Missouri Taxpayers Defeat Billion-Dollar School Lawsuit

Published December 1, 2007

Three members of the board of directors of the Show-Me Institute, a free-market think tank, helped make Missouri the latest state to strike down a lawsuit claiming inadequate funding for education.

The Committee for Educational Equity (CEE)–a group of 236 public school districts–had claimed in a lawsuit filed in January 2004 that the state’s funding levels failed to meet the constitutional requirement for all students to receive an adequate education. The group’s experts testified the state would need to spend an additional $1 billion annually to fulfill their interpretation of its constitutional spending requirements.

In August 2007, Cole County Circuit Judge Richard Callahan ruled the plaintiffs failed to prove the state’s current funding formula was unconstitutional. He refused to impose on the legislature a funding formula higher than required by the state’s constitution. Importantly, the judge ruled individual taxpayers could assist defendants in constitutional battles over school spending.

Good Investment

By the time Callahan rendered his decision, CEE had spent $3.2 million on the case and had forced defendants to spend $1 million. About $800,000 of the latter sum was contributed by Show-Me Institute President Rex Sinquefield, who–along with Institute Secretary Bevis Schock and Treasurer Menlo Smith–were allowed by Callahan to become “defendant intervenors.”

Sinquefield believes it’s been worth the investment.

“Judge Callahan’s ruling saves Missouri taxpayers more than a billion dollars,” Sinquefield said. “This proves that the plaintiffs tried to get something out of the state legislature, and when they failed they went to the courts. Hopefully, this ruling will discourage the use of taxpayer dollars to sue the state.”

Inadequate Job

While it’s not unusual for plaintiffs to include intervenors–in this case, CEE was joined by the St. Louis school board, which is performing so badly it has been taken over by the state–legal experts believe this is the first time individuals have been allowed to “intervene” to work with a state attorney general to defend a case.

“We decided to try it in this case because we didn’t think the attorney general was adequately representing the taxpayers of Missouri,” said Joshua M. Schindler, lead attorney for Sinquefield and his colleagues.

Schindler said Missouri Attorney General Jay Nixon took only two depositions since the lawsuit was filed almost four years ago. After Sinquefield got involved, 52 depositions were filed, including that of Michael Podgursky, an economics professor at the University of Missouri-Columbia and a member of the Show-Me Institute’s board.

Several calls to Nixon’s office were unreturned.

‘Vigorous Defense’

Podgursky testified about the relationship between school funding and student performance.

“We put on a very vigorous defense,” Podgursky said. “Having these individual intervenors allowed us to bring up issues about a lack of competition and single-salary schedules for teachers, and to show the non-relationship between the spending and student achievement–to get a lot of information out in the open.”

Podgursky was able to counter claims that teachers are underpaid by noting Missouri has decided to lower its student-teacher ratio to 13.8:1. The national average is 15.8:1. He testified the state could give every teacher a 14 percent raise by moving to the national student-teacher ratio.

“Many common misconceptions about school performance, accountability, and per-pupil spending were brought to light because of this case,” Sinquefield said.

National Trend

Even without individual intervenors, the Missouri decision is part of a national trend of school districts unsuccessfully suing based on claims current funding formulas don’t produce enough revenue to ensure each student receives an “adequate” education.

While adequacy lawsuits have been filed in 21 states, they are not having the success of those filed during the 1990s.

Those earlier actions challenged the constitutionality of school funding systems relying primarily on property taxes, reasoning that districts with lower property values have less to spend on their students.

Adequacy lawsuits also have failed in Alaska, Kentucky, Massachusetts, and South Carolina over the past five years, Podgursky said.

Important Reversal

The Council for Better Education in Kentucky set the tone for the rest of the nation with its successful equity lawsuit in the early 1990s.

But earlier this year, a Kentucky judge ruled–in a decision similar to Callahan’s–that the legislature, not the courts, should decide how to dole out school funds, in a second case filed by the group, this one an adequacy lawsuit. Taxpayers were not involved in resolving either Kentucky case.

In Missouri the outcome would likely have been different without taxpayers’ personal involvement, Schindler said.

“The dynamics of the defense changed rather dramatically after the intervenors were allowed,” Schindler noted. “When a taxpayer is involved at the table in the courtroom, they’re more likely to see it as a defense of tax dollars.”

Jim Waters ([email protected]) is director of policy and communications at the Bluegrass Institute for Public Policy Solutions in Bowling Green, Kentucky.