After Supreme Court rules on state immunity, Lake View decision getting new scrutiny

Arkansas’ school funding formula was created in response to the long-running Lake View lawsuit against the state. But now that the Arkansas Supreme Court has ruled in favor of the state’s “sovereign immunity” from actions in its own courts, there is a looming question if Lake View still applies.

The latest court decision came about in The Board of Trustees of the University of Arkansas v. Matthew Andrews. On Jan. 18, the Arkansas Supreme Court noted in a 5-2 ruling that Article 5, Section 20 of the Arkansas Constitution says “[t]he State of Arkansas shall never be made a defendant in any of her courts.”

The court ruled in that overtime pay case that the Legislature cannot pass laws that waive the state’s ability to assert sovereign immunity. The case potentially has far-reaching effects on state policies and may affect another important court case, Lake View School District No. 25 v. Huckabee.

That case began in 1992 when the Lake View school district in Phillips County sued the state. It said Arkansas’ public school funding system violated the 1874 Arkansas Constitution and the United States Constitution because it was inadequate and inequitable. The Arkansas Constitution requires the state to “ever maintain a general, suitable and efficient” education system.

First filed in 1992, the case was not ended until 2007. Arkansas in response increased funding for public schools and created a funding formula meant to spread the wealth to school districts throughout the state. Funding for K-12 education is assured before all other state priorities are funded. Major education policy and other state funding decisions have been based on keeping the state from enduring another painful lawsuit.

But now that the Arkansas Supreme Court has interpreted Article 5, Section 20 so literally, does that mean the state is safe from any lawsuit? If so, what happens to the Lake View decision? And will legislators feel emboldened to change the funding formula now that the threat of another lawsuit might not hang over their heads?

The answers to those questions are unclear.

Gov. Asa Hutchinson told Talk Business & Politics Feb. 11 the state should not have a “blanket sovereign immunity across the board, in non-monetary cases particularly.” He said he has asked state agencies not to assert sovereign immunity without his office’s approval.

But in her dissent in the Andrews case, Justice Karen Baker wrote that the ruling means that if the Legislature cannot waive the state’s sovereign immunity, then neither can the executive branch.

Nicole Waugh, Rutledge’s communications director, said, “The attorney general does not comment on hypothetical or potential cases. However, as a general matter, the attorney general believes citizens can still sue to prevent state officials and agencies from acting in a way that is unconstitutional, illegal or outside the scope of their authority.”

Education Commissioner Johnny Key said his staff members “have had discussions, but I can’t say we have drawn any conclusions” about the latest ruling’s effect on Lake View. He said the Department of Education would seek the advice of the attorney general and the governor’s legal counsel. In the Lake View case, it was Gov. Mike Huckabee, not the department, who was the defendant, so presumably in another case it would not be ADE making a sovereign immunity claim.

Key said ADE staff members haven’t played out the various potential scenarios that could ensue. Asked what would happen if legislators decided to challenge the funding formula, Key said the question was “too speculative.”

“We’re approaching it as business as usual when it comes to how we distribute funding, how we look at all the elements of adequacy, so nothing’s changed that at this point,” he said.

Rep. Bruce Cozart, R-Hot Springs, chair of the House Education Committee, said he began considering the implications of the Supreme Court’s ruling in late February and would seek legal advice. The Legislature’s adequacy committee began meeting last year to consider changes to the school funding formula and will resume meeting once this year’s fiscal session concludes. It will present its report to the governor by Nov. 1.

“That question’s going to come up, and it’s probably going to pop up when we start having meetings or before, so I think that’s something that we need to know is how is this going to affect the Lake View case and our adequacy reports, or do we have to continue adequacy, or can we do this in a different way?” he said.

Cozart said the Lake View case was good for the state in that it “was necessary to get people’s attention on what wasn’t happening.” Since then, it’s required the state to spend a lot of money on attorney’s fees, and it’s constrained lawmakers, he said.

Cozart said legislators last year considered changing some policies “because of the case being so old and didn’t think anybody would really push it. And of course, we’ve talked about a lot of things on changing up the way adequacy’s done. Hopefully, this will give us a little leeway. I’d like to do something better for the kids but not have to go deal with that type of situation where lawsuits are always prevalent.”

Other legislators agreed that the sovereign immunity ruling could affect the formula, but it’s unclear how. Senate Majority Leader Jim Hendren, R-Gravette, a member of the Senate Education Committee, said legislators will need more legal guidance, adding, “We certainly must have clarity before we make decisions that would lead to a likely court challenge.”

Sen. Joyce Elliott, D-Little Rock, said she had given the issue “lots of thought.”

“There is a frightening storm brewing,” she said. “And my biggest concern is Lake View. … But I don’t believe sovereign immunity empowers the legislative body to disregard the Arkansas Constitution. It seems to me our commitment to Lake View is a constitutional obligation that the court allowed us to define. So we, therefore, must live up to what we promised.”

Rep. Stephen Meeks, R-Greenbrier, a member of the House Education Committee, said he has spoken casually with attorneys who have said the decision prohibits future cases like Lake View. Regardless, he said the courts have never had the authority to order the Legislature to do anything. Meeks said it’s possible legislators might now feel freer to “make some more bold decisions.” However, the Lake View decision spotlighted the failings of the state’s school funding system and led to a formula that is working.

“Short-term, I don’t see a whole lot of changes taking place even with the Lake View cloud not being there,” he said. “Long-term, it’s anybody’s guess.”