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Center for
New York City Law
New York Law School
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NY, NY 10013
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CityLaw Featured Article
SCHOOL FINANCE
Appellate Div. Sends Message to Court of Appeals in CFE Case
by Ross Sandler and David Schoenbrod
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The Campaign for Fiscal Equity litigation
achieved two of its major goals: it
focused media attention on the condition
of New York City schools and reinforced
the claim that the State of New York “owes”
billions of dollars more to City schools. Nonetheless,
the Legislature and Governor have failed to appropriate
the billions of additional dollars that the courts
directed be appropriated. This clash of court
demands with political reality has set up a constitutional
crisis. The CFE litigation is on its way to the
State Court of Appeals for the third time. Perhaps this
time the Court of Appeals will listen more closely to
advice from the Appellate Division.
To get to the Court of Appeals the CFE litigation
has to pass through a sort of purgatory, the Appellate
Division of the First Department, the State’s mid-level
appellate court in Manhattan. The Appellate Division
hears appeals after a case leaves the lower, trial court,
and before the appeal is heard by the plenipotentates
in the Court of Appeals. The midway assignment calls
for the Appellate Division to sort out and expiate the
sins committed by the trial judge and, in doing so,
reach a result satisfactory to the high court in Albany.
The theory is that the Appellate Division will leave the
Court of Appeals with little if anything to do. Twice
before with the CFE litigation, the Appellate Division
judges tried, but both times they failed to satisfy the Court of Appeals. They have now
tried for a third time.
On March 23, 2006, the Appellate Division rendered
a decision that reads like a lecture on the inherent
limitations of the judiciary when it comes to managing
public educational enterprises. It advised the
Court of Appeals to pull back from a direct confrontation
with the State Legislature over the authority
to appropriate money. The Appellate Division also
reminded the Court of Appeals that courts are illequipped
to second guess the State’s education
experts when they make reasonable decisions with a
rational basis. Nonetheless, the Appellate Division
ordered the State to appropriate billions more for
New York City schools, but modified the trial court’s
order by setting a range of appropriations rather than
a precise amount.
Initial reaction to the Appellate Division’s decision
was confusion. On the one hand, the Appellate
Division ordered the State to appropriate more education
money, but, on the other hand, sided with the
State on how much would suffice, and used words
like “consider” where other passages in the opinion
made it seem that words like “must” were more
appropriate. One lawyer working on the State side said that he disagreed with the opinion’s first and last
paragraphs, but loved everything in between. The
lawyers for the plaintiffs declared that they succeeded
in their goals, but acknowledged that the opinion
made the nature of the court’s directive less clear.
Legislators were reportedly confused, and editorial
writers hedged their bets.
In a case like CFE where the Court of Appeals will
surely weigh in no matter what the Appellate Division
does, the intermediate court can do little but send a
letter of advice up the chain of command. So far the
Court of Appeals has not taken the Appellate
Division’s advice.
The Appellate Division’s first attempt.
In 1994 the Appellate Division tried after Judge
Leland DeGrasse approved the CFE case for trial. The
CFE complaint was a so-called third generation
school funding case. First generation plaintiffs
focused entirely on equality of funding and invoked
the federal constitution. The United States Supreme
Court rejected that theory in 1973. Second generation
plaintiffs invoked the State constitution’s equal protection
clause. They alleged that the State’s school
funding system disproportionately discriminated
against poorer and urban school districts and therefore
violated the State’s equal protection clause. But
this theory was rejected in New York by the Court of Appeals in 1982. Left open in the Court of Appeals
decision, however, was the possibility that plaintiffs
could link the State’s education funding system to
woeful performance in a particular education district.
If plaintiffs could show that the funding system
caused the woeful performance, they could win. This
so-called third generation claim is what the CFE case
is all about.
In 1994 Judge DeGrasse ruled that the CFE plaintiffs
had in their complaint stated a viable cause of
action when they alleged that City schools failed to
meet minimum educational standards and that the
cause was the State’s funding system. The State,
which had moved to dismiss the complaint, appealed
to the Appellate Division.
The Appellate Division sided with the State and
reversed, but not with a lot of explanation. The
Appellate Division described the complaint as “conclusory”
and said it was “virtually identical” to the
earlier equal protection complaint rejected by the
Court of Appeals in 1973. While not expressly stated,
the effect of the Appellate Division’s opinion was that
resolution of disputes over the adequacy of the education
provided would be through political processes,
and not by the courts.
The Court of Appeals, however, had other ideas.
Rejecting the Appellate Division’s opinion, the Court
of Appeals in 1995 enthusiastically embraced judicial
intervention in education adequacy issues, and began
to read into the State constitution’s language a “constitutional
floor with respect to education adequacy.”
The Court went on to describe the facilities and teachers
that were required to provide a sound basic education,
and listed the student outcomes that marked
an adequate education. The Court of Appeals wrote
that “plaintiffs allege and specify gross educational
inadequacies that, if proven, could support a conclusion
that the State’s public school financing system
effectively fails to provide for a minimally adequate
educational opportunity.”
The Court of Appeals sent the CFE case back for
trial. Following months of testimony, Judge DeGrasse
in 2001 ruled in favor of the CFE plaintiffs and, as a
remedy, listed precisely the managerial, financial and
educational reforms that the State had to undertake.
He ordered the State to take necessary steps to ensure
that the children had qualified teachers, appropriate
class sizes, adequate buildings, up-to-date books and
libraries, suitable curricula, adequate special education
and a safe, orderly environment. All of this was to
be achieved by September 15, 2001, then only nine
months away.
The Appellate Division’s second attempt.
The State appealed to the Appellate Division, and
the Appellate Division again reversed Judge
DeGrasse. His error, they wrote was to define the constitutional
floor at too high a level. Judge DeGrasse
defined a sound basic education as one that would
train students to evaluate complex campaign issues
such as tax policy and global warming, and have the
math and reasoning skills to understand statistical
analysis. Further, he stated that a sound basic education
should prepare students for employment at jobs
higher than minimum wage jobs.
The Appellate Division ruled that Judge DeGrasse
erred when he set an aspirational standard when all
he was called upon to do was to enforce a constitutional
floor. The Appellate Division ruled that the constitutional
floor lay somewhere between the 8th and
9th grade, basing this conclusion upon the State’s evidence
on the education needed for a citizen to undertake
civic responsibilities.
The Appellate Division’s opinion had three major
advantages. It insured that the judiciary would only
intervene in the worst cases. It kept the constitutional
floor low enough to allow educational experts and
the political process plenty of room to set aspirational
standards. And it avoided the worst aspects of Judge
DeGrasse’s remedial order which would have had the
courts directly dictating school policy and management
goals in every area of importance. “This is not to
say,” the Appellate Division wrote, “that the State
should not strive for higher goals,” but, as a matter of
setting the constitutional floor, an 8th or 9th grade
education sufficed.
The Appellate Division judges must have been
stunned by the acerbic and violently negative media
reaction their opinion received. As logical as its reasoning
may have been, the public misread the opinion
to mean that the State should provide only an 8th
grade education, a policy that would set the State’s
education policy back to the Nineteenth Century. The
Appellate Division thought it was setting a floor; the
public read it as a limitation.
The Appellate Division’s advice again was rejected
when the Court of Appeals heard the case for a second
time. The Court of Appeals in its 2003 opinion reinstated
most of Judge DeGrasse’s opinion, but altered
his remedy. The Court of Appeals held that the judiciary
should defer to neither the executive nor legislative
branch when it came to defining a sound basic
education. But, in a major modification of Judge
DeGrasse’s remedy, it rejected his list of commandments,
stating it had no authority to micromanage
education financing. The Court told him instead to
determine how much money would be required and
have the State provide that amount by a deadline of
July 30, 2004. It instructed Judge DeGrasse to ascertain
the cost of a sound basic education in New York
City, look to reforms in the financing of education to
insure that the schools had that level of funding, and
provide for a system of accountability to measure whether the reforms actually provided the opportunity
for a sound basic education.
The Court of Appeals decision triggered action in
the political branches of State and City government,
but the State failed to appropriate all of the money
that the Governor’s own commission had recommended,
and the deadline imposed by the Court of
Appeals passed. Judge DeGrasse appointed three referees
to recommend a remedy. This led to a new opinion
by Judge DeGrasse in March 2005 in which he
ordered the State to provide $5.63 billion more annually
for the City schools. The State again appealed to
the Appellate Division.
The Appellate Division’s third attempt.
On March 23, 2006, the Appellate Division issued
the opinion which caused so much confusion. Yet,
this time the Appellate Division might just convince
the Court of Appeals.
First the Appellate Division ruled that Judge
DeGrasse and his referees erred when they ruled that
costing out a sound basic education was a matter for
judicial fact finding. The correct standard, the
Appellate Division ruled, was one of deference:
“Where there is sufficient evidence to support a range
of numbers, it ill behooves the Court to dictate the
result; at that point, more than ever, the issue becomes
a matter of policy for the other branches of government
to determine.” Judge DeGrasse, the Appellate
Division ruled, had violated this principle when he
preferred the plaintiffs’ numbers over the State’s.
The Appellate Division then embarked on a long
discussion of the doctrine of separation of powers
which, in this context was particularly relevant since,
as it reminded the Court of Appeals, judges could only
look at the education budget, whereas members of the
Legislature and Governor looked at the entire budget.
There exists, the Appellate Division wrote, a stark difference
between stating a constitutional right to education,
and telling the State how to achieve that right.
Quoting an earlier Court of Appeals case, the
Appellate Division summed up its view of separation
of powers as one of the guarantees of liberty. “It is not
merely for convenience in the transaction of business
that [the powers of the branches] are kept separate by
the Constitution, but for the preservation of liberty
itself.” And, opening up a small window on the politics
surrounding the CFE case, the Appellate Division
chided those who hoped the courts would take the
heat off the Legislature. “The fact,” the Appellate
Division wrote, “that certain legislators might hope
that the courts will take control of educational budgeting
. . . is of no moment.”
The upshot of the Appellate Division’s decision
was that the State’s lower estimate of the cost of a
sound basic education, to be acceptable, had only to
meet something like the rational basis test. So long as the State acted rationally in developing its estimate, it
was irrelevant that the plaintiffs might have a more
refined or improved estimate.
But what was the State to do with its estimate?
Here the Appellate Division commanded that the
Governor and Legislature “consider” the State’s proposed
funding plan of at least $4.7 billion in additional
annual operating funds, as well as the Referees’
recommended annual expenditure of $5.63 billion,
“or an amount in between, phased in over four years,
and that they appropriate such amount. . . .”
The obvious question is what should the Court do
now that the Legislature and Governor considered,
but failed to appropriate an amount within the range?
The Appellate Division would have the judiciary
declare that a violation exists, but stop short of interfering
in the budget process. The failure of the State
to appropriate the money that the judiciary declared
was needed did “not give the Court the authority to
participate in budget negotiations,” the Appellate
Division wrote. “The fact that the other two branches
of government have not remedied constitutional failings
in the past does not authorize the courts to commit
their own constitutional violations now.”
This reasoning will not sit well with those who
only focus on the money, but it has a sound basis in
constitutional principles and in past Court of Appeals
decisions. And it prevents a constitutional crisis.
It allows the court to accept the State’s admission
of how much it has shortchanged New York City
schools, compels public attention to that shortchanging,
forces the Legislature and Governor to consider
the unacceptable results of what the State deemed to
be inadequate financing of public education, preserves
the judiciary’s role as the moral arbiter of constitutional
rights, and avoids having the judiciary
insert itself into the taxing and spending prerogatives
of the State.
What it does not do is put the Governor and
Legislature in jail, or garnish the State’s treasury. The
plaintiffs and many in the media act as if such remedies
might be in the cards. Judges know better, and,
paraphrasing the Appellate Division, it ill behooves
the Court of Appeals to pretend that it has such
power. Better to acknowledge its limitations when it
comes to ordering appropriation of funds and in the
process preserve the judiciary’s authority as the ultimate
arbiter of constitutional rights. The Appellate
Division has shown the way to do precisely that.
Ross Sandler is Professor of Law at New York Law
School and Director of the Center for New York City Law.
David Schoenbrod is Professor of Law at New York Law
School and Senior Fellow at the Cato Institute. Together
they authored an op-ed on the CFE case published in the
Wall Street Journal, April 8, 2006.
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