Does the Connecticut Constitution require the Education Cost Sharing formula to weight a town's ability to pay 90% on property wealth and 10% on income?

Plain-English summary

Connecticut funds public elementary and secondary education through the Education Cost Sharing (ECS) grant. The grant is divided among local districts based on student count, equalized net grand list (a measure of taxable property wealth), median household income, the number of students eligible for free or reduced-price meals, and several other factors. As of 2017 the formula weighted ability-to-pay 90% on property wealth and 10% on income. Senator Duff asked whether the state constitution required exactly that 90/10 split.

The AG said no. The Connecticut Supreme Court in Horton I (1977) struck down the prior funding system, which relied almost entirely on local property taxes, and required the state to assure substantially equal educational opportunity. Horton III (1985) upheld the original ECS formula and articulated a three-step strict-scrutiny test for any future challenge: (1) plaintiffs must show non-de minimis disparities that jeopardize the right to education, (2) the state must justify those disparities as advancing a legitimate state policy, and (3) the disparities must not be so great as to defeat substantial equality. The Supreme Court did not prescribe any specific weighting and has not revisited the standard since 1985.

The practical takeaway: the legislature has wide latitude to adjust the 90/10 ability-to-pay weighting, but a formula whose effect is to recreate large disparities tied to local wealth could fail constitutional review.

Currency note

This opinion was issued in 2017. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. The CCJEF v. Rell case, which was pending on appeal at the time of this opinion, has since been decided. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Connecticut's funding history starts with Horton v. Meskill, 172 Conn. 615 (1977) ("Horton I"). At that time the state gave each district a flat $250 per pupil and left the rest to local property taxes. The Court held that relying primarily on local property taxes "without regard to the disparity in the financial ability of the towns to finance an educational program" failed the state's constitutional duty to educate. The General Assembly responded with Public Acts 79-128 and 79-553, which created the original ECS formula. Horton v. Meskill, 195 Conn. 24 (1985) ("Horton III") upheld that formula and established the strict-scrutiny test.

The ECS formula at issue in 2017 took a fixed legislative appropriation, divided it across districts using the equalized net grand list, the median household income adjustment factor, free/reduced meal counts, and other measures. The 90% property-wealth and 10% income split governed how the formula calibrated each town's ability to pay. The formula also added a 30% upward adjustment for students in poverty and channeled additional funding through Alliance Districts and Commissioner's Network Schools.

Although the formula remained on the books, between 2014 and 2016 the legislature did not strictly follow it, instead allocating specified dollar amounts that approximated formula outputs (P.A. 14-47, P.A. 15-244, P.A. 16-2). That practice did not change the AG's analysis: the constitutional question turns on whether the funding system as a whole satisfies Horton III's test, not on whether the legislature follows any particular formula.

The AG's analysis emphasized that Horton III's test is fact-specific, requires a showing of disparities that jeopardize the fundamental right to education, and gives the state room to justify disparities incident to legitimate policy. The Supreme Court has not had occasion to refine the standard since 1985, although the CCJEF v. Rell case (then pending on appeal) was set to address its application. Without numeric benchmarks from the Court, the AG could not predict with confidence how a particular reweighting of the property-wealth and income factors would fare in court.

The AG identified competing policy arguments. Advocates for keeping or strengthening the property-wealth weighting can argue that a locality's tax base is the only thing it can actually tax, so its true ability to pay tracks property wealth. Advocates for shifting weight to income can argue that high-property/low-income communities cannot bear tax rates comparable to higher-income towns. Neither view, the AG noted, is constitutionally preferred. The legislature should engage in the analysis, document the policy rationale, and avoid deviations so dramatic that the resulting funding disparities would obviously fail strict scrutiny.

Common questions

Did the AG say a 90/10, an 80/20, or a 50/50 split is required?

No. The AG explicitly said Horton III does not prescribe any particular weighting. The legislature can choose, subject to the substantive limit that the resulting disparities not jeopardize substantially equal educational opportunity.

Could the legislature replace the formula entirely with fixed dollar amounts?

The AG noted that the General Assembly was already doing that to some extent, allocating fixed amounts that approximated the formula. The constitutional question is whether the system as a whole, however structured, meets Horton III. A formula is a useful structure but not constitutionally required.

Was a specific budget proposal blessed or condemned?

Neither. The AG addressed only the abstract question of whether Horton III mandates a specific 90/10 weighting. Any actual proposal would need to be evaluated on its own facts: how it affects districts, the size of remaining disparities, and the policy reasons offered.

What does Horton III's strict-scrutiny test ask?

Three steps. First, the plaintiffs must make a prima facie showing that disparities in educational expenditures are more than de minimis and continue to jeopardize the fundamental right to education. If they do, the state must justify those disparities as incident to advancing a legitimate state policy. If that justification is acceptable, the state must further demonstrate the disparities are not so great as to defeat the goal of substantial equality.

Citations

Statutes

• Public Acts 79-128 and 79-553 (original ECS formula)
• Conn. Gen. Stat. §§ 10-261 to 10-262h (ECS formula components)
• Conn. Gen. Stat. § 10-262f(44) (90% property wealth / 10% income weighting)
• Conn. Gen. Stat. § 10-262f(25)(G) (free/reduced meals upward adjustment)
• Conn. Gen. Stat. § 10-262u (Alliance Districts)
• Conn. Gen. Stat. § 10-223h (Commissioner's Network Schools)
• P.A. 13-247, § 153; P.A. 14-47, § 18; P.A. 15-244, § 33; P.A. 16-2, § 20 (legislative variations from formula)

Cases

• Horton v. Meskill, 172 Conn. 615 (1977) ("Horton I")
• Horton v. Meskill, 195 Conn. 24 (1985) ("Horton III"), three-step strict-scrutiny standard

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Original PDF: https://portal.ct.gov/-/media/ag/opinions/2017/2017-03_opinion_for_senator_duff_re_ecs_formula-pdf.pdf?rev=acc64ecafd9643198762a46b3e779412

Original opinion text

55 Elm Street
P.O. Box 120
Hartford, CT 06141-0120

GEORGE JEPSEN
ATTORNEY GENERAL

Office of the Attorney General
(860) 808-5319

State of Connecticut
April 19, 2017

The Honorable Bob Duff
Senate Majority Leader
Legislative Office Building
300 Capitol Avenue, Suite 3300
Hartford, CT 06106-1591

Dear Senator Duff:

You have asked whether certain potential changes to Connecticut's Education Cost Sharing ("ECS") formula would violate our state constitution. Specifically, you ask whether our constitution requires that the ECS formula measure a town's ability to raise property tax revenue "using a ratio of ninety percent property wealth and ten percent income wealth." We conclude that the Connecticut Supreme Court has never specifically required that or any other particular approach, but rather has articulated general standards for state educational funding as further described below.

Before discussing your specific question, it is necessary to provide some background regarding certain Supreme Court cases and the ECS formula.

In Horton v. Meskill, 172 Conn. 615 (1977) (Horton I), our Supreme Court ruled that the state's method of funding education was unconstitutional. At that time, the state provided a flat grant of $250 per pupil in state aid, and left the rest of the responsibility for funding local public education to each district to provide through local property taxes. The Court explained that by relying primarily on a local property tax base without regard to the disparity in the financial ability of the towns to finance an educational program, the state was failing to meet its constitutional duty to educate its children. Id. at 649.

In 1979, in response to Horton I, the General Assembly adopted the original ECS funding formula. Following a subsequent constitutional challenge, the Court held that the formula was constitutional, and ordered further proceedings to determine whether legislative changes to the system after 1979 undermined the new system's constitutionality. Horton v. Meskill, 195 Conn. 24 (1985) (Horton III).

The ECS grant program created in response to Horton I has been the principal method by which the General Assembly appropriates funds to support local public elementary and secondary education. The original ECS formula was created by P.A. 79-128 and P.A. 79-553. The formula was last set out in a repealed section of Conn. Gen. Stat. § 10-262h, which may be found in P.A. 13-247, § 153. Many of the terms defining the components of the formula are still set out in Conn. Gen. Stat. §§ 10-261 to 10-262h. While the General Assembly has not precisely followed the formula in the last three fiscal years, choosing instead to allocate funds by specified dollar amounts to each local district, see P.A. 14-47, § 18; P.A. 15-244, § 33; P.A. 16-2, § 20, those specified dollar amounts still closely follow the results that would be produced by the ECS formula, with some minor variations.

The ECS formula takes the total amount of funding allocated by the legislature for this purpose for a fiscal year and divides it among the local school districts based upon the number of students attending school in each district and numerous other factors set forth in the statutes, including the "equalized net grand list," Conn. Gen. Stat. § 10-261(a)(6) and § 10-262f(8), the "median household income adjustment factor," Conn. Gen. Stat. § 10-262f(43), and the number of children in district schools who are eligible for free or reduced price meals, Conn. Gen. Stat. § 10-262f(25)(G). The "equalized net grand list" is the basis for an adjustment that weights each town's ability to raise property taxes based upon the property wealth of the town. The "adjusted equalized net grand list" is the basis of an adjustment that weights each town's ability to raise property taxes based upon the property wealth of the town adjusted on the basis of the median household income of the town compared to that of other Connecticut towns. The number of students eligible for free or reduced price meals is a measure of the number of students in poverty in a town. In recent years, the grants have also awarded substantial additional funding and support for the 30 poorest performing school districts through the Alliance Districts program, Conn. Gen. Stat. § 10-262u, and the Commissioner's Network Schools program, Conn. Gen. Stat. § 10-223h.

Under the most recent ECS formula, in determining a town's ability to raise revenue, the "equalized net grand list" factor counts for 90% of the adjustment for ability to pay, and the "median household income adjustment factor" counts for 10% of the adjustment for ability to pay. Conn. Gen. Stat. § 10-262f(44). Districts also receive a 30% upward adjustment for students in poverty. Conn. Gen. Stat. § 10-262f(25)(G).

With this background, we turn to your specific question. You have asked whether a revision of the ECS formula that decreased the 90% weight given to towns' "equalized net grand lists" and correspondingly increased the 10% weight given to the "median household income adjustment factor" in computing ECS grants would violate the requirements of Horton III.

The short answer to your question is that Horton III does not discuss the manner in which various towns' ability to pay for education costs should be determined, and therefore does not directly address your question. The Court did not discuss how town wealth should best be measured. In order to provide a fuller answer, however, we must briefly review the Horton III decision. That decision contains our Supreme Court's last significant discussion of the constitutional requirement that the legislature move towards equalizing funding for public education. The Court held that the state "was required to assure to all students in Connecticut's free public elementary and secondary schools a substantially equal educational opportunity." Horton III, 195 Conn. at 35 (internal quotation marks and citations omitted). In determining whether a funding plan meets that standard, the Court said that the constitutionality of education funding:

must be strictly scrutinized using a three step process. First, the plaintiffs must make a prima facie showing that disparities in educational expenditures are more than de minimis in that the disparities continue to jeopardize the plaintiffs' fundamental right to education. If they make that showing, the burden then shifts to the state to justify these disparities as incident to the advancement of a legitimate state policy. If the state's justification is acceptable, the state must further demonstrate that the continuing disparities are nevertheless not so great as to be unconstitutional. In other words, to satisfy the mandate of Horton I, a school financing plan must, as a whole, further the policy of providing significant equalizing state support to local education. However, no such plan will be constitutional if the remaining level of disparity continues to emasculate the goal of substantial equality.

Id. at 38. The Supreme Court has not had occasion to further explain or apply this standard since 1985, although its interpretation and application are at issue in the case of CCJEF v. Rell, now pending on appeal before that Court.

In sum, Horton III stands for the general proposition that if disparities in educational expenditures among towns are more than de minimis in that they jeopardize the fundamental right to education, then the courts will look closely to consider the size of the disparities, the reason for the disparities, and the effects of the disparities. If spending disparities are jeopardizing the right to education, then Horton III requires the state to use state funding so that the overall availability of funds to local districts is less dependent on variations in local school districts' ability to raise funds through local property taxes. Because this test does not provide a formula or numeric benchmarks, it is impossible to predict with confidence how the Supreme Court might apply it in considering a challenge to a new or revised ECS formula.

Thus, while Horton III does not directly answer the question you ask, it does generally describe the standard under which the courts may view the question. The Horton III ruling would appear to require a court evaluating any new formula in the future to first consider whether the formula created disparities in education spending that were more than de minimis and jeopardized students' opportunities for an adequate education. If the court found such disparities, then it would need to consider the size of, reasons for, and effects of the disparities. In applying the standard to evaluate a district's ability to pay, advocates of giving greater weight to the "equalized net grand list" factor might argue that because a locality can only tax its own taxable property to raise revenue, the sole or principal factor in determining ability to pay should be the "equalized net grand list." On the other hand, advocates of giving some or greater weight to the "median household income adjustment factor" might argue that even if a district has a high value of taxable property, if its residents have relatively low income levels, they still cannot afford tax rates comparable to those in higher income communities. No doubt there are many other policy and factual arguments that could be made in support of many different approaches to creating a constitutional and fair formula.

In addition, in evaluating any change to the role of the property wealth and income factors in considering a challenge to a new funding formula, a court might wish to consider data at the time of trial showing the effects of various formulas upon the neediest (and other) districts, and possibly data showing the effects of various alternatives. Because the formula includes a complex web of interrelated factors, and each factor may have different effects depending on the other factors, and also because Horton III does not provide more than the most general guidance, we cannot confidently predict how a court would evaluate any particular change in the relative weighting of the "equalized net grand list" and "median household income adjustment" factors. That said, it is fair to assume that a funding formula could so deviate from the standards set out in Horton III as to cross the line into unconstitutionality. Accordingly, in any redefinition of the ECS formula, the legislature should seek to adhere to the general standards identified by the Court.

GEORGE JEPSEN
ATTORNEY GENERAL