No. 88-3818
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
HELENA ELEMENTARY SCHOOL DISTRICT NO. 1 AND HIGH SCHOOL
DISTRICT NO 1 OF LEWIS & CLARK COUNTY; BILLINGS ELEMENTARY
SCHOOL DISTRICT NO 2 AND HIGH SCHOOL DISTRICT NO 2 OF
YELLOWSTONE COUNTY; et al.,
Plaintiffs and Respondents,
and
MONTANA EDUCATION ASSOCIATION et al.,
IntervenorsIPlaintiffs and Respondents,
-vs-
THE STATE OF MONTANA; and THE MONTANA BOARD OF PUBLIC EDUCATION;
and THE MONTANA SUPERINTENDENT OF PUBLIC INSTRUCTION,
Defendants and Appellants,
and
C. J. HOLJE,BERNT WARD and ROBERT FREDERICH on behalf of the residents
and taxpayers of Sheridan County, Montana, and all others similarly
situated,
Intervenors/Defendants and Appellants
HAYS-LODGE POLE ELEMENTARY SCHOOL DISTRICT NO 50 AND HIGH SCHOOL DISTRICT
NO 50, AND BLAINE COUNTY; et al. and the ASSOCIATTON OF INDIAN IMPACT
SCHOOLS OF MONTANA,
IntervenorsIDefendants and Appellants
APPEAL FROM: The District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Henry Loble, Judge presiding.
COIJNSEL OF RECORD:
For Appellant:
Terry G. Spear, Crowley Law Firm, Billings, Montana
Hays-Lodge Pole School Dist #50, et al.
Beda Lovitt, Helena, Montana, Montana Superintendent of
Public Instruction
Benjamin Hilley, Hilley & Loring, Bigfork, Montana
for Montana Education Association
Hon. Marc Racicot, Attorney General, Helena, Montana
Clay R Smith, Assistant Attorney General, Helena, for
State of Montana
W. William Leaphart, Helena, Montana
Loren O'Toole, Plentywood, Montana
Donald A. Garrity, Helena, Montana
For Respondent:
James H. Goetz, Goetz, Madden & Dunn, Rozeman, Montana
For Amicus Curiae:
Charles E. Erdmann, Helena, Montana
Bruce W.Moerer, Helena, Montana
Dennis Lopach, Helena, Montana
Submitted: January 13, 1989
Decided: February 1, 1989
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
In this action for declaratory judgment, plaintiffs
challenge the constitutionality of the 1985-86 method of
funding public elementary and secondary schools in the State
of Montana. The District Court for the First Judicial Dis-
trict, Lewis and Clark County, ruled in its primary holding
that the system of funding violated the 1972 Montana Consti-
tution. We affirm the holding of unconstitutionality, al-
though on a narrower ground than that used by the District
Court.
The issues upon which we decide this case and our con-
clusions are:
1. Does Montana's system of funding the public school s
violate the education article, Art. X I of the Montana Consti-
tution? We conclude that the system of funding does violate
Art. X. We do not find it necessary to consider the equal
protection analysis under Art. 11, Sec. 4, of the Montana
Constitution.
2. Should this Court clarify the District Court's
findings regarding the accreditation standards promulgated bv
the Montana Roard of Public Education? We conclude that some
clarification is required.
3. Did the District Court err in its findings and
conclusions relating to consideration in the equalization
process of federal "874" funding? We affirm the holding o f
the District Court that Montana presently may not factor
"874" revenue into the equalization formula because our
system does not meet the federal definition of an equalized
program. In its review of Montana's system of funding for
public schools, the Legislature may desire to review the
nature and extent of "874" funding, even thouqh it may not in
any manner factor that into an equalization formula without
meeting federal requirements.
4. Did the District Court err in denying plaintiffs'
attorney fees? We affirm the denial of attorney fees.
In the 1985-86 school year, there were 545 school dis-
tricts in Montana with a total student enrollment of 153,869.
These included 382 elementary and 163 secondary districts.
Nearly 45% of Montana schools have enrollments of less than
100 students.
The six-week-long trial included extensive evidence and
testimony about the complex combination of federal, state,
and local sources through which Montana's public elementary
and secondary schools are funded. In addition to the General
Fund, each school district uses up to nine other types of
budgeted funds. These include transportation funds, teacher
retirement funds, debt service funds, and building reserw
funds. Some of these depend upon voted levies and all are
primarily funded on a district or county level. School
districts also have nonbudgeted funds including food service,
traffic education, rental funds, sick leave reserves, block
grants, building funds, endowment funds, and interlocal
agreement funds. Expenditures from these nonbudqeted funds
may only be made from cash on hand.
The General Fund, which provides 70% of school fundinq
in Montana, includes several components. In 1949, the Mon-
tana Legislature enacted the Montana School Foundation Pro-
gram. Under that program, every two years the legislature
sets "Maximum General Fund Rudqet Without a Vote" (MGFRFn7)
schedules for elementary and secondary school districts in
the state. Eighty per cent of the MGFRW7 is funded by county
and state equalization revenues. These equalization revenues
are derived from levies of 45 mills on all taxable propertv
in each county and state aid from such sources as earmarked
revenues, surplus county Foundation Program revenue, and
direct legislative appropriations.
The remaining 20% of the funding of MGFBFlV is through
permissive mill levies of up to 6 mills for elementary dis-
tricts and 4 mills for high school districts. These levies
are made without a vote. If the school district is unable to
obtain the MGFRFW level through permissive levies and other
specified nonlevy revenue, state permissive equalization
revenues are used to make up the difference.
The evidence shows that, in 1985-86, most school dis-
tricts adopted budgets in excess of the MGFBWV. They uti-
lized a third stage of fund-Fng under which monies were
obtained primarily from propertv tax levies voted by each
school district. Other revenues which were used in thj-s
third level of funding included vehicle taxes, interest
income, tuition income, and federal "874" funds. By 1985-86,
35% of all General Fund budgets were obtained from this level
of funding. In contrast, in 1950, the Foundation Program
furnished 81.2% of all general fund revenues in Montana,
1-eaving less than 20% of revenues to he obtained by local
levies and other sources.
Plaintiffs presented voluminous evidence to support
their theory that the system of funding public education in
Montana is unconstitutional. The evidence established great.
differences in the wealth of the various school districts
and, more significantly, established disparities of spending
per pupil as high as 8 to 1 in comparisons between
similarly-sized school districts. We affirm the following
unchallenged findings of the District Court:
214. Several Plaintiff witnesses had experi-
ence either as teachers or administrators in other
Montana districts, including some relatively
wealthier districts. Mr. Walt Piipo, for example,
currently Superintendent at Drummond, was previous-
ly Superintendent for Geraldine schools. The two
school districts are very close in size, at both
the elementary and high school levels. Geraldine's
taxable valuation, however, is more than twice that
of Drummond's. The tax efforts for the elementary
schools are comparable, while Geraldine levies more
General Fund mills than does Drummond at the high
school level. Consequently, Geraldine spends
approximately $1,000 more per ANR than Drummond at
the elementary level, and over $2,000 more per ANR
at the high school level. Approximately 40% of
Geraldine's General Fund revenues derive from the
voted levy, while at Drummond, the voted levy
supplies approximately 15% of General Fund revenue.
This illustrates the fact that wealthier districts
are able to rely to a greater extent on the voted
levy to generate revenues for the General Fund.
215. Mr. Piipo testified unequivocally that
Geraldine schools have advantages, and offer
opportunites, which Drummond schools cannot afford.
Geraldine has much greater budget flexibility to
address educational needs and goals than does
Drummond. Mr. Piipo testified that there is no
question that the educational opportunities afford-
ed students in Drummond could be improved if the
district had the same amount of money as Geraldine.
216. The fact that spending disparities
result in unequal educational opportunities was
established more systematically by Plaintiffs'
experts Dr. Ron Mattson, Mary Pace, and Dr. John
Picton. Each of these individuals has many years'
experience in Montana public education. They
comprised a "Study Team" which was commissioned by
the Plaintiffs to do a comparative study of several
pairs of school districts in the State. They
compared three pairs of elementary districts, and
three pairs of secondary districts. Schools in
each pair were of similar size, with one spendina
considerably more per pupil than the other. In
addition to analyzing the budget data for each of
these districts, members of the Study Team visited
all 12 districts to observe the schools first hand,
and to conduct interviews with administrators and
teachers.
7 . The Study Team identified clear differ-
ences between the schools in each of the pairs.
They found that the better funded schools tended to
offer more enriched and expanded curricula than
those offered in the schools with less money. The
richer schools were also better equipped in the
areas of textbooks, instructional equipment,
audio-visual instructional materials, and consum-
able supplies. With respect to buildings and
facilities, the districts with more money were
better able to maintain their facilities than were
the poorer districts. The Study Team concluded:
*Availability of funds clearly affect the
extent and quality of the educational
opportunities.
*There is a positive correlation between the
level of school funding and the level of
educational opportunity.
*The better funded districts have a greater
flexibility in the reallocation of resources
to programs where there is a need.
*The differences in spending between the
better funded and underfunded districts are
clearly invested in educationally related
programs.
*All 12 school districts in this study exhib-
ited a responsible and judicious use of their
financial resources.
R. Mattson, M. Pace, and J. Picton, Does Money Make
a Difference - - Quality - Education - -
- in the of in the
Montana Schools?
218. Intervenor-Plaintiff MEA commissioned a
study similar to that conducted by Plaintiffs'
Study Team. Dr. Gary Gray, an assistant professor
in Eastern Montana College's School of Education,
studied educational opportunities in a number of
high and low spending school districts in Montana.
His methodology differed from that of the Plain-
tiffs' Study Team, but he arrived at essentially
the same conclusions. Dr. Gray used an extensive
checklist of indicators to compare educational
opportunities among school districts within two
expenditure classifications, a low expenditure
category, and high expenditure category.
219. Dr. Gray concluded that there are sub-
stantial differences in educational opportunities
among Montana school districts, which are manifest-
ed significantly between the high versus low expen-
diture categories which he studied. More
specifically, he found that wealthier districts
offered more science classes, i n labs which were
typi-cally larger, better stocked with more equip-
ment and consumable supplies, with more storage,
and generally more functional than those in poorer
districts. Consequently, students in wealthier
districts had more "hands on" learning experiences
than students in poorer districts. Dr. Gray found
the same things to be true in the home economics
and industrial arts programs. Similarly, schools
with more money tended to offer a wider and more
enriched range of courses in the language arts,
including foreign languages.
220. In the specialty areas of physical
education, music, and art, the wealthier schools
offered more opportunities. Gifted and Talented
Programs were much stronger in the high expenditure
districts. Consistant with the situation in many
Plaintiff districts, Dr. Gray found that many of
the low expenditure districts could not even afford
to offer a Gifted and Talented Program.
221. With respect to computers, he found
significant differences, with the high expenditure
districts having more and better computers and
computer labs. He also found significant differ-
ences between the two expenditure categories for
library and media center services, with the high
expenditure districts having larger and newer book
collections, larger periodical collections, larger
reference collections, larger audio-visual collec-
tions, and better special collections.
222. With respect to facilities, high expen-
diture districts reported that they have not had to
defer necessary maintenance or work projects due to
a lack of funds, as have low expenditure districts.
223. Wealthier districts also offer a wider
range of extracurricular activities to students
than low expenditure districts.
224. In sum, the comparative evidence estab-
lishes that spending differences among similarly
sized school districts in the State result in
unequal educational opportunities for students.
Furthermore, the comparative evidence verifies the
fact that the deficiencies and problems identified
by Plaintiff witnesses are part of a consistent
pattern in lower-spending districts, and that such
deficiences and problems are not consistantly found
in relatively higher spending districts.
[footnotes and citations to exhibits omitted]
The problems were compounded by the adoption of Initia-
tive 105 in the November 1986 general election. In 1987 the
Legislature adopted Senate Bill 71. See, 55 15-10-401, -402,
-411, and -412, MCA. The District Court correctly found that
the net effect was to freeze property tax levies at 1986
levels, which resulted in the locking in of any disparities
and inequities.
Federal "874" funding is not presently included in the
State's computations for the funding of schools. However,
plaintiffs' experts did include "874" funds in some of their
studies comparing the wealth of various school districts.
Intervenor-defendant Hays-Lodge Pole Elementary School Dist.,
et al., (Hays-Lodge Pole) is an association of Montana public
schools which receive "874" funds by reason of the attendance
of Indian students on and around the 7 federal treaty reser-
vations in Montana. Hays-Lodge Pole argued that "874" funds
should remain outside of the State's budgetary process.
The District Court concluded that education is a funda-
mental right under Montana's Constitution. It concluded
that, under the 1985-86 system of funding public elementary
and secondary schools, disparities in per pupil spendinq
among schools as a result of disparities in local property
wealth do not even pass the rational basis test of equal
protection analysis. It concluded that the concept of local
control is not related to the spending disparities now
present. It further concluded that the State's budgetary
difficulties do not constitute a 1-egal defense to these
inequalities.
The court also concluded that the Montana School Accred-
itation standards do not define the constitutional right to
education. It concluded that the treatment of federal "874"
funding for schools with Indian enrollment exacerbates the
inequalities present in the school finance system. The court
ordered that the present system of school funding may remain
in effect until October 1, 1989, and retained jurisdiction,
but left to the Legislature the task of fashioning a consti-
tutional funding system.
The State of Montana and defendants Holje, Ward, and
Frederich appeal the District Court's determination that the
present system of school funding is unconstitutional. The
Montana Board of Public Education asks this Court to clarify
the comments in the District Court's findings concerning the
role of accreditation standards which the Board establishes.
Hays-Lodge Pole raises five allegations of error in the
District Court's ruling that federal "874" funding should he
considered for purposes of equalization. Plaintiffs
cross-appeal on the denial of their request for attorney
fees.
I
Does Montana's system of funding the public schools
violate the education article, Art. X, of the Montana
Constitution?
Art. X I Sec. 1, Mont.Const., provides:
(1) It is the goal of the people to establish
a system of education which will develop the full
educational potential of each person. Equality of
educational opportunity is guaranteed to each
person of the state.
(2) The state recognizes the distinct and
unique cultural heritage of the American Indians
and is committed in its educational goals to the
preservation of their cultural integrity.
(3) The legislature shall provide a basic
system of free quality public elementary and secon-
dary schools. The legislature may provide such
other educational institutions, public libraries,
and educational programs as it deems desirable. It
shall fund and distribute in an equitable manner to
the school districts the state's share of the cost
of the basic elementary and secondary school
system.
By referring to the discussions in the transcript of the
1972 Montana Constitutional Convention, the State contends
the provision in subsection (1) that "[elquality of educa-
tional opportunity is guaranteed to each person," is an
aspirational goal only. We disagree with that contention.
In interpreting the Constitution, as in statutory construc-
tion, this Court must first look to the plain meaning of the
words used. State ex rel. Cashmore v. Anderson (1972), 160
Mont. 175, 184, 500 P.2d 921, 926. In the first sentence of
Art. X, Sec. 1(1), the framers of the Constitution clearly
stated the "goal" of the people to establish a system of
education which will develop the full educational potential
of each person. In the next sentence, the framers did not
use the term "goal." Instead they stated that equality of
educational opportunity "is guaranteed" to each person of the
state. As we review our Constitution, we do not find any
other instance in which the Constitution "guarantees" a
particular right. We conclude that the plain meaning of the
second sentence of subsection (1) is that each person - is
guaranteed equality of educational opportunity. The plain
meaning of that sentence is clear and unambiguous.
The State argues that the last sentence of subsection
(3) limits the Legislature's duty in connection with the
guarantee of equal educational opportunity. It points out
that Foundation Program funds are conceded by all parttes to
have been distributed in an equitable manner, and then sug-
gests that because the State has distributed such funds in an
equitable manner as required under the last sentence of
subsection (3), the Legislature has met its constitutional
obligations as required under Art. X, Sec. 1.
Art. X , Sec. 1(3), Mont.Const., requires that the Legis-
lature shall provide a basic system of free quality educa-
tion, that it may provide various types of educational
institutions and programs, and that the state's share of the
cost of the basic system shall be distributed in an equitable
manner. There is nothing in the plain wording of subsection
( 3 ) to suggest that the clear statement of the obligations on
the part of the Legislature in some manner was intended to he
a limitation on the guarantee of equal educational opportu-
nity contained in subsection (1). The guarantee provision of
subsection (1) is not limited to any one branch of govern-
ment. Clearly the guarantee of equal educational opportunity
is binding upon all three branches of government, the legis-
lative as well as the executive and judicial branches. We
specifically conclude that the guarantee of equality o f
educational opportunity applies to each person of the State
of Montana, and is binding upon all. branches of government
whether at the state, local, or school district level. We
hold that the last sentence of subsection ( 3 ) is not a limit-
ing provision on the guarantee of equal educational opportu-
nity contained in subsection (1).
The evidence presented at the trial of this case clearly
and unequivocally established large differences, unrelated to
"educationally relevant factors," in per pupil spending among
the various school districts of Montana. The evidence also
demonstrated that the wealthier school districts are not
funding frills or unnecessary educational expenses. Plain-
tiffs' expert witnesses testified that discrepancies in
spending as large as the ones present in Montana translate,
in their opinions, into unequal educational opportunities.
There was also unrebutted testimony that Foundation Program
funding falls short of even meeting the costs of complying
with Montana's minimum accreditation standards.
The State attempted to present an argument at trial that
equality of educational opportunity is more appropriately
measured by output, that is, by analvsis of the success of
students from the different school districts, rather than by
input of dollars. The District Court concluded that the
State had failed to submit convincing evidence on the output
theory of measurement. We agree with that conclusion on the
basis of this record. The District Court found similarly
unpersuasive the argument that statewide fiscal difficulties
in the last few years somehow excuse the disparities in the
spending per pupil in the various school districts. We agree
with the District Court that such fiscal difficulties in no
way justify perpetuating inequities.
The State also argued that the Constitutional directive
of local control of school districts, Art. X I Sec. 8, Mont.
Const., requires that spending disparities among the dis-
tricts be allowed to exist. That section provides:
School district trustees. The supervision and
control of schools in each school district shall be
vested in a board of trustees to be elected as
provided by law.
While Section 8 does establish that the supervision and
control of schools shall be vested in the board of trustess,
there is no specific reference to the concept of spending
disparities. Further, as made especially apparent after the
passage of Initiative 105, the spending disparities among
Montana's school districts cannot be described as the result
of local control. In fact, as the District Court correctly
found, the present system of funding may be said to deny to
poorer school districts a significant level of local control,
because they have fewer options due to fewer resources. We
conclude that Art. X I Sec. 8, Mont.Const., does not allow the
type of spending disparities outlined in the above quoted
findings of fact.
In 1972, when our Constitutional Convention met, approx-
imately 65% of General- Fund revenues were funded through the
Foundation Program. Con.Con. Tr. 2157. The transcript of
the debate on Art. X, Sec. 1(3), Mont.Const., clearly ex-
presses the delegates' concern with that level of fundinq.
See, for example, Con.Con. Tr. 1981-86, 2152-59.
We conclude that as a result of the failure to adequate-
ly fund the Foundation Program, forcing an excessive reliance
on permissive and voted levies, the State has failed to
provide a system of quality public education granting to each
student the equality of educational opportunity guaranteed
under Art. X, Sec. 1, Mont.Const. We specifically affirm
that portion of the District Court's Conclusion of Law 17
which holds that the spending disparities among the State's
school districts translate into a denial of equality of
educational opportunity. We hold that the 1985-86 system of
funding public elementary and secondary schools in Montana is
in violation of Article X, Section 1 of the Montana
Constitution.
In analyzing school funding under an equal protection
analysis pursuant to the provisions of Art. 11, Sec. 4,
Mont.Const., the District Court concluded that education is a
fundamental right and also made numerous and extensive find-
ings of fact and adopted a number of conclusions of law.
Because we have concluded that the school funding system is
unconstitutional under Art. X, Sec. 1, Mont.Const., we do not
find it necessary to consider the equal protection issue. We
therefore make no decision with regard to the findings of
fact and conclusions of law relating to the equal protection
of the laws analysis of the District Court, and in particular
do not rule upon the determination by the District Court that.
education is a fundamental right.
Several of the parties suggested that in the event we
concluded the school funding was unconstitutional, we should
spell out the percentages which are required on the part of
the State under the Foundation Program and for the d-istricts
under the voted levy system. P e are not able to reach that
7
type of a conclusion. As previously indicated, the 1985-86
school funding involved more than 20 different funds. The
control of such funds is primarily in the Legislature. Our
opinion is not directed at onlv one element of the system of
funding public schools in Montana, as we recognize that the
Legislature has the power to increase or reduce various parts
of these elements, and in addition to add other elements for
such funding.
While this opinion discusses spending disparities so far
as pupils are concerned, we do not suggest that financial
considerations of that type are the sole elements of a quali-
ty education or of equal educational opportunity. There are
a number of additional factors which are a significant part
of the education of each person in Montana, including but not
limited to such elements as individual teachers, classroom
size, support of the parents of students, and the desire and
motivation on the part of the student which moves him or her
to seek earnestly after an education. By not discussinq
these elements, we do not in any way suggest they are irrele-
vant, for the financing of education is only one aspect n f
equal educational opportunity. Our opinion is intentionally
limited to the elements discussed in the opinion.
Should this Court clarify the District Court's findings
regarding the accreditation standards promulgated by the
Montana Board of Public Education?
Under Art. X, Sec. 9 (3), Mont. Const. , the Montana Board
of Public Education (Board) has general supervisory power
over the public school system. The Board has adopted state-
wide accreditation standards for elementary and secondary
schools. Those standards require teachers to be certified by
the State, limit teachers' cl-ass loads, outline a minimum
instructional program (for example, courses required for high
school graduation), and establish minimum size, maintenance,
and safety standards for school facilities. The Board argues
that these standards establish the instructional component of
a basic system of free quality public elementary and secon-
dary schools. It objects to the District Court's findings
no. 262 and 270, which read as follows:
262. The testimony of superintendents, teachers,
and trustees clearly establish that from a profes-
sional educators' perspective, the minimum Accredi-
tation Standards in no way define a qualitv
education.
270. In sum, the Montana School Accreditation
Standards are minimum standards only, and do not
provide the basis for defining quality education.
The Board also objects to the last sentence of the court's
conclusion no. 18:
18. . . . Thus, the Montana School Accreditation
Standards do not define either the constitutional
rights of students or the constitutional responsi-
bilities of the State of Montana for funding its
public elementary and secondary schools.
The Board moved the District Court to amend the above find-
ings, but the motion was deemed denied after 45 days had
passed, under Rule 59(d), M.R.Civ.P. None of the parties
disagree with finding no. 261 of the District Court that the
accreditation standards establish a minimum upon which quali-
ty education can be built.
After reviewing the Board's argument and the transcript,
we conclude that the findings and conclusion in question
should be a-mended as requested. We therefore hold that
findings of fact 2 6 2 and 2 7 0 and conclusion of law 1 8 shall
be amended to read as follows:
[Finding of Fact 2 6 2 . 1 The testimony of superin-
tendents, teachers, and trustees clearly estab-
lishes that from the professional educators'
perspective, the minimum accreditation standards do
not fully define a quality education.
[Finding of Fact 2 7 0 . 1 In sum, the Montana School
Accreditation Standards are minimum standards upon
which quality education must be built.
[Conclusion of Law 1 8 . 1 Thus, the Montana School
Accreditation Standards do not fully define either
the constitutional rights of students or the con-
stitutional responsibilities of the State of Mon-
tana for funding its public elementary and
secondary schools.
111
Did the District Court err in its findings and conclu-
sions relating to consideration in the equalization process
of federal " 8 7 4 " funding?
Public Law 8 1 - 8 7 4 ("874") was enacted by the United
States Congress in 1 9 5 0 . It provides federal payments to
school districts which serve children who reside on or whose
parents are employed on federal property, including Indian
lands, or who have a parent on active duty in the military.
Hays-Lodge Pole asserts that, contrary to the District
Court's finding, Public Law 8 1 - 8 7 4 has as one of its purposes
assisting with the special problems in Indian education and
is not only a federal effort to replace lost tax revenue
resulting from the federal presence. It argues also that the
court's finding that, in some districts, " 8 7 4 " funding has
been used as tax relief is irrelevant and shows only the
State's neglect of the special needs of Indian children. It
contends that "874" funding is closely tied to the need on
and near Indian reservations +or additional school fundinq
because of the extraordinary educational difficulties present
- language barriers, poverty, unemployment, and cultural
differences. It maintains that any inequity present in "874"
districts will vanish when the Montana funding system is
equalized without consideration of "874" funding and that the
history of neglect of Indian education justifies judicial
protection of the benefits provided by "874" fundinq.
Hays-Lodge Pole argues that the District Court erred in
ruling that the Legislature may consider "874" funding in
equalization.
This issue is resolved by the federal statutory require-
ment that the United States Secretary of Education must
approve of Montana's equalization plan before "874" fundinq
may be taken into account. 20 U.S.C.A. S 240(d) (Supp. 1988).
The District Court recognized this requirement in its finding
no. 235, and found that Montana's system had not secured that
federal approval. We specifically affirm the District
Court's Conclusions No. 20:
20. A state may factor P. L. 81-874 revenue
into its school finance equalization system only if
the system meets the federal definition of an
equalized program, subject to the determination of
the Secretary of Education. [See Gwinn Area Commu-
nity Schools v. State of Michigan, 741 F.2d 840
(6th Cir. 1984)l ~ontana presently does not and
may not factor P. L. 81-874 revenue into the Foun--
dation Program equalization formula, because Mon-
tana's system does not meet the federal definition
of an equalized progra-m.
Art. X I Sec. 1(2), Mont.Const., states as fol.l.ows with
regard to our American Indians:
The state recognizes the distinct and unique cul-
tural heritage of the American Indians and is
committed in its educational goals to the preserva-
tion of their cultural integrity.
That provision establishes a special burden in Montana for
the education of American 1ndia.n children which must be
addressed as a part of the school funding issues. We do
invite the attention of the Legislature and the executive
branch to Montana's failure to meet the federal equalization
requirements. As a part of the changes to be made in Mon-
tana's school funding system, it may be appropriate to meet
the federal equalization requirements in order that "874"
funding may be factored into the State's equalization
formula.
IV
Did the District Court err in denying plaintiffs' attor-
ney fees?
Plaintiffs argue that they are entitled to recover their
reasonable attorney fees under the "common fund" doctrine.
This Court has described that doctrine as one which:
. .
. provides that when a party through active
litigation creates, reserves or increases a fund,
others sharing in the fund must bear a portion of
the litigation costs including reasonable attorney
fees. The doctrine is employed to spread the cost
of litigation among all beneficiaries so that the
active beneficiary is not forced to bear the burden
alone and the "stranger" . e l passive) benefi-
ciaries do not receive their benefits at no cost to
themselves.
Means v. Montana Power Co. (Mont. 1981), 625 P.2d 32, 37, 38
St.Rep. 351, 355-56. See also Serrano v. Priest (Cal. 1977),
The District Court concluded that the common fund doc-
trine did not apply in this case because no common fund was
created from which attorney fees and expert witness fees
could he paid. Tn a similar manner, under the "substantial
benefit" concept which has grown out of the common fund
doctrine, the District Court concluded that no substantial
benefit had resulted from its opinion and that no such bene-
fit would accrue unless the Legislature acts. We conclude
that the District Court properly denied attorney fees. We
affirm the District Court's denial of plaintiffs' request for
attorney fees.
v
We approve the District Court's rationale that "in order
to provide the Legislature with the opportunity to search for
and present an equitable system of school financing,'' the
holdings in this case should not become immediately effec-
tive. We modify the reservation of jurisdiction by the
District Court to provide that this Court specifically re-
tains jurisdiction until July 1, 1989, and on that date the
holdings of this opinion shall become fully in effect for all
school terms comrnencins after that date.
We Concur:
Justice John C. Sheehy, concurring:
I concur emphatically with the foregoing opinion but wish to
comment respecting the entitlement of plaintiffs to attorney fees.
We cite Serrano v. Priest (Cal. 1977), 569 P.2d 1303, 1310-
1311, to the effect that the common fund theory and the substantial
benefit theory do not at this time present a basis for attorney
fees. Not to be forgotten, however, is that in Serrano, the court
awarded the plaintiffs attorney fees on the "private attorney
general1!theory. If, as we all hope, because of the efforts of the
plaintiffs an equitable funding of education is eventually
established, all of the requisites for an award of attorney fees
on the private attorney general theory would be present in my view.
~ ~ ~ 4.
- R
Justice -%
A -
% x