Krueth v. Independent School District No. 38

OPINION

Relators Barbara Krueth, Steven Thompson, Martin Reinke, and Jeffrey Zeller challenge their placement on unrequested leaves of absence by respondent Independent School District No. 38 while other less senior teachers were retained pursuant to respondent’s American Indian teacher retention policy under Minn.Stat. § 126.501 (1990). Relators challenge the statute’s interpretation, its constitutionality under equal protection and the contracts clause, and its application. Relators also challenge retention of less senior non-Indian teachers for grant-funded positions. We affirm respondent on all issues except the grant-funded position issue, which we reverse.

FACTS

Relators were tenured teachers in respondent school district. Ordinarily, teachers are placed on unrequested leave of absence in reverse order of seniority under Minnesota’s teacher tenure act. Minn.Stat. § 125.12 (1990). Relators were placed on unrequested leave of absence while less senior American Indian teachers were retained under respondent’s American Indian teacher retention policy.

An administrative hearing was held on May 13, 1992. The hearing examiner issued findings of fact, conclusions of law, and a recommendation favoring relators. Respondent accepted some of the findings, but rejected other findings, conclusions, and the recommendation of the hearing examiner, and placed relators on unrequested leave of absence while less senior American Indian teachers were retained under re *832 spondent’s American Indian teacher retention policy.

Respondent’s American Indian teacher retention policy, adopted on March 4, 1991, reads in part as follows:

WHEREAS, Minnesota Statute 126.501 permits the Board of Education in placing a teacher on unrequested leave of absence, to retain a probationary teacher or a teacher with less seniority in order to retain an American Indian teacher, notwithstanding the provisions of Minnesota Statute 125.12, subdivisions 4, 6a, or 6b; 125.17, subdivisions 3 and 11, and other laws or contract provisions,

NOW THEREFORE BE IT RESOLVED, that it shall be the general policy of the District, in placing any teacher or teachers on unrequested leave to retain, wherever possible, American Indian teachers pursuant to the above quoted provisions of Minnesota Statute 125.501 [126.501],

In placing any teacher or teachers on unrequested leave of absence the District may retain a probationary teacher or a teacher with less seniority in order to retain an American Indian teacher regardless of the provisions of Minnesota Statute 125.12, subdivision 4, 6a or 6b; 125.17, subd. 3 and 11, or any contract provision.

Relators exercised their right to a hearing. The hearing examiner found the retention policy could only be applied against teachers who had become tenured after May 7, 1988, the effective date of the statute. Since relators had all become tenured before May 7, 1988, the examiner found relators should not have been placed on unrequested leave of absence under the policy. Respondent rejected the examiner’s conclusion. Respondent found the May 7, 1988, date limitation of the statute applied to the master contract respondent had with its teachers (including all rela-tors). The master contract (used interchangeably with the term collective bargaining agreement) in this case is dated December 16, 1991. Therefore, respondent found the statute’s saving clause did not apply and that respondent had a right to implement the intent of Minn.Stat. § 126.-501 and retain less senior American Indian teachers over more senior non-Indian teachers. Respondent found the retention policy could be applied against all teachers in the district and placed relators on unrequested leave of absence.

Respondent then retained less senior non-Indian teachers with special qualifications for grant-funded positions called Pride Theatre Project and Project Preserve. The examiner found respondent could not rely upon special qualifications and requirements of the funding agency in order to retain less senior teachers who had held these positions over more senior teachers who also had the necessary qualifications. Respondent rejected this conclusion and retained the less senior teachers. There was evidence the funding for these positions might have been withdrawn if the same teachers were not retained for the positions. Relators appeal the hiring preferences respondent used to place them on unrequested leave.

ISSUES

1. Did the school district err by interpreting the language limiting the application of Minn.Stat. § 126.501 (1990) to “contracts entered into after May 7, 1988” as referring to the teachers’ master contract with the school district?

2. Does Minn.Stat. § 126.501 (1990) violate the United States Constitution?

a. Does Minn.Stat. § 126.501 violate the equal protection clause of the Fourteenth Amendment?

b. Does Minn.Stat. § 126.501 violate the contracts clause?

3. Does Minn.Stat. § 126.501 (1990), when applicable, allow only one American Indian teacher per district to be retained?

4. Did the school district err by retaining less senior non-Indian teachers for grant-funded positions when the funding for the positions may have been revoked if those teachers were not retained?

*833 ANALYSIS

Respondent school district’s decision to terminate relators will be set aside only if the decision is

fraudulent, arbitrary, unreasonable, not supported by substantial evidence on the record, not within the school board’s jurisdiction, or is based on an erroneous theory of law.

Liffrig v. Independent Sch. Dist. No. 442, 292 N.W.2d 726, 729 (Minn.1980); State ex rel. Lucas v. Board of Educ. of Ind. Sch. Dist No. 99, 277 N.W.2d 524, 526 (Minn. 1979).

I.

Date of Contract versus Date of Tenure

The American Indian Education Act of 1988 includes a declaration of policy which provides:

The legislature finds that a more adequate education is needed for American Indian people in the state of Minnesota. The legislature recognizes the unique educational and culturally-related academic needs of American Indian people. The legislature also is concerned about the lack of American Indian teachers in the state. Therefore, pursuant to the policy of the state to ensure equal educational opportunity to every individual, it is the purpose of sections 126.45 to 126.55 to provide for American Indian education programs specially designed to meet these unique educational or culturally-related academic needs or both.

Minn.Stat. § 126.46 (1990).

As part of this act, the legislature allowed school districts with more than ten American Indian students to retain American Indian teachers with less seniority over other teachers with more seniority. Minn. Stat. § 126.501 (1990) provides:

This section applies to a school board of a school district in which there are at least ten American Indian children enrolled. The school board shall actively recruit teacher applicants who are American Indian from the time it is reasonably expected that a position will become available until the position is filled or September 1, whichever is earlier. Notwithstanding section 125.12, subdivision 4, 6a or 6b, 125.17, subdivisions 3 and 11 [the teacher tenure act], any other law to the contrary, or any provision of a contract entered into after May 7, 1988 to the contrary, when placing a teacher on unrequested leave of absence, the board may retain a probationary teacher or a teacher with less seniority in order to retain an American Indian teacher.

(Emphasis added.) Relators argue the language limiting the application of the act to contracts entered into after May 7, 1988, means any teacher tenured before May 7, 1988, is protected from application of the act. Respondent argues the term “contract” refers to the master contract controlling the school year at issue between relators and the district. Since the master contract here was signed on December 16, 1991, (well after 1988) respondent argues it is entitled to take advantage of the spirit and the letter of section 126.501 and favor less senior American Indian teachers over more senior non-Indian teachers.

Relators 1 point to Minn.Stat. § 125.12, subd. 4 (1990), which provides that teachers have continuing contract rights after they have obtained tenure.

A teacher who has completed a probationary period in any school district, and who has not been discharged or advised of a refusal to renew the teacher’s contract * * * shall have a continuing contract with such district. Thereafter, the teacher’s contract shall remain in full force and effect, except as modified by mutual consent of the board and the teacher * * *.

Minn.Stat. § 125.12, subd. 4. Thus, they argue that since tenure is a type of eon- *834 tract, any teacher who acquired tenure before May 7, 1988, is exempt from the American Indian preference set out in section 126.501.

Respondent argues the “contract” referred to in the statute is the master contract or the collective bargaining agreement covering the teachers for that school year. Since this master contract was entered into after May 7, 1988, the statute applies, according to respondent:

The provision in Minn.Stat. § 126.501 which permits a school district to place more senior teachers on unrequested leaves of absence in order to retain an American Indian teacher, notwithstanding any provision of a contract entered into after May 7, 1988 refers to the collective bargaining agreement covering the teacher and not the individual contract signed by a teacher at the commencement of teaching in the district. The Board rejects the hearing officer’s, conclusions * * * and hereby determines that it may retain less senior American Indian teachers while placing more senior non-Indian teachers who acquired continuing contract rights prior to May 7, 1988 on unrequested leave of absence pursuant to Minn.Stat. 126.501 and the District’s Indian teacher retention policy. See attached letter from the office of Senator Gary DeKramer [sic], Minnesota Legislature, which is hereby made a part the record herein.

Although we agree with respondent, we do not rely on Senator Gary DeCramer’s letter in our analysis. Comments regarding legislative intent made after the statute had been passed are inadmissible for the purpose of construing a statute. See Washington County v. AFSCME, 262 N.W.2d 163, 167 (Minn.1978); In re State Farm Mut. Auto. Ins. Co., 392 N.W.2d 558, 569 (Minn.App.1986).

Respondent properly found that the date limiting clause in section 126.501 referred to the date of the master contract rather than the date of each individual teacher’s acquisition of tenure. In Minnesota Ass'n of Pub. Schs. v. Hanson, 287 Minn. 415, 423, 178 N.W.2d 846, 852 (1970), the Minnesota Supreme Court found that

[a]ll contracts of tenure[d] teachers must be construed to incorporate the provisions of the tenure statute in effect not at the time the teachers obtained tenure but at the time their contracts were negotiated and signed.

(Emphasis added.) The teachers in Hanson had made an argument similar to rela-tors’ argument in this case. Since the teachers had obtained tenure prior to the amendment at issue, they argued the amendment did not apply to them. Id. at 421,178 N.W.2d at 851. The court rejected that argument, but recognized the legislature could alter the effect of a change in the teacher tenure laws:

If the legislature had intended to exempt from the amendment teachers whose tenure had been acquired prior to such amendment, it would have included a savings clause in the amendatory act.

Id. at 423-24, 178 N.W.2d at 852. In Hanson there was no savings clause. Id. at 424, 178 N.W.2d at 853. Here, the savings clause in Minn.Stat. § 126.501 only exempts teachers covered under master contracts entered into before May 7, 1988, not teachers who obtained tenure before that date.

The hearing examiner relied upon Jurkovich v. Independent Sch. Dist. No. 708, 467 N.W.2d 360 (Minn.App.1991) in concluding the phrase “contract entered into after May 7, 1988” was a savings clause rendering the statute inapplicable to teachers who acquired tenure before the effective date of the statute, May 7, 1988. We disagree. Jurkovich involved a statute which removed superintendents from most applications of the teacher tenure act. Id. at 361. The statute only applied to “contracts entered into or modified after July 1, 1990.” The superintendent had been employed in that capacity by the school district since 1981. His most recent employment contract was entered into in August 1989. The school district offered him a contract in August 1990, which he did not sign. The superintendent chose instead to continue under his existing contract. Id.

*835 This court found the statute could not be applied against the superintendent since he had not entered into nor modified a contract after July 1, 1990, because “[a]bsent his execution of a new contract, the old contract is not modified.” Id. at 362. The date of his employment contract, not the date of tenure, was controlling. Jurkovich supports respondent, not relators. The saving clause in Jurkovich, similar to that involved in this case, referred to the most recent employment contract, not the date of tenure. Respondent properly interpreted Minn.Stat. § 126.501 to apply to teachers who had obtained tenure before May 7, 1988, as long as the master contract they were working under was signed after that date.

II.

Constitutionality

a. Equal protection

Relators also argue Minn.Stat. § 126.501 violates the Equal Protection clause of the Fourteenth Amendment to the United States Constitution. 2 Under equal protection analysis, strict scrutiny is applied to legislatively created classifications if they impermissibly limit a fundamental right or affect a suspect class. City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 440, 105 S.Ct. 3249, 3254, 87 L.Ed.2d 313 (1985). Otherwise, the legislation is subject to review under the rational basis standard. Under this standard, if the classification is rationally related to a legitimate governmental purpose, it does not violate the equal protection clause. In re Estate of Turner, 391 N.W.2d 767, 769 (Minn.1986).

Strict scrutiny requires the classifications to be necessary or narrowly tailored to a compelling governmental purpose. Strict scrutiny applies to state and local government racial affirmative action cases. Richmond v. J.A. Croson Co., 488 U.S. 469, 109 S.Ct. 706, 102 L.Ed.2d 854 (1989); Wygant v. Jackson Bd. of Educ., 476 U.S. 267, 106 S.Ct. 1842, 90 L.Ed.2d 260 (1986); see also 3 Ronald D. Rotunda, John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 18.10 (2d ed. 1992); Laurence H. Tribe, American Constitutional Law 1524 (2d ed. 1988). Contra Metro Broadcasting, Inc. v. Federal Communications Comm’n, 497 U.S. 547, 110 S.Ct. 2997, 111 L.Ed.2d 445 (1990) (rational relationship test used for federal affirmative action plan).

Wygant involved a preference policy for lay-offs, similar to the policy in this case, which allowed minority teachers with less seniority to be retained over non-minority teachers with more seniority. The policy applied to “those employees who are Black, American Indian, Oriental, or of Spanish descendancy.” Wygant, 476 U.S. at 271 n. 2, 106 S.Ct. at 1845 n. 2. The Supreme Court held that the policy in the collective bargaining agreement, which constituted state action, violated the equal protection clause. Id. at 284, 106 S.Ct. at 1852. The Court found the strict scrutiny standard applied, and that the lay-off preference was not specifically and narrowly framed to accomplish a compelling governmental interest.

There was no finding of prior discrimination, and the Court found societal discrimination was not a compelling interest. Id. at 276, 106 S.Ct. at 1848; see also Croson, 488 U.S. at 497-508, 109 S.Ct. at 723-28. The Court rejected the “role model theory,” that minority students need minority teachers as role models, as sufficient grounds for the classifications. Wygant, 476 U.S. at 276, 106 S.Ct. at 1848. Finally, the Court noted the distinction between layoffs and hiring goals in their burden on innocent parties. Id. at 282, 106 S.Ct. at 1851. Since less intrusive means such as hiring goals were available, the lay-off preference for minority teachers could not withstand the strict scrutiny standard. Id. at 283-84, 106 S.Ct. at 1852.

*836 If the strict scrutiny test is applied to this case, respondent’s policy is arguably not narrowly tailored and could create a problem. Wygant found lay-off preferences too burdensome on innocent parties compared to less intrusive alternatives such as hiring goals. Id. at 282, 106 S.Ct. at 1851; see also Firefighters v. Stotts, 467 U.S: 561, 574-76, 104 S.Ct. 2576, 2585-86, 81 L.Ed.2d 483 (1984); Steelworkers v. Weber, 443 U.S. 193, 208, 99 S.Ct. 2721, 2730, 61 L.Ed.2d 480 (1979). Also, there is no evidence of prior discrimination against American Indian teachers, which would require a comparison of the racial composition of the teaching staff and the racial composition of the qualified public school teacher population in the relevant labor market. See Wygant, 476 U.S. at 275, 106 S.Ct. at 1847. No such comparison was done in this case.

The reason Wygant does not control this case in favor of relators is that the policy at issue in Wygant did not distinguish between American Indians and the other minorities involved.

If the policy had applied only to American Indians in Wygant, the result likely would have been different because the Supreme Court has allowed preferences in employment for American Indians. Morton v. Mancari, 417 U.S. 535, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974). Mancari articulates that preferences for American Indians are not racial but political when the preferences apply to members of federally recognized tribes. Id. at 553 n. 24, 94 S.Ct. at 2484 n. 24.

As commentators have noted:

The Supreme Court employs a mere rationality test when scrutinizing tribal classifications because such classifications are viewed as political rather than racial. Laws which give preferential employment or economic benefits to members of American Indian tribes may be upheld on this basis without consideration of whether they constitute a benign racial classification which might not otherwise survive scrutiny under the equal protection guarantee.

1 Ronald D. Rotunda, John E. Nowak, Treatise on Constitutional Law: Substance and Procedure § 4.2 (2d ed. 1992).

Wygant and Mancari recognize a substantive difference between American Indians and other races. American Indians who belong to a recognized tribe or sovereign entity are a race and, unlike white, black and yellow, are also part of a bona fide political class. Other races are not designated as independent political entities. A preference given to American Indians, although falling heavily on those individuals affected, is neither new nor startling in view of the policy that while race, color, and creed cannot be the basis for discrimination, membership in a political entity can be. 3

The Court in Mancari recognized that a special trust relationship exists between American Indians and the federal government. That relationship allows preference to be given to American Indians in certain situations. Mancari, 417 U.S. at 553, 94 S.Ct. at 2484. This has been characterized as the trust doctrine, which provides

[w]hen special or preferential treatment is reasonable and rationally related to the fulfillment of the special trust obligation to Indians, it is permissible differentiation in legitimate public interest rather than prohibited racial discrimination.

St. Paul Intertribal Housing Bd. v. Reynolds, 564 F.Supp. 1408, 1410-11 (D.Minn. 1983). The trust doctrine also applies to state action. “State action for the benefit of Indians can also fall under the trust doctrine and therefore be protected from challenge under the equal protection clause or civil rights statutes.” Id. at 1412 (citing Washington v. Fishing Vessel Ass’n, 443 U.S. 658, 99 S.Ct. 3055, 61 L.Ed.2d 823 (1979) (fishing regulations protecting Indi *837 an treaty rights do not violate equal protection); Livingston v. Ewing, 601 F.2d 1110 (10th Cir.), cert. denied, 444 U.S. 870, 100 S.Ct. 147, 62 L.Ed.2d 95 (1979)).

Intertribal Housing involved legislation which provided low cost urban housing for American Indians. Intertribal Housing, 564 F.Supp. at 1409-10. The federal district court in Minnesota found the Minnesota legislature’s intent to benefit American Indians clearly stated in the legislation, that the preference in urban housing for American Indians was rationally related to the government’s unique obligation to American Indians, and that it therefore fell under the trust doctrine and survived an equal protection challenge. Id. at 1413. The Minnesota legislature has expressed a similar clear intent to benefit American Indians under the American Indian Education Act with “American Indian education programs specially designed to meet these unique educational or culturally-related academic needs.” Minn.Stat. § 126.46.

Mancari found the American Indian classifications were not racial but political since they were limited to members of federally recognized tribes. Mancari, 417 U.S. at 553, n. 24, 94 S.Ct. at 2484 n. 24; see also Intertribal Housing, 564 F.Supp. at 1409 (housing legislation applied to members of federally recognized tribes). The classification must be limited to members of federally recognized tribes, not just people of some American Indian ancestry, otherwise strict scrutiny would apply to limit state racial affirmative action preferences. Minn.Stat. § 126.501 applies to “American Indian teachers.” An “American Indian child” is defined as “any child, living on or off a reservation, who is enrolled or eligible for enrollment in a federally recognized tribe.” Minn.Stat. § 126.47, subd. 2 (1990). Thus, the reasonable implied definition of an American Indian teacher is any teacher “enrolled or eligible for enrollment in a federally recognized tribe.” All the teachers retained by respondent under its policy are enrolled in an American Indian tribe.

The test to be applied to Minn.Stat. § 126.501 for equal protection analysis is the rational basis test. Under the rational basis test, the policy of retaining American Indian teachers in school districts with American Indian students is rationally related to the legislature’s stated purposes of improving education for American Indian students and increasing the number of American Indian teachers through education programs designed to meet the unique educational and culturally related academic needs of American Indians.

If section 126.501 has meaning anywhere in the State of Minnesota, it has meaning in Independent School District No. 38, Red Lake, Minnesota. This school district is located entirely on the Red Lake Reservation and consists of a student population almost 100% American Indian. The spirit of the law and the intent of the legislature’s designation of policy fits in this school district far stronger than school districts which primarily serve non-Indian students but happen to have at least ten American Indian students in the district. If the law applies to them, it must apply here.

The goals of the American Indian Education Act and the goals of Minnesota’s strong teacher tenure laws clash at the Red Lake school district. In a nation with thousands of laws, state and federal, and overlapping jurisdictions, township, school district, city, county, state and federal, it is inevitable that worthy laws, representing worthy interest groups, will meet in an impasse. So it is here. When two rivers meet, one has to yield. The Mississippi absorbs the St. Croix and the Missouri, the Gulf absorbs the Mississippi. We find the American Indian Education Act, with its specific section 126.501, takes precedence over general teacher tenure laws when reconciliation becomes impossible.

b. Contracts clause

Relators also claim application of Minn. Stat. § 126.501 against them is impermissible impairment of their teaching contract. Article I, § 10 of the United States Constitution states that: “No State shall * * * pass any * * * Law impairing the Obligation of Contracts.”

*838 The Minnesota Supreme Court has found a teacher’s continuing contract with a school district may not be constitutionally impaired. Minnesota Ass’n of Pub. Scks. v. Hanson, 287 Minn. 415, 423, 178 N.W.2d 846, 852 (1970); see also Minn.Stat. § 125.-12, subd. 4 (1990). However, a change in the statutes governing continuing contracts does not impair relators’ contracts. Hanson, 287 Minn, at 422, 178 N.W.2d at 852. Furthermore, even though a teacher has continuing contract rights, those rights are “held to be subject to a proper exercise of the police power of the state * * * for the betterment of the general welfare” without that exercise being an unconstitutional impairment of contractual rights. Id. at 424, 178 N.W.2d at 853; see also Doyle v. City of St. Paul, 206 Minn. 649, 289 N.W. 784 (1939), aff'd, 310 U.S. 615, 60 S.Ct. 1102, 84 L.Ed. 1391 (1940) (reduction of teacher salary by ordinance was not an unconstitutional impairment of contract).

The Hanson court distinguished Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 58 S.Ct. 443, 82 L.Ed. 685 (1938), where certain school districts were completely removed from the protection of the tenure laws of Indiana. That action was found to be an unconstitutional impairment of contractual rights. In Hanson, the court found a change in the statute did not rise to that level of impairment. Hanson, 287 Minn, at 424,