                IN THE SUPREME COURT OF IOWA
                              No. 11–1498

                           Filed May 11, 2012


EAST CENTRAL COMMUNITY
SCHOOL DISTRICT,

      Appellant,

vs.

MISSISSIPPI BEND AREA
EDUCATION AGENCY,

      Appellee.


      Appeal from the Iowa District Court for Jackson County, Mary E.

Howes, Judge.



      Appellant asserts the appellee acted unlawfully in approving for

submission to the voters a petition proposing a consolidation of two

school districts. AFFIRMED.



      Andrew J. Bracken and Amanda G. Wachuta of Ahlers & Cooney,
P.C., Des Moines, for appellant.



      Mikkie R. Schiltz and Wendy S. Meyer of Lane & Waterman LLP,

Davenport, for appellee.
                                     2

APPEL, Justice.

      In this case, we consider whether an area education agency (AEA)

acted lawfully when it approved for submission to the voters a petition

that proposed a consolidation of the Preston and East Central

Community School Districts. East Central seeks to block the measure

from being placed before the voters.        In support of its position, East

Central asserts that the AEA approval of the petition for submission to

the voters is legally flawed because the AEA failed to comply with a

statutory requirement that it develop a plan for the AEA district.

Further, East Central maintains that the AEA failed to make a required

statutory finding that the consolidation proposed in the petition was in

conformity with the plan. The district court rejected the claims.

      On appeal, we conclude that the AEA acted lawfully in approving

submission of the petition to the voters.

      I. Background Facts and Proceedings.

      This case involves two small school districts, Preston and East

Central Community School Districts. The certified enrollment in Preston

in October 2010 was 335.9 students and 370.1 students for East

Central.   Of these students, thirty-two and fifty, respectively, enrolled

outside of the districts.

      In 1986, the Mississippi Bend AEA (MBAEA) developed what was

entitled “Reorganization Plan” (Plan). The Plan contains page after page

of data about the school districts within the MBAEA.          The Plan also

includes seven alternate reorganization plans for schools within the

MBAEA that had less than three hundred students enrolled in the

districts. Public hearings were held in connection with the Plan, after

which the Plan was reviewed and adopted by the MBAEA Board (Board).
                                     3

      In   December    2000,   the   MBAEA    consulted   with   the   Iowa

Department of Education (department) in updating the Plan.          Preston

requested the department to prepare a feasibility report addressing the

possible merger of Preston and East Central.       The report praised East

Central and Preston for how well they had worked together and

suggested a merger as an alternative.     The Plan was revised, a public

hearing was held, and the Board again adopted it in August. The 2000

survey conducted of the East Central and Preston Community School

Districts was included in the Plan as an appendix.

      In 2005, Preston and East Central again requested the department

to address the possibility of a merger.       The 2005 study addressed

reorganization and noted that the two schools operating as independents

was “not the most efficient use of time and resources, and [did] not allow

for ‘best practice’ in the educational program.”

      In 2008, a petition was circulated to determine if there was

support for a merger of the two school districts.     Over seven hundred

citizens in the two districts signed the petitions requesting the school

boards and administrators to work together and consider the option of

reorganization.    No petition, however, was filed with the MBAEA

requesting that school reorganization be submitted to the voters.

      In January 2010, Preston and East Central representatives along

with representatives of a third school district, the Northeast Community

School District (Northeast), held discussions regarding the possibility of

expanding collaboration to increase the quality of education for students.

The meetings included discussion of potential reorganization options.

      On May 3, a petition for reorganization of East Central and Preston

was filed with the MBAEA.      Approximately thirty-three percent of the
                                       4

registered voters in the East Central district and fifty-four percent of all

registered voters in the Preston district signed the petition.

      As a result of the filing of the petition, Dr. Glenn Pelecky, Chief

Administrator of the MBAEA, sent a letter dated May 10, 2010, to Board

members      providing   the   Board       with   information   regarding   the

reorganization process and a history of the cooperative efforts involving

Preston and East Central. The matter was discussed further on May 12

at a regular board meeting and board retreat.

      The MBAEA and East Central at this point requested the

department to conduct a study regarding the proposed merger.                The

department prepared a feasibility report dated May 21, 2010, regarding

the future options for Preston, East Central, and Northeast.                The

department concluded that a merger between Preston and East Central

was not an appropriate “intermediate step” if the goal was to join

Preston, East Central, and Northeast. The department noted, however,

that the discussions regarding reorganization of Preston, East Central,

and Northeast had been ongoing for ten years without any result.

      On June 4, Pelecky sent to members of the Board a packet of

materials.   The June packet included the most recent report from the

department, the 1986 Reorganization Plan (as amended), and letters from

community members.

      On June 7, Pelecky sent to Board members additional materials,

including an objection requesting that the petition be dismissed; copies

of objections requesting boundary changes; and a basket of documents

from the superintendent of East Central, Jim House, which included a

PowerPoint presentation, financial materials, data related to enrollments,

information related to high school classes, and sharing agreements

between East Central and Northeast.
                                      5

      The Board held a hearing on the petition on June 16.              After

hearing almost four hours of testimony, the Board voted to “grant the

approval for moving ahead with the community vote” on the question of

the reorganization of Preston and East Central. A subsequent hearing on

June 30 established the boundaries of the proposed merged district.

      East Central filed an action in district court seeking to invalidate

the action of the Board approving the petition.       East Central argued,

among other things, that the 1986 Reorganization Plan, along with its

amendments, was flawed because it did not contain a specific plan for

the merger of the Preston and East Central Community School Districts.

East Central further claimed that the Board failed to make a necessary

factual finding, namely, that the merger proposed in the petition was in

conformity with the MBAEA’s Plan.          The MBAEA filed a motion for

summary judgment, claiming that as a matter of law there was no

requirement that the MBAEA Plan specifically describe a merger between

Preston and East Central and that the action of the Board approving the

petition was in accordance with law. The district court granted summary

judgment, and this appeal followed.

      II. Scope of Review.

      We consider the school reorganization process as a local legislative

matter.   Templeton Indep. Sch. Dist. v. Carroll Cnty. Bd. of Educ., 228

N.W.2d 1, 3 (Iowa 1975). In engaging in judicial review, we are careful to

consider only legal questions and do not substitute our judgment for the

wisdom or practicality of a proposed reorganization.       In re Lone Tree

Cmty. Sch. Dist., 159 N.W.2d 522, 525 (Iowa 1968). Our review is limited

to determining whether the agency has exceeded its jurisdiction or has

taken an action that is arbitrary, unreasonable, and unsupported by

substantial evidence in the record.       Templeton, 228 N.W.2d at 3.    We
                                       6

have    defined   arbitrary    or   unreasonable     action   in    the   school

reorganization context as action “without rational basis; unconsidered,

willful and irrational choice of conduct.”         Id. (citation and internal

quotation marks omitted). In reviewing school consolidation matters, we

“will not draw fine, technical lines or indulge inferences that would

invalidate a reorganization plan.” Hedrick Cmty. Sch. Dist. v. S. Prairie

Area Educ. Agency 15, 433 N.W.2d 746, 751 (Iowa 1988). We make all

inferences in favor of the legality of official steps. Id.

       III. Discussion.

       A. Positions of the Parties.

       1.   Lack of specific plan for merger of Preston and East Central.

East Central maintains that under Iowa Code chapter 275 (2011), the

MBAEA must develop a “plan” that specifically discusses a proposed

merger between East Central and Preston before a petition for merger

may be approved by the MBAEA and placed on the ballot. East Central

cites provisions of Iowa Code sections 275.2, 275.4, and 275.5 which use

the terms “plans” and “definite plans” in describing the responsibilities of

the Board.

       The MBAEA counters that there is no requirement that its Plan

include a specific proposal for merger of school districts in which more

than three hundred students are enrolled. Because enrollment in both

Preston and East Central was above the three hundred student

threshold, the MBAEA maintains that it had no obligation under Iowa

Code chapter 275 to develop such a plan.

       2.    Failure to determine compliance with plan.            East Central

maintains that under Iowa Code section 275.5, an AEA board

considering whether to pass a proposed merger of school districts onto

the voters must first “determine whether the petition complies with the
                                     7

plans which had been adopted by the board.” Iowa Code § 275.5. East

Central notes that the provision requiring a determination of compliance

with plans is declared to be mandatory by Iowa Code section 275.9.

       East Central then canvasses the record in this case and concludes

that there is a genuine issue of material fact as to whether the Board

actually made the determination that the proposed merger complied with

its plans.   East Central notes that the official Board minutes do not

indicate that the Board voted on this precise issue.         East Central

recognizes that there is evidence to the contrary in the record, but

maintains that summary judgment should not have been granted to the

Board on this issue.

       The MBAEA responds that the action of the Board is legislative, not

judicial, and points out that judicial review is limited to determining

whether the Board exceeded its jurisdiction or acted in an arbitrary,

unreasonable, or unsupported manner. The MBAEA contends that the

standard to be applied is one of substantial compliance.      The MBAEA

argues that implicit in the Board’s vote granting the petition is a finding

that the proposed merger complied with the plans that had been adopted

by the Board.

       B. Statutory Framework. In order to facilitate consolidation of

smaller local school districts, the legislature enacted Iowa Code chapter

275.    Iowa Code chapter 275 establishes a framework for school

reorganization in Iowa.     Originally, the county school boards had

responsibilities for planning the reorganization of school districts, but

beginning in July 1975, the AEAs replaced the county boards as the

facilitator of school reorganization.    See Hedrick, 433 N.W.2d at 747

(citing 1974 Iowa Acts ch. 1172, § 9).
                                    8

      The declared policy of Iowa Code chapter 275 is to “encourage

economical and efficient school districts which will ensure an equal

educational opportunity to all children of the state.”         Iowa Code

§ 275.1(2). In order to meet these objectives, the AEAs are required to

develop “detailed studies and surveys of the school districts within the

area education agency and all adjacent territory.”    Id. § 275.1(3).   The

studies and surveys were to include information about

      the adequacy of the educational program, pupil enrollment,
      property valuations, existing buildings and equipment,
      natural community areas, road conditions, transportation,
      economic factors, individual attention given to the needs of
      students, the opportunity of students to participate in a wide
      variety of activities related to the total development of the
      student, and other matters that may bear on educational
      programs meeting minimum standards required by law.

Id. § 275.2.

      This information is designed to “provid[e] for reorganization of

school districts in order to effect more economical operation and the

attainment of higher standards of education in the schools.”            Id.

§ 275.1(3).

      In 1984, the legislature amended Iowa Code chapter 275 to require

that “the plans shall also include suggested alternate plans that

incorporate the school districts in the area education agency into

reorganized districts that meet the enrollment standards specified in

section 275.3 [of enrollment of at least three hundred students].”      Id.

§ 275.2.      Iowa Code section 275.9 reinforces the importance of the

substantive provisions in Iowa Code sections 275.1 through 275.5 by

noting that compliance with these sections is mandatory. Id. § 275.9.

      The process for merger or consolidation begins with a citizen

petition that is submitted to the AEA. Id. § 275.12. Following receipt of

a petition, the AEA is directed to “review its plans and determine whether
                                      9

the petition complies with the plans which had been adopted by the

board.”    Id. § 275.5.   If the petition “does not comply” with the plans

adopted by the board, the board “shall conduct further surveys pursuant

to section 275.4 prior to the date set for the hearing upon the petition”

and present the results of such surveys at the public hearing. Id. If the

petition does comply with the plan, the board may set a hearing on the

petition without further surveys. Id.

      Within ten days after the petition is filed, the AEA administrator

sets a date for the filing of objections and for the public hearing.         Id.

§ 275.14. If the petition is not dismissed and the board determines that

additional information is needed to fix boundaries, the hearing may be

continued for thirty days.      Id. § 275.15(3).   After the hearing on the

petition, the AEA may approve a reorganization plan for submission to

the voters. Id. § 275.18(1).

      C.    Applicable Caselaw.     Our school reorganization cases have

long recognized two twin concepts.        First, our cases have emphasized

that a reviewing court should “liberally construe” the law relating to

matters of reorganization of school districts. Allerton-Clio-Lineville Cmty.

Sch. Dist. v. Cnty. Bd. of Educ., 258 Iowa 846, 849, 140 N.W.2d 722, 724

(1966).    Second, our cases have recognized that precise and exact

compliance     with   school   reorganization   statutes   is   not   essential;

substantial compliance will suffice. Turnis v. Bd. of Educ., 252 Iowa 922,

933, 109 N.W.2d 198, 205 (1961).          Life has been breathed into these

principles in a series of school reorganization cases.

      In Board of Education of Audubon County v. Joint Board of

Education, 196 N.W.2d 423 (Iowa 1972), we considered a challenge to a

school consolidation.      In Audubon County, the joint board did not

expressly fix the method of electing directors of the new school district.
                                     10

Audubon Cnty., 196 N.W.2d at 426–27.         Iowa Code section 275.12(4)

(1971) authorized the board to review and to change the method

proposed in the petition. Id. at 427. We held that by approval of the

petition, the method of electing directors proposed was necessarily

approved. Id. We further held that by approving the petition, the board

necessarily approved boundary changes that did not conform to the

county plan. Id. In reaching these results, the Audubon County court

emphasized that school reorganization statutes are to be “liberally

construed.” Id.

      Next, we decided Bloom v. Arrowhead Area Education Agency, 270

N.W.2d 594 (Iowa 1978).      The question in Bloom was closely related,

though not identical, to one of the issues in this case.          In Bloom,

Arrowhead AEA decided to adopt plans of county boards in its area as its

tentative plan rather than develop a new tentative plan on its own.

Bloom, 270 N.W.2d at 597. The county plans, however, did not provide

for reorganization of the school districts. Id. The question in Bloom was

whether the tentative plan, as adopted by the AEA, met the statutory

requirement that a tentative plan be developed within sixty days of the

submission of a petition. See id. (citing Iowa Code § 275.5 (1977)). We

held that the tentative plan was sufficient to comply with the statute,

even though it did not specifically call for the reorganization of the school

districts as proposed in the petition.    Bloom, 270 N.W.2d at 597.      We

further emphasized that while reorganization was encouraged by Iowa

Code chapter 275, it was not required or compelled. Id.

      In Hedrick, the Hedrick Community School District challenged the

action of an AEA in approving a petition calling for a vote on the merger

of Hedrick and the Pekin School Districts. Hedrick, 433 N.W.2d at 750.

Among other things, the plaintiff claimed that the AEA failed to include
                                        11

alternate plans in its reorganization plan and failed to review the matter

on its merits after a hearing. Id.

       Before considering the merits in Hedrick, we reviewed the proper

framework for evaluating school district reorganization decisions.          We

noted that because reorganization is a legislative rather than a judicial

function, our review was limited to review for substantial compliance that

did not include reevaluation of the wisdom of the judgment of the AEA.

Id. at 750–51.    We further observed that judicial interference in local

legislative matters would occur only when the agency had exceeded its

jurisdiction or taken an action that is arbitrary, unreasonable, or

unsupported by substantial evidence in the record.          Id.   The Hedrick

court emphasized that all inferences in favor of the legality of the official

steps would be observed. Id.

       With respect to the plaintiff’s challenge to the adequacy of the AEA

plan that did not specifically propose or contemplate reorganization of

school districts with enrollments over three hundred students, we held in

Hedrick that the statute imposed no such requirement. We emphasized

that   the   legislature    did   not   mandate   reorganizations,   but   only

encouraged them. Id. at 751. We held that an AEA plan that contained

no specific plans to propose mergers for school districts with enrollments

greater than three hundred students, but did consider reorganization of

school districts with less than three hundred students, was legally

sufficient under Iowa Code chapter 275. Id. at 752–53.

       The plaintiff in Hedrick also claimed that the AEA board did not

consider the matter on the merits as required by Iowa Code section

275.15 (1985).     Id.     Apparently, the board took only six minutes to

approve the reorganization petition. Id. at 753. We rejected the claim.

Id. We noted that the AEA board had been considering reorganization
                                    12

possibilities for several months prior to the day that the petitions were

actually approved. Id. Further, we noted that the AEA board had given

tentative approval to the alternate plan that recommended the merger of

Hedrick and Pekin. Id. As a result, we found substantial compliance

with the statutory requirements. Id.

      Finally,   in   Armstrong-Ringsted Community     School   District v.

Lakeland Area Education Agency, 597 N.W.2d 776 (Iowa 1999), we

considered a case in a much different posture. In Armstrong-Ringsted,

residents of a school district challenged the dismissal of a petition

seeking to combine school districts. Armstrong-Ringsted, 597 N.W.2d at

776–77. During the pendency of the proposed merger of Lincoln Central

and Armstrong-Ringsted, another petition was filed, this one proposing a

merger of Lincoln Central and the Estherville School Districts.       Id. at

777. The Lakeland AEA declined to approve the first petition and sent

the second petition to the voters, which was approved.          Id.   Citing

Hedrick, we emphasized that reorganization is a legislative, not a judicial

process, and that our review was limited to determining whether the AEA

“exceeded its jurisdiction or has taken an action that is arbitrary,

unreasonable or unsupported by substantial evidence in the record.” Id.

at 777–78 (citation and internal quotation marks omitted).

      D. Application of Law to Facts.

      1. Requirement of plan that specifically includes merger between

Preston and East Central. We begin by considering East Central’s first

contention, namely, that the MBAEA failed to meet its statutory mandate

because its Plan did not specifically describe a merger between Preston

and East Central.

      We begin our analysis by noting that there is no provision in Iowa

Code chapter 275 that requires an AEA to develop a specific plan of
                                       13

mergers for all school districts within its geographic area. Indeed, such a

task would be virtually impossible in an area with twenty-two school

districts and literally hundreds of potential combinations. Instead, Iowa

Code section 275.1 simply requires the AEA board to
      develop detailed studies and surveys of the school districts
      within the area education agency . . . for the purpose of
      providing for reorganization of school districts in order to
      effect more economical operation and the attainment of
      higher standards of education in the schools.

Iowa Code § 275.1(3) (2011). Iowa Code section 275.2 states that an AEA

board plan shall “include suggested alternate plans that incorporate the

school districts in the area education agency into reorganized districts”

only with respect to school districts that meet the less than three-

hundred pupil enrollment standard contained in Iowa Code section

275.3. Id. § 275.2. By requiring that the AEA prepare plans for merger

of school districts with less than three hundred pupils, the implication is

that plans need not be developed for school districts that do not meet

that threshold. Meinders v. Dunkerton Cmty. Sch. Dist., 645 N.W.2d 632,

637 (Iowa 2002) (express inclusion of specific requirement implies

exclusion of others not mentioned).

      In evaluating the claim raised in this case, it is important to

recognize that the AEA board has no power to take the initiative and

direct school districts to reorganize. It cannot, acting on its own, submit

reorganization to the voters. Instead, the AEA board acts as a resource

for school officials and citizens who are interested in potential

reorganization. When local citizens propose such school reorganization,

the AEA board then serves as a gatekeeper to ensure that the proposed

merger    meets   applicable   legal   requirements   and   establishes   the

appropriate boundaries for the school districts subject to the potential

merger.
                                    14

      In this case, the Plan and the testimony of Dr. Pelecky revealed
that the criteria applied by the Board for evaluating compliance with the
Plan were twofold. First, there needed to be sufficient public support for
the reorganization as reflected in the filing of a valid petition to
reorganize the school districts. Second, the resulting district must have
at least three hundred enrolled students.
      The implication of the Plan was that the MBAEA would not lead the
way by proposing specific school reorganizations with respect to school
districts with enrollment over three hundred students, but would instead
defer to citizens to initiate such a school reorganization through the
petition process.   The MBAEA would review a petition, but not shape
public dialogue in advance through its planning process for school
districts over three hundred enrolled students other than by providing
studies and surveys.
      We do not consider the wisdom of the MBAEA’s approach, but only
its legal sufficiency.   In Bloom, we approved a plan that did not have
specific proposals for reorganization. Bloom, 270 N.W.2d at 597. While
the statute now requires alternative reorganization plans for school
districts that fall below the threshold of three hundred enrolled students,
there is no similar requirement with respect to school districts with over
three hundred enrolled students. See Hedrick, 433 N.W.2d at 752 (“[T]he
1984 change in the law . . . mandates the development of alternate plans
for the reorganization of school districts with less than 300 students.”).
Consistent with Bloom and the language of Hedrick, we hold that there is
no legal requirement that the MBAEA Board’s plan contain a specific
proposal for the merger of school districts with more than three hundred
enrolled students prior to approval of a petition submitted by the voters.
      2. Alleged failure to make specific determination of compliance with
plan. We next consider the assertion of East Central that the MBAEA
                                     15

acted improperly by approving the submission of the merger proposed in
the citizen petition because the MBAEA did not make a specific finding
that the petition was in accordance with the MBAEA Plan as required by
Iowa Code section 275.5.
      We again agree with the MBAEA. When an AEA considers whether
to place a proposed merger on the ballot for voters to consider, it is
acting in a legislative capacity, not a judicial capacity. See Hedrick, 433
N.W.2d at 750. Substantial compliance is the standard used to measure
the conformance of actions taken by the AEA to approve a merger with
applicable legal requirements. Id. at 750. When an AEA board acting in
its legislative capacity determined to “grant the approval for moving
ahead with the community vote,” inherent in that action is a finding that
all statutory prerequisites have been met. See Hedrick, 433 N.W.2d at
752; Audubon Cnty., 196 N.W.2d at 428. While it might have been more
transparent if the MBAEA Board held public discussion and voted on the
predicate issues necessary to approve submission of a proposed merger
to the voters, we do not believe the failure to do so requires invalidation
of the action of the Board.
      IV. Conclusion.
      For the above reasons, we conclude that the MBAEA was not
required to develop a specific plan of merger between the Preston and
East Central School Districts prior to approval of submission of a citizen
petition to the voters of the districts.     We further conclude that by
approving the submission of the issue to the voters, the Board made an
implied finding that all the statutory requisites were met. As a result,
the decision of the district court in this matter is affirmed.
      AFFIRMED.
      All justices concur except Waterman, J., who takes no part.
