DeRolph v. State (89 Ohio St. 3d 1, 2000)

Alice Robie Resnick, J.

I

BACKGROUND AND INTRODUCTION

In DeRolph I, after an exhaustive review of the evidence, a majority of this court concluded that Ohio’s system of primary and secondary public schools in place at that time fell well short of the mandate of Section 2, Article VI. DeRolph I recognized that, despite the earnest efforts of the General Assembly, it was simply impossible to characterize the existing system as “thorough and efficient.” Accordingly, this court declared the-system unconstitutional and stated that the General Assembly must devise and implement a new “thorough and efficient” system.

Now, this court is called upon to consider the same basic constitutional question that was before us in DeRolph I — Can the revised system be characterized as thorough and efficient pursuant to Section 2, Article VI of the Ohio Constitution? Although the key inquiry is the same, the specifics of that inquiry have changed commensurately with the state’s attempts to institute the necessary reforms. Therefore, realizing that legislation involving schools is an ongoing and ever-changing process as new laws are continuously enacted and former laws are constantly amended or repealed, it is incumbent upon us to examine the extent of those reforms to consider whether the mandate of the Constitution has been satisfied.

The benchmark of our inquiry remains the Thorough and Efficient Clause, as set forth in Section 2, Article VI of the Ohio Constitution:

“The general assembly shall make such provisions, by taxation, or otherwise, as, with the income arising from the school trust fund, will secure a thorough and efficient system of common schools throughout the State * *

We reiterate the standard for a thorough and efficient system of common schools as set out in Miller v. Korns (1923), 107 Ohio St. 287, 297-298, 140 N.E. 773, 776:

“This declaration is made by the people of the state. It calls for the upbuilding of a system of schools throughout the state, and the attainment of efficiency and thoroughness in that system is thus expressly made a purpose, not local, not municipal, but state-wide.

“With this very purpose in view, regarding the problem as a state-wide problem, the sovereign people made it mandatory upon the General Assembly to secure not merely a system of common schools, but a system thorough and efficient throughout the state.

“A thorough system could not mean one in which part or any number of the school districts of the state were starved for funds. An efficient system could not mean one in which part or any number of the school districts of the state lacked teachers, buildings, or equipment.”

Furthermore, in Cincinnati School Dist. Bd. of Edn. v. Walter (1979), 58 Ohio St.2d 368, 387, 12 O.O.3d 327, 338, 390 N.E.2d 813, 825, this court observed that a school system could not be thorough and efficient if any school district in Ohio “was receiving so little local and state revenue that the students were effectively being deprived of educational opportunity.” See, also, DeRolph I, 78 Ohio St.3d at 204, 677 N.E.2d at 741, citing both Miller and Walter with approval.

In DeRolph I, 78 Ohio St.3d at 212, 677 N.E.2d at 747, this court identified four aspects of the school-funding scheme in place at that time that contributed “to the unworkability of the system and which must be eliminated.” Those four aspects were “(1) the operation of the School Foundation Program, (2) the emphasis of Ohio’s school funding system on local property tax, (3) the requirement of school district borrowing through the spending reserve and emergency school assistance loan programs, and (4) the lack of sufficient funding in the General Assembly’s biennium budget for the construction and maintenance of public school buildings.”

This court, in declaring the statutes unconstitutional, stated in DeRolph I at 213, 677 N.E.2d at 747, that “[bjecause of its importance, education should be placed high in the state’s budgetary priorities. A thorough and efficient system of common schools includes facilities in good repair and the supplies, materials, and funds necessary to maintain these facilities in a safe manner, in compliance with all local, state, and federal mandates.”

The defendants claim that they have enacted a package of remedial legislation that meets and even exceeds the requirement for a system that is both thorough and efficient. Defendants argue that the decision of the trial court should be reversed and ask this court to “give the new, ongoing remedy a chance to succeed.”

Plaintiffs, on the other hand, urge this court to find that the state has fallen woefully short of its obligations to craft a thorough *and efficient system. Plaintiffs argue that this court should affirm the judgment of the trial court, which was in their favor on every significant point. Furthermore, plaintiffs request that this court (1) declare that the right to an education is a fundamental right under the Ohio Constitution, with a corresponding duty on the state to justify any disparities in the funding system; (2) specify what programs and services must be provided to children at every level, in order to define what level of educational opportunities must be made available; (3) retain jurisdiction of the case and direct the parties to a settlement conference under the supervision of a special master; and (4) issue an interim funding order that, among other things, requires the state to fund the foundation level at $5,051 per pupil, updated for inflation from FY99, and also requires the state to fund school facilities at a minimum level of $1 billion for each fiscal year.

In DeRolph I, 78 Ohio St.3d at 198, 677 N.E.2d at 737, this court stated that “Ohio’s statutory scheme for financing public education is complex.” In addition, this court noted that “[sjchool funding has been, and continues to be, a Herculean task.” Id. at 211, 677 N.E.2d at 746. These remarks apply with equal force to the system now at issue. In fact, the educational system continues to be extraordinarily complex, and as evidenced by the record now before us, reforming that system continues to be a task of unparalleled magnitude. It is impossible to overstate the scope of the challenge presented to the state by this case. This case implicates more than just funding; it also involves other complex intertwined issues.

The General Assembly must give this problem its undivided attention. If it is not addressed and solved immediately, it will only increase in magnitude. For example, the 1990 Ohio Public School Facility Survey determined that Ohio’s public primary and secondary schools then needed $10.2 billion for building repair and construction. In 1997, the Legislative Budget Office completed a study and concluded that the need had risen to a staggering $16.5 billion, with the state’s share estimated to be $7.2 billion and the local share estimated at $9.3 billion. In a 1996 report of the United States General Accounting Office, Ohio was ranked very near the bottom among the states in many categories regarding the condition of its school facilities, and was ranked dead last among the states in percentage of schools with at least one inadequate building feature. Furthermore, Ohio was ranked forty-eighth among the fifty states in percentage of schools reporting the heed to spend money to repair or upgrade schools to good overall condition, with more than ninety-five percent of Ohio schools needing to spend for that improvement. In a report released in March 2000 concerning construction expenditures for school facilities, the General Accounting Office found that the national average annual state construction expenditure per student for FY90 through FY97 was $473. Ohio ranked fortieth among the states, with an average annual expenditure for the time period of $274 per student. School Facilities, Construction Expenditures Have Grown Significantly in Recent Years, GAO/HEHS-OO-41 (Mar. 3, 2000) 29-30.

Other statistics also illustrate the magnitude of the school-funding challenge. There are six hundred eleven separate school districts in this state and forty-nine joint vocational school districts. There are approximately 1.8 million school children in primary and secondary public schools in Ohio and approximately one hundred eight thousand public school teachers. There are approximately three thousand nine hundred public school buildings in the state. Appropriations for primary and secondary education account for about forty percent of the state’s overall budget for this biennium, with more than $6.5 billion appropriated for FY00 for primary and secondary education out of a total state budget of more than $16.2 billion. For FY01 the appropriation is more than $6.9 billion for primary and secondary education out of a total state budget of more than $17.2 billion. These numbers reflect only the share contributed by the state for the funding of primary and secondary education and do not include the federal and local shares.

In FY97, a statewide total of more than $10 billion in local, state, and federal funds was spent on primary and secondary education. The federal government’s contribution was approximately six percent of that total. Considering only the combined state and local revenues of the districts, the state contribution was about 43.8 percent, and the local share was about 56.2 percent. These statistics illustrate the accuracy of this court’s observation in DeRolph I, 78 Ohio St.3d at 199, 677 N.E.2d at 738, that “Ohio relies more on local revenue than state revenue, contrary to the national trend.”

The Ohio school-funding system’s reliance on local revenue, chiefly in the form of local property taxes, is one aspect of the overall system with deep historical roots. In Ohio, as in many other states, the tradition of using local property taxes as the primary means to fund public schools has been entrenched since early statehood. See, e.g., 19 Ohio Laws 51, 55. As we recognized in DeRolph I, Ohio is just one of many states in recent years to face the fundamental problems caused by an overreliance on local property taxes.

The inherent inequities of funding systems that rely too much on local property taxes not only are extremely difficult to rectify, but also run counter to our Constitution’s explicit requirement for a statewide system of public schools. The valuation of local property has no connection whatsoever to the actual education needs of the locality, with the result that a system overreliant on local property taxes is by its very nature an arbitrary system that can never be totally thorough or efficient. In a very real sense, this problem underlies most of the other deficiencies in Ohio’s school system and is either the direct or indirect cause of them. The majority and all three separate concurring opinions in DeRolph I specifically recognized the inadequacies of a system that is overreliant on local property taxes.

We recognize that the problems associated with school funding being faced by recent and current sessions of the General Assembly are not of recent vintage. Many of the current deficiencies in school-funding policies arose over a long time and are the products of the failure for so many years of legislators who have long since retired to appropriately place education as a high priority in the state budget. To a significant degree, current members of the General Assembly have inherited a problem that has been coming to a head for many years. Our current legislators must confront problems that General Assembly members of the past were reluctant to address because education was simply not in the forefront of public concerns. Education was too often ignored, and issues relating to it were too often given short shrift.

Many factors have contributed in recent years to make what had been a problematical system into one that has reached crisis proportions throughout the state. The problems have escalated in part due to “unfunded mandates” imposed by the state and federal governments, causing the cost of educating our children to rise dramatically. Even when the state or federal government does fund a particular program or endeavor, significant associated local costs may be incurred. Increased costs for numerous programs and needs, such as special education, R.C. 3323.04, vocational education, R.C. 3313.90, gifted-student programs, R.C. 3313.21, transportation, R.C. 3327.01, facilities improvements {e.g., asbestos abatement and wiring for technology, as well as day-to-day maintenance on deteriorating buildings), compliance with the Americans With Disabilities Act, Sections 12101 et seq., Title 42, U.S.Code, employee costs (e.g., benefits such as health care, and for teacher certification, licensing, and development), increased staffing needs (e.g., additional teachers of science, math, and computer skills, and speech, hearing, and psychological educational aides), textbooks and supplies, R.C. 3315.17(A), science labs, computers and other technology purchases, summer school remediation, dropout-prevention programs, adolescent-pregnancy programs, Head Start and preschool programs, adult-literacy programs, substance-abuse-prevention programs, school lunch and breakfast programs, R.C. 3313.813(C), and a myriad of other things, have exacerbated problems that seem less and less manageable as total expenditures continually rise within a system impeded by the arbitrariness of its revenue stream.

It is apparent that the task of passing and implementing legislation involving education is exceedingly complex — studies must be conducted, experts must be consulted, goals must be formulated, and priorities set. There are many options to choose from, and deciding upon the best option and then reaching a consensus are formidable undertakings. In addition, a consensus must be reached in a climate in which other budgetary considerations are always present, with other spending priorities constantly lobbying for their own larger pieces of the limited state budget pie. Political realities, such as an individual legislator’s reelection concerns, also complicate the effort to devise a fair and adequate system. These budgetary and political concerns must yield, however, when compliance with a constitutional mandate is at issue. The task is difficult enough in prosperous times, when the state’s coffers are full. However, the funding system that is devised must be solid enough that it can also function in an economic downturn, because a consistent revenue stream is an absolute necessity for a thorough and efficient system.

Because the arguments before both the trial court and this court focused so narrowly on school funding, it is extremely important to recognize that funding is only one aspect of a thorough and efficient system of schools. We would be remiss if we failed to acknowledge that thoroughness and efficiency embrace far more than simply adequate funding. Even if the system were very generously funded, if other factors are ignored, it might still not be thorough and efficient. If teachers are ill prepared and students are unaware of what is expected of them, then our state has failed them. If students have access to the latest technology but cannot take advantage of it, then our state has failed them. If students have the most up-to-date textbooks but cannot comprehend the material in those books, then our state has failed them.

The definition of “thorough and efficient” is not static; it depends on one’s frame of reference. What was deemed thorough and efficient when the state’s Constitution was adopted certainly would not be considered thorough and effi-dent today. Likewise, an educational system that was considered thorough and efficient twenty-five years ago may not be so today. Moreover, it is impossible to generate an all-inclusive list that specifically enumerates every possible component of a thorough and efficient system. In light of this, we offer the following guidance: A thorough system means that each and every school district has enough funds to operate. An efficient system is one in which each and every school district in the state has an ample number of teachers, sound buildings that are in compliance with state fire and building codes, and equipment sufficient for all students to be afforded an educational opportunity.

In November 1998, former Governor George Voinovich requested a study by a group of experts, Achieve, Inc., the purpose of which was to provide incoming Governor Robert Taft and the new State Superintendent of Education, as well as legislators and others, a candid assessment of the strengths and weaknesses of Ohio’s reform strategy. When completed in March 1999, the Achieve, Inc. Report made the following observations:

“Ohio can be proud of a substantial set of policy initiatives it has launched in the 1990s, and of the deepening investments it has made in educational improvement. Since Fiscal Year 1991, state education funding has increased by approximately 50 percent, twice the rate of inflation. The increase has been greatest for low-wealth districts. Legislation already enacted guarantees an additional 40 percent increase in state aid over the next five years.

“Over and above these increases in general state aid for education, there have been substantial new investments in early childhood education, technology, facilities, and urban education, and major policy initiatives to overhaul teacher education and strengthen public accountability for results. Each of these initiatives deserves comment, for each could be an important element in a comprehensive state strategy to close the gap in student and school performance.”

In some ways, funding is the most easily quantifiable of the many factors that play a part in establishing a thorough and efficient system of schools. When considering the per-pupil spending disparities and the inadequacies in facilities that have of late characterized our system of schools, it is evident that some of. the most glaring problems are engendered by inadequate funding. Therefore, remedying those problems is naturally of paramount importance. Yet all of the other requirements of a thorough and efficient system of education must be developed along with funding. Ensuring adequate school funding is simply one of the means to reach the end — with the end being a statewide thorough and efficient system of schools that is adequately funded and that has statewide standards for success.

Even though remedying the scheme for school funding is not an end unto itself, it is an important step in establishing the type of school system that the Constitution requires. No one can ensure that adequate facilities and educational opportunities will lead to the success of the students of this state. One thing that is apparent, though, is that substandard facilities and inadequate resources and opportunities for any of those students are a sure formula for failure.

Our decision in DeRolph I required the General Assembly to respond to the untenable funding situation that had developed over time. Rather than allowing the status quo to continue, we realized that, we could not, in good conscience, ignore the overwhelming evidence before us that our statewide system of public schools was simply not a thorough and efficient system. Significant changes had to be made in the way primary and secondary public education is funded, and if it took a judgment of this court to make those changes happen, then so be it.

We fully realize that no miraculous alternatives will suddenly appear and make the General Assembly’s task any easier. In order to create a thorough and efficient system of statewide common schools, hard choices must be made. Moreover, because the stakes in this endeavor cannot be overestimated — we are dealing with the futures of the children of this state and in reality the very future of our state — the course must be stayed. As past experience has shown, the longer an inadequate funding system is allowed to continue, the more difficult it is to reform the system. The General Assembly should not allow the momentum of recent efforts to be impeded for any reason. Everyone’s cooperation and best efforts are required as we strive to ensure that educational opportunities are available to all children in this great state, not just those residing in affluent suburbs or in well-to-do neighborhoods.

Throughout its history, this case has presented two contradictory features that have made it difficult for all parties involved, including the courts of this state, to define the roles of those charged with solving the system’s problems. On the one hand, the courts of this state are entrusted with the authority to determine whether a school-funding scheme complies with the Constitution. See DeRolph I at 198, 677 N.E.2d at 738. However, this court in DeRolph I did not require a specific funding scheme and did not instruct the General Assembly as to what legislation should be enacted, leaving it to the General Assembly to determine the specifics of the remedial legislation. Id. at 212-213, 677 N.E.2d at 747. The reason for this is the doctrine of separation of powers. The legislature has the power to draft legislation, and the court has the power to determine whether that legislation complies with the Constitution. However, while it is for the General Assembly to legislate a remedy, courts do possess the authority to enforce their orders, since the power to declare a particular law or enactment unconstitutional must include the power to require a revision of that enactment, to ensure that it is then constitutional. If it did not, then the power to find a particular Act unconstitutional would be a nullity. As a result there would be no enforceable remedy. A remedy that is never enforced is truly not a remedy.

Thus, it might be tempting for this court to do its own analysis, for example, determining the level of funding per pupil to achieve a thorough and efficient system, and then ordering that amount of funding. For instance, we conceivably could simply order, as plaintiffs request, that the foundation amount be set in excess of $5,000 per pupil for FY00, and order the General Assembly to fund that amount. However, this court respectfully declines to pursue that course. That degree of involvement in fashioning a remedy in this case is not, nor should ever be, how we perceive our role. Our role, as we have declared in past cases, is to decide issues of constitutionality — not to legislate, as some may believe.

II

SUMMARY OF LEGISLATIVE ACTIVITY

A substantial amount of legislation has been enacted since DeRolph I was decided. There are indications that Governor Taft and the General Assembly have taken some of the steps necessary to remedy a situation that has been neglected for more than twenty-five years. We now examine the laws that have been enacted in response to DeRolph I. Before we consider the specifics of the legislation in context, we summarize the developments that have occurred. The key initiatives include:

• Am.Sub.S.B. No. 102 (“S.B. 102”) (signed into law on May 20, 1997) created the Ohio School Facilities Commission (see R.C. 3318.30), transferred responsibility for the Classroom Facilities Assistance Program from the State Board of Education to that commission, required that commission to establish the Emergency School Building Repair Program (see R.C. 3318.35), and instituted and authorized money for the so-called Big Eight Repair Program for major renovations and repairs of school facilities in some of the largest school districts in the state (Section 7 of the Act).

• Am.Sub.H.B. No. 215 (“H.B. 215”) (the Biennial Budget Bill for FY98 and FY99, signed into law on June 30, 1997) made adjustments in the basic aid formula amount (R.C. 3317.022) and made other changes to R.C. Chapter 3317. It also provided additional equity aid (Section 50.05 of the Act; see R.C. 3317.0213), additional funding for textbooks (Section 50.16), additional funding for facilities (Section 188), and additional funding for the SchoolNet (Section 69.01) and SchoolNet Plus (Section 69.03) programs, as well as creating and providing initial funding for the Disability Access Program (Sections 50 and 69).

• Am.Sub.S.B. No. 55 (“S.B. 55”) (signed into law on August 22, 1997), the student and school district “Academic Accountability Bill,” established school district performance standards (R.C. 3302.02) and school district report cards (R.C. 3302.03), increased high school graduation requirements (R.C. 3313.603), and instituted a “fourth-grade guarantee,” preventing students who do not pass the fourth-grade proficiency test from advancing to the fifth grade unless exceptions apply (R.C. 3313.608).

• Sub.H.B. No. 412 (“H.B. 412”) (signed into law on August 22, 1997), the “School District Fiscal Accountability Act,” requires school districts to maintain budget reserves (former R.C. 5705.29[K], now R.C. 5705.29[H]) and requires set-asides for building maintenance (R.C. 3315.18) and textbooks and instructional materials (R.C. 3315.17), and created the school district solvency assistance fund (R.C. 3316.20).

• Am.Sub.H.B. No. 650 (“H.B. 650”) (signed into law on February 13, 1998) and Am.Sub.H.B. No. 770 (“H.B. 770”) (signed into law on June 17,1998) make up the heart of the General Assembly’s remedy. H.B. 650’s stated purpose is “to establish a new system for funding education.” H.B. 770, among other things, modified some of H.B. 650’s provisions. This legislation set out the essence of the current R.C. Chapter 3317 school-funding formula, including the base cost amount and the adjustments and subsidies. It also provided money for school facilities. H.B. 650 at Section 14.

• Am.Sub.H.B. No. 850 (“H.B. 850”) (the capital appropriations bill for the biennium ending June 30, 2000, signed into law on December 17, 1998) provided money for school facilities, some specified for districts with exceptional needs. Sections 6 and 26 of the Act.

• Am.Sub.H.B. No. 282 (“H.B. 282”) (the biennial Education Budget Bill for FY00 and FY01, signed into law on June 29, 1999) marks the first time that the state has created an education budget separate from its main operating budget, by placing the education budget into its own bill. H.B. 282 made adjustments to the R.C. 3317.02 per-pupil formula amount, and made other adjustments in the R.C. Chapter 3317 funding formula, enacted R.C. Chapter 3324 pertaining to gifted students, and provided additional money for SehoolNet plus. Section 11 of the Act.

• Am.Sub.H.B. No. 283 (“H.B. 283”) (the Biennial Budget Bill for FY00 and FY01, signed into law on June 30, 1999) the main operating budget bill for the biennium, allocated state budget surplus revenue to SehoolNet Plus and for school facilities, with some of the facilities money to go to districts with exceptional needs. Section 124 of the Act.

• Am.Sub.S.B. No. 192 (“S.B. 192”) (signed into law on March 3, 2000) provided for the allocation of money received by the state pursuant to the Tobacco Master Settlement Agreement, committing a significant amount of tobacco settlement funds for school construction and repair. R.C. 183.02(F) and 183.26. See, also, Section 17 of the Act.

In addition, other initiatives are pertinent to our inquiry, including Am.Sub. H.B. No. 1 (“H.B. 1”) (signed into law March 30, 1999; implemented the OhioReads initiative); Am.Sub.S.B. No. 1 (signed into law May 6, 1999; established school safety zones); and Senate Joint Resolution No. 1 (concurred in by the House on May 4, 1999), which placed on the November 2, 1999 ballot a proposed constitutional amendment (ultimately approved by the voters of the state) to allow the state to issue general obligation bonds to pay for school facilities (Sections 2n and 17, Article VIII).

Ill

REMEDIAL LEGISLATION AND ITS EFFECTS

We will now examine the foregoing legislation and assess its compliance with Section 2, Article VI of the Ohio Constitution.

We emphasize that due to the extent of some of the legislation, especially H.B. 650 and H.B. 770, our discussion of it is not in any way intended to be exhaustive.

A

Cost of an Adequate Education

In DeRolph I, this court noted that Ohio’s system of public education is a “statewide system” and admonished the General Assembly to “create an entirely new school financing system.” Id., 78 Ohio St.3d at 213, 677 N.E.2d at 747.

An essential aspect of the school-funding program contained in R.C. Chapter 3317 is “basic state aid,” which provides eligible school districts with a guaranteed minimum amount of support. R.C. 3317.022. It is dependent on the base cost, calculated as the unweighted average cost per student of educating students who were enrolled in a school district that in fiscal year 1994 met seventeen out of eighteen performance criteria and that was not excluded on the basis of wealth or income. R.C. 3317.012(B).

In determining basic state aid, several components are considered in calculating the amount a school district will receive: the guaranteed minimum dollar level of financial support (the formula amount), the district’s cost-of-doing-business factor, average daily membership (“ADM”), adjusted total taxable value, and the charge-off amount. R.C. 3317.022.

A district’s cost-of-doing-business factor is based on the cost of goods and services in the county where the district is located. R.C. 3317.02(N)(1). Since the cost of goods and services.is not uniform throughout the state, the cost-of-doing-business factor is intended to put all school districts on a more level playing field.

The ADM represents the number of students enrolled in a given school district and is calculated pursuant to R.C. 3317.03(A). R.C. 3317.02(D)(1). If it is more advantageous, a district may use a “three-year average formula ADM” to calculate its ADM. R.C. 3317.02(D)(2); 3317.022(A).

A school district’s “adjusted total taxable value” is defined in R.C. 3317.02(W) and 3317.022(A)(2).

The “charge-off amount” defines a district’s responsibility for its portion of the funding requirement. To calculate the charge-off amount, a district’s adjusted total taxable value is multiplied by the charge-off rate, which is currently twenty-three mills ($0,023) per dollar of valuation. R.C. 3317.022. Subtracting the charge-off amount from the rest of the formula yields the amount of basic state aid the district will receive. Id.

All of these variables function together so that the amount that an eligible district will receive from the state as basic aid can be determined. The current formula for basic state aid is: Cost-of-doing-business factor x formula amount x (the greater of formula ADM or the three-year average of formula ADM) - (0.023) (adjusted total taxable value). R.C. 3317.022(A)(1). The formula demonstrates that as more per-pupil revenue is generated locally, the state’s contribution declines.

The formula amount is the “base cost for the fiscal year specified in section 3317.012,” adjusted with a phase-in. R.C. 3317.012(B) sets forth the criteria used by the General Assembly to determine the base cost figure for FY96. This number was then adjusted for inflation at an annual rate of 2.8 percent. R.C. 3317.012(A). Consequently, the base cost per pupil in FY00 is $4,177 and in FY04 will be $4,665. Id.

The base cost figure is phased in over a period of three years. R.C. 3317.02(B). Commencing in July 2001, and every six years thereafter, the President of the Senate and the Speaker of the House of Representatives are required to appoint three members to a committee, which will reexamine the cost of an adequate education. R.C. 3317.012(C). This is certainly a positive step in view of the fact that the cost of an adequate education in Ohio had not been determined since 1973-1974. DeRolph I, 78 Ohio St.3d at 261, 677 N.E.2d at 780 (Resnick, J., concurring).

In addition to the basic aid, the state provides funding for certain programs and school district operations individually, according to formulas established by the General Assembly. Such programs include funding for special education, R.C. 3317.022(C), education for gifted students, R.C. 3317.024(P), vocational education, R.C. 3317.022(E), transportation, R.C. 3317.024(E) and 3317.07, and Disadvantaged Pupil Impact Aid (“DPIA”), R.C. 3317.029. These supplemental expenditures are often referred to collectively as categorical aid. If the formula takes local wealth into account, then the formula is referred to as equalized.

Special education is funded by the state in addition to the basic aid formula. H.B. 650 and H.B. 770 require special education students to be counted in ADM for determining basic aid. R.C. 3317.03(A). In addition to basic aid, districts receive separate state aid for special education pupils based on a weighted ADM, which is calculated based on the severity of the student’s disability. R.C. 3317.013, 3317.022(C), and 3317.02(F)(1) through (3). This treatment of handicapped students differs from the prior law, under which students whose education was separately funded were not also included in ADM for basic aid purposes. Former R.C. 3317.02(A), H.B. 215; former R.C. 3317.024(N), Am.Sub.S.B. No. 230,146 Ohio Laws, Part VI, 10301,10304.

The state continued to fund education programs for gifted children through funding units separate from basic aid in 1999, R.C. 3317.024(P), and H.B. 650 increased the number of funding units available for FY99 from nine hundred twenty-seven to nine hundred fifty. In H.B. 770 the General Assembly stated that it would review and revise the formula used to fund education for gifted children. Former R.C. 3317.024(P)(2).

Vocational education is another program for which districts receive funds from the state in addition to those provided by the basic aid formula. “The average vocational education additional cost per pupil can be expressed as a multiple of the base cost per pupil calculated under section 3317.012 of the Revised Code.” R.C. 3317.014. Generally speaking, each vocational student is counted as one ADM in the basic aid calculation, R.C. 3317.03, and an additional percentage, which is called a “weight,” is added to take into account additional costs incurred in providing vocational education. R.C. 3317.022(E).

The state also pays for transportation costs apart from the basic aid formula. A district’s predicted costs are based on the density of the student population and the number of miles traveled. R.C. 3317.022(D)(2). The state’s share of calculated transportation costs in FY00. is 52.5 percent. R.C. 3317.022(D)(3). The percentage will increase annually until FY03, when the state’s share will be sixty percent. Id.

Disadvantaged Pupil Impact Aid (“DPIA”) is available to districts that satisfy certain requirements. DPIA is designed to provide funding for programs such as all-day kindergarten and class-size reduction to provide a select group of students with individual attention. R.C. 3317.029.

The present school-funding scheme contains a variety of guarantees and caps. For instance, there are guarantees for basic aid, R.C. 3317.0212, transportation funding, R.C. 3317.022(D)(4), and DPIA funding, R.C. 3317.029(B). Guarantees are often criticized because they tend to provide some districts with more money than they would receive under the foundation formula alone. “[Guarantees work to the substantial benefit of wealthier districts and represent a flaw in the system of school funding, because they work against the equalization effect of the formula.” DeRolph I, 78 Ohio St.3d at 200, 677 N.E.2d at 739. Warren G. Russell, the current Director of Legislative Services for the Ohio School Boards Association, expressed the belief that the continued need for guarantees indicates that the basic aid formula has structural problems.

Even though the current formula is almost identical to its predecessor, we acknowledge that the state has made some alterations to the school-funding scheme that was at issue in DeRolph I. See id., 78 Ohio St.3d at 199-200, 218, 677 N.E.2d at 738-739, 751. However, this does not mean that we retreat from our mandate in DeRolph I, requiring Ohio’s public school financing scheme to undergo a “complete systematic overhaul.” DeRolph I, 78 Ohio St.3d at 212, 677 N.E.2d at 747. Our assessment of compliance with this mandate is qualitative rather than quantitative.

In order to determine the cost of a basic education, the state engaged the services of Dr. John G. Augenblick, an expert in school finance. The state adopted Augenblick’s methodology, with three significant changes, which ultimately lowered his base cost figure.

The Augenblick methodology is an outputs-based approach, which uses the eighteen performance levels enumerated in S.B. 55 to ascertain whether a district is effective. R.C. 3302.02 and 3302.03(B)(1). A district that meets seventeen of the eighteen criteria is deemed an effective district. R.C. 3302.03(B)(1). Augen-blick screened out some districts using criteria intended to measure administrative efficiency. In the first of the three changes to Augenblick’s method, the General Assembly did not use this screening procedure.

In the second change, the General Assembly enlarged the screen that was intended to remove anomalous districts in terms of personal income, from the fifth and ninety-fifth percentiles recommended by Augenblick to the tenth and ninetieth percentiles. According to Dr. Stephen P. Klein, an independent consultant, who is also employed as a Senior Research Scientist with Rand Corporation in Santa Monica, California, this change lowered the basic expenditure amount by “several hundred dollars.”

Using these two screens, Augenblick selected one hundred two districts. As a result of the first two changes, the method used by the General Assembly selected a substantially overlapping group of one hundred three districts. Of the one hundred three districts used, the district -with the lowest base cost per pupil spent $2,755 per pupil, and the district with the highest base cost per pupil spent $5,898.

In the third change, the method used to calculate the base figure was changed from a weighted per-pupil average to an unweighted district average, R.C. 3317.012, with no convincing rationale given for the change. This alteration further reduced the figure for the base cost of an adequate education.

As a result of these three changes, the base cost of an adequate education was reduced from $4,269 for FY99 to $4,063. We can only hope that Howard Fleeter, an Assistant Professor in the School of Public Policy and Management at the Ohio State University, was incorrect when he opined that the legislature made these changes in order to come up with a lower number because some legislators were concerned with cost and the “necessity of responding to the DeRolph decision at all because of the feeling that the state had already made significant progress since 1991 and that they didn’t need to do anything else.”

Although we recognize that deciding what methodology to adopt is a policy determination, we are perplexed by the General Assembly’s actions of enlisting an expert in the area of school financing and then, with no adequate explanation, altering his method. According to Senator Robert Cupp, no one in the working group was an expert in statistics or Augenblick’s methodology. Russell testified that he did not believe that the legislature had the expertise to understand the impact of the changes made to the Augenblick methodology and to grasp the statistical concepts involved. We share Russell’s concern. Furthermore, Klein questioned whether the Augenblick methodology or the one adopted by the General Assembly would provide adequate funding for Ohio’s public schools.

Another matter that concerns us is the process of phasing in the base cost over a three-year period. See R.C. 3317.02(B). Because of the phase-in, the $4,063 figure that was deemed by R.C. 3317.012 to be the base cost of an adequate education for FY99 will not be reached until FY01 in inflation-adjusted dollars. We find it difficult to understand how the state can justify its position that it is funding a thorough and efficient education for Ohio’s public school children when it is currently funding below the level that the General Assembly deemed to be the base amount for an adequate education.

B

Budgetary Residual

In DeRolph I, we recognized that the state was funding education as a “residual after other mandated programs” were funded. Id., 78 Ohio St.3d at 261, 677 N.E.2d at 780. This method for calculating the cost of a basic education involved determining how much money the state could afford for education and working backward to arrive at the per-pupil basic subsidy.

According to Speaker Davidson, the General Assembly’s response to the court’s concern that “the formula amount has no relation to what it actually costs to educate a pupil” is the funding scheme set forth in H.B. 650 and H.B. 770. Speaker Davidson claimed that the General Assembly has made a commitment to fund primary and secondary education “based upon a rational methodology of adequacy,” which is “locked into House Bill 650.” Senator Cupp claimed that as a result, “there is no priority in that budget that now has a higher priority than education.”

The General Assembly divided the budget for the 2000-2001 biennium into two sections: H.B. 282, the Education Budget Bill, and H.B. 283, the Biennial Budget Bill. Prior to this, the budget had never been split into two separate bills, with one bill dedicated solely to the education budget. Both bills proceeded through the General Assembly together and were passed almost simultaneously. Governor Taft signed H.B. 282, the Education Budget Bill, into law on June 29, 1999, and H.B. 283 the next day.

The system’s skeptics allege that residual budgeting remains despite the new legislation. Dr. Samuel Kern Alexander, the current president of Murray State University, a regional state university in Kentucky, criticized the formula for being unreliable and subject to manipulation. Alexander testified that “factors are just being added and subtracted to reach a dollar amount that is available, a predetermined, presumably, dollar amount that the Legislature can afford, and Dr. Augenblick is justifying it.” In July 1997, Speaker Davidson stated that the General Assembly was considering lowering the $4,269 per pupil figure recommended by Augenblick because “the amount was calculated on inexact data and that lower per-pupil funding would help make up revenues lost from scrapping the cigarette tax and expanding property tax relief.”

We acknowledge the progress the General Assembly has made in this area. We give defendants the benefit of the doubt, particularly in light of recent developments, in their contention that they have not merely disguised residual budgeting. However, we cannot totally discount evidence that the actual cost might have been the deciding factor in selecting the method used to determine the base cost of an adequate education.

C

School Facilities — Funding for Construction and Maintenance

In DeRolph I, we held that the Classroom Facilities Act, R.C. Chapter 3318, was unconstitutional to the extent that it was underfunded. Id., 78 Ohio St.3d 193, 677 N.E.2d 733, syllabus. Our opinion presented graphic examples of some of the deplorable conditions existing in primary and secondary schools throughout the state. Id. at 206-208, 677 N.E.2d at 743-744. We further remarked that “state funding of school districts cannot be considered adequate if the districts lack sufficient funds to provide their students a safe and healthy learning environment.” Id. at 208, 677 N.E.2d at 744.

The Classroom Facilities Act in R.C. Chapter 3318 was enacted in 1957 and was substantially amended in May 1997. Am.Sub.S.B. No. 102. William L. Phillis, who serves as the executive director in a consultant relationship with the Ohio Coalition for Equity and Adequacy of School Funding, testified that “historically not much money had been put into that program until the beginning” of the 1990s. The 1990 Ohio Public School Facility Survey indicated that $10.2 billion was needed for facility repair and construction. DeRolph I, 78 Ohio St.3d at 206, 677 N.E.2d at 742. The amount required as of August 1997 was estimated to be $16.5 billion. Phillis also testified that a 1996 report issued by the United States General Accounting Office listed Ohio as the state having the highest percentage of school buildings with major flaws.

The General Assembly’s response to this situation was Am.Sub.S.B. No. 102, which was signed into law on May 5, 1997. S.B. 102 established the Ohio School Facilities Commission, R.C. 3318.30(A), which oversees the Classroom Facilities Assistance Program (R.C. 3318.02 through 3318.041), the Emergency School Building Repair Program (R.C. 3318.35), and the Big Eight Program (Section 7, S.B. 102).

The commission is also charged with assessing all classroom facility needs and conditionally approving repair and construction projects. R.C. 3318.02(A) and 3318.04. Those districts whose adjusted valuation per pupil ranks in the lowest one to five percent shall have priority in project approval. R.C. 3318.02(B). Once the commission conditionally approves a district’s project, the project is submitted to the State Controlling Board for final approval. R.C. 3318.04. If the board approves it, the district has one year to pass a half-mill levy representing its share of the cost. R.C. 3318.05. See, also, R.C. 3318.032. If the district does not pass a levy within that time, the conditional approval for the project shall lapse, and the amount reserved and encumbered for the project is released. R.C. 3318.05. If conditional approval for the district’s project lapses, that district shall be given first priority for project funding as such funds become available. Id. The entire process, from approval of the project to its completion, may take as long as four years.

S.B. 102 also established the Emergency School Building Repair Program in order to fund districts’ urgent repair needs. R.C. 3318.35. Each eligible district that applied could receive up to $500,000 in emergency repair funds, and districts were not required to provide matching funds. As of trial, a total of two hundred fifty-four districts had received emergency repair funds, totaling $118 million.

The Big Eight Program is a repair program for the eight school districts in the state that, roughly speaking, have more than twelve thousand pupils, thirty percent of whom receive Aid to Dependent Children. Section 7, S.B. 102. S.B. 102 set aside $100 million for this program, which requires these eight school districts to match funds received from the state and use them for major repairs and renovations of school facilities. Id.

In July 1997, the General Assembly adopted Sub.H.B. No. 412, effective November 21,1997. One of H.B. 412’s provisions requires districts to establish a capital and maintenance fund and to deposit “four per cent * * * of all revenues received by the district that would otherwise have been deposited in the general fund, except that money received from a permanent improvement levy authorized by section 5705.21 of the Revised Code may replace general revenue moneys in meeting the requirements of this section.” R.C. 3315.18(A).

We recognize that the General Assembly has attempted to formulate a viable plan to fund the construction of new school facilities and to repair Ohio’s decaying school buildings; however, we are not without concern. For instance, a high school in the Mad River-Green Local School District in Clark County has a bathroom that is infested with a lethal mold. Beacon Journal, “Schools Suffering Despite State’s Fix” (Apr. 10, 2000). This situation appears to be of an urgent nature, yet it has not been remedied. Consequently, Mad River-Green Local Superintendent Denny Howell must keep the bathroom boarded up in order to prevent students from being exposed to the lethal mold that resulted from “a leak that allowed urine and feces to drain slowly into a ceiling.” The situation in the Mad River-Green Local School District is not an isolated incident. Many other facilities issues plaguing our schools involve sewage problems. At Park Street Middle School, in the South-Western City School District, a section of a locker room in the school’s basement had to be sealed off due to a sewage backup. During a visit to one school, Phillis walked through a “stream of water” in the building and smelled the odor of sewage.

Randall Fischer, the Executive Director of the Ohio School Facilities Commission, testified at the trial court hearing that except for the reserve for emergency-repair funds, the funds available for the Classroom Facilities Assistance Program have been completely exhausted. In light of this, Fischer testified that emergency situations were still in existence at the time of trial. For example, thirteen schools in the Youngstown City School District did not receive funds for asbestos abatement. Likewise, the Jackson City School District applied for but did not receive funds for asbestos removal. The Ruhlin Company served as one of the-Site Evaluation Team Leaders for the Ohio School Facilities Commission Emergency Repair Grant Program and visited over one hundred ten schools in forty-eight school districts in northwest Ohio. The Ruhlin Company made the following observations: “Many of these buildings were built in the 1920s and 1930s. Although the roofs are not original, many are over 20 years old and have reached the end of their expected life. Masonry tuckpointing has been neglected in many buildings and exterior windows are old and leaking. The electrical systems are not able to handle today’s power requirements for computers, TV’s and other electronic equipment. Because of the rural nature of many of the schools, well water and septic systems are utilized and do not meet today’s current EPA standards and need [to be] replaced. Boilers are old and are nursed through each heating season with yearly retubings and expensive maintenance.”

Another troublesome aspect of the Classroom Facilities Assistance Program is that an eligible district must pass a levy within one year in order to receive funds from the state. R.C. 3318.05. Thus, a district that fails to pass a levy the first time must wait until the General Assembly appropriates more funds for the program and still must pass a levy as a condition of receiving the funds.

Again, referring to the report compiled by Achieve, Inc., we note that “despite significant recent investments the challenge remains severe. Although estimates differ on the magnitude of the problem, by all accounts too many Ohio children, especially in poor rural and urban districts, attend classes in dreadfully substandard facilities. [Emphasis sic.] * * * During this decade [the 1990s] the state has invested over $1 billion in capital improvement funds for schools, more than tripling the investments made over the previous four decades. However, without a reliable inventory of the state’s facilities and a solid cost estimate for bringing all Ohio sehool[s] up to standard, it is impossible to know just how much progress has been made. While the state has at least made a down payment on a long deferred problem, this is a major piece of unfinished business for Ohio’s policymakers.” (Emphasis added.)

In addition, according to Fischer, there is no degree of certainty as to what the future funding from the state will be. Am.Sub.H.B. No. 770, effective June 17, 1998, requires the Governor to recommend and request that no less than $300 million be appropriated annually to school facilities when future budgets are submitted to the General Assembly. R.C. 107.031. R.C. 107.031 merely requires that the Governor shall “ensure that among the various budget recommendations made * * * to the general assembly each biennium there are recommendations for appropriations to the Ohio school facilities commission, aggregating not less than three hundred million dollars per fiscal year.” R.C. 107.031. Phillis testified that at a rate of $300 million per year, it would take fifty-five years to correct the $16.5 billion deficit, and this estimate does not take into account “rolling decay.”

While visiting some of Ohio’s schools, Phillis made several observations. At trial, Phillis described a school building in the Morgan Local School District that was built before 1900 and has sunk approximately six inches. As a result of this settling, the doors no longer fit in their frames. Phillis visited a school that was heated with a coal-fired furnace and saw coal dust in the classrooms. During a visit to Bloom Carroll Middle School, which was built in the early 1900s, Phillis noticed that the brick on the building’s fagade was cracked. Additionally, Phillis noted that many of the buildings he visited lacked handicapped access.

From the foregoing, it is readily apparent that this is an important area that will continue to require the attention of the Governor and future General Assemblies. We acknowledge the initiatives in Am.Sub.H.B. No. 850 (effective March 19,1999), which appropriated $505 million for school facilities (see Sections 6 and 26 of the Act), and Am.Sub.H.B. No. 283, which appropriated an additional $325.7 million, by devoting money from the state’s budget surplus to school facilities. See Section 124 of the Act. When combined with moneys appropriated from Am.Sub.S.B. No. 102, Am.Sub.H.B. No. 215, Am.Sub.H.B. No. 650, and commitments from other sources, recent appropriations for facilities are in excess of $1.6 billion, yet the immediate needs are much greater. As recognized in the reply brief of amicus curiae Governor Taft, on September 9, 1999, the Governor proposed a school facilities allocation plan called “Rebuilding Ohio’s Schools: A 12-Year Commitment.” The plan proposes to allocate an additional $23.1 billion in state and local funds to school facilities from FY01 to FY12. The state share of that amount would be $10.2 billion, broken down into $5.9 billion from the capital budget, $1.8 billion from cash appropriations and interest earnings, and $2.5 billion from the state tobacco litigation settlement. The plan calls for the state share to be accompanied by $12.9 billion in local matching funds. In addition, the plan calls for the establishment of a trust fund with some of the tobacco settlement money to take care of future school needs.

At the time of this writing, a significant component of the Governor’s plan appears to be in place. On March 3, 2000, the Governor signed into law Am.Sub.S.B. No. 192, which provides for the distribution of money received by the state pursuant to the Tobacco Master Settlement Agreement. As pertinent to our consideration here, this legislation allocates nearly $2.5 billion in tobacco settlement funds through FY12 to go for school construction and repair, through the Education Facilities Trust Fund. See R.C. 183.02(F) and 183.26. The legislation also allocates funds for classroom technology, see R.C. 183.02(H) and 183.28, and establishes and allocates money to an Education Facilities Endowment Fund, with investment earnings transferred each quarter to the Facilities Trust Fund, R.C. 183.02(G) and 183.27. Provisions are also made addressing appropriations for school construction and repair from FY12 to FY25. Section 17 of the Act. The firmness of all the commitments contained within this legislation is of course limited by the prohibition of Section 22, Article II of the Ohio Constitution, which prohibits the General Assembly from appropriating for more than a two-year period. Thus, even though the long-term plan is in place, the General Assembly must appropriate the money every two years.

The task at hand is not one to be taken lightly. One-half of Ohio’s school buildings are fifty years old or older. DeRolph I, 78 Ohio St.3d at 206, 677 N.E.2d at 742. Constructing and maintaining school buildings is an ongoing process, and this court recognizes that it would be unreasonable to require the General Assembly to remedy overnight what has taken decades of neglect to develop, yet there remains an extensive amount of work to be done in order to educate Ohio’s students in “safe and healthy learning” environments. Id. at 208, 677 N.E.2d at 744. Continuing funding in this area is of the utmost importance.

D

Borrowing

In DeRolph I, this court found the following provisions, relating to forced borrowing, unconstitutional: R.C. 133.301, which granted borrowing authority to school districts, and R.C. 3313.483, 3313.487, 3313.488, 3313.489, and 3313.4810, which provided for emergency school assistance loans. Id., 78 Ohio St.3d 193, 677 N.E.2d 733, syllabus. These statutes were deemed to be an inherent weakness in the state’s school-financing system because they required districts that were unable to satisfy their budgetary requirements to borrow funds at commercial lending rates. Id. at 201, 677 N.E.2d at 739. When these borrowing statutes were in effect, over $700 million was borrowed by local school districts so that they could keep their schools operating.

The first type of borrowing held unconstitutional in DeRolph I was the “spending reserve” loan in R.C. 133.301, which enabled school districts to borrow against a subsequent year’s revenue, as long as the district received approval from the Superintendent of Public Instruction. Id. at 201, 677 N.E.2d at 739. If the spending reserve loan was not enough to enable the district to meet current operating needs, then the district was required to seek necessary funding from a commercial lender. Id. at 201, 677 N.E.2d at 739; R.C. 3313.483 and 3313.483(D). These borrowing programs, which were characterized by this court as “nothing less than a clever disguise for the state’s failure to raise revenue sufficient to discharge its constitutional obligations,” drove school districts into deeper financial distress. Id. at 202, 677 N.E.2d at 740.

What is the status of forced borrowing today? Although the General Assembly has taken some steps to eliminate forced borrowing from the school-financing scheme, it remains unclear whether these changes will rectify the problem.

The Spending Reserve Loan Program is being phased out pursuant to R.C. 5705.29(F)(1) and (2). Additionally, the School District Solvency Assistance Fund, which is operated by the Ohio Department of Education, was established in H.B. 412 and went into effect on November 21, 1997. R.C. 3316.20. The Solvency Assistance Fund provides interest-free “advancements to school districts to enable them to remain solvent and to pay unforeseeable expenses of a temporary or emergency nature that they are unable to pay from existing resources.” Id.

One concern voiced by Russell is that many districts will still be forced to borrow funds, because the circumstances that necessitated the initial borrowing still exist, despite the recent legislation. Likewise, Charles Brown, the Assistant Director of the Division of School Finance of the Ohio Department of Education, is concerned that H.B. 412’s set-aside requirements will require additional borrowing in order to comply with the mandates.

The plaintiffs allege that the School Solvency Assistance Fund is no different from the former Emergency School Assistance Loan Program, other than the fact that the School Solvency Assistance Program Fund provides for interest-free loans. According to Brown, the procedures for obtaining and repaying loans are virtually identical under both programs. For instance, the repayment period for both types of loans is typically two years. Furthermore, districts must exhaust their spending reserve before they can access advances from the solvency fund. R.C. 3316.20. This requirement mirrors one in the former Em