VOL. 19  ISSUE NO. 10   |   MARCH 6 – 12, 2013


Court of appeals upholds ruling against CCUSD93

Section 34, introduced by then Rep. Nancy Barto, ‘essentially abrogates the voters’ rights … and … strikes a blow to the election process’
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nancy bartoPHOENIX – Last Thursday, the Arizona Court of Appeals affirmed the lower court’s decision in favor of plaintiffs Jayne Friedman and Richard Bail against Cave Creek Unified School District (CCUSD93) that Section 34, a 2010 session law introduced by Sen. Nancy Barto (l), R-Dist. 15, when she was a member of the Arizona House of Representatives, is unconstitutional.

Barto’s bill, passed as Section 34 to HB 2725, reads: “Notwithstanding section 15-491, subsection J, Arizona Revised Statutes, when nine years or more have passed since an election that authorized a school district to issue bonds, the school district may choose to use the proceeds of any bonds authorized at that election for any necessary capital improvement, provided that the school district’s governing board votes to authorize the proposed use of the bond proceeds prior to June 30, 2013.”

In November 2000, CCUSD93 held a special election during which voters passed a $41.6 million class B bond measure for the purpose of constructing new school buildings, purchasing buses, improving school grounds and the payment of other associated costs.

A.R.S. § 15-491(J) allows school districts to use bond proceeds only for the purposes listed in the publicity pamphlet, except that up to 10 percent can be used for general capital expenses.
In its 2010 annual report, the district stated it owed $17.9 million on the 2000 bond measure and held approximately $13 million in unspent proceeds.

Because the district determined it no longer needed to construct new schools, in August 2010, the board authorized the remaining funds to be used on projects not specified in the voter publicity pamphlet.

The Goldwater Institute, on behalf of Friedman and Bail, then sued the district for declaratory relief, claiming the approval of the 2000 bond measure created a contract between the district and the voters and Section 34 authorized expenditure of the bond funds inconsistent with the purposes authorized by voters.

The superior court granted summary judgment to Friedman and Bail and denied CCUSD’s motion for summary judgment, while noting A.R.S. § 15-1024(B)(1) mandates unspent money shall be used to pay down bond debt and that § 15-491(J) prohibits the use of bond proceeds for purposes other than those stated in the publicity pamphlet.

The court found Section 34 “essentially abrogates the voters’ rights existing at the time of their bond vote, and by doing so, strikes a blow to the election process,” in violation of the contract clauses of the United States and Arizona Constitutions.

The court found there was no significant legitimate public purpose to justify the district’s appropriation of unused funds and determined Section 34 was an unconstitutional special law.

The court of appeals agreed that summary judgment was appropriate because Section 34 conflicts with the Arizona Constitution, which provides: “Questions upon bond issues or special assessments shall be submitted to the vote of real property tax payers, who shall also in all respects be qualified electors of this state, and of the political subdivisions thereof affected by such question.”

The purpose of that provision is to provide electors with a voice to accept or reject a proposed expenditure for which they will ultimately pay.

The court of appeals determined Section 34 conflicts with that constitutional provision because it allows districts to change the purpose for which bond proceeds may be used without submitting the question to a district-wide vote.

The opinion, drafted by Judge Randall Howe on behalf of the appeals panel, stated the court’s interpretation was in keeping with the framers’ intent for Article 7, Section 13 of the Arizona Constitution, pointing out the provision was to guarantee that voters of a district will decide whether to accept or reject the financial obligations of a bond. And, the question whether to accept or reject a bond measure necessarily includes accepting or rejecting the stated purpose.
The court determined Section 34 takes away the voters’ right guaranteed by Article 7, Section 13 with respect to particular bond measures and cannot stand.

Friedman and Bail were both pleased with the court’s decision, with Bail stating, “It is reassuring to know that the promises in bond elections must be kept and the funds not be used for other causes. CCUSD93 has a history of financial excess. It’s good to see that this one will not stand.”

Bail took it a step further by sending an e-mail to the governing board over the weekend asking them to reconsider its contract with Applied Economics (AE), which the district has utilized for over a decade to perform demographic analysis.

He said, “I think that they need to be replaced by a more competent firm.”

Demographic analysis provided by AE was used to pass the bond measure in 2000, which later proved to be based on erroneous growth information and voters paying for construction of at least one school the district didn’t need.

Bail said AE is “always wrong and always very high” in its growth projections.

He pointed out over the past 15 years AE has provided the district with demographic analysis, the purpose of which is to allow the governing board to plan effectively for the number of students that will require services and provide for more schools if necessary.

Bail said, “It is virtually the only reason for these reports.”

Because it takes years to plan for and build schools, five to 20-year outlooks are deemed critical information.

However, according to Bail, AE is never close to correct and is always extremely high.

For example, Bail said, “Today you have about 5,500 students. In 2006, AE predicted there would now be 7,100. A year earlier they predicted 7,300. A year before that 7,400,” noting at one time AE predicted there would be over 10,000 students.

Bail went on to say, “Every year you pay them for their analysis and get grossly incorrect assessments,” and asked, “Why do you keep using them and wasting our money on bad data?”

Meanwhile, the district will be required to pay additional attorney fees on top of the $31,867.60 already awarded to the Goldwater Institute by the superior court.

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