen
ter.
On July 20, 2001, White Hat Management, LLC (“Whit
e 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 2
3, 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.
3
Plaintiffs filed a motion for leave to file a Thir
d 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 a
nd 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 b
y 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 Com plaint 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 unti l after the Court’s decision on issues of
law, potentially narrowing the issues to be litigated.
In accordance with this schedule, the Court direct
ed 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 Educatio n, 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
4
School Defendants filed a Motion for Judgment on th e Pleadings on Counts Three, Four,
Five, Six, Seven, and Eight. On May 28, 2002, Whit
e Hat filed a Motion for Judgment
on the Pleadings. On June 19, 2002, Defendant Univ
ersity of Toledo Charter School
Council filed a Motion for Judgment on the Pleading
s. On July 22, 2002, Additional
Community School Defendants filed a Motion to Join
Community School Defendants’
Motion for Judgment on the Pleadings on Counts Thre
e, 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, t
his 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, F ive, 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 3
314 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 a
nd 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 Complain
t 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 D
efendants have allowed certain
5
community schools to exist in violation of statutor
y requirements. Count Three seeks a
writ of mandamus to compel enforcement and/or termi
nation of certain sponsorship
contracts that Plaintiffs allege were breached. Co
unts Eight and Ten allege that the
sponsorship contracts for, and operation of, eCOT,
and the Alternative Education
Academy, respectively, violate statutes and that th
e sponsorship contracts have been
breached. Count Nine alleges that certain communit
y schools have failed to employ
teachers and other personnel in compliance with statutes.
The discussion below is therefore limited to matte
rs 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 Com
munity 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. 3
314.03(A)(11)(c).
Community schools are exempt from certain state law
s and regulations. R.C.
3314.04. Each community school is governed by a co
ntract between its sponsor and the
6
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 educat
ion, 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, a
cademic goals and method of
measurement (including the statewide achievement te
sts), performance standards, admission
standards, requirements and procedures for financia
l audits, facilities to be used,
qualifications of teachers, etc. R.C. 3314.03(A).
Under newly enacted R.C. 3314.015, the Department o
f 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 au
thorities 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 t
erm, the sponsor may terminate the
contract. R.C. 3314.07.
III.
FINDINGS AND CONCLUSIONS
The parties have filed motions to dismiss and for j
udgment on the pleadings on
Counts Four through Seven of the Third Amended Comp
laint.
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
7
material factual allegations in the Complaint and a
ll 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 constituti
onality 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 o
f Local
School Boards
Article VI, Section 3 of the Ohio Constitution pro
vides as follows:
Provision shall be made by law for the organization
, administration, and
control of the public school system of the state su pported by public funds:
provided, that each school district embraced wholly
or in part within any
city shall have the power by referendum vote to det
ermine for itself the
number of members and the organization of the distr
ict board of
education, and provision shall be made by law for t
he exercise of this
power by such school districts.
The Third Amended Complaint alleges that through A
rticle VI, Section 3 of the
Ohio Constitution, Ohio’s citizens reserved to them
selves 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 sc hools. (Third Amended Complaint, ¶
89). Count Four alleges that in violation of these constitutional provisions, R.C. Chapter
3314 “has usurped this constitutional right of loca
l 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 i
s “a public school, independent
of any school district, and is part of the state’s
program of education.” Plaintiffs argue that
8
this is a constitutionally impermissible infringeme
nt on the power of local school
districts.
It should be noted at the outset that all legislat
ive 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 constitut
ional, 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 wis dom 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 nec
essary. In
State ex rel. Core v. Green
(1953), 160 Ohio St. 175, the Ohio Supreme Court no
ted 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 t
hat “Clearly,
the General Assembly possesses the power to prescri
be the system of education which
shall prevail throughout the state … and in pursuan
ce 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 t o a statute vesting significant powers in
9
the mayor to control the local Cleveland City Schoo
l District Board of Education and
creating a new classification of school district kn
own as a “municipal school district.”
The court recognized the General Assembly’s authori ty 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 scho ols 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 c onferred 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 pur ely 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 necessar
y, 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 Legi
slature. Rather, the narrow language
of Article VI, Section 3 merely gives the residents
of local school districts the power to
10
decide “by referendum vote … the number of members
and the organization of the
district board of education….”
For these reasons, Plaintiffs’ challenge to the con
stitutionality 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 – Applica
tion of
Local Taxes
Article XII, Section 5 of the Ohio Constitution pr
ovides 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 meth
ods of funding community
schools approved by the General Assembly has the ef
fect of diverting funds raised by
local tax levies and the sale of state bonds for pu
rposes not stated in the levies or
constitutional amendments approved by voters, in vi
olation 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 fu
nds to community schools in city
school districts without the consent of the city sc
hool board, Chapter 3314 violates
Article VI, Section 3 of the Ohio Constitution.” (
Id
., ¶92).
The purpose of Article XII, Section 5 is to preven
t taxes that have been levied for
a particular purpose from being used for purposes n
ot 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 protectio
n could not be transferred to the
township’s general revenue fund).
Plaintiffs cannot demonstrate a violation of Artic
le XII, Section 5 because tax dollars
financing community schools come entirely from the state; no local tax moneys are used to
11
fund community schools. R.C. 3314.08(D) provides t
hat 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 th
e 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 dete
rmined, it is subtracted from the district’s
total base cost funding, and the State is responsib
le for paying the remainder.
From the State’s payment to a local school distric
t, 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 d
istrict 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 s
chool.
The tax dollars financing community schools come d
irectly 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 e
ach 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
12
deduction from state tax dollars, “the district must rely to a greater extent on local property
taxes than it would without the community school de
duction.” (Plaintiffs’ Motion for
Partial Summary Judgment, pg. 19). This does not s
how diversion of local property taxes.
As set forth above, Plaintiffs cannot show a divers
ion of local tax levies to
community schools in violation of Article XII, Sect
ion 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 Co
mplaint.
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 sch
ool trust fund, will
secure a thorough and efficient system of common sc hools 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 guideli
nes must be developed and rigorously
followed throughout all of Ohio’s public school dis
tricts.’
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
13
with
DeRolph
,
supra,
because they have been allowed to operate with diff
erent and
diminished standards. Plaintiffs allege that the e
stablishment 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 comm unity schools deprives certain city
school districts of the funds required to operate a thorough and efficient system of public
schools.” (Third Amended Complaint, ¶105). Plaint
iffs allege: “On its face and as
implemented by the State Defendants-Respondents, Ch
apter 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 “th
orough 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. Pu
rsuant to R.C. 3314.01(B),
community schools are public schools and are part o
f the state’s program of education.
The
DeRolph
plaintiffs specifically argued that “[c]harter sch
ools 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
14
public school system violates the mandate in Articl
e 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 m
any 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 wh at is needed, not further
nibbling at the edges.
Accordingly, we direct the General Assembly to enac
t
a school-funding scheme that is thorough and effici
ent
, 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 p
revious final judgment.”
City of Canton,
Ohio v. Maynard
(6
th
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 part
ies for collateral estoppel to
apply, the Ohio Supreme Court has created an except ion 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 taxpaye
r’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 … i
s binding and
conclusive as
res judicata
on all residents, citizens and taxpayers with
respect to matters adjudicated which are of general
and public interest.
15
Id
. at 101.
In Counts Five and Six of the Third Amended Complai
nt, Plaintiffs complain
about whether one facet of the State’s system of pu blic education, community schools, is
in violation of the “thorough and efficient” clause
.
DeRolph IV
resolves whether the
entire public school system, of which community sch ools are one part, is constitutionally
thorough and efficient.
In
DeRolph IV
, the Ohio Supreme Court determined the remedy afte r finding that
the public school system violates Article VI, Secti on 2. The Court stated: “we direct the
General Assembly to enact a school-funding scheme t
hat is thorough and efficient, as
explained in
DeRolph I
,
DeRolph II
, and the accompanying concurrences.” 97 Ohio St. 3
d 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 Ohi
o Supreme Court.
For the foregoing reasons, Counts Five and Six of t he 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. 3
314.08(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 w
hatever; nor shall the
16
state ever hereafter become a joint owner, or stock holder, 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 count
y, city, town or
township, or of any corporation whatever, unless su
ch debt shall have
been created to repel invasion, suppress insurrecti on, or defend the state in
war.