In a November 2000 special election, voters of the Cave Creek Unified School District approved a $41.6 million bond program for the primary purpose of constructing new schools. The initial bond revenues were used to build Sonoran Trails Elementary School and funded more than half of the construction at Horseshoe Trails Elementary School.
The district had $13 million remaining. Instead of paying off the bonds, the Cave Creek Unified School District used bond money on projects voters hadn’t approved, violating the contract they had made with voters. Instead of holding the district accountable, the Arizona Legislature passed a special law that allowed some school districts to divert funds from voter-approved projects.
The Goldwater Institute is representing Cave Creek residents Jayne Friedman (pictured) and Richard Bail, to stop the district from using bond funding in ways not approved by the voters.
If successful, this lawsuit will enhance constitutional protection for contracts, a principle that the school district and legislature violated when they failed to honor the district’s contract with voters. Moreover, the legislature exceeded its power by enacting a law that doesn’t apply to all citizens equally.
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Last step: Oral argument in the Arizona Court of Appeals.
The Arizona Constitution empowers voters to decide whether specific projects funded by bonds are worth the additional tax burden.
Article 7, Section 13 of the Arizona Constitution states, “Questions upon bond issues or special assessments shall be submitted to the vote of real property tax payers...” The constitution specifically puts the decision about issuing debt bonds by a school district in the hands of those who are responsible for any additional taxes that might be necessary to repay those bonds. The Legislature is encouraging fiscal irresponsibility by telling school districts if they spend too much on one project, lawmakers will overrule voters and ignore the state constitution to allow funding to be diverted from other areas.
Taxpayers of Cave Creek Unified School District have an enforceable contract that requires the school district to spend bond revenues only on projects approved by voters.
Arizona Revised Statute 15-491(H)(6) requires school districts holding a bond election to mail a publicity pamphlet to each voting household. Taxpayers in the Cave Creek school district voted specifically on the projects listed in the pamphlet for the November 2000 special election, creating a contract with the school district and the voters.
Article II, Section 25 of the Arizona Constitution states, “No bill … or law impairing the obligation of a contract, shall ever be enacted.” Section 34 of HB2725 allows school district officials to spend bond revenues in any way they see fit, which directly conflicts with the district’s contractual obligation to spend the money as the voters intended.
The Arizona Legislature has adopted a special law intended to apply only to a few school districts.
Article IV, part 2, Section 19 of the Arizona Constitution states, “No local or special laws shall be enacted in any of the following cases,” including “When a general law can be made applicable.” Section 34 of HB2725 only applies to bonds approved on or before June 30, 2004. The law also expires in 2013, which prevents other school districts from receiving the same privilege in the future. The law only covered bonds which had already been voted on, giving Cave Creek a special benefit, which the constitution forbids.
April 5, 2011: Complaint
April 5, 2011: Motion for Preliminary Injunction
June 2, 2011: Amended Complaint
June 17, 2011: Motion for Summary Judgment
June 17, 2011: Response to Defendant's Motion for Summary Judgment
August 1, 2011: Plaintiffs' Reply
September 12, 2011: Ruling
September 15, 2011: Decision
March 26, 2012: Response to the Opening Brief
March 26, 2012: Response to the Opening Brief Appendix
May 2, 2012: Order
April 5, 2011: The Goldwater Institute files a lawsuit against the Cave Creek Unified School District in Maricopa County Superior Court.
May 2, 2011: Cave Creek Unified School District signs stipulation agreeing not to spend any of the bond money in question until a judge decides if it is legal.
August 23, 2011: Oral arguments at 9:30 a.m. in front of Judge Eileen S. Willett; Maricopa County Superior Court, Central Court Building, 201 West Jefferson Street, Courtroom #401 (4th floor), Phoenix.
September 12, 2011: Judge rules the district violated its contract with voters and cannot spend bond money in ways that voters did not approve.
November 23, 2011: Cave Creek Unified School District appeals to the Court of Appeals.
October 23, 2012: Oral Arguments, Arizona Court of Appeals, Courtroom 2, 2nd Floor, 1501 W. Washington, Phoenix, Ariz., and 9:30 a.m.
2012: Expected decision.
April 5, 2011: Goldwater Institute Seeks to Block Misuse of School District Bond Money
May 16, 2011: School District Agrees Not to Spend Leftover Bond Money Until Judge Decides Legality
September 19, 2011: Court: School Districts Must Abide By Voters' Wishes On Bonds
The Legal Team
Christina Sandefur worked to advance liberty as a law clerk at the Pacific Legal Foundation in California and a research intern at the Michigan-based Mackinac Center for Public Policy before joining the Goldwater Institute as an attorney in 2010. Christina earned her law degree from Michigan State University College of Law, where she served as notes editor of the Law Review and president of the campus Federalist Society.
Clint Bolick is the Goldwater Institute’s litigation director. He has extensive success before trial judges and appellate courts. He has won two cases before the U.S. Supreme Court. He was named as a Lawyer of the Year in 2003 by American Lawyer magazine.