Judge Declares No Reimbursement for School District Desegregation Efforts

PHOENIX — The Arizona Supreme Court has ruled that school districts are not entitled to state reimbursement for court-ordered desegregation programs. This decision came on Monday, affirming that state lawmakers acted within their rights when, in 2018, they shifted the financial responsibility to district residents rather than statewide taxpayers.

The immediate consequence of the ruling is the denial of an $8.1 million claim from the Tucson Unified School District (TUSD) for state reimbursement. The decision has broader implications, pushing the burden of desegregation costs onto local taxpayers or forcing districts to cut other expenditures.

Adelita Grijalva, a former TUSD board member now serving on the county board of supervisors, emphasized the potential impact. “We may have to reduce spending on critical equity programs,” she noted, referencing the longstanding nature of these programs. The district, she added, has already approved its budget for the upcoming school year, making immediate adjustments challenging.

This ruling affects more than just TUSD. Other districts under desegregation orders might now have to fund these programs solely through local taxes. The judges underscored that such primary property tax costs fall under a 1980 constitutional amendment capping property taxes at 1% of a home’s market value. For instance, a $400,000 home cannot be taxed more than $4,000 annually for primary property taxes.

Since 1985, desegregation costs were included as part of primary taxes. However, in 2018, Governor Doug Ducey reclassified these expenses as secondary taxes to fund a teacher pay raise plan, which shifted the financial load to local residents and saved the state $8.1 million.

Tax Court Judge Christopher Whitten initially ruled that this legislative maneuver violated the state constitution. However, Justice Robert Brutinel, writing for the unanimous court on Monday, stated that definitions of primary and secondary taxes are statutory and can be changed by the Legislature.

Brutinel further clarified that regardless of tax classification, these costs are still subject to the 1% tax limit unless they fall under specific exemptions such as voter-approved bonds. He noted that school districts must either reduce overall expenditures or find alternative revenue sources to remain compliant with the 1% cap.

Following a prior Court of Appeals decision in 2021, Pinal County supervisors had already imposed an additional tax rate on Maricopa Unified School District residents to cover the unreimbursed desegregation costs. This new Supreme Court ruling solidifies that approach as the standard moving forward.