School Board of the Parish of Livingston, La., Etc., et al.,plaintiffs- Appellants, v. Louisiana State Board of Elementary & Secondary Education,etc., et al., Defendants-appellees, 830 F.2d 563 (5th Cir. 1987)

Plaintiffs-appellants Livingston and Grant Parish School Boards, their individual members, and schoolchildren and their parents who reside in those parishes (collectively, the plaintiffs) brought this 42 U.S.C. § 1983 suit attacking the Louisiana system of financing public education. Named as defendants were the members of the Louisiana State Board of Elementary and Secondary Education (BESE), the treasurer of the State of Louisiana, and the state's legislative auditor. Upon submission of cross-motions for summary judgment, the district court dismissed the plaintiffs' suit with prejudice. The plaintiffs appeal that judgment, claiming that the state's system of financing public education violates the equal protection clause of the Fourteenth Amendment. Finding no constitutional violation, we affirm the district court's dismissal.

Facts and Proceedings Below

Louisiana's elementary and secondary public school system is financed by a combination of federal, state, and local funding. During the 1983-84 school year, the last year for which complete figures were available when the record below was completed, federal revenues constituted 9.8 percent of all funds spent, state revenues represented 53.4 percent, and local revenues contributed 36.8 percent. The major (but not the sole) source of the state's contribution is the Minimum Foundation Program (MFP), the stated purpose of which is to provide funds sufficient to ensure an adequate minimum foundation program of education in all public schools in the state.¹ 

Pursuant to the state constitution, the BESE administers the MFP. To implement the program, the BESE adopts a formula each year by which the MFP funds are to be allocated to each of Louisiana's sixty-six parish and city school systems.²  The legislature must then approve the formula before appropriating funds for the MFP. For the last several years, the BESE has proposed, and the Louisiana legislature has adopted, essentially the same formula. See Appendix A for the 1983-84 version of this formula. As in previous years, the 1983-84 MFP formula contains a "cost-side" and a "supply-side." The cost-side establishes the minimum cost of providing each of the services funded under the MFP. The supply-side of the formula calculates the respective contributions of the state and the local school districts, on a district-by-district basis.

Pursuant to the cost-side of the MFP formula, the cost of funding the MFP is calculated essentially on the basis of student membership (per capita basis). The formula allocates to local school boards funds to provide at least one teacher for every twenty-five students, as well as funding for other support personnel including principals, assistant principals, instructional supervisors, visiting teachers, and social workers. See Appendix A; see also La.Rev.Stat.Ann Sec. 17:7 (West 1982 & Supp.1987). Sabbatical and sick leave pay, injured and unemployed workers' compensation costs, utilities, insurance, and materials and supplies are also provided for, with the funds distributed on the basis of student membership. The MFP also funds a "special education program," which provides salaries for teachers and other personnel.³  The state, supplying funds from its general revenues, finances approximately ninety-four percent of the MFP, and the school districts in the aggregate are responsible for the remaining six percent.

The six percent aggregate local contribution is apportioned among districts in a manner designed to ameliorate, in part, the differences in each district's relative tax-paying ability. To achieve its partial equalizing effect, the MFP formula assumes that each local school board has passed and collected a uniform ad valorem property tax of five and a half mills of the currently assessed value of all taxable property in that district.⁴  The sum that such a tax would yield is then deducted from the cost of providing the MFP services for a given district, and the remainder represents the state's MFP contribution to that district.

Local school districts finance their share of MFP costs, along with supplemental funding for the schools within the district, with revenues from locally imposed property and sales and use taxes, from sixteenthsection lands,⁵  and from local bond issuances. Article 8, section 13(C), of the Louisiana Constitution authorizes each local school board⁶  to levy annually an ad valorem tax not to exceed five mills per dollar of taxable property within the district. The state constitution also permits any school district to levy a special ad valorem property tax for the support of schools when authorized by vote of a majority of electors in the district. See La. Const. art. 8, Sec. 13(C); id. art. 6, Sec. 32. Neither the constitution nor the legislature has limited the rate or amount of special property taxes that the local electorate may authorize a school district to levy.⁷  With voter approval, local school boards may also levy a sales and use tax of up to four percent of revenues derived from personal property and services sold within the district.⁸ 

In addition, local school boards may finance their contribution to public education within their district with any funds the school board receives from the state's "revenue sharing fund." In its current form, the mandate to create the revenue-sharing fund is set forth in article 7, section 26 of the Louisiana Constitution.⁹  This provision establishes an annual $90,000,000 fund to be created as a special fund in the state treasury, and to be distributed to parishes according to a legislatively derived formula. The stated purpose of the fund is to offset losses incurred due to Louisiana's constitutionally prescribed homestead exemption from state and local ad valorem property taxes.¹⁰  Revenue-sharing funds must be distributed to each parish on the basis of the relative population of the parish (eighty percent of the fund) and the ratio of number of homesteads in the parish to the total number of homesteads throughout the state (twenty percent of the fund). La. Const. art. 7, Sec. 26(C); see also 1984 La. Acts No. 946, Sec. 3.¹¹ 

According to the legislature's formula, the revenue-sharing funds are then distributed to a number of tax recipient bodies within the parishes, including school boards. See, e.g., 1984 La. Acts No. 946. Any funds remaining after disbursement according to this formula are further allocated to eligible tax recipient bodies and municipalities. In parishes having a high percentage of property to which the homestead exemption applies, there are no "excesses" for further distribution, and in many cases, the funds allocated to a parish do not totally reimburse each of the tax recipient bodies for the full amount of revenues lost by virtue of the homestead exemption. Thus, in some parishes, the school board receives revenue-sharing funds sufficient to replace all the property tax revenues that cannot be collected due to the homestead exemption, as well as additional monies from "excess" state revenue-sharing funds. In other parishes, however, amounts lost by virtue of the homestead exemption are not completely reimbursed and no excess funds are available for further distribution to the school board. In 1984, the last year for which data was introduced into the record, the parishes of the plaintiff school boards were among thirty-eight parishes that were incompletely reimbursed for property tax revenues uncollectable due to the homestead exemption.

On May 31, 1985, the plaintiffs filed this suit for declaratory and injunctive relief against the BESE, its individual members in their official capacities, the state treasurer, and the state's legislative auditor. The complaint asserted a cause of action under 42 U.S.C. § 1983 and invoked federal question jurisdiction pursuant to 28 U.S.C. §§ 1331, 1343(a) (3), and 1343(a) (4). Initially, the plaintiffs alleged that Louisiana's system of financing its public elementary and secondary schools violated the equal protection clause of the Fourteenth Amendment, the privileges and immunities clause of article IV of the United States Constitution, and article 7, section 26, of the Louisiana Constitution. Subsequently, they amended their complaint to delete the claimed violations of the Louisiana Constitution.

The parties submitted cross-motions for summary judgment. The plaintiffs also moved for preliminary certification of a class of similarly situated persons, but the district court continued that motion pending its resolution of the summary judgment motions. Following submission of memoranda and oral argument by the various parties, the district court eventually granted summary judgments in favor of all of the defendants, dismissing the plaintiffs' suit with prejudice. The plaintiffs then brought this appeal.

Discussion

On appeal the plaintiffs raise only the issue whether Louisiana's system of public school financing denies them equal protection. They first argue that the supply-side of the MFP formula, which reduces the state's contribution to each parish by the amount of revenues that would be generated by a locally imposed five and a half mills tax on that parish's taxable property, has an "arbitrary, rather than [an] equalizing," effect. Furthermore, the plaintiffs contend, because disparities exist in the amount of revenues available to parishes for support of public schools, and because part of that disparity is a result of the means authorized by the state for localities to generate school support revenues, the state must distribute MFP funds on the basis of "relative need," rather than according to its current, predominantly per capita basis. Finally, the plaintiffs also claim that the legislature's formula for distribution of the $90,000,000 revenue-sharing fund unlawfully discriminates against parishes having a large percentage of property subject to the homestead exemption by arbitrarily providing the school boards in those parishes less state funds for school support.

Our standard for testing the plaintiffs' equal protection challenges to Louisiana's system of funding public school education hinges upon the nature of the rights affected by the classification scheme at issue here. This is not a case where the state has failed to provide schoolchildren in the plaintiff parishes with a minimally adequate education. Although the plaintiffs so complain on appeal, they made no attempt to prove before the district court that any child received an inadequate education. Furthermore, the record contains no evidence whatever that any Louisiana schoolchild was deprived of a minimally adequate education because of insufficient funds.¹²  Consequently, the classifications challenged in this case are not entitled to any heightened scrutiny under the equal protection clause based upon any theory--the abstract validity of which we do not address--either of wealth being a suspect classification or of education being a fundamental right. See Papasan v. Allain, --- U.S. ----, 106 S. Ct. 2932, 2943-45, 92 L. Ed. 2d 209 (1986).

Instead, the funding disparities attacked by the plaintiffs are properly analyzed under the so-called rational basis standard. See San Antonio Indep. School Dist. v. Rodriguez, 411 U.S. 1, 93 S. Ct. 1278, 1300, 36 L. Ed. 2d 16 (1973); accord Papasan, 106 S. Ct. at 2945. Under this standard the state's school financing scheme will withstand equal protection clause scrutiny if it rationally furthers a legitimate state purpose or interest. Rodriguez, 93 S. Ct. at 1308. In a rational basis analysis, we presume the constitutionality under the federal constitution of state-authorized discriminations. We require the parties challenging the state's judgment to show either that the state had no constitutionally valid purpose for developing the classifications at issue, or that the state could not reasonably have concluded that the allegedly unlawful classifications were rationally related to such a purpose. See, e.g., New Orleans v. Dukes, 427 U.S. 297, 96 S. Ct. 2513, 2517-18, 49 L. Ed. 2d 511 (1976).

Applying the rational basis test to the plaintiffs' challenges to Louisiana's school financing system, we conclude that the plaintiffs have failed to meet their burden of proving that the state's scheme violates their Fourteenth Amendment right to equal protection of the laws.¹³ 

First, despite the plaintiffs' argument to the contrary, we conclude that the BESE "equalization factor" is rationally related to its stated purpose of tending to equalize local school district contribution to the MFP according to each district's wealth. As noted, the "cost-side" of the MFP formula calculates for each district the total cost of providing every student in that district the educational services--such as one teacher per twenty-five students and appropriate numbers of other personnel, special education costs, utilities, supplies, insurance, and the like--which the program contemplates every district and student having. The state pays to each district an amount equal to this entire cost in that district less what that district could raise by a uniform ad valorem property tax of five and a half mills of the currently assessed value of all taxable property in the district.¹⁴  Thus, districts with more taxable property pay a higher percentage of the cost of the MFP within the district, and the state pays a lesser percent. Districts with a high percentage of their total property in tax exempt homesteads are helped by this formula because only taxable property is used to calculate the amount generated by the hypothetical local tax, which amount serves to reduce the portion of the MFP cost in that district borne by the state. Accordingly, the formula tends to favor districts which are "poorer" in terms of taxable property values.

We observe that the MFP cost formula is just that, namely, an attempt to measure the cost in each district of providing the same educational services to each student. This is because special factors in some districts--such as economy of scale, concentrations of special education students, or the like¹⁵ --may render it less expensive, on a per student basis, to provide the same services as are provided in other districts. In other words, what is uniform in this side of the MFP is the services to be provided per student, not the dollar cost per student. Thus, for example, the record reflects that in 1983-84 the total cost per student of the MFP contemplated educational services was $1,385 per student in Cameron Parish and $1,075 per student in Livingston Parish, though the services covered by the MFP were the same in each parish. This doubtless resulted, at least in substantial part, from differing economics of scale, as Livingston Parish had some 15,583 students and Cameron Parish only 2,150.¹⁶  We do not understand plaintiffs to have attacked the MFP total cost formula below. That is to say, plaintiffs did not assert, and the record does not demonstrate, that there would be any material inequality if the state paid the entire MFP (instead of ninety-four percent of it) and no other funds (or nonfederal funds) were spent on public school education. Accordingly, as to the MFP, the relevant comparison between parishes is not the state MFP dollar contribution per student in each, but rather the percentage of the total MFP cost per student which the state bears in each parish respectively.

Throughout this litigation, plaintiffs have sought to compare the Livingston Parish school district with that of Cameron Parish, which is by far the most affluent district in the state. For 1983-84, the total per pupil educational expenditure from all sources was $1,892 in Livingston Parish, the lowest in the state, compared with $6,099 in Cameron Parish, the highest in the state.¹⁷  However, of the total MFP cost per student in Cameron Parish, the state contributed 77.08 percent and Cameron Parish contributed 22.92 percent, while in Livingston Parish the state contributed 98.43 percent of the total MFP cost per student and Livingston Parish contributed only 1.57 percent. The state's bearing a much higher percentage of the total MFP cost per student in Livingston Parish than in Cameron Parish results from the Cameron Parish assessed value of taxable property per student ($59,700) being much higher than that of Livingston Parish ($3,333, the next to lowest in the state).¹⁸ 

Based on the 1983-84 data submitted by the parties, it clearly appears that the local districts with less value per student of taxable property contribute a smaller fraction of their per student MFP cost than do the districts having higher values per student of taxable property, with the state contributing a correspondingly higher fraction of the MFP cost in the former districts. Thus, while the supply side of the BESE equalization formula produces a local contribution that may reflect relative school district wealth less than if it also accounted for interdistrict differences in sales tax, bond, and sixteenth-section land revenues, the formula is not without some substantial equalizing effect. We find that the MFP formula's equalization factor does not violate the equal protection clause. See Rodriguez, 93 S. Ct. at 1286.

Likewise, we do not find any equal protection violation as a result of the state's allocation of funds pursuant to the MFP. Under the MFP, funds are allotted to each school district according to the cost-side of the BESE formula. See Appendix A. The formula distributes funds on essentially a per capita cost of equal service basis. It determines teacher and other personnel costs, as well as costs of materials and utilities, on the basis of student membership. Of the numerous expenses funded under the program, only transportation costs are determined on the basis of actual cost, rather than on a per student basis.

As noted above, the Louisiana legislature has authorized the school boards to generate revenues not only by levying local ad valorem property taxes, but also by imposing a local sales and use tax and by issuing bonds. In addition, some school boards are able to obtain funds from revenues derived from sixteenth-section lands owned by their parish and/or from their allocation of revenue-sharing funds. The plaintiffs complain that by authorizing local sales taxes and bond issuances and by then failing to account for these "state-fostered" revenue sources and for revenues from sixteenth-section lands owned by local districts¹⁹  in calculating the cost of funding public education, the state has acted to create inequalities among school districts in the amount of revenues available for school support.

The plaintiffs do not directly challenge the propriety of the state's chosen means of allowing local school districts to finance education at the local level. Instead, they argue that the equal protection clause requires the state, through the BESE formula, to calculate educational costs in a manner that takes fully into account substantially all of the sources of interdistrict disparities in local funding ability rather than on a predominantly per capita, across-the-board basis. Alternatively, they contend, to pass constitutional muster, the formula must offset the disparities in local funding ability by taking substantially all such disparities into account in determining the amount of each parish's contribution to the MFP. Thus, according to the plaintiffs, by allocating MFP funds on essentially a per capita basis and by equalizing local contribution only by the assumed five and a half mills property tax, the MFP formula results in a state-fostered net inequality among parishes in available public school funding that violates the equal protection clause.

To the extent that we understand it, we find this argument unpersuasive. The district court found that Louisiana's MFP reflected two competing legitimate state goals, that of assuring each child in the state an opportunity for a basic education on an equal basis and of permitting and maintaining some measure of local autonomy over public education. We concur with the district court that Louisiana's allocation of MFP funds is responsive to these two goals. The program provides basic educational requirements on an equal basis throughout the state by allocating funds on the basis of student membership; yet, by not cancelling out all disparities in local revenues available for school support, the program also gives local school districts encouragement and flexibility to supplement state funds. It is plain that the state's public school educational financing does not enhance, but rather materially diminishes, the inequalities in educational services which would exist between parishes if the state provided no such support and spent the funds in question for other purposes.

It may be true, as the plaintiffs urge, that the failure of Louisiana's school financing system to ameliorate all differences in local district wealth serves as a disincentive in some poorer parishes to tax more heavily in order to make up for these differences. Nevertheless, the system cannot be condemned because it imperfectly and incompletely effectuates the state's goals. Rodriguez, 93 S. Ct. at 1306; Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 1161, 25 L. Ed. 2d 491 (1970). Moreover, as long as the state's means of achieving its objective is not so irrational as to be invidiously discriminatory, the financing scheme does not fail merely because other methods of serving these goals exist that would result in smaller interdistrict disparities in school support expenditures. At least where, as here, no suspect class or fundamental right is involved, the equal protection clause "does not require absolute equality or precisely equal advantages." Rodriguez, 93 S. Ct. at 1291. We find that the program's formula is rationally related to the MFP's goals of providing each child in each school district with certain basic educational necessities and of encouraging local governments to provide additional educational support on a local level, to the extent that they choose to and are financially able to do so. We therefore reject the plaintiffs' challenge to the MFP formula's method of allocating funds and determining local contribution.

Finally, we also reject the plaintiffs' attack on Louisiana's revenue-sharing fund. The plaintiffs assert that the fund is unconstitutional because the revenue-sharing distribution formula fails to fully reimburse school boards in parishes having a disproportionately high percentage of property subject to the homestead exemption for the property tax revenues those school boards lose by operation of the homestead exemption. According to the plaintiffs, the legislature's formula for distribution of the state's revenue-sharing fund is not rationally related to its stated purpose of offsetting losses incurred by virtue of the homestead exemption.

We disagree. While the distribution formula does not always directly reimburse local school boards for every dollar of property tax the school boards cannot collect due to the homestead exemption, the "80 % per capita, 20% per household" method of distributing the revenue-sharing fund is a rational one. It is not unreasonable for the state to suppose, as this formula does, that parishes with larger concentrations of population and homesteads will generally lose more property tax revenues due to the homestead exemption than will less populous parishes. Rough accommodations are constitutionally permissible, even where not wholly logical or scientific. See U.S. R.R. Retirement Board v. Fritz, 449 U.S. 166, 101 S. Ct. 453, 459, 66 L. Ed. 2d 368 (1980). Within each parish, the fund supplements resources available to a host of tax recipient bodies, not just school boards. The distribution of funds within the parishes recognizes the impact of the homestead exemption upon the local tax recipient bodies by proportioning the funds according to amounts lost.²⁰  The revenue-sharing fund distribution formula is deliberately independent of the direct property tax revenue loss from the homestead exemption on a parish-by-parish basis because historical attempts at direct reimbursement on this basis resulted in deliberate manipulation of homestead exemption losses by some parishes. See Levy v. Parker, 346 F. Supp. 897 (E.D. La. 1972), aff'd, 411 U.S. 978, 93 S. Ct. 2266, 36 L. Ed. 2d 955 (1973); see also note 9, supra. Furthermore, while the distribution formula disadvantages school boards in parishes with a high percentage of homestead exempt property by not fully reimbursing their loss of property tax revenues, the homestead exemption itself counteracts that loss to some extent by providing residents in those parishes with saved property tax dollars that can be used to stimulate the local economy, ease the burden of local sales taxes, and support local education in other ways. In sum, therefore, the state's homestead exemption and revenue-sharing fund reimbursement system involves a balancing of historical and economic factors that is reasonably related to the state's valid objectives of relieving poorer homeowners of the burdens of property taxation, see Levy, 346 F. Supp. at 899, and of partially reimbursing local governments for losses resulting from the exemption. Consequently, as with the other components of Louisiana's school financing system challenged in this lawsuit, we find no equal protection violation in the distribution of the state's revenue-sharing fund.²¹ 

Conclusion

We conclude that the principles of Rodriguez are controlling and mandate affirmance of the district court's judgment. The interparish disparities in total educational expenditures per student appear to be less wide than the Texas interschool district disparities involved in Rodriguez, especially laying aside small, aberrational Cameron Parish.²²  In Louisiana, the total state contribution--which has an equalizing influence--represents 53.4 percent of all public school spending, and local revenues account for only 36.8 percent; in Rodriguez, the state share was 48 percent and the local share 41.1 percent. Id. 93 S. Ct. at 1284 & n. 21. Moreover, in Texas, the prime equalization funding mechanism--the Foundation School Program--was eighty percent state funded and 20 percent locally funded, id., while the Louisiana MFP is approximately ninety-four percent state funded. Moreover, certain wealthier school districts in Texas netted significantly more per student from the Foundation School Program than did significantly poorer districts. Id. at 1286. See also id. at 1321 (dissenting opinion of Justice Marshall).²³  Texas school districts did not have sales tax authority, as Louisiana districts do²⁴ ; and, unlike the situation in Louisiana, Texas limited the rate of local ad valorem taxation. While Louisiana's homestead exemption is significantly higher than Texas' was, nevertheless this is at least partially offset by the Louisiana revenue-sharing fund. Nevertheless, it remains true in Louisiana, as in Texas, that " [t]hose districts that have more property, or more valuable property, have a greater capability for supplementing state funds." Id. at 1303. But this is a necessary consequence of reliance on local taxation for local expenditures, and such reliance, despite that consequence, is not unconstitutional. Id. at 1307.

We reject the plaintiffs' equal protection challenges to the Louisiana system of funding public school education. Accordingly, we affirm the district court's dismissal of their suit.

AFFIRMED.

APPENDIX A

For the 1983-84 school year, the following MFP formula was adopted by the BESE and approved by the Louisiana legislature.

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE