                                                                                       November 3 2015


                                    DA 15-0215
                                                                                       Case Number: DA 15-0215

         IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    2015 MT 313



IN RE THE PETITION TO TRANSFER
TERRITORY FROM VAUGHN ELEMENTARY
SCHOOL DISTRICT NO. 74, CASCADE COUNTY,
TO POWER ELEMENTARY SCHOOL DISTRICT NO. 30,
TETON COUNTY


APPEAL FROM:      District Court of the Eighth Judicial District,
                  In and For the County of Cascade, Cause No. ADV 14-368
                  Honorable Gregory G. Pinski, Presiding Judge


COUNSEL OF RECORD:

           For Appellant:

                  Jeffrey A. Weldon, Mary E. Duncan, Felt, Martin, Frazier & Weldon,
                  P.C.; Billings, Montana

           For Appellee:

                  Elizabeth A. Kaleva, Megan D. Morris, Elizabeth A. O’Halloran, Kaleva
                  Law Office; Missoula, Montana



                                              Submitted on Briefs: September 9, 2015
                                                         Decided: November 3, 2015


Filed:

                  __________________________________________
                                    Clerk
Justice Jim Rice delivered the Opinion of the Court.



¶1     Power Elementary School District No. 30 (Power School District) appeals an order

entered by the Eighth Judicial District Court, Cascade County, affirming an

administrative panel’s dismissal of a petition for the transfer of territory from Vaughn

Elementary School District No. 74 (Vaughn School District) to Power School District.

We affirm and address the following issue:

       Did the District Court err by affirming the decision of a panel of county school
superintendents to dismiss a school territory transfer petition?

                 FACTUAL AND PROCEDURAL BACKGROUND

¶2     The educational facility in question is the Hillcrest Hutterite Colony Attendance

Center, located in Cascade County. The Attendance Center was formed after several

colony members petitioned the Vaughn School District’s Board of Trustees in February

2013 to open an attendance center for elementary education on the Colony. Vaughn

School District ultimately entered into a contract with Hillcrest Colony to provide

educational services in exchange for use of a Colony facility, entitled the Hillcrest

Colony Attendance Center Agreement.           The Agreement provided that “Hillcrest

Elementary School shall be operated at all times as a public school of the Vaughn School

District . . . .” Vaughn School District employs a full-time teacher and a teacher’s aide to

staff the Attendance Center. Vaughn School District also provides textbooks, equipment,

and teaching supplies for the Attendance Center, and the Administrator of Vaughn


                                         2
School District serves as the chief administrator for the Attendance Center.              The

Attendance Center opened its doors to students in the late summer of 2013.

¶3     In November 2013, Vaughn School District received a petition, pursuant to

§ 20-6-105, MCA, requesting the transfer a specified portion of territory (Transfer

Territory) from Vaughn School District to the Power School District in Teton County.

Because the petition sought a territory transfer involving more than one county, a panel

of three county school superintendents was assembled to decide the matter, pursuant to

§ 20-6-105(10), MCA.        The statutory criteria for a transfer petition include the

requirement that the requested territory not be “located within 3 miles, over the shortest

practicable route, of an operating school in the district from which it is to be transferred.”

Section 20-6-105(1)(a)(iii), MCA.         After receiving briefing on this issue, the

superintendent panel determined: “It is the majority opinion of the Panel that Hillcrest

Attendance Center is a school based on the information discussed above and operates as

any public school in the state of Montana.” Because the Transfer Territory was located

within three miles of the Attendance Center, the panel dismissed the transfer petition.

¶4     Power School District petitioned for judicial review of the superintendent panel’s

decision. The District Court affirmed the panel’s dismissal of the petition, reasoning that

“[t]he [Attendance Center] has been operating as a school since the 2013-2014 school

year. In all respects, it is an operating school maintained under state law at public

expense.” Power School District appeals.




                                          3
                               STANDARDS OF REVIEW

¶5     A ruling on a territory transfer petition “must be upheld unless the court finds that

the county superintendent’s decision constituted an abuse of discretion under this

section.” Section 20-6-105(9), MCA. “An abuse of discretion occurs when a tribunal

acts ‘arbitrarily without employment of conscientious judgment or exceed[s] the bounds

of reason[,] resulting in substantial injustice.’” In re Petition to Transfer Territory from

Dutton, 2011 MT 152, ¶ 7, 361 Mont. 103, 259 P.3d 751 (citation omitted). “A decision

is arbitrary if it appears to be ‘random, unreasonable, or seemingly unmotivated, based on

the existing record.’” Dutton, ¶ 7 (citation omitted).

¶6     “We review a district court’s conclusions of law for correctness.” Dutton, ¶ 7

(internal citation omitted). “A statutory interpretation is a conclusion of law, which we

review to determine whether the district court’s interpretation of the law is correct.”

State v. Price, 2002 MT 150, ¶ 15, 310 Mont. 320, 50 P.3d 530.

                                       DISCUSSION

¶7     Did the District Court err by affirming the decision of a panel of county school
superintendents to dismiss a school territory transfer petition?

¶8     Power School District contends that the superintendent panel’s decision to dismiss

the petition on the ground that the Transfer Territory was located within three miles of an

operating school was an abuse of discretion, arguing that the Attendance Center does not

constitute an “operating school.”     Section 20-6-105(1)(a)(iii), MCA.       Power School

District further asserts that the District Court’s interpretation of the governing statute was

incorrect.
                                          4
¶9     Section 20-6-501, MCA, provides the following definition of “school”: “[U]nless

the context clearly indicates otherwise, the term ‘school’ means an institution for the

teaching of children that is established and maintained under the laws of the state of

Montana at public expense.” While interpreting statutes, a court is simply to ascertain

and declare what is in terms or in substance contained therein. See § 1-2-101, MCA.

“The terms of a writing are jurisprudentially presumed to have been used as they are

primarily and generally accepted.” Labatte v. Town of Culbertson, 282 Mont. 342, 345,

938 P.2d 611, 613 (1997) (applying maxim to interpretation of city code); see § 1-4-107,

MCA.

¶10    Montana statutes do not provide a definition for an attendance center. An informal

description is provided by the Office of Public Instruction (OPI): “An attendance center

is a location where students regularly attend school at a location other than the regular

school building. The attendance center is effectively part of a specified school of the

district. Attendance centers are not specifically defined in law, since they are a part of a

school, which is defined.” Mont. Office of Pub. Instruction, Get Answers – Attendance

Centers, opi.mt.gov, http://perma.cc/Q39Q-A59R (last updated May 21, 2010).

Throughout the description, OPI refers to an attendance center as a “school,” using the

terms synonymously: “Because it is a public school that is also part of a school district,

an attendance center falls under the accreditation requirements of the school it is a part

of.” Mont. Office of Pub. Instruction, Get Answers. However, while OPI’s description




                                         5
gives helpful information about attendance centers generally, it is not conclusive of the

legal issue before the Court.

¶11    The operative facts are essentially uncontested. Under the terms of the Agreement

between Vaughn School District and the Hillcrest Colony, the Attendance Center was

opened to “operat[e] at all times as a public school of the Vaughn School District,” or in

other words, as “an institution for the teaching of children” of Vaughn School District.

Section 20-6-501, MCA. The Attendance Center was open to any student in the area, not

just colony students.1 Vaughn School District employs a teacher and a teacher’s aide to

staff the Attendance Center, and Vaughn School District had applied for and received

funding from OPI for the Attendance Center.2              Vaughn School District provides

textbooks, teaching supplies, and administrative supervision to the Attendance Center,

and is also responsible for providing any additional support services for the Attendance

Center students.    In addition, by terms of the Agreement, the Attendance Center is

required to meet Vaughn School District policies and standards, including “all State and

Federal laws, administrative rules and policies applicable to public schools and all rules

and policies of the School District,” as well as compulsory enrollment requirements.

These facts convince us that the panel’s judgment did not exceed the bounds of reason,



1
 The Agreement provided that “Enrollment at Hillcrest Elementary School shall also be open to
any and all qualified residents of the Vaughn School District.”
2
 While the Dissent notes that Vaughn School District applied for and received additional funding
for the Attendance Center under the procedure for “Anticipated Enrollment Increase,” the
funding application stated that the reason for such increased enrollment was the “Opening of
Colony Attendance Center.”
                                           6
nor did the panel act unreasonably when concluding that the Attendance Center

“currently operates as any public school in the state of Montana.”

¶12    Power School District also contends that the District Court “misinterpreted and

misapplied operative statutes,” arguing that the Attendance Center cannot be an

established “school” because it was not opened consistent with the procedures set forth in

§ 20-6-502, MCA. That statute establishes the procedures for opening or reopening an

elementary school, including the requirements that the county superintendent and board

of county commissioners approve the opening of the school, and that the superintendent

of public instruction likewise approve the opening. See § 20-6-502(2)˗(4), MCA. Power

School District argues that “[t]he District Court’s conclusion ignores a significant part of

the statutory definition (i.e. that to be a school, the institution must also be established

under the laws of Montana) and it ignores a more specific statute prescribing what must

be done before a school can be opened.” We review a district court’s interpretation of a

statute for correctness. Price, ¶ 15.

¶13    The District Court addressed this issue, reasoning:

       The territory transfer panel acknowledged the approval of the county
       commissioners was missing from the process to open the Hillcrest Colony
       facility. . . . The Court agrees with the transfer panel, though, that the lack
       of county commissioner approval does not, ipso facto, invalidate the
       Hillcrest Colony facility’s status as an “operating school” for purposes of
       § 20-6-105(1)(a)(iii), MCA . . . . The Hillcrest Colony facility is currently
       operating as a public elementary school.

¶14    In McKirdy v. Vielleux, 2000 MT 264, ¶ 21, 302 Mont. 18, 19 P.3d 207, this Court

was faced with the validity of a single petition seeking transfer of territory for both a high

                                          7
school and an elementary school under a statute providing that a high school territory

petition “must be accompanied by a petition to transfer the same territory as elementary

territory in accordance with [§] 20-6-213, [MCA],” in the absence of such a separate

petition. Approving the combined petition, we reasoned that “this Court has refused to

abide by such a strict, formalistic approach to statutory interpretation, and have readily

applied the maxim: ‘The law respects form less than substance,’ pursuant to § 1-3-219,

MCA.” McKirdy, ¶ 35.

¶15    Similarly, we conclude upon the record of this case, including that the Attendance

Center was approved by local school authorities and approved for funding by state school

authorities, staffed with school employees, funded with public resources, regulated under

state3 and federal law, and opened to all qualifying students, that it was “established and

maintained under the laws of the state of Montana at public expense.” Section 20-6-501,

MCA. To conclude that a school was not established here by the lack of a vote by the

county commissioners, who do not exercise direct supervision over public schools, and

the lack of formal approval by the state superintendent, when that office approved the

Attendance Center de facto by funding and regulating it, would truly elevate form over

substance. The record evidence clearly establishes the substance of the matter—the



3
  The Dissent posits that “the Attendance Center could not have been accredited under State law”
because it was not properly opened as a school. Dissent, ¶ 12. The record is devoid as to the
Attendance Center’s accreditation status as of the 2013-2014 year because it opened at the same
time that OPI was in the data collection phase for the accreditation process for that year.
However, the record indicates that “Hillcrest Colony Elementary” was granted regular
accreditation status for the 2014 school year, as attested to by a certificate signed by the
Superintendent of Public Instruction.
                                            8
Attendance Center is fully functioning as a public school and providing “for the teaching

of children.” Section 20-6-501, MCA.

¶16    The District Court correctly held that the superintendent panel did not abuse its

discretion or otherwise err as a matter of law in interpreting the governing statutes.

¶17    Affirmed.



                                                  /S/ JIM RICE

We concur:

/S/ MIKE McGRATH
/S/ JAMES JEREMIAH SHEA
/S/ MICHAEL E WHEAT



Justice Laurie McKinnon, dissenting.

¶18    I respectfully dissent from the Court’s opinion. I cannot agree with the Court that

the Attendance Center was a “school” within the meaning of § 20-6-105(1)(a)(iii), MCA.

Pursuant to § 20-6-501, MCA, before a learning facility may be classified as a “school” it

must be “established . . . under the laws of the state of Montana at public expense.” Once

established in accordance with State law, a learning facility is entitled to all the benefits

and protections of a school under Montana law, including the availability of funding,

accreditation, and protection against land transfers within the district. Sections 20-9-313,

20-7-102(1), (2), 20-6-105, MCA.




                                          9
¶19    The Legislature has specifically provided a process under which a new elementary

school is established. Section 20-6-502, MCA, et seq. That process includes seeking and

obtaining approval from the board of county commissioners and the superintendent of

public instruction. Sections 20-6-502(3), (4), MCA. In this regard, the Vaughn School

Trustees failed to follow the applicable law for establishing a new elementary school.

The Vaughn School Trustees neither sought, nor obtained, approval from the Cascade

Board of County Commissioners or the Montana Superintendent of Public Instruction to

open a new elementary school. Because the Trustees failed to establish the Attendance

Center as a new elementary school under the laws of the State of Montana, the

Attendance Center cannot be considered a school. To conclude otherwise would be

tantamount to disregarding the plain language of the statutory scheme and omitting

language that the Legislature inserted. Section 1-4-101, MCA.

                                              I.

¶20    The statutory scheme unambiguously requires the board of county commissioners

to approve the opening of a new elementary school. The initial step in establishing a new

elementary school is for the parents of the students of the prospective school to submit a

petition. Section 20-6-502(1), MCA. If the trustees approve the petition, § 20-6-502(3),

MCA, provides that the trustees “shall present the petition, the trustees’ approval, and the

county superintendent’s findings” on the parents’ petition to the “board of county

commissioners for their consideration.”       The county commissioners shall deny the

opening if the anticipated enrolment is less than two pupils. Section 20-6-502(3), MCA.

                                         10
“In all other cases,” § 20-6-502(3), MCA, states that it is within the county

commissioners’ discretion to “approve or disapprove the requested opening or reopening

of the elementary school.” The statutory scheme is clear that the county commissioners’

approval is necessary to establish an elementary school. The Legislature has vested them

with this power under Montana law.

¶21    Although it is not this Court’s function to question the wisdom of the Legislature,

the Legislature is not without a policy justification for providing the commissioners with

their power over the opening of a new elementary school. The county commissioners are

directly responsible for financing schools in Montana. While the trustees control the

budget process in a school district, the trustees are without taxing authority. It is the

county commissioners who actually levy the required mills for the budget. Section

20-9-131(3), MCA, provides that after the adoption of the final budget for the school

district, the trustees “shall deliver the adopted budget, including the amounts to be raised

by tax levies, to the county superintendent,” to be placed before the county

commissioners. Section 20-9-142, MCA, then requires the county commissioners “to fix

and levy on all the taxable value of all the real and personal property within the district

all district and county taxation required to finance, within the limitations provided by

law, the final budget.”

¶22    The process for funding the transportation fund for a school district, which is a

county based fund used to pay for the costs of getting students from home to school and

back, operates in much the same way, with the exception that the transportation fund is

                                         11
controlled by a county transportation board made up of five members, including the

county superintendent and a county commissioner. Section 20-10-131, MCA. Like the

final budget for a school, the levy required for the final budget for the county

transportation fund “must be made by the county commissioners in accordance with

20-9-142.” Section 20-10-144(5), MCA.

¶23   Based upon this statutory scheme, it is clear that the county commissioners have a

genuine interest in deciding whether a new elementary school is established. It is the

county commissioners who will ultimately levy the taxes for its formation and the

transportation of its students. And it is the commissioners who will no doubt be held

accountable by taxpayers for the creation of the new school and the corresponding tax

increases. The statutory scheme allows the commissioners one substantive opportunity to

exercise their power over the funding of a new school for which they are responsible—

this comes at the time the school is to be established pursuant to § 20-6-502, MCA. After

the school is established, the county commissioners must levy the required taxes to fund

and provide transportation for the new school. In short, the Legislature vested the board

of county commissioners with their power for good reason.

                                            II.

¶24   The statutory scheme also unambiguously requires the superintendent of public

instruction to approve the opening of a new elementary school. Section 20-6-502(4),

MCA, provides that “[i]f the board [of county commissioners] approves a school

opening” the trustees must provide “a copy of the approval, along with the petition, the

                                       12
trustees’ approval, and the county superintendent’s estimate of the probable [number of

students], to the superintendent of public instruction.”     Section 20-6-502(4), MCA,

further provides that the “superintendent of public instruction shall approve or disapprove

the requested opening or reopening of the elementary school by the fourth Monday of

June.”     Here again, the statutory scheme is clear: the superintendent of public

instruction’s approval is necessary to establish an elementary school.

¶25      Nonetheless, the Court concludes that the superintendent of public instruction’s

approval is unnecessary in this case because the office of public instruction (OPI)

“approved the Attendance Center de facto by funding and regulating it.” Opinion, ¶ 15.

First, the statutory scheme by its plain terms expressly requires the superintendent of

public instruction, not OPI officials, to approve an elementary opening.               The

“superintendent of public instruction” is defined as the “state government official

designated as a member of the executive branch by the Montana constitution.” Section

20-1-101(24), MCA. The OPI is defined separately under § 90-14-105, MCA. The

Montana Constitution requires that the superintendent of public instruction be “elected by

the qualified electors at a general election” and vests the superintendent of public

instruction with all “duties as are provided by law.” Mont. Const. art. VI, §§ 2, 4. The

Legislature does not use the terms “superintendent of public instruction” and “office of

public instruction” interchangeably within the statutory scheme and defines their




                                         13
respective powers and duties separately.1 Had the Legislature intended OPI officials to

have the power to approve an elementary school opening, instead of the superintendent of

public instruction, it could have easily stated as much. The approval of OPI is no

substitute for the exercise of actual authority by the superintendent of public instruction.

¶26    Second, the Court’s statement that OPI “approved the Attendance Center de facto

by funding [it]” is inherently misleading. While OPI did release funding to the Vaughn

School District for additional students, it did not do so because of the opening a new

elementary school. The Attendance Center did not receive any funding from OPI in its

own name as a newly cast elementary school. Rather, OPI released additional funding to

the Vaughn School District because the Vaughn School Trustees claimed an unusual

increase of students at the already existing Vaughn Elementary School.

¶27    Section 20-9-313, MCA, permits a school district to seek increased funding from

OPI for additional students under limited circumstances. For purposes of the present

case, there are two relevant subsections of § 20-9-313(1), MCA, which permit OPI to

release increased funding for additional students: subsection (a) and subsection (d).

Subsection (a) provides that funding may be increased when “the opening of a new

elementary school or the reopening of an elementary school has been approved in

accordance with [§] 20-6-502.” Subsection (d) provides that funding may be increased in


1
  For instance, compare § 20-1-401(3), MCA (“The trustees shall certify to the office of public
instruction that a school safety plan or emergency operations plan has been adopted.”) with
§ 20-1-301(3), MCA (“[T]he superintendent of public instruction shall reduce the direct state aid
for the district for that school year by two times an hourly rate, as calculated by the office of
public instruction, for the aggregate hours missed.”) (Emphasis added.).
                                             14
other unusual circumstances, such as the creation of a new mining operation, when “a

district anticipates an unusual enrollment increase in the ensuing school fiscal year.” The

manner of computation of funding and the requisite procedures to obtain funding under

subsection (a) and subsection (d) are not the same. See Sections 20-9-313, 314, MCA.

¶28    In the present case, the Vaughn School Trustees did not seek funding under

§ 20-9-313(1)(a), MCA, but instead applied for funding under § 20-9-313(1)(d), MCA.

The application form for additional funding submitted by the Vaughn School Trustees

clearly described the different categories for requesting funding and the procedures to be

followed for obtaining such funding, including an explanation that the procedures under

subsection (a)—for obtaining funding for the opening of a new elementary school—and

the procedures under subsection (d)—for obtaining funding for an unusual enrollment

increase at an existing elementary school—were statutorily different. Yet, the Vaughn

School Trustees opted to apply for funding under subsection (d) and follow the requisite

procedures applicable to that subsection. And it was under that subsection that OPI

provided funding to the Vaughn School District. The release of taxpayer dollars to the

Vaughn School District under § 20-9-313(a), MCA—absent the Attendance Center being

“approved in accordance with [§] 20-6-502,” MCA—would have been a clear violation

of State law. Section 20-9-313(1), MCA. Make no mistake about it, the Montana

Superintendent of Public Instruction, nor anyone in her office, approved any funding to

the Vaughn School District for additional students based on the opening of a new

elementary school at the Hillcrest Colony.

                                        15
¶29    Lastly, there is no evidence in the record showing that OPI regulated the

Attendance Center as a school under State law during the 2013-2014 school year. The

only evidence in the record concerning past accreditation is the Vaughn Elementary

School’s accreditation status. There is simply no accreditation data for the Attendance

Center in the record.2 More importantly, the Attendance Center could not have been

accredited under State law. A learning facility must be established in accordance with

§ 20-6-502, MCA, before it can be accredited. Sections 20-7-102(1), (2), MCA, provide

that “each elementary school . . . must be reviewed by the superintendent of public

instruction to determine compliance with the standards of accreditation”; the

“accreditation status of each school must then be established”; and only a “school may be

accredited . . . .” (Emphasis added.). The Superintendent of Public Instruction could not

have properly accredited the Attendance Center because the Vaugh School Trustees did

not open the Attendance Center as a school in accordance with § 20-6-502, MCA.



2
   The Court concedes that the “record is devoid as to the Attendance Center’s accreditation
status as of the 2013-2014 year,” but nonetheless argues that the Attendance Center “was granted
regular accreditation status for the 2014 school year, as attested to by a certificate signed by the
Superintendent of Public Instruction.” Opinion, ¶ 15 n.3. First, because the taxpayers here
sought to transfer the land in 2013, the relevant inquiry is whether the Attendance Center was a
“school” within the meaning of § 20-6-105(1)(a)(iii), MCA, in 2013, not 2014. Thus, whether
the Attendance Center later became a “school” is irrelevant. Second, the “certificate” the Court
relies on to show that the Attendance Center was later accredited is not part of the record. “[I]t is
axiomatic that evidence must be introduced for admission at a trial or hearing by a party.
Evidence does not simply make its way into the record unless and until it is offered.” In re
Adjudication of Existing Rights In the North End Subbasin of the Bitterroot River, 1999 MT 202,
¶ 12, 295 Mont. 447, 98 P.3d 151. The Vaughn School District did not introduce the certificate
into the record before the Territory Transfer Panel during the evidence phase of this case. The
certificate was merely attached to the Vaughn School District’s brief on appeal to the District
Court. The Court’s reliance on the document is improper.
                                             16
                                             III.

¶30   The Legislature designed a statutory scheme in which the board of county

commissioners and the superintendent of public instruction approve the opening of a new

elementary school.    Once established in accordance with State law, the Legislature

permitted the new elementary school to seek funding, obtain accreditation, and protect

itself against land transfers. The Court today fundamentally alters that design. The

Court’s decision permits a school to be established in an entirely different manner than

the one provided by law. Local school trustees may now sidestep elected officials; seek

funding under the pretext of an unusual enrollment increase in an existing school; and, as

long as OPI grants funding of some type, establish a new elementary school. This is not

the system the Legislature adopted when it passed § 20-6-501, MCA, et seq.

¶31   The Court’s decision ultimately rewards the failure to follow State law. The

Vaughn School Trustees are now entitled to all the benefits and protections that come

with a new elementary school. The Cascade County Commissioners must now levy taxes

to support the Attendance Center; the Montana Superintendent of Public Instruction must

now fund and accredit the Attendance Center; and the Power Elementary School District

is now prohibited from transferring land within three miles of the Attendance Center.

¶32   The Legislature vested the Cascade Board of County Commissioners and the

Montana Superintendent of Public Instruction with the collective authority to establish a

new elementary school in Cascade County. It is not this Court’s function to divest

elected officials of power that has been properly granted to them by the Legislature. The

                                        17
Vaughn School District failed to obtain the requisite approval to open a new elementary

school under the laws of the State of Montana. I would accordingly conclude that the

Attendance Center was not established as an elementary school under the laws of the

State of Montana.

¶33   I dissent.

                                              /S/ LAURIE McKINNON




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