Would the 2013 Tennessee charter-school bill (HB 702) unconstitutionally impose unfunded costs on school districts or violate equal protection?

Subject

Opinion No. 14-06, State Authorization of Public Charter Schools, January 9, 2014

Plain-English summary

Speaker Beth Harwell and Rep. Mike Stewart asked whether HB 702/SB 830 of the 108th General Assembly, a charter-school bill that gives the Tennessee State Board of Education ("State Board") authority to serve as the "chartering authority" for charter schools in LEAs containing a "priority school," would impose an unfunded mandate in violation of Tenn. Const. art. II, § 24, or would face viable equal-protection challenges.

The AG said the bill would likely survive both challenges on a facial review.

Article II, § 24 (unfunded-mandate clause). This provision bars laws of general application from imposing increased expenditure requirements on cities or counties unless the General Assembly shares in the cost. The AG had previously concluded in Op. 13-72 (Sept. 9, 2013) that the underlying Tennessee Public Charter Schools Act (Tenn. Code Ann. §§ 49-13-101 et seq.) did not violate Article II, § 24, on three grounds: (1) the Act does not directly require LEA expenditures; (2) the State already provides the majority of LEA education spending through the Basic Education Program (BEP), which satisfies the cost-sharing requirement; and (3) the General Assembly has broad discretion in education funding. The AG concluded HB 702 follows the same pattern. The bill also expressly prohibits the State Board from approving charters denied for "substantial negative fiscal impact" if the impact actually would be substantial and contrary to the best interests of pupils, district, or community (a built-in safeguard against significant unfunded LEA costs).

Equal Protection — Fourteenth Amendment. The bill draws no racial classification on its face. Where a law is facially race-neutral, an equal-protection challenge requires both discriminatory impact and discriminatory intent (Washington v. Davis, 426 U.S. 229, 242 (1976); Hernandez v. New York, 500 U.S. 352, 372-73 (1991)). HB 702 has no evidence of discriminatory intent. It distinguishes between LEAs with priority schools and LEAs without them, but the distinction operates at the LEA-administrative level, not the student level. Under rational-basis review (FCC v. Beach Communications, 508 U.S. 307, 313-14 (1993)), HB 702 is rationally related to the legitimate interest of educating Tennessee's young people, and the General Assembly could reasonably conclude that LEAs with priority schools require greater state intervention.

Tennessee equal privileges — Art. I, § 8, and Art. XI, § 8. These provisions, read together, guarantee equal privileges for those similarly situated. Tenn. Small School Systems v. McWherter, 851 S.W.2d 139, 152 (Tenn. 1993). They prohibit only classifications that are "capricious, unreasonable, or arbitrary." McCarver v. Ins. Co. of State of Penn., 208 S.W.3d 380, 384 (Tenn. 2006). HB 702's classification (LEAs with priority schools versus LEAs without) is rationally related to a legitimate purpose.

The opinion is expressly limited to facial challenges. As-applied challenges, which depend on specific factual circumstances, are outside its scope. Waters v. Farr, 291 S.W.3d 873, 922-23 (Tenn. 2009) (Koch, J., concurring in part and dissenting in part).

Currency note

This opinion was issued in 2014. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Tennessee charter-school law in Title 49, Chapter 13 has been amended since 2014, and HB 702 itself was a pending bill the opinion analyzed before enactment. Anyone applying this opinion in a current dispute should check the current text of Tenn. Code Ann. §§ 49-13-101 et seq. and confirm what, if anything, was enacted from this bill.

Background and statutory framework

HB 702/SB 830 in summary. The bill would amend eleven existing statutes in Tenn. Code Ann. tit. 49, ch. 13, and create one new provision (Tenn. Code Ann. § 39-14-142). Its central reform: the State Board could serve as "chartering authority" for new charter schools in LEAs containing at least one "priority school" (the bottom 5% of schools statewide by overall achievement). If the State Board found, on appeal, that the LEA's denial of a charter application was "contrary to the best interests of the pupils, school district or community," it could approve the application and serve as its chartering authority.

For LEAs without priority schools, the bill kept the existing rule: the State Board can reverse the LEA's denial, but the LEA still serves as the chartering authority.

Article II, § 24. "[N]o law of general application shall impose increased expenditure requirements on cities or counties unless the General Assembly shall provide that the state share in the cost." The provision is a Tennessee analog to unfunded-mandate restrictions in other states.

The BEP and cost-sharing. The Basic Education Program is the State's principal mechanism for funding local education. The AG read the State's BEP contribution as a substantial cost-share that satisfies Article II, § 24's "share in the cost" requirement.

The "priority school" definition. Tenn. Code Ann. § 49-1-602(b)(2) defines a priority school as one in the bottom 5% of schools statewide in overall achievement under State Board performance standards. § 49-1-602(b)(1) governs the list's periodic revision (at least every three years), so the membership of "LEAs with priority schools" is not static.

Strict scrutiny vs. rational basis. Statutes that infringe fundamental rights or use suspect classifications get strict scrutiny (Reno v. Flores, 507 U.S. 292, 301-02 (1993); Adarand Constructors v. Pena, 515 U.S. 200, 227 (1995)). Other statutes get rational-basis review (Romer v. Evans, 517 U.S. 620, 631 (1996); FCC v. Beach Communications, 508 U.S. 307, 313 (1993)). The AG concluded HB 702 doesn't trigger strict scrutiny: no suspect classification on its face, no fundamental right at stake, and no evidence of discriminatory intent.

Discriminatory impact alone is not enough. Washington v. Davis and Hernandez v. New York require intent for an equal-protection violation. Disparate impact, without more, isn't sufficient.

No fundamental right at stake. Students have no fundamental right to attend a school system without charter schools (City of Humboldt v. McKnight, 2005 WL 2051284, at 15). LEAs have no fundamental right to retain chartering authority — they "derive the whole of their authority solely from the General Assembly" (Southern Constructors, Inc. v. Loudon County Bd. of Educ.*, 58 S.W.3d 706, 710 (Tenn. 2001)).

Tennessee's equal-privileges doctrine. Art. I, § 8, and Art. XI, § 8, are read together. A statute that distinguishes between similarly situated parties is upheld unless the classification is capricious, unreasonable, or arbitrary, or absent a rational basis. McCarver, 208 S.W.3d at 384; Riggs v. Burson, 941 S.W.2d 44, 53 (Tenn. 1997); City of Chattanooga v. Davis, 54 S.W.3d 248, 276 (Tenn. 2001). HB 702 distinguishes between LEAs based on whether they have priority schools, a classification that the AG concluded the legislature could rationally make.

Common questions

Why didn't the bill violate the unfunded-mandate clause?

Because Art. II, § 24 requires the State to share in the cost, not pay everything. The State's BEP contribution to LEA spending is substantial, and the bill imposes no direct expenditure requirement on LEAs. The bill's express safeguard (the State Board cannot approve a charter denied for substantial negative fiscal impact where the impact really would be substantial) further reduced the unfunded-mandate concern.

Doesn't the bill have disparate racial impact since priority-school LEAs have more minority students?

Disparate impact alone is not an equal-protection violation. Washington v. Davis requires intent. The AG found no evidence of discriminatory intent and noted the bill operates at the LEA-administrative level, not the student level.

What about as-applied challenges?

The opinion explicitly does not address them. An LEA could potentially raise an as-applied challenge based on its specific circumstances, especially if the State Board's actions in a particular case caused a financially crushing burden.

Does this opinion bind a court?

No. AG opinions are persuasive authority, not binding precedent. A court evaluating an actual challenge to the statute would conduct its own analysis. The opinion does, however, summarize the legal framework an attorney would encounter.

Was HB 702 actually enacted?

The opinion is a pre-enactment analysis. It was passed by the House in April 2013 and was under Senate review at the time of the opinion. Whether and in what form it was ultimately enacted requires checking Tennessee session laws of the 108th General Assembly.

What is a "priority school"?

The bottom 5% of Tennessee public schools statewide in overall achievement under State Board standards. The list is updated at least every three years.

Citations

Constitutional: Tenn. Const. art. I, § 8; Tenn. Const. art. II, § 24; Tenn. Const. art. XI, § 8; U.S. Const. amend. XIV, § 1. Statutory: Tenn. Code Ann. §§ 49-13-101 et seq.; § 49-13-108(a)(4); § 49-1-602(b)(1); § 49-1-602(b)(2). Cases: Waters v. Farr, 291 S.W.3d 873 (Tenn. 2009); Reno v. Flores, 507 U.S. 292 (1993); Adarand Constructors v. Pena, 515 U.S. 200 (1995); Romer v. Evans, 517 U.S. 620 (1996); FCC v. Beach Communications, Inc., 508 U.S. 307 (1993); Washington v. Davis, 426 U.S. 229 (1976); Hernandez v. New York, 500 U.S. 352 (1991); Southern Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706 (Tenn. 2001); City of Humboldt v. McKnight, 2005 WL 2051284 (Tenn. Ct. App. Aug. 25, 2005); Crites v. Smith, 826 S.W.2d 459 (Tenn. Ct. App. 1991); Tenn. Small School Systems v. McWherter, 851 S.W.2d 139 (Tenn. 1993); McCarver v. Ins. Co. of State of Penn., 208 S.W.3d 380 (Tenn. 2006); Riggs v. Burson, 941 S.W.2d 44 (Tenn. 1997); City of Chattanooga v. Davis, 54 S.W.3d 248 (Tenn. 2001). Prior AG opinion: Tenn. Att'y Gen. Op. 13-72 (Sept. 9, 2013).

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2014/op14-006.pdf

Original opinion text

STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL

January 9, 2014

Opinion No. 14-06

State Authorization of Public Charter Schools

QUESTIONS

1. If enacted, would House Bill 702/Senate Bill 830 of the 108th General Assembly, as amended, (hereinafter "HB702") impose undue financial burdens on school districts in violation of Article II, Section 24, of the Tennessee Constitution?

2. If enacted, would HB702 be otherwise constitutionally suspect because it permits the Tennessee Board of Education ("the State Board") to approve, on appeal, new charter schools that were denied approval by a local education agency ("LEA") within local school districts with priority schools?

OPINIONS

1. No. HB 702 would not impose financial burdens on local school districts in violation of Article II, Section 24, of the Tennessee Constitution.

2. If enacted, HB702 would likely withstand any facial constitutional challenge with respect to allowing the State Board to approve new charter schools on appeal within local school districts with priority schools.

ANALYSIS

HB702 is a comprehensive bill concerning charter schools in Tennessee. If enacted, it would amend eleven existing statutes within Title 49, Chapter 13, of the Tennessee Code and create one new provision, Tenn. Code Ann. § 39-14-142, within the same title and chapter. The bill as amended was passed by the Tennessee House of Representatives during the 108th General Assembly on April 18, 2013, and is currently under review by the Senate. HB702 provides a new mechanism by which the State Board can serve as the "chartering authority" for new charter schools within any LEA that contains at least one "priority school." See H.B. 702, §§ 2, 7. Specifically, HB702 permits the State Board to authorize a charter school when the LEA has denied the charter school's initial application and the charter school sponsor appeals that denial to the State Board. Id. If the State Board finds, on appeal, that the LEA's denial of the charter school application was "contrary to the best interests of the pupils, school district or community," the State Board may approve the charter school application and serve as its chartering authority. Id. § 7(E).

With respect to LEAs in which there are no priority schools, HB702 provides that the State Board may reverse the LEA's decision to deny a charter school application and remand the decision to the LEA with instructions for approval of the charter. In such instances, the LEA, rather than the State Board, would be the "chartering authority." See id. § 7(D). Under current law, this procedure applies to all charter appeals, regardless of whether the LEA in question contains a priority school. See Tenn. Code Ann. § 49-13-108(a)(4).

1. Article II, Section 24, of the Tennessee Constitution provides, in pertinent part, that "[n]o law of general application shall impose increased expenditure requirements on cities or counties unless the General Assembly shall provide that the state share in the cost." This Office recently opined that the Tennessee Public Charter Schools Act, codified at Tenn. Code Ann. §§ 49-13-101 et seq., does not violate this constitutional provision. See Tenn. Att'y Gen. Op. 13-72 (Sept. 9, 2013). That opinion was based on three factors: (1) the Tennessee Public Charter Schools Act does not "directly or expressly" require the expenditure of additional funds by any LEA; (2) the State provides the majority of total education spending by LEAs through the Basic Education Program ("BEP"), thus meeting the participation requirements imposed by Article II, Section 24; and (3) the General Assembly is afforded broad discretion in funding education. Each of these factors applies equally to HB702.

HB702 does not, on its face, "directly or expressly" require the expenditure of additional funds by any LEA. Any indirect expenditure required of LEAs by HB702 would be consistent with Article II, Section 24, because the State funds a large portion of LEA education spending through the BEP. This substantial participation in funding education expenses satisfies the State's obligation to share in any indirect costs of HB702. Finally, the General Assembly's broad discretion in education funding gives it the authority to make policy changes, even if those changes may indirectly result in increased LEA expenditures. HB702 appears to be a reasonable exercise of this discretion. In fact, HB702 prohibits the State Board from approving any charter school denied by an LEA based on "substantial negative fiscal impact" where the State Board determines on appeal that operation of the school would have a substantial negative fiscal impact on the LEA such that authorization would be contrary to the best interests of the pupils, school district, or community. See H.B. 702, § 8(e). For all of these reasons, HB702 does not violate Article II, Section 24, of the Tennessee Constitution.

2. HB702 is also likely to withstand other constitutional challenges, including claims that its provisions violate the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution; Article I, Section 8, of the Tennessee Constitution; and Article XI, Section 8, of the Tennessee Constitution with respect to allowing the State Board to approve new charter schools on appeal within local school districts with priority schools.

The Equal Protection Clause of the Fourteenth Amendment provides: "nor shall any state . . . deny to any person within its jurisdiction the equal protection of the laws." U.S. Const. amend. XIV, § 1. Statutes that infringe fundamental rights or make distinctions based on suspect classifications such as race or national origin are subject to strict scrutiny, which requires that the statute be narrowly tailored to achieve a compelling government interest. Reno v. Flores, 507 U.S. 292, 301-02 (1993); Adarand Constructors v. Pena, 515 U.S. 200, 227 (1995). On the other hand, if a law neither burdens a fundamental right nor targets a suspect class, the law will be upheld so long as it bears a rational relation to some legitimate end. Romer v. Evans, 517 U.S. 620, 631 (1996). "A statute is constitutional under rational basis scrutiny so long as there is any reasonably conceivable state of facts that could provide a rational basis for the statute." FCC v. Beach Communications, Inc., 508 U.S. 307, 313 (1993).

A claim that HB702 violates the Equal Protection Clause by discriminating on the basis of race is unlikely to succeed. First, the law contains no racially discriminatory language and, in fact, never mentions race. Because the law is facially race-neutral, an Equal Protection challenge would require a showing of both discriminatory impact and discriminatory intent. "A law, neutral on its face and serving ends otherwise within the power of government to pursue," is not invalid under the Equal Protection Clause simply because it may disproportionately affect a suspect class. Washington v. Davis, 426 U.S. 229, 242 (1976). "An unwavering line of cases from [the Supreme Court] holds that a violation of the Equal Protection Clause requires state action motivated by discriminatory intent; the disproportionate effects of state action are not sufficient to establish such a violation." Hernandez v. New York, 500 U.S. 352, 372-73 (1991).

There is no indication of discriminatory intent in HB702. The bill targets no suspect class and, on its face, applies equally to every LEA and every student in Tennessee. The State Board continues to have the authority to overrule local denials of charter schools in all LEAs, as does it under current law. If an LEA contains at least one priority school, and the State Board overrules the LEA's denial of a charter school application, HB702 provides that the State Board will become the chartering authority instead of the LEA. But this is so regardless of the race, national origin, religion, or nationality of any student in the LEA. This Office is unaware of any evidence in the legislative history or background of HB702 that would lead a reviewing court to conclude that HB702 is motivated by racial discrimination.

Because there is no discriminatory intent, it matters not for equal protection purposes whether HB702 would have a racially disparate impact. Nevertheless, there is no reason to conclude that HB702 on its face would have such an impact, notwithstanding the fact that, currently, four of the five LEAs with priority schools have a higher proportion of minority students than the state average. The change that HB702 works pertains only to the designation of the chartering authority in LEAs with a priority school, when such an LEA denies a charter school application and the State Board overrules that denial. Under current law, the chartering authority would be the LEA; under HB702, the chartering authority would be the State Board. Thus, the "disparate impact," if any, falls not on the students within the LEA but on the LEA itself as an administrative entity. HB702 treats differently only the administrative control of charter schools in a limited class of LEAs, not students.

HB702 does not interfere with any fundamental right. Rather, it effects an administrative change to the way charter schools are approved and governed in Tennessee. An LEA has no fundamental right to deny a charter application or to have that denial undisturbed by the State. See generally Southern Constructors, Inc. v. Loudon County Bd. of Educ., 58 S.W.3d 706, 710 (Tenn. 2001) (explaining that "municipal governments in Tennessee derive the whole of their authority solely from the General Assembly."). Likewise, students have no fundamental right to attend a public school system without charter schools. See City of Humboldt v. McKnight, No. M2002-02639-COA-R3-CV, 2005 WL 2051284, at *15 (Tenn. Ct. App. Aug. 25, 2005), perm. app. denied (Tenn. Feb. 21, 2006) ("[T]he General Assembly has the broadest discretion to create or allow various entities to provide educational services to children in the state.").

Because HB702 is based on no suspect classification and does not interfere with any fundamental right, it will be upheld if supported by a rational basis. The rational basis standard is highly deferential to the State. In F.C.C. v. Beach Communications, Inc., 508 U.S. 307, 313-14 (1993), the United States Supreme Court explained the scope of rational-basis judicial review as follows:

Whether embodied in the Fourteenth Amendment or inferred from the Fifth, equal protection is not a license for courts to judge the wisdom, fairness, or logic of legislative choices. In areas of social and economic policy, a statutory classification that neither proceeds along suspect lines nor infringes fundamental constitutional rights must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification. . . . Where there are "plausible reasons" for Congress' action, "our inquiry is at an end." . . . This standard of review is a paradigm of judicial restraint. [citations omitted]

HB702 is rationally related to at least one "reasonably conceivable" legitimate state interest, the education of the State's young people, and it is reasonably conceivable that the General Assembly could rationally conclude that HB702 would advance that interest. See Crites v. Smith, 826 S.W.2d 459, 466 (Tenn. Ct. App. 1991) ("The State has a compelling interest in the proper schooling of all children."). Both current law and HB702 empower the State Board to authorize new charter schools in any LEA, regardless of whether the LEA contains a "priority school," provided that an appeal is filed with the State Board by a charter school whose application has been rejected by the LEA in which it seeks to operate. The General Assembly could rationally conclude that in LEAs where priority schools do exist, there is greater need for educational innovation, state governance, and added choice such that the State Board should serve as the "chartering authority" of charter schools that it approves on appeal. There is thus nothing arbitrary or capricious about the provisions of HB702 related to charter schools. Accordingly, a reviewing court would likely find a rational basis for HB702.

Article I, Section 8, of the Tennessee Constitution provides: "That no man shall be taken or imprisoned, or disseized of his freehold, liberties or privileges, or outlawed, or exiled, or in any manner destroyed or deprived of his life, liberty or property, but by the judgment of his peers or the law of the land."

Article XI, Section 8, of the Tennessee Constitution provides:

The Legislature shall have no power to suspend any general law for the benefit of any particular individual, nor to pass any law for the benefit of individuals inconsistent with the general laws of the land; nor to pass any law granting to any individual or individuals, rights, privileges, immunities, or exemptions other than such as may be, by the same law extended to any member of the community, who may be able to bring himself within the provisions of such law. No corporation shall be created or its powers increased or diminished by special laws but the General Assembly shall provide by general laws for the organization of all corporations, hereafter created, which laws may, at any time, be altered or repealed and no such alteration or repeal shall interfere with or divest rights which have become vested.

Tennessee courts interpret Article I, Section 8, together with Article XI, Section 8, to "guarantee equal privileges and immunities for all those similarly situated." Tenn. Small School Systems v. McWherter, 851 S.W.2d 139, 152 (Tenn. 1993). "Article XI, Section 8 is implicated when a statute contravenes some general law which has mandatory application." McCarver v. Ins. Co. of State of Penn., 208 S.W.3d 380, 384 (Tenn. 2006) (quoting Riggs v. Burson, 941 S.W.2d 44, 53 (Tenn. 1997)). Such a statute will, nevertheless, be upheld unless it creates classifications that are "capricious, unreasonable, or arbitrary." McCarver, 208 S.W. 3d at 384. If the questioned statute does not interfere with an established fundamental right or disadvantage a suspect class, it will be upheld against an Article XI, Section 8 challenge as long as the classification it creates is "rationally related" to any conceivable legitimate legislative purpose. See City of Chattanooga v. Davis, 54 S.W.3d 248, 276 (Tenn. 2001); Riggs, 941 S.W. 2d at 53. Thus, even where a statute does contravene general law or suspends the application of general law in specific circumstances, it does not violate Article XI, Section 8, if there is a rational basis for the distinctions made. Id.

As discussed above, HB702 does not infringe upon any fundamental right nor target any suspect class of people. HB702 has a reasonably conceivable rational basis. Therefore, HB702 is defensible under Article I, Section 8, and Article XI, Section 8.

ROBERT E. COOPER, JR.
Attorney General and Reporter

JENNIFER L. SMITH
Deputy Attorney General

KEVIN STEILING
Deputy Attorney General

Requested by:

The Honorable Beth Harwell
Speaker of the House of Representatives
Suite 19, Legislative Plaza
Nashville, TN 37243

The Honorable Mike Stewart
State Representative
23 Legislative Plaza
Nashville, TN 37243-0152