Ind. AG: Funding lawsuits cost taxpayers

By Jessica M. Karmasek | May 16, 2011


INDIANAPOLIS (Legal Newsline) - Indiana Attorney General Greg Zoeller, who defended the state's school funding formula from a legal challenge brought last year, says it's "inappropriate" for such government entities to use state tax dollars to sue the State.

On Thursday, Zoeller's office was notified that the three school districts that filed a lawsuit in Hamilton Superior Court over the funding formula decided to dismiss their suit.

Zoeller defended the State in the suit brought by the Hamilton Southeastern, Middlebury and Franklin Township school corporations in February 2010. The case was on appeal before the Indiana Supreme Court until last week's dismissal.

School district leaders told the Indianapolis Star the lawsuit was rendered moot by a new formula in the budget bill, signed into law last week by Gov. Mitch Daniels, making funding more uniform in the next seven years.

"I am mindful of the budget challenges that suburban school corporations face in educating growing populations of students. But as the state's lawyer, I contend that only the Legislature has the authority to change the school funding formula -- and that school corporations created by the Legislature cannot challenge the formula the Legislature uses to fund schools," Zoeller said in a statement.

"The statutory change the plaintiffs sought was within the jurisdiction of the legislative branch, not the judicial branch."

Zoeller said he thinks it is "inappropriate" for government entities, like schools, to use state tax dollars to hire private lawyers to sue the State.

Neither taxpayers nor parents nor students benefit from such costly private litigation, the attorney general said.

He said he was "relieved" that the state Legislature recently passed Senate Enrolled Act 495, which prohibits school corporations from doing so.

"While schools still have the legal right to bring lawsuits against the state, they no longer will be able to use state tax dollars to pay their resulting legal fees," the attorney general said.

SEA 495 passed 33-17 in the state Senate and 67-26 in the House of Representatives and was signed into law by Daniels on April 26. The new law will go into effect July 1.

Now known as Public Law 69-2011, the new law is not retroactive so any state dollars already spent would not have to be refunded, but it will apply to school corporations going forward, the Attorney General's Office explained.

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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