Memorandum of Law in Support of
Petitioners' Motion
for Compensatory Educational Services
NOW COME the petitioners in this
matter, by counsel, and respectfully submit the following memorandum of
law in
support of their motion for sanctions.
On November 10, 1998, petitioners filed a motion with this Court requesting attorney's fees from the State. Petitioners relied upon two legal grounds to justify their request: 1) the substantial benefit analysis established in Irwin Marine, Inc. v. Blizzard, Inc., 126 N.H. 271 (1985); and 2) the sanctions analysis set forth by this Court in Harkeem v. Adams, 117 N.H. 687 (1977). The State raised a sovereign immunity defense to the petitioners' fee request. However, at oral argument before this Court in November, 1998, the State conceded that sovereign immunity would not bar a fee award based upon sanctions. Moreover, in Harkeem, the seminal case on sanctions, attorney's fees were assessed against a state agency. Thus, Harkeem, establishes that fee awards against the State are possible and are not barred by sovereign immunity.
In November 1998, petitioners also asked the Court to rule on its December 1997 motion for costs under Supreme Court Rule 23. The Court granted the motion on November 26,1998 and the State moved for reconsideration based in part upon sovereign immunity grounds. The State's motion is pending before this Court along with petitioners' request for attorney's fees. Given the State's concession and the clear legal precedent establishing that sovereign immunity is not a bar to a fee award based upon sanctions, petitioners request that this Court grant its motion for fees and its motion for costs as a sanction against the State for its continuing failure to meet its constitutional obligations. In the alternative, petitioners request that this Court award petitioners' attorney's fees for time incurred from December 1998 through the ultimate conclusion of this litigation.[1]
In Harkeem v. Adams, this Court set forth the standard for awarding attorney's fees and costs as sanctions against a party.
Where an individual is forced to seek judicial assistance to secure a clearly defined and established right, which should have been freely enjoyed without such intervention, an award of counsel fees on the basis of bad faith is appropriate. This principle, which merely shifts the cost of what should have been an unnecessary judicial proceeding to the responsible party, has long been recognized in New Hampshire=85.
117 N.H at 691.
The two essential elements of the Harkeem standard are met in this case and a fee award against the State as a sanction is appropriate. The petitioners have had to seek judicial assistance from this Court on five separate occasions to date to secure their constitutional rights to an adequate education and fair taxation and are again required to file pleadings with this Court contemporaneously with this motion because of the State's continued failure to meet its constitutional obligations in both respects. As set forth more fully below, the State has still failed to comply with this Court's ruling in Claremont II. The State has not established a fair and equal method of funding education and it has not met its obligation to provide the children of this State with an adequate education.
The bad faith prong of Harkeem is also met in this case because of the State's seditious refusal to meet its constitutional obligations. Under Harkeem, bad faith is established when a party's actions can be characterized as unreasonably obdurate or obstinate or when a party demonstrates a callous disregard for the rights of another. 117 N.H. at 691-93. This Court also considers whether it should have been unnecessary for the successful party to have brought the action when assessing whether a party has acted in bad faith. Id.
The following are some examples of the State's obdurate and obstinate actions in this case which demonstrate the State's callous disregard for the constitutional rights of the children and taxpayers of this State and have forced the petitioners to continuously seek legal redress in this Court to secure their constitutional rights.
In December 1997, this Court ruled the current method of funding education unconstitutional and provided the State with 16 months, until April 1, 1999, to implement a new method of funding education. Claremont School Dist. v. Governor, 142 N.H. 462 (1997) (Claremont II). In November, 1998, the State filed a motion with this Court seeking a two year extension of the April 1, 1999 deadline. This Court denied the request stating Absent extraordinary circumstances, delay in achieving a constitutional system is inexcusable=85.The constitutional rights of the children in this State to an adequate State-funded education and of all taxpaying citizens in New Hampshire to reasonable and proportional taxation are not to be denied any longer. Claremont School Dist. v. Governor, 143 N.H. 154, 158 (1998). The Court declared that [i]t is apparent that time is now of the essence. Id. at 160.
Despite two clear court decisions on the matter, the State did not enact or implement a new method of funding education by April 1, 1999. Rather, it intentionally missed the deadline and did not pass legislation creating a new method of funding education until April 29, 1999. As a result of the State's tardiness, many schools were forced to give termination notices to their teachers and staff and were in jeopardy of having to close down altogether because they lacked the revenue to meet various contractual obligations and to pay operational expenses. It was only when the schools were on the verge of shutting down and various parties threatened to sue the State because of the school districts' inability to meet financial obligations and special education requirements under federal law that the State passed HB 117 on April 29, 1999.
Moreover, HB 117, as interpreted by the Department of Revenue Administration (DRA), further defies this Court's April 1, 1999 implementation deadline by permitting towns and cities to maintain the current unconstitutional tax scheme for the 1999 semi-annual tax bill. As a result, the taxpayers of this State must endure an additional six months of unfair and unequal taxation.
HB 117 provided three methods by which towns and cities could assess the 1999 semi-annual property tax bills in June 1999. The third method provided the DRA with the authority to approve the use of a different method to calculate municipality's 1999 semi-annual property tax rate. See HB 117 Section 51 B6 III, attached as Exhibit 1. Relying upon this authority, the DRA issued a Technical Information Release on April 30, 1999 granting a blanket approval for all towns and cities to calculate the semi-annual rates based upon the current provision of RSA 76:15-a and RSA 76:15-b. See DRA TIR 99-005, attached as Exhibit 2.
RSA 76:15-a and RSA 76:15-b permit towns and cities to issue tax bills the same way they have issued them in the past with tax rates that vary widely from town to town to fund education. Thus, the statewide property tax rate of $6.60 to fund education in HB 117 was not implemented for the June 1999 semi-annual tax billing period and cities and towns in New Hampshire issued tax bills with unequal rates for education in June 1999. Such unequal tax rates to fund education are exactly what this Court found unconstitutional in Claremont II.
The $6.60 statewide property tax rate to fund education in HB 117 will not be implemented until the December 1999 tax billing period, eight months after this Court's deadline.
Moreover, HB 117 does not satisfy the State's requirement to implement a fair and equal method of funding education as required by the New Hampshire Constitution and Claremont II.
The State overtly disregarded its constitutional obligations by implanting a five year phase-in for the statewide property tax portion of HB 117. While the bill purports to set a statewide property tax rate of $6.60 for education funding, certain towns are permitted to phase in the $6.60 tax rate while other towns are not. Section 41 of the bill permits towns whose tax rates are currently below $6.60 to phase in the increase from their current rate to the $6.60 level over 5 years. See RSA 198:46 (IV) in A7 41 of HB 117, attached as Exhibit 1. As a result, some towns, will have a state tax rate as low as $2 for education in the upcoming tax year, while other towns such as Claremont will have a state tax rate of $6.60[2] for education. The unequal tax rates persist for an additional five years. As a result of the State's failure to implement a constitutional method of funding education, petitioners are again required to come before this Court to secure their constitutional rights and challenge the phase-in in a separate motion.
The State has also demonstrated its bad faith by failing to fully define and implement a definition of educational adequacy. Last session, the State passed HB 1075 which sets forth the State's definition of educational adequacy. RSA 193-E. Petitioner's challenged the definition in November 1998 alleging that the definition did not comport with Claremont I and Claremont II because, inter alia, the definition did not contain any accountability or assessment provisions that would delineate how the definition of adequacy would be implemented, how schools would be assessed to determine if they were providing an adequate education, how the State would enforce its obligation to provide an adequate education, or how the State would provide assistance to school districts that were not providing an adequate education to their students.
In response to petitioners' motion, the State asserted that its obligation under Claremont II was a two step process. The first step was to define educational adequacy, which the State claimed it did in HB 1075, and the second step was to develop a system of implementing the definition. See State's November 20, 1998 Objection to Motion to Declare Definition of Adequacy Unconstitutional. The State admitted it had not yet done the second step and asserted that During the 1999 session, the House and the Senate will be able to develop a system to implement the delivery of a constitutionally adequate education in accordance with this Court's mandates. Id. at 5. The State also stated that The legislative and executive branches are prepared to proceed with their work to comply with Claremont II mandates when the Legislature convenes in January 1999. Id. at 11.
At oral argument, the State conceded that an implementation system was necessary in order to comply with Claremont II and stated that such a system would be in place by the April 1, 1999 deadline.
The 1999 legislative session has come and gone and, to date, the State still has not passed an implementation system or any mechanism to enforce its obligation to provide an adequate education and provide assistance to school districts that are not providing an adequate education to their students.
Implementation provisions to provide school districts with assistance in providing an adequate education and to enforce the State's obligation to provide an adequate education are particularly important now that the State has acknowledged that many of the school districts in New Hampshire currently do not provide an adequate education.
The purpose and intent section of HB 117 states, The general court finds that school districts that have 40 to 60 percent of students scoring at or above the basic level on the NHEIAP tests [the state assessment tests] are those districts that are meeting the relevant outcome expectations and are providing an adequate education. HB 117 A71(V), attached as Exhibit 1. Thus, under HB 117, school districts with less than 40 to 60 percent of their students scoring basic and above on the state assessment tests are not providing an adequate education.
HB 117 charged the Department of Education (DOE) with determining which school districts meet the 40 to 60 percent standard. The DOE's assessment is attached as Exhibit 3. The DOE assessment shows that 22 school districts are not providing an adequate education at the elementary level and 19 school districts are not providing an adequate education at the secondary level. The list includes three of the five petitioner districts, Allenstown, Franklin and Pittsfield. Lisbon does not meet the standard at the secondary level and barely meets the standard at the elementary level with 41.83 percent of students scoring basic and above. Claremont squeaks by in both the elementary and secondary levels with 41 and 40 percent of students scoring basic and above respectively. However, individual schools within the Claremont district do not meet the State's standard.
While petitioners do not concede that the State's standard for educational adequacy is constitutional, under their own standard these school districts are not providing an adequate education and the State is not providing any assistance to help them do so. In a separate motion, petitioners seek equitable relief in the form of compensatory services to help the schools in the petitioner districts meet the State's adequacy standard.[3]
While the State may argue that provisions to assist school districts in providing an adequate education will be addressed by the Adequate Education and Education Financing commission established in HB 117, that committee is not due to report its findings until December 1, 2000 and the findings need not be implemented until 2004. Five more years of inadequate education is not acceptable for the children in these school districts.
The State's bad faith is also demonstrated by its failure to comply with its constitutional obligations regarding educational adequacy. HB 117 is not a good faith effort to develop and provide an adequate education. Aside from the failure to include any method of assisting districts
in providing an adequate education, the methodology used by the State to determine the cost of
an adequate education in HB 117 is severely flawed in numerous areas and is nothing more than a mechanism to calculate a predetermined monetary amount that is based entirely upon a political desire to keep the State's financial obligation below a certain level. The methodology has little if any relationship to the State's own definition of educational adequacy passed into law just last year in HB 1075.
The State's own actions demonstrate the illegitimacy of the formula in HB 117. During the conference committee negotiations on HB 117, the conferees agreed upon $825 million as the cost of an adequate education. The number is the result of nothing but sheer political negotiations. After agreeing upon the number, the State developed a formula to attempt to justify the $825 million. Thus, the formula in HB 117 is clearly designed to arrive at a predetermined amount and is not based upon any legitimate analysis or educational methodology to assess the cost of an adequate education.
The proof that the formula in HB 117 is end-oriented is found in the State's modification of the formula after passage of HB 117. When the DOE calculated the per pupil adequacy amounts in accordance with the formula in HB 117, the calculations totaled $843 million instead of $825 million. Instead of honoring the $843 million figure, which one would have done if the formula were legitimate and not simply targeted to producing a predetermined amount, the State passed a technical corrections bill, HB 300, that altered the formula in HB 117 to force the total figure down to $825 million.
Additionally, the State has not fully funded HB 117. The cost of an adequate education as set forth in HB 117 is $825 million. Yet, to date, the revenue sources to fund HB 117's requirements raise only about $700 million of the $825 million. Instead of working to fully fund HB 117 in a timely manner, the House and Senate are currently in recess and blaming each other for the lack of full funding. It is uncertain when either body may return to address this issue.
As this Court is well aware, the legislature has a disturbing pattern of failing to fully fund educational programs. The Foundation Aid program was never fully funded. Governor Merrill vetoed a bill that would have provided full funding for the program in 1994. Catastrophic Aid, the State's contribution towards special education, is also frequently not fully funded. Unfortunately, it appears that the State intends to continue its practice of failing to live up to its financial obligations with its new funding program. As a result, petitioners, and children throughout New Hampshire, will again be denied the resources to which they are constitutionally entitled.
The State's bad faith is further demonstrated by its failure to appoint commissions established under HB 117 in a timely manner and its failure to deliver promised studies on the condition and funding for school buildings and facilities in New Hampshire.
HB 117 established an Adequate Education and Education Financing Commission and a Tax Equity and Efficiency Commission. Under the statute, the Tax Equity and Efficiency Commission was to have its first meeting 30 days after passage of HB 117. See HB 117 Section 55(V) attached as Exhibit 1. HB 117 was passed into law on April 29, 1999. Members of both the Adequate Education and Education Financing Commission and a Tax Equity and Efficiency Commission were not even appointed until July, 1999, over two months after the 30 day deadline. Neither Commission has yet to meet.
The State's failure to deliver studies and establish commissions regarding the condition of school buildings and facilities and funding for buildings and facilities in New Hampshire dates back to 1997. During the 1997 legislative session, HB 230 was passed into law. The bill commissioned a School Building Aid System Study Committee to analyze funding issues for school facilities. The committee was originally due to issue a report before November 1, 1997. In 1998, the legislature passed HB 1294 which extended the reporting date for the committee through 1998. On October 30, 1998, the chair of the committee issued a final report stating due to the uncertain status of Claremont II, no substantive recommendations could be made at this time. See Final Report of School Building Aid System Study attached as Exhibit 4.
The School Building Aid System Study Committee also cited the establishment of a new study committee as one of the reasons it did not issue any recommendations. The new study committee was established under SB 462 which passed into law in the 1998 legislative session. The bill states:
By July 1, 1999, the state board of education shall commission a statewide qualitative study to determine the adequacy and condition of all New Hampshire public school facilities and to review the current method for distributing school building aid. Based on this study, the board shall make recommendations to the legislature and governor by September 1, 2000.
To this day, the state board of education has not commissioned this study.
The State's failure to honor its statutory obligations regarding a study commission on school buildings and facilities has impacted its ability to develop an accurate cost for educational adequacy. The December 17, 1998 Final Report for the Adequacy Commission stated that it could not consider the cost of facilities in its adequacy determinations because such costs were unknown at this time. See Report attached as Exhibit 5. The Commission expressly referenced the building and facility study in SB 462 as the mechanism to provide necessary information before building and facility costs could be included in the cost of an adequate education.[4]
The Adequacy Commission's findings were adopted and utilized in HB 117. Thus, the failure to establish a study commission that reports information regarding the status and costs of school facilities and buildings in New Hampshire resulted in the exclusion of such information from the cost of an adequate education in HB 117. As a result, local school districts must pay for many of the costs associated with school buildings and facilities on their own.
III.
Conclusion
This litany of items clearly demonstrates the State's bad faith in this litigation. The State's actions can easily be characterized as unreasonably obdurate or obstinate. 117 N.H. at 691-93. It has been almost six years since this Court issued its decision in Claremont I and almost two years since Claremont II and the State still refuses to meet its constitutional obligations and has overtly and covertly disregarded this Court's orders. The State's actions and inactions have demonstrate a callous disregard for the rights of the children and taxpayers of this State. 117 N.H. at 691-93. As a result of the State's actions, the petitioners are again required to seek legal redress from this Court to protect their constitutional rights.
Therefore, the elements of Harkeem are met and an award of attorneys' fees and costs is appropriate under the circumstances of this case as a sanction against the State. As this Court has stated when overriding considerations so indicate, the award of fees lies within the power of the court, and is an appropriate tool in the court's arsenal to do justice and vindicate rights. Harkeem v. Adams, 117 N.H. 687, 690 (1977). Such overriding considerations are present in this case and an award of fees is also necessary for petitioners to continue to vindicate their constitutional rights, and the rights of the children, school districts, and taxpayers of this state. Therefore, petitioners request that this Court grant their November 10, 1998 motion for fees and their December 1997 motion for costs. In the alternative, petitioners request that this Court award them attorney's fees for time incurred from December 1998 through the ultimate conclusion of this litigation.
Respectfully submitted,Scott F. Johnson, Esq.
Stein, Volinsky & Callaghan, P.A.
One Barberry Lane
P.O. Box 2159
Concord, NH 03302-2159
(603) 228-1109
Certificate of Service
Andru H. Volinsky, Esq.
[1] In Claremont II, this Court stayed further proceedings to give the legislature to the end of the 1998 legislative session to correct the unconstitutional method of funding education and to develop a constitutional method of providing an adequate education. 142 N.H. at 476. The 1998 legislative session ended in December 1998. 143 N.H. at 159. It is the State's continued failure to achieve these two tasks that compels the petitioners to seek further legal redress with this Court.
[2] The $6.60 tax rate actually higher in some towns due to the valuation procedures utilized by the State. See Section A(2) of Petitioners' Memorandum of Law in Support of Motion for Procedural Order.
[3] Petitioners contend that under Claremont II the State must assess adequacy at the level of each school, not just each school district. In a separate motion, petitioners set forth the schools within the five petitioner districts that are not meeting the 40 to 60 percent standard and seek equitable relief in the form of compensatory services to assist the schools in meeting this standard.
[4] Petitioners do not necessarily agree with this assertion. Many of the costs for facilities and buildings are known and reported by the Department of Education. The State chose to ignore this data and did not include many of the costs associated with buildings and facilities, such as capital outlay or debt service, in its adequacy cost calculations. According to the Department of Employment Security's labor market report, Vital Signs, the cost of capital construction during the 1996-97 school year was $589 per pupil and debt service costs for buildings was $350 per pupil. Petitioners challenge the State's exclusion of building costs from its adequacy costs in a separate motion.