SCHOOL DISTRICT OF OMAHA, COUNTY OF DOUGLAS, STATE OF NEBRASKA, ET AL., APPELLEES, V. STATE BOARD OF EDUCATION ET AL., APPELLANTS.
No. 37458.
Supreme Court of Nebraska
Filed June 4, 1971.
187 N. W. 2d 592
See 186 Neb. 170, 181 N. W. 2d 861, for original opinion.
Leo Eisenstatt and J. Patrick Green of Eisenstatt, Higgins, Kinnamon & Green and William Ross King, for appellees.
Heard before WHITE, C. J., SPENCER, BOSLAUGH, SMITH, MCCOWN, NEWTON, and CLINTON, JJ.
WHITE, C. J.
This case was previously reported at 186 Neb. 179, 181 N. W. 2d 861. On motion for rehearing we granted reargument. Our previous opinion affirming the judgment of the district court is withdrawn and the judgment of the district court is reversed and the cause remanded with directions.
Under sections 4, 5, 7, 8, and 11 of L. B. 448 (Laws 1967, chapter 514), providing for state aid to public school districts, the total amount of state aid for the School District of Omaha was computed for the school year 1968-69 to be $5,661,999. Under the limitation provisions of section 12 of the act, the State Board of Education limited the amount of aid to the School District of Omaha to $4,165,114. This reduction was required to bring it within the maximum 8 percent increase of the preceding year allowable under subsection (2) of section 12. The state prescribed aid, therefore, was cut in the
In order to understand this case it is necessary to review the pertinent facts and the sections of the statutes involved and to interpret them in the light of the purposes of the overall scheme and design of L. B. 448. The essential facts are not in dispute. The Legislature did not fully fund the act, and it was stipulated that the Legislature of the State of Nebraska at its 1967 legislative session for the biennium ending June 30, 1969, appropriated the sum of $25,000,000 for distribution among the school districts of the State of Nebraska pursuant to L.B. 448 (Laws 1967, chapter 514),
Also on or before November 1 two reports, one an end of the school year annual statistical summary and one an annual financial report showing number attending school under 5 and over 21 and other information including qualified teacher hours; teacher wages; amount
Under the provisions of L. B. 448 (
“(3) Per pupil cost shall mean a district‘s current operating expense for the preceding year as shown in the district‘s annual financial report to the State Department of Education, divided by the average daily membership of resident and nonresident pupils for the preceding school year.” (Emphasis supplied.)
The financial support payable out of the State Foundation and Equalization Fund is provided in the statutes in stated amounts for each of several categories. Deductions are provided for late reports, failure to levy taxes in prescribed amounts, etc. The method used in determining the total base amount due Omaha under sections 4, 5, 7, 8, and 11 of the act appears to have been correct.
The act provided comprehensively for school aid in proportionate amounts to every school district in the state. The act also provided for pro rata funding in the event that the Legislature did not fully fund the act.
We are called upon in this case to construe L. B. 448, and in construing a legislative act resort may be had to the history of its passage. Chicago, B. & Q. R.R. Co. v. Amack, 112 Neb. 437, 199 N. W. 724. A proponent of this bill, Senator Jerome Warner, succinctly stated the reasons and purposes, as pertinent to the issues herein, to the Legislature‘s Committee on Education as follows:
“The following constitute my reasons for this bill and the purposes which are sought to be accomplished there-
by: The purpose of LB 448 is to provide a formula for the distribution of state aid to public school districts. It is a Foundation Equalization Act. Under the foundation portion every school district in the state would be eligible to receive the amount of money prescribed in the bill on a per pupil basis, * * *. The equalization portion is for the purpose of equalizing costs between school districts. To qualify for equalization aid, a school district must levy a minimum of 22 mills if it is a Class 2, 3, 4 or 5 District; 15 mills for Class 1 District and 12 mills for a Class 6 District. The equalization aid is based upon $450.00 per pupil, one through six, $225.00 for kindergarten, $500.00 grades seven and eight and $550.00 for grades nine through twelve or 108% of the previous years per pupil cost whichever is less. These amounts times the respective number of students in average daily membership in each of the grades minus the other sources of income to the district including the amount raised by the minimum mill levy, the foundation aid and other sources of income, the difference between these equals the equalization aid. * * * “The bill also has a provision for an appeal procedure made to the State Board of Education to use the current years average daily membership for a school if it has had an increase in the number of students as prescribed in this bill.
“The bill also provides for the pro-rating of a fund in proportion to what the district would have received of the full amount in the event that the Legislature appropriates less than the amount necessary for full funding of the bill. * * *
“In addition the bill has an over-all limit in the increase in per pupil cost per year which is for the purpose of insuring that any state aid is used to reduce local mill levy and is not just additional spending by the local district. This is to insure the concept of replacement of local property tax.” (Emphasis supplied.)
It would unduly lengthen this opinion to fully de-
| Foundation grant, 79-1334 | - | $ 1,622,761.80 |
| Incentive grant, 79-1340 | - | 458,862.00 |
| Equalization grant, 79-1336 | - | $27,626,756.00 |
| plus 79-1337 | 752,031.25 | |
| $28,378,787.25 | ||
| less 79-1338 | 14,057,272.07 | |
| $14,321,515.18 |
In other words, if L.B. 448 had been fully funded and if the School District of Omaha had not exceeded the 8 percent limitation of
With this background, we approach the first issue of the case. It is whether or not the limitation section,
“(1) The sum necessary to support an increase in
per pupil expenditures which, when added to the increases and decreases of the four preceding fiscal years, results in a mean annual increase in per pupil costs for the five-year period of eight per cent; or “(2) The sum necessary to support a per pupil cost eight per cent above that of the preceding year; Provided, a district which may suffer undue financial hardship because of such limitations, such hardship being a result of an abnormal change in enrollment, depreciation in the value of school properties, alteration of property values within the district, or other abnormalities or emergencies of similar magnitude or consequence may file a written application for relief with the State Board of Education, which may grant whatever relief, if any, it deems appropriate by altering the percentage limitations of this section.”
The exact issue in this case involves the distribution of funds for the 1968-69 school year. We feel that it is self-evident and that the “particular year” referred to in the statute means the 1968-69 school year. This appears, from the record, to have been the year considered both by the School District of Omaha and the State Board of Education at the hearing before the State Board of Education, such hearing being instigated by the Omaha School District for the only purpose of securing relief under the hardship issue of the act. The district court, although finding erroneously that section 12 did not apply, did find in its memorandum order after its hearing on appeal that the particular year involved in the computation was the 1968-69 school year.
To arrive at the limitation on the amount due the Omaha School District we must determine the per pupil cost. Unless the context otherwise requires, we must take the district‘s current operating expense for the preceding year (1967-68) and divide it by the average daily membership of resident and non-resident pupils for the preceding school year (1967-68). The financial support payable for 1968-69 can only exceed by up to 8
The district court held that the actual per pupil cost meant the total per pupil cost for 1967-68. Naturally, the total per pupil cost for 1967-68 could not exceed by 8 percent nor any other amount the already determined per pupil cost for 1967-68. The only logical possible conclusion is that actual per pupil cost means the actual per pupil cost for the particular year for which the distribution is being figured, to wit 1968-69. The context requires this construction. If it does not, the word actual means nothing and we are saying that the total per pupil cost does not exceed the total per pupil cost, therefore the limitation does not apply because it is not 8 percent more than the per pupil cost. We would be comparing total per pupil cost for 1967-68 with total per pupil cost for 1967-68.
It is elementary that a statute must be given a reasonable construction to accomplish the objectives and purposes of the act. It appears that the limitation section is designed to accomplish equalization of the aid among all the school districts and not permit arbitrary increases in the per pupil cost at the expense of the other school districts in the state. The 8 percent limitation is designed to insure this equalization and it seems to us that such a provision is fundamental to the purposes of the act. A chaotic condition could easily result from permitting an unlimited increase in costs by the different districts in order to secure the maximum aid possible.
The semantical analysis of the language of the different sections of the act supports our conclusion. Any difficulty with reference to the meaning of per pupil cost is eliminated in all of the other sections of the act besides section 12, because each section of the act (except section 12) in itself defines per pupil cost as meaning the per pupil cost in the next preceding year. Under
This act was designed to fit the actual realities of school district financing. It is clear that the amount of the distribution for the particular year 1968-69 is based upon reports for 1967-68. The reports for 1968-69 will not be filed until after the school year is completed. While the statute does not say that the 8 percent limitation is to be determined by the number of students registered and the budget for 1968-69, that is the only possible source. It would hardly seem logical to say that while payments are to be distributed in December and April of the 1968-69 year they would have to wait until reports for 1968-69 were filed in July and November 1969, following the end of the 1968-69 school year to determine what the actual per pupil cost had been. By October 1968 they will know how many pupils are in school. They will know the amounts of the teachers’ salaries. They will have budgeted the amounts needed for all expenses.
To make a rather complex story short, the Legislature told the school districts, in effect, that if they would make a certain minimum levy, provide a certain quality education, the Legislature would appropriate the funds to insure the expense of per pupil cost established in the next preceding year or on the last 5-year average (section 12, subsection (1)). The Legislature also told the school districts that since the total amount they
The second issue which was not specifically ruled on by the district court since it held it was not applicable, arises from the following proviso in
The Omaha School District filed such a written application for relief. It stated that the hardship designations of abnormal change in enrollment, depreciation in value of school properties, and alteration of property values within the district were not applicable. The claim for relief was based upon the last designation to wit “* * * other abnormalities or emergencies of similar magnitude or consequence.”
We observe that the computations made by the School District of Omaha in its application for relief under section 12, were on the forms provided it by the State Department of Education. As we have stated the hearing involved solely a request for relief from the 8 percent limitation,
For these reasons we hold that
The judgment of the district court is reversed and the cause remanded with directions to dismiss the petition on appeal of the School District of Omaha.
REVERSED AND REMANDED WITH DIRECTIONS.
BOSLAUGH, J., dissenting.
The term, “per pupil cost,” is defined in section 79-
The term is used in only two sections of the 1967 act. There is nothing in the context of the act that requires or justifies a construction that ignores the definition set out in the act.
The majority opinion suggests that “a chaotic condition could easily result from permitting an unlimited increase in costs by the different districts in order to secure the maximum aid possible.” The only districts that could receive increased aid through increased expenditures, under the 1967 act, were those districts in which per pupil expenditures fell below the amounts specified in
In my view of the case, it is not necesasry to reach the hardship issue.
MCCOWN, J., joins in this dissent.
SMITH and MCCOWN, JJ., dissenting.
The majority opinion misconstrues the statute. It gives the issue of undue hardship short shrift. We concur with the dissenting opinion by Boslaugh, J., regarding statutory construction, but we also dissent respecting the hardship issue.
The majority opinion states that the purpose of the
We turn to the opening clause of section 12 of the act. The majority opinion insists that 1968-69 is the year for determination of actual pupil cost; yet it uses operating costs and average pupil membership in 1967-68 to make that determination. The approach is incorrect. It appears either to invert the statutory relationship between actual pupil cost and total financial support or to read the opening clause completely out of the act.
We are told that any other construction of the opening clause of section 12 would make the relationship between cost and support every year an invariable. The argument overlooks a fair construction of the statute: Prescribed support for one year would become an item of cost the next year.
Other states have determined school aid in a given year by revenue, costs, and membership in the prior year. See, Mort, Reusser, and Polly, Public School Finance 44-49 and 265; Johns and Morphet, Financing the Public Schools 283 (1960); Zenith School District No. 32 v. Peterson, 81 N. W. 2d 764 (N. D., 1957).
At the hearing before the state board on the issue of undue hardship, the Omaha district appeared by its president, Charles A. Peters, and its superintendent, Dr. Owen A. Knutzen. The board elicited minor instances of inefficiency, and greater inefficiency was probably inherent in a district of that size. One-half of all children in public schools of America attended schools located in 50 districts. Omaha ranked 38th.
The tragic plight of disadvantaged children in large urban school districts across the nation was well known. An urban crisis struck Omaha. In the year of passage of the state aid act one student was killed. Students boycotted schools. The buildings became targets of racial disturbances.
Dr. Knutzen poignantly declared: “. . . the fact of life is that we live today and for these children tomorrow. We cannot undo . . . yesterday . . . Omaha . . . has 50 percent of all A.D.C. (child welfare) cases in Nebraska . . . If that doesn‘t . . . spell human disaster in the consequences of the cost, I don‘t know what would.” The burden of meeting the emergency fell upon the 1968-69 budget. The evidence stood unchallenged.
The technical staff of the Commissioner of Education for Nebraska recommended distribution of the money to Omaha on account of undue hardship. The commissioner, Dr. Floyd A. Miller, concurred, and he conveyed his recommendation to the board.
Sitting on the board was Robert G. Simmons, Jr., a resident of Scottsbluff and a practicing lawyer admitted to the bar in 1941. At the hearing this dialogue occurred: “Peters: . . . But . . . because we attempted to solve the problem, you are saying no . . . Simmons: The Legislature said that . . . That‘s the trouble with the Omaha people, you don‘t realize that you are part of the State of Nebraska.”
It is our opinion that this court misconstrues the statute and that the state board acted arbitrarily. We would affirm the judgment of the district court, reaffirming School District of Omaha v. State Board of Education, 186 Neb. 170, 181 N. W. 2d 861 (1970).
CLINTON. J., concurring.
I concur in the majority opinion. I add the following.
At the hearing before the State Board of Education,
The legislative intent is to be sought, first of all, within the bounds of the statute itself. Set forth following are: 1. A draft of the statute as it ought to read if the plaintiff‘s present contention were correct. 2. A draft rewritten in accordance with the practical construction placed upon it by both parties until otherwise interpreted by the trial court, which draft also contains my interpretative comments.
Section 12, if drafted in accordance with the plaintiff‘s present contention that “actual per pupil cost, in any particular year” means per pupil cost in the year preceding the year for which aid is being computed, would read as follows. The portions in brackets and/or parentheses indicate the changes required by such contention.
“For a district in which actual per pupil cost [for the year preceding the year for which aid is being computed (or is to be paid)], exceeds the total financial support prescribed [for the year for which aid is being computed (or is to be paid)], by sections 7, 8, and 11 of this act the following limitation shall apply: Notwithstanding the grant provisions of sections 4, 5, 7, 8, and 11 of this act, funds received under this act [in the aid year], when added to operating funds received [in the aid year] from all other sources, shall not exceed the larger of the following amounts:
(1) [Not applicable]; or
(2) The sum necessary to support a per pupil cost eight per cent above that of the preceding
year; Provided, (here follow the hardship provisions).”
If section 12 were rewritten in accordance with the practical construction placed upon it by both parties until otherwise interpreted by the trial court, it would read as follows. Interpolated in brackets are my interpretative comments indicating my analysis of all versions, including that of the statute itself.
“For a district in which the per pupil cost for the year in which aid is being computed (or for which it is to be paid), exceeds the total financial support prescribed by sections 7, 8, and 11 [the foregoing clause under any version of the section can only refer to the year for which aid is being paid], of this act the following limitation shall apply: Notwithstanding the grant provisions of sections 4, 5, 7, 8, and 11 of this act, funds received under this act, [the immediately foregoing clause under any version can only refer to year for which aid is being paid], when added to operating funds received from all other sources [again this clause under any version can refer only to the aid year (and most significantly determination of operating funds must be based upon budget figures and not actual expenditures)], shall not exceed the larger of the following amounts:
(1) [Not applicable]; or
(2) The sum necessary to support a per pupil cost eight per cent above that of the preceding year.”
Plaintiff concedes in its brief, page 29, under its theory of a condition precedent, that to read the section literally results in an absurdity. It then proposes to solve the quandry by reading something into the statute that is not there. This is a concession by it, at least, that the section is ambiguous. It therefore must be analyzed to try to determine the legislative intent.
From the analyses of section 12, which I have set forth earlier, it seems apparent to me that where this
I say this because based upon the analyses it is, to me, indisputable that the clause “the total financial support prescribed by sections 7, 8, and 11” necessarily refers to the support for the aid year, for it, by the very context, relates to the phrase “in any particular year“. Therefore the phrase “in any particular year” refers to the year for which aid is being computed. The original opinion in this case concedes this.
Even more conclusive, in my judgment, is the relation of the phrase “in any particular year” to the clause “funds received under this act.” It obviously refers to funds received in the aid year and that under the statute is “in any particular year.”
Then we get to the clause “when added to operating funds received from all other sources.” It is apparent that the determination of these funds can be made only with reference to the budget figures. Yet surely the statute is referring again necessarily to “funds received from all other sources” “in any particular year.”
The plaintiff‘s interpretation of the statute necessarily requires that the phrase “in any particular year” be used in the very same sentence to mean both “the preceding year” and “the year for which aid is being computed and funds received” (quotation marks supplied on the last). This obviously cannot be. It necessarily follows that in this section the term “actual per pupil cost” must, because of the context, not be equated with the definition in subsection (3) of section 2.
The three clauses or phrases by the very language of the act refer to matters which are determinable only with reference to the aid year and by the terms of the section all relate back to “any particular year.” It seems to me that it follows as night the day that “actual per pupil cost in any particular year” can refer only
The uncontradicted evidence is that the plaintiff in its application, exhibit 3, to the State Board of Education for aid computed its estimated per pupil cost for 1968-69 as $494.42. It used that figure to determine the applicability of the limitation of section 12. Total financial support per pupil under sections 7, 8, and 11 would be $465.31 or $476.81. See original opinion, 186 Neb. 178, 181 N. W. 2d 861, 863. The 108 percent of the per pupil cost for 1967-68 was $469.67 and this constituted the limitation for 1968-69. Section 12 did apply to plaintiff.
Additionally we offer the following grounds for reversal. A party may not on review change the theory on which the case was tried or the ground or action of defense relied upon by him below. 5 C. J. S., Appeal & Error, § 1503, p. 863. Before the State Board of Education, its theory was the section 12 limitation applied. In addition, both the State Board of Education and the plaintiff interpreted the section 12 limitation to apply. Contemporaneous construction may be considered by the court. 82 C. J. S., Statutes, § 357, p. 758. See, also, State v. Equitable Life Assur. Soc., 68 N. D. 641, 282 N. W. 411. The case of Zenith School District No. 32 v. Peterson (N. D.), 81 N. W. 2d 764, cited in the dissenting opinion of Judge Smith has no application. The reversal of the judgment of the trial court is required.