DeRolph v. State

dissenting. In its Machiavellian maneuver to halt this litigation, the majority gives its seal of approval to a system of public education that, even with the judicially legislated adjustments of the majority, falls well short of the system required by the Ohio Constitution. In doing so, a *345majority of this court abandons adherence to the requirements of the Ohio Constitution and puts an end to this litigation, even while recognizing that the General Assembly’s enactments are unsatisfactory. It is indeed ironic that one thing all the justices (both in the majority and in dissent) of this court agreed on in both DeRolph v. State (1997), 78 Ohio St.3d 193, 677 N.E.2d 733 (“DeRolph I”), and DeRolph v. State (2000), 89 Ohio St.3d 1, 728 N.E.2d 993 (“DeRolph II ”), was that it was the General Assembly’s task, not that of this court, to enact school-funding legislation. Now, a majority of this court has determined that, for the sake of expediency, harmony, and consensus, it is acceptable for this court to sit as a superlegislature and enact its own version of a constitutionally acceptable school-funding plan. The majority states:

“A climate of legal, financial, and political uncertainty concerning Ohio’s school-funding system has prevailed at least since this court accepted jurisdiction of the case. We have concluded that no one is served by continued uncertainty and fractious debate. In that spirit, we have created the consensus that should terminate the role of this court in the dispute.”

The majority’s creation of this consensus provides an uncertain future for the children and citizens of Ohio for two reasons. The first, of course, is that this court has no authority to order the level of spending or impose other specific requirements that would make the state’s system of funding education constitutional. The second is that the General Assembly must accept the majority’s judicial mandates and enact legislation that complies with this court’s order. Judging by past history, when will that take place?

The defendants have once again resisted as too politically unpopular the fundamental changes required to bring our public school system into compliance with the Constitution. Instead, the defendants have merely tweaked the system that was rejected by this court in two previous decisions. They have stamped “new and improved” on a system that is neither, and have trumpeted that this “revised” system, with a supposed massive infusion of cash provided by the state, satisfies the Constitution. However, it takes much more than money to accomplish the systematic overhaul of school funding in Ohio that a majority of this court in DeRolph I and DeRolph II recognized was required to bring the system into compliance with our Constitution.

Even today’s majority cannot accept the state’s transparent, self-serving, and expedient portrayal of its inadequate response without judicially legislating its own amendments in order to arrive at a “constitutional” funding system. The majority has acquiesced to the desires of the defendants, and has abandoned all pretense of objectivity, ostensibly in the spirit of creating a consensus. The majority appears to be working hand in hand with the legislative branch of government when it quotes Thomas Jefferson as support for its decision to *346impose a compromise in this case for “the greater good.” Jefferson was a wise man, but he was certainly not discussing the function of a supreme court when he wrote of “sacrificing our opinions sometimes to the opinions of others for the sake of harmony.” The oath of a Supreme Court justice is to “administer justice without respect to persons.” R.C. 3.23. Nowhere in that oath is there any recognition of an overriding necessity of harmonious decisions for the sake of getting along with the other branches of government or of creating a “consensus” among the members of the court.

The role of the Supreme Court is to act independently from the other two branches of government in determining whether the laws as enacted by the General Assembly pass constitutional muster. We are not members of the legislature, where compromise is the order of the day and backroom deals are taken for granted. Rather, we have taken a sacred oath to support and uphold the Constitution to the best of our ability and understanding.

The majority apparently recognizes that the state’s plan is too flawed to meet the goals illuminated by two previous decisions of this court. However, rather than giving the state additional time to enact a constitutional system, the majority, “for the sake of harmony,” does its own toying with the system, adding its own layer of legislation to that enacted by the General Assembly. The majority’s determination that the state must revise its calculations to increase Am.Sub.H.B. No. 94’s basic aid amount and must move up the date for the full phase-in of parity aid will cause little more than an ineffective addition to an inadequate plan and simply does not make the plan constitutionally acceptable.

The majority evaluates the plan not for what the plan actually accomplishes, but what it wishes the plan would accomplish, including making its own additions to meet that end. Ignoring the numerous deficiencies along the way, the majority places its confidence in a General Assembly that has once again failed to comply with the Constitution.

The majority ignores the directives of DeRolph I and DeRolph II, sets the bar lower than is justified, and then of course finds that the bar has been cleared. Rather than building upon the analyses of previous decisions of this court, as the majority purports to do, the majority actually weakens those precedents beyond recognition and then proclaims that the watered-down standards allegedly extracted from those decisions have been satisfied. Somehow, a half-hearted response by the state is portrayed as the basis of an acceptable solution. However, the majority imposes its own caveat — the solution is acceptable only after the changes ordered by the majority are implemented.

In order to comply, the General Assembly not only must pass legislation to reflect the majority’s order, but accordingly must find a source of funding to satisfy the majority’s predilection for what a constitutional level of state support *347for schools must be. The majority innocuously asserts that, due to its belief in the “good faith” of the defendants, it expects the General Assembly to comply. It blandly states that if its order “receives less than full compliance, interested parties have remedies available to them.” The possible consequences of a refusal to comply are glossed over, and the majority does not specifically say what the available remedies would be. Presumably, if the General Assembly fails to adopt the majority’s judicially legislated amendments, the majority is prepared to hold the General Assembly in contempt for its failure, or perhaps take even more drastic action. Since what the majority has done is in direct violation of separation of powers, it can do nothing to effectively enforce its judicial mandates. Moreover, the majority abandons precedent and enters dangerous territory in ordering that specific legislation must be enacted to make the school-funding system constitutional. School funding is a complicated and intricate system. Any changes to one aspect, while appearing to be straightforward, will cause ripple effects and. give rise to unintended consequences in ways that no justice could possibly anticipate. That is why the specifics of school funding must be devised by the General Assembly and not this court.

Merely raising these concerns illustrates that the majority’s order is ill advised. The majority, rather than limiting itself to highlighting the deficiencies in the legislation before us as this court has been careful to do in past cases, now takes it upon itself actually to order that specific additional legislation be enacted. What the majority conveniently forgets is that this case has always been centered on satisfying the Ohio Constitution. The majority now turns that consideration on its head. Instead of satisfying the Constitution, the additional legislation must satisfy the individual inclinations of four members of this court, and only the majority’s preferred legislation, and no other, is acceptable. Where was this majority when DeRolph I and DeRolph II were decided? If this type of action is legally permissible now, why not then? This case could have been concluded in 1997 by this court merely legislating a constitutional system from the bench. But as we all are aware, this court does not legally possess the power to legislate.

What the majority continually fails to appreciate is that our Constitution envisions much more than a school system that barely meets the minimum needs of its pupils. Our Constitution envisions a thorough and efficient school system, not a system built on backroom deals and political expediency. When the majority proclaims what is essentially a victory for the state in this case, it is actually knelling defeat for the students and citizens of Ohio.

The majority has ignored that “ ‘[t]he sovereign people made it mandatory upon the General Assembly to secure not merely a system of common schools,’ but rather a thorough and efficient system of common schools.” DeRolph II, 89 Ohio St.3d 1, 728 N.E.2d 993, at paragraph one of the syllabus, quoting Miller v. *348Korns (1923), 107 Ohio St. 287, 297-298, 140 N.E. 773, 776. In surrender, the majority has accepted (and allowed itself to become entangled with) a solution that, while politically palatable, leaves a bad taste in the mouths of those of us who recognize the state’s revised plan for what it is — a flawed and incomplete response to the problems at hand.

In this court’s opinion in DeRolph II, a majority of this court found that Ohio’s method of funding public schools continued to violate the Thorough and Efficient Clause of the Ohio Constitution. In DeRolph II, at paragraph three of the syllabus, this court defined the meaning of that clause: “A thorough system means that each and every school district has enough funds to operate. An efficient system means 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 building and fire codes, and equipment sufficient for all students to be afforded an educational opportunity.” With today’s decision, this court, while paying lip service to those principles, places its imprimatur on a system of education that still fails to meet the standards for thoroughness and efficiency mandated by the Ohio Constitution.

Perhaps some who have been immersed in this litigation have lost sight of where Ohio stands among the fifty states in meeting the problems in its school-funding system. Including Ohio, the highest courts of at least sixteen states have found that their state’s school-funding system violated the state Constitution.5 In addition, several states have had lower courts call into question some or all aspects of their school-funding system (see, e.g., lower court orders reviewed in Opinion of the Justices [Ala.1993], 624 So.2d 107, and Bismarck Pub. School Dist. No. 1 v. State [N.D.1994], 511 N.W.2d 247). Furthermore, some states, including Michigan (see Section 11, Article IX, Michigan Constitution [amended March 15, 1994 by “Proposal A”] and 1993 Mich.Pub.Act Nos. 145 and 336 and related acts cited in section 6; see, also, Mich.Comp.Laws Ann. 388.1601 et seq., M.S.A. § 115.1919[901] et seq.) and Kansas (Finance and Quality Performance Act of 1992, 1992 Kansas Session Laws, Ch. 280, Kan.Stat.Ann. 72-6405 et seq.) have completely revised their school-funding system without a judicial order from the *349state’s highest court to do so. Thus, Ohio is definitely not alone on the path it is pursuing among the states, many of which are facing the same problems we are facing.

Furthermore, Ohio is not by any means the only state in which the state’s high court has conducted multiple considerations of funding systems that have bounced back and forth among lower courts, state legislatures, and the highest court.6 In some other states, school funding has been a persistent problem for much longer than it has been in this state. If there is any attitude among those in this state that this litigation is best concluded no matter the result, merely for the sake of moving the case out of our court system, I point out that in those other states, discomfort with facing this issue has not caused their courts to shirk their task in the name of expediency.

I

DeRolph I and II Highlighted Deficiencies in Previous Enactments That Were Inconsistent with a “Thorough and Efficient System of Common Schools”

As stated in DeRolph II, 89 Ohio St.3d at 5, 728 N.E.2d at 997:

“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 * *

*350In DeRolph II, 89 Ohio St.3d at 5-6, 728 N.E.2d at 998, this court quoted from Justice Francis E. Sweeney, Sr.’s majority opinion in DeRolph I, as follows:

“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’s opinion in DeRolph II reviewed the legislation passed in response to DeRolph I and once again determined that the state’s attempts to remedy the defects in the system had fallen short. Near the end of the opinion in DeRolph II, 89 Ohio St.3d at 37, 728 N.E.2d at 1021, this court stated:

“The following major areas warrant further attention, study, and development by the General Assembly, but are not by any means the only areas requiring scrutiny:

“(1) Continued reliance on local property taxes as a primary means to fund Ohio’s schools has not been specifically addressed and may in fact be compounded by H.B. 283’s phase-out of the inventory tax, which may result in even greater reliance on local contributions in the future. The failure to address this problem will make it exceedingly difficult for any system of school funding to comply with the Thorough and Efficient Clause, since the inherent inequities will remain.

“(2) The basic aid formula has structural deficiencies and may not in fact reflect the amount required per pupil to provide an adequate education. The phase-in aspect of the basic aid amount should be reconsidered.

“(3) Continuing attention must be given to the mechanism implemented to fund the construction of new school facilities and to repair older, decaying school buildings, until the task is complete. Additionally, requiring local districts to pass levies as a prerequisite for obtaining state funding should be reviewed.

“(4) The School Solvency Assistance Fund established by H.B. 412 must be reevaluated, so that funds are available and used only in case of extreme emergencies and not for unfunded mandates or day-to-day expenses.

“(5) The unfunded mandates in H.B. 412 and S.B. 55, which will necessitate either increased reliance on local property taxes or additional borrowing from the School Solvency Assistance Fund, must be addressed and immediately funded.

“(6) The phenomenon known as phantom revenue has not been eliminated and may increase as a consequence of H.B. 650.

*351“(7) Strict, statewide academic guidelines must be developed and rigorously followed throughout all of Ohio’s public school districts.”

These points highlighted only some of the key concerns discussed in DeRolph II that stood in the way of a thorough and efficient system. Tellingly, many of those same deficiencies had been pointed out as major problems in this court’s opinion in DeRolph I. These fundamental deficiencies continue to this day. The state’s contention that it has increased the amount of money for K-12 students at the expense of every other department in the state budget cannot obscure the truth of the facts in evidence before us. Although the majority is swayed by the state’s protestations, actions speak louder than words, and the state’s actions fall well short of the mark.

II

Perspectives on Recent Developments and on This Court’s Role in This Litigation

Before debunking the defendants’ claim that the revised system satisfies the Constitution, it is first necessary to put in perspective the recent history of our state’s education system. The history of the system from the beginning of Ohio’s statehood was thoroughly discussed in the majority and concurring opinions in DeRolph I and DeRolph II and will not be repeated here.

The state has undoubtedly made some grudging progress in addressing a few of the problems that have plagued our state’s system of common schools. The school-funding system that existed in 1991, when this litigation began in Perry County Common Pleas Court, was truly in crisis, as numerous problems all contributed to a very poor system that was nowhere near being thorough and efficient. The late 1980s and early 1990s marked the absolute nadir of our statewide system of schools in Ohio.

As detailed in DeRolph I, the system under review in that case was so disjointed, ineffective, and underfunded that it was a disgrace to the citizens of Ohio. Numerous school buildings in a depressingly large number of districts were in deplorable condition. Particularly in our large city school systems and in southeastern Ohio, it was evident that the state had shirked its responsibility to the students of the state and had consigned many of them to second-class status. The system was burdened by so many problems that some of the defendants in DeRolph I had not at first wanted to appeal the trial court decision that the system was unconstitutional.

By the time DeRolph I reached this court, the General Assembly had made some unfocused attempts to rectify the most glaring problems. See 78 Ohio St.3d at 211, 677 N.E.2d at 746. After this court’s decision in DeRolph I, the *352General Assembly did make further improvements, some of them fairly substantial, as detailed in DeRolph II, which gave some reason for optimism that significant improvements might be possible if more time was allotted for the state to devise a remedy. Based on the evidence before us, it is apparent that the system we review today is only a minimal improvement.

The overriding question (indeed the only question) that we should be answering is whether the system of schools established by the legislation before us is a thorough and efficient system. Now, amazingly, the majority has taken upon itself to do its own toying with the system, has picked out the deficiencies it is willing to acknowledge, and has declared that with the adjustments it requires the system is fixed. Yet the sum of the details in evidence yields a single conclusion — the system we examine today (even as “amended”- by the majority) is neither thorough nor efficient as constitutionally required.

HI

A Failure of Resolve — Lack of Significant Basic Reforms Means That No Complete Systematic Overhaul Was Accomplished, and the State Has Failed Yet Again to Satisfy the Constitutional Mandate

Since DeRolph II was decided, the General Assembly has enacted four major pieces of new legislation that are most pertinent to our inquiry. They are 2000 Am.Sub.S.B. No. 272 (“S.B. 272”), 2000 Am.Sub.S.B. No. 345 (“S.B. 345”), 2001 Am.Sub.H.B. No. 94 (“H.B. 94”), and 2001 Am.Sub.S.B. No. 1 (“S.B. 1”). In addition, much of the legislation at issue in DeRolph II remains relevant, particularly in the areas of school facilities construction and maintenance, but also in other areas. For instance, the state’s school-funding formula and its underlying methodology closely resemble the formula before us in DeRolph II. Critical examination of this legislation, in particular of H.B. 94, reveals that the most recent reform package assembled by the General Assembly, as further adjusted by the majority, is disappointingly similar to the school-funding scheme found deficient in DeRolph II.

A

Overreliance on Local Property Taxes

This court in both DeRolph I and DeRolph II informed the General Assembly in no uncertain terms that the system’s overreliance on local property taxes was the single greatest impediment to a thorough and efficient system: “The most glaring weakness in the state’s attempts to put in place a thorough and efficient system of education is the failure to specifically address the overreliance on local property taxes. If this problem is not rectified, it will be virtually impossible for *353the revised school-funding system to be characterized as thorough and efficient.” DeRolph II, 89 Ohio St.3d at 36, 728 N.E.2d at 1020.

Reiterating another of the majority’s observations from DeRolph II, id. at 8, 728 N.E.2d at 999-1000: “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.” (Emphasis sic.)

In both DeRolph I and DeRolph II, this court found that the system was in need of a “complete systematic overhaul.” See DeRolph I, 78 Ohio St.3d at 212, 677 N.E.2d at 747; DeRolph II, 89 Ohio St.3d at 17, 728 N.E.2d at 1006. There are two essential aspects of the challenge for a “complete systematic overhaul” the court has now twice issued to the state: the revenue side of the equation and the expenditure side. As to the revenue side, this court has made clear that local property taxes can still be a part of the overall revenue system, but they cannot continue to be the primary means of funding the system. DeRolph v. State (1997), 78 Ohio St.3d 419, 678 N.E.2d 886, 887.

After the decision in DeRolph II was announced, the defendants were faced with some basic choices as to how to reduce overreliance on local property taxes: they could either institute major reforms to the property tax system, or they could significantly increase the adequacy level of state funding to education, or they could undertake some combination of the two approaches.

Perhaps the most disappointing feature of this entire case is that, once again, the state has chosen to totally forgo making any reforms to the property tax system. Consequently,' as in the previous DeRolph opinions, the state has not specifically addressed this overreliance, instead choosing to deal with it in the context of revising the expenditure side of the school-funding picture. In essence, the state has claimed throughout that if it modifies the expenditure side enough, it has overhauled the system sufficiently to satisfy the Constitution. The state contends that the formula and base funding amount it has established ensure adequacy of funding, and that if a local district chooses to fund above the base amount of^funding ensured by the state, it is free to do so. The state’s view is that disparities in the property tax on the revenue side of funding can be rectified by increases in state funding on the expenditure side, so that if adequate *354per-pupil funding is provided by the state, then overreliance on local property taxes melts away.

This is so, however, only if the state’s revised plan provides truly adequate funding to each school district. If adequate funding is not provided, then the state’s argument that it does not need to specifically address the problems in the revenue inequities shatters. Unfortunately, the amount of funding provided by the state under its revised plan (as modified by this court) is seriously inadequate, and the process of establishing the funding amounts was replete with inconsistencies and false assumptions.

H.B. 94, the biennial budget bill, is the major piece of legislation that the state claims eliminates overreliance on local property taxes. To that end, H.B. 94 sets the base cost foundation level at $4,814 in FY02 and at $4,949 in FY03. R.C. 3317.012(A). (Under the statutes at issue in DeRolph II, the base amount was set to be $4,414 for FY02 and $4,538 for FY03. See former R.C. 3317.012[A], 1998 Am.Sub.H.B. No. 650, 147 Ohio Laws, Part III, 5138.) The majority orders an increase in the base funding amount above H.B. 94’s provisions, but the majority’s revised amount is simply not enough to make the difference needed to truly eliminate overreliance on local property taxes.

It is important to keep in mind a central point about the base funding amount. It is simply an amount the state has established to reflect the supposed per-pupil cost of a basic education. The state does not fully fund this amount for each student. In fact, in terms of total funding of the base cost amount, a large percentage is provided locally. For those districts fortunate enough to have the ability to generate a large amount of money locally, the state pays very little of the base amount.

H.B. 94 also introduces the concept of “parity aid” to be phased in to provide further money to low-wealth districts (R.C. 3317.0217[C]). The majority orders that the phase-in of parity aid be moved up from FY06 to FY04, but, again, the increase provided by that amount is not enough to truly make the needed difference. Under H.B. 94’s plan, parity aid, which is approximately $100 million for FY02, is to increase about $100 million per year as it is phased in, with it set to be approximately $500 million for FY06 when fully phased in. See R.C. 3317.0217(C)(1); H.B. No. 94, Section 44, line item 200-525. The majority’s order to move up the date of full phase-in appears to have no effect on funding for FY02 and FY03, and will therefore have an effect only in FY04 and FY05. The parity aid amount thus becomes approximately $500 million for FY04 (rather than the approximately $300 million under H.B. 94) and approximately $500 million for FY05 (rather than the approximately $400 million scheduled under H.B. 94). The majority’s ordered adjustment of parity aid thus adds a total of about $300 million more to the total funding package than what would have been provided under the *355plan covering FY02 to FY07 as detañed in H.B. 94. It is not clear what the majority’s order in this regard does to equity aid, which was slated to be phased out by FY06 as parity aid was phased in under the H.B. 94 plan. R.C. 3317.0213(A)(7) and (B).

H.B. 94 also limits the amounts any district has to pay for special education, vocational education, and transportation, so that the state picks up more of those costs for some districts (R.C. 3317.022[F]); and expands “gap aid” from the state to try to deal with phantom revenue (R.C. 3317.0216[C]). None of these provisions is really directly targeted to reduce overreliance on local property taxes — añ are actually directed at other deficiencies pointed out in DeRolph II.

This argument that the state had dealt with overreliance simply by increasing funding was soundly rejected in DeRolph II, 89 Ohio St.3d at 28, 728 N.E.2d at 1015: “The state’s fañure to specificaüy address the school-funding system’s overrelianee on local property taxes is of paramount concern as we evaluate the state’s attempts to craft a thorough and efficient system of funding. The state’s argument that it can minimize this problem by addressing the other aspects identified in DeRolph I as contributing to the unworkabüity of the system in place at that time, see 78 Ohio St.3d at 212, 677 N.E.2d at 747, is unconvincing. We see no indication that anything significant has been done to remove this primary impediment, which was the major factor in the previous funding system found unconstitutional in DeRolph 7. No further effort at specifically addressing this overreliance on property taxes has been made since the voters of the state rejected the one-cent sales tax increase on the May 5, 1998 ballot. The problem of overreliance on local property taxes must be independently addressed, and all potential solutions to this problem must be explored. The inequities inherent in a system that relies too heavñy on local property taxes wül remain until this problem is resolved by the General Assembly.” (Emphasis sic.)

Further, this area of concern was the most strongly criticized in both DeRolph I and DeRolph II, and again is the overriding weakness of the state’s response now. See DeRolph II, 89 Ohio St.3d at 26-27, 728 N.E.2d at 1013-1014:

“Overreliance on local property taxes was one of the factors that rendered the school-funding scheme deficient [in DeRolph 7], yet this aspect of the former system persists in the state’s current funding plan, wholly unchanged. The system’s dependence on local, property taxes has resulted in vast disparities among Ohio’s six hundred eleven public school districts due to the differences in revenue generated by each. * * *

“The state would like this court to believe that overreliance on local property taxes wül dissipate once the new measures are fully phased in, so that the only reason a district would have to look to local property taxes would be that the *356district wants to fund beyond adequacy. Unfortunately, the reality of the situation at this time appears to be otherwise.” (Emphasis sic.)

The state simply has not made the “complete systematic overhaul” of the funding system that this court has called for. This court could not have been clearer than in DeRolph II and in DeRolph I that overreliance had to be independently addressed. Yet, once again, it has not been. While the “adjustments” imposed by the majority do increase somewhat the total state education spending package above the H.B. 94 level, those adjustments do nothing to rectify the inherent disparities.

B

A Lack of Adequate Funding

Given that the state has chosen not to reform the property tax system, the related question is whether the state has adequately funded the system it has chosen to put in place. It is apparent that the state had no intention of actually establishing an adequate amount of state-provided funding, but instead tried to do the minimum amount it could, always with an eye to reducing spending whenever possible, in order to try to satisfy this court, rather than trying to legitimately mount an effort that complied with our Constitution. The result was a series of political bargains that established the state spending amount on education at a level the state felt it could get by on without cutting other programs too much and without raising significantly more revenue, and that had little, if any, relationship to the cost of an adequate education. The majority partakes of the same approach — ordering more funding (but not too much more), according to its own opinion of what the state budget can tolerate.

The General Assembly, rather than exploring all potential solutions (see DeRolph II, 89 Ohio St.3d at 28, 728 N.E.2d at 1015) as it sought to revamp the system after DeRolph II was announced, seems to have operated under a two-pronged plan. The first was to delay doing anything meaningful in response to DeRolph II until after the November 2000 election, in the hopes that the makeup of this court might change so that no response would be necessary. When the makeup of this court did not change, the General Assembly then realized that some type of action would be required, and so hastily assembled a perfunctory response when it became clear that the problem would not simply go away.

There are essentially two failures in the state’s unsatisfactory response. One is that state funding per student under the basic aid formula is inadequate, and the other is that state funding for construction and repair of school facilities is not only inadequate, but also inefficient. If the state wants to repeat its argument in DeRolph II that it has achieved adequacy in funding (and that overreliance on *357property taxes has been eliminated thereby), it has to do much more than it has done and must fund at a significantly greater level.

There are many forces at work that put revenue pressure on local school districts, and the state has not acted to dispel those pressures. Two immediate examples that come to mind are the 1976 H.B. 920 tax-reduction factors, 136 Ohio Laws, Part II, 3182, discussed in DeRolph I, 78 Ohio St.3d at 201, 677 N.E.2d at 739, which prevent a school district from realizing additional revenue even though local property increases in valuation, and the inventory tax phase-out of 1999 H.B. 283 discussed in DeRolph II, 89 Ohio St.3d at 27-28, 728 N.E.2d at 993, which reduces local revenue for some districts. Another area where the state has not acted concerns the tax breaks that the state and local governments are affording businesses throughout this state. A July 2001 Wall Street Journal article about business tax abatements and their effect on the Toledo Public School District points out that Toledo-area businesses complain about the “abysmal academic record” of the district, which they claim “hampers efforts to hire well-trained workers and attract new employers.” Wall Street Journal (July 18), at Al. However, the article details that, ironically, “even as they call for reform, companies are receiving hefty breaks from the very taxes that would help pay for it. Since the late 1970s, tens of millions of dollars that would have otherwise flowed into Toledo school coffers have instead gone to businesses as tax abatements.” While local business executives defend the abatements as a benefit to the community as a whole, there is no doubt that the abatements are a serious and sometimes overwhelming burden to local school districts.

The Wall Street Journal article points out that Ohio is not the only state where school district revenue is being significantly reduced through tax abatements and that “Toledo is hardly alone.” In other states, too, the problem is prevalent:

“[A large corporation] is seeking a two-thirds reduction in the assessed value of a big appliance plant in Louisville, Ky., where school officials estimate that the resulting loss of tax revenue would be enough to pay the annual salaries of as many as 10 teachers. [Another company] recently sought $1 billion in reduced assessments on three San Jose, Calif., properties, although a local school district warned of financial havoc, and the company’s bid failed. Meanwhile, Memphis-area businesses have now received so many tax abatements that school officials in surrounding Shelby County talk of eliminating high school athletics.”

The General Assembly has done little to rectify problems caused by tax abatements and related revenue losses. In a system characterized by inadequate funding, local districts have great difficulty in generating additional local money to replace the money they have lost. These considerations help illustrate why, if state funding is not adequate, the system cannot be thorough and efficient.

*358IV

The Details of an Inadequate Response A

The Basic Ad Formula

It is evident that, as in DeRolph II, under the legislation we review “[t]he basic aid formula has structural deficiencies” and does not “in fact reflect the amount required per pupil to provide an adequate education.” See 89 Ohio St.3d at 37, 728 N.E.2d at 1021. Once again, the basic aid formula reflects a series of compromises, characterized by giving with one hand and taking away with the other, and not by a serious attempt to deal forthrightly with the problems highlighted by this court.

The type of “residual budgeting” identified by this court in DeRolph I was blatant. During the late 1980s and early 1990s, the General Assembly simply funded all other departments first, and then funded education with what was left, with no regard to what the cost to fund education actually should have been. See DeRolph I, 78 Ohio St.3d at 261, 677 N.E.2d at 780 (Resnick, J., concurring). The major deficiency of that approach was that no attempt was made to determine the cost of, and then to fund, an adequate education. As we recognized in DeRolph II,