Bd Educ Oak Park 200 v. IL State Bd Educ ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-1589
Board of Education of Oak Park and River Forest
High School District No. 200,
Plaintiff-Appellee,
v.
Kelly E., by her parent and next friend Nancy E.,
Defendant,
and
Illinois State Board of Education,
Defendant-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 98 C 2390--Morton Denlow, Magistrate Judge.
No. 00-1361
T.H., a minor, and L.H. and S.H., individually
and as next friends of T.H.,
Plaintiffs,
v.
Board of Education of Palatine Community
Consolidated School District No. 15, et al.,
Defendants-Appellants,
v.
Illinois State Board of Education and Glenn McGee,
Superintendent of Education,
Third-Party Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 C 4633--James B. Moran, Judge.
Argued December 10, 1999/*--Decided March 24, 2000
Before Easterbrook, Rovner, and Diane P. Wood, Circuit
Judges.
Easterbrook, Circuit Judge. Does the Individuals
with Disabilities Education Act, 20 U.S.C.
sec.sec. 1400-87, entitle a local school district
to reimbursement from the state for some or all
of the expense when the district must reimburse
parents for a child’s private education? A court
may direct a school district to pay for private
education "if the court ultimately determines
that such placement, rather than a proposed IEP
[individualized education program], is proper
under the Act." Burlington School Committee v.
Massachusetts Department of Education, 471 U.S.
359, 369 (1985). Such an order was entered in
both of the cases now on appeal. Magistrate Judge
Denlow, presiding by consent under 28 U.S.C.
sec.636(c), concluded that Oak Park’s school
district had made so many procedural and
substantive errors in preparing an IEP for Kelly
E. that her parents are entitled to reimbursement
for private education. 21 F. Supp. 2d 862 (N.D.
Ill. 1998). District Judge Moran enforced an
administrative decision that T.H.’s parents are
entitled to reimbursement for an intensive home-
based educational program. 55 F. Supp. 2d 830(N.D. Ill. 1999). Both school districts have
accepted these decisions; the only remaining
dispute is whether the state must chip in. Our
cases appear to be the first to present that
question to a court of appeals.
The magistrate judge directed the state to pay
for Kelly E.’s private education and half of her
parents’ legal expenses. He gave two principal
reasons. 21 F. Supp. 2d at 883, reconsideration
denied, 1999 U.S. Dist. Lexis 1612. First, he
viewed the state as a guarantor of every local
school district’s compliance with the Act, and
therefore responsible for part of the cost.
Second, he concluded that state statutes and
regulations offering to pay for private
placements at approved schools are not generous
enough to comply with Florence County School
District v. Carter, 510 U.S. 7 (1993), which the
magistrate judge understood as calling for state
reimbursement of local districts’ expenses for
private education. Illinois law provides (105
ILCS 5/14-7.02):
A school district making tuition payments
pursuant to this Section is eligible for
reimbursement from the State for the
amount of such payments actually made in
excess of the district per capita tuition
charge for students not receiving special
education services. . . .
. . .
If a child has been placed in an approved
individual program and the tuition costs
including room and board costs have been
approved by the Review Board, then such
room and board costs shall be paid by the
appropriate State agency subject to the
provisions of Section 14-8.01 of this Act.
An implementing regulation adds: "A program not
approved in accordance with the requirements of
this Part shall not be used by school districts
to serve students with disabilities under Section
14-7.02 of the School Code." 23 Ill. Adm. Code
sec.401.10. This means that a non-approved
program is ineligible for reimbursement under
sec.14-7.02, not that such a program "shall not
be used" at all. Still, the magistrate judge
thought that the statute and regulation steered
school districts away from placements that might
be educationally best for students, and toward
either continued education in the public schools
or approved private placements that were
educationally less desirable (but cheaper for the
local school districts). To counteract this
incentive, the magistrate judge directed the
state to pay for half of Kelly’s education even
though state law does not authorize the outlay.
By contrast, the district judge in T.H. declined
to order the state to contribute toward the cost
of the home education. The judge explained: "If
the [Palatine school] district was concerned
about its ability to recoup expenses in excess of
the district per capita tuition charge for
students not receiving special education
services, see 105 ILCS sec.5/14-7.02, it could
have worked harder to develop an appropriate
placement that was approved by the state." 55 F.
Supp. 2d at 847. Judge Moran disagreed with the
magistrate judge’s conclusion that the state must
either ensure local districts’ compliance or
insure their compliance costs.
Illinois, as appellant in the Oak Park case and
appellee in the Palatine case, leads off with a
flurry of objections to the very possibility of
litigation. Local school districts lack standing,
the state insists; if they suffer injury in fact,
they do not meet prudential standards for
adjudication; and if the local districts may sue,
still the state is not a proper defendant given
the eleventh amendment. None of these arguments
was presented in the district court--though if
they establish an absence of subject-matter
jurisdiction we must consider them anyway. But
they are feeble, individually and collectively.
Although, as Illinois stresses, the school
districts are not the persons for whose benefit
the Act is designed, they have been injured in
fact by the need to pay for Kelly E.’s and T.H.’s
private education. Although the injury may not be
traceable to acts of Illinois, in seeking to
recover part of their outlay the school districts
are asserting a claim for contribution. Federal
courts regularly resolve disputes about
contribution. E.g., McDermott, Inc. v. AmClyde,
511 U.S. 202 (1994); Akzo Nobel Coatings, Inc. v.
Aigner Corp., 197 F.3d 302 (7th Cir. 1999). Until
now, no one has expressed doubt that cross-claims
among joint wrongdoers present cases within the
scope of Article III. Perhaps the Act does not
authorize awards of contribution, but a party’s
failure to establish a claim for relief differs
from a deficiency in subject-matter jurisdiction.
Steel Co. v. Citizens for a Better Environment,
523 U.S. 83, 89-90 (1998); Bell v. Hood, 327 U.S.
678, 682 (1946). Recast as a claim that local
districts do not fall within the zone of
interests protected by the Act and thus lack
"prudential" standing, the state’s position fares
no better, if only because we have held, see
United Transportation Union v. Surface
Transportation Board, 183 F.3d 606, 611 (7th Cir.
1999) (citing cases), that prudential
considerations in general, and the zone-of-
interests test in particular, are forfeited if
not presented in a timely fashion. Illinois asks
us to overrule this line of cases, but we
decline; requiring litigants to raise zone-of-
interests arguments at an early opportunity is
compatible with, if not compelled by, decisions
of the Supreme Court. See, e.g., Air Courier
Conference v. Postal Workers Union, 498 U.S. 517,
522-23 & n.3 (1991).
Section 604(a) of the IDEA, 20 U.S.C.
sec.1403(a), provides that "[a] State shall not
be immune under the eleventh amendment to the
Constitution of the United States from suit in
Federal court for a violation of this chapter."
Language this direct satisfies the clear-
statement requirement. Illinois contends that
abrogation exceeds Congress’ powers under sec.5
of the fourteenth amendment, see Kimel v. Florida
Board of Regents, 120 S. Ct. 631 (2000); Florida
Prepaid Postsecondary Education Expense Board v.
College Savings Bank, 527 U.S. 627 (1999); Boerne
v. Flores, 521 U.S. 507 (1997), but this is
beside the point. Having enacted legislation
under its spending power, Congress did not need
to rely on sec.5. States that accept federal
money, as Illinois has done, must respect the
terms and conditions of the grant. South Dakota
v. Dole, 483 U.S. 203 (1987). One string attached
to money under the IDEA is submitting to suit in
federal court. Bradley v. Arkansas Department of
Education, 189 F.3d 745, 752-53 (8th Cir.),
rehearing en banc granted on a different issue,
197 F.3d 958 (1999) (argued January 14, 2000).
Although sec.604(a) does not use words such as
"consent" or "waiver," it is hard to see why that
should matter. Congress did what it could to
ensure that states participating in the IDEA are
amenable to suit in federal court. That the power
comes from the spending clause rather than (as
Congress may have supposed) the commerce clause
or the fourteenth amendment is not relevant to
the issue whether the national government
possesses the asserted authority. Otherwise we
require the legislature to play games ("guess
which clause the judiciary will think most
appropriate"). What matters, or at least should
matter, is the extent of national power, rather
than the extent of legislative prevision. Thus we
hold that states must take the bitter with the
sweet; having accepted the money, they must
litigate in federal court. See also 20 U.S.C.
sec.1415(i)(2). Suit is of course limited to
enforcing the federal terms and conditions; local
school districts can’t piggyback claims based on
state law. We must assume that Illinois has
complied with all of its own statutes and
regulations; school districts that want a more
generous reimbursement policy under 105 ILCS
5/14-7.02 and 23 Ill. Adm. Code sec.401.10 must
resort to a state forum. See Pennhurst State
School and Hospital v. Halderman, 465 U.S. 89(1984). But if the IDEA itself entitles a local
school district to reimbursement from a state,
then the eleventh amendment does not stand in the
way.
Thus we arrive at the principal question: does
the Act prescribe a particular allocation of
expenses between local and state bodies?
Magistrate Judge Denlow did not identify a
statutory source of authority for his award
against the state, and 20 U.S.C.
sec.1415(i)(3)(A) does not by itself supply what
is needed. (In 1997 Congress extensively amended
the Act. All of our citations are to the current
version.) Uncommon as it is for a municipality to
sue a state (or the reverse) under federal law,
compare Illinois v. Chicago, 137 F.3d 474 (7th
Cir. 1998), with Chicago v. Lindley, 66 F.3d 819,
823 n.6 (7th Cir. 1995), sec.1415(i) may allow
this under some circumstances. When a parent
disagrees with a local decision about a pupil’s
IEP, an administrative appeal lies to a state
agency, see sec.1415(g), and sec.1415(i)(2)
allows "[a]ny party aggrieved by the [state
agency’s] findings and decision" to contest the
outcome by suit under sec.1415(i)(3). A local
board of education therefore may sue the parent
asking the court to upset the state’s decision
and to restore the local board’s preferred
educational plan. Perhaps, by analogy to federal
administrative law, it may sue the state as the
decisionmaker (just as employers and unions sue
the NLRB). But nothing in this subsection
authorizes awards of financial relief in favor of
local educational officials. Cases such as Texas
Industries, Inc. v. Radcliff Materials, Inc., 451
U.S. 630 (1981), and Northwest Airlines, Inc. v.
Transport Workers, 451 U.S. 77 (1981), show that
simple grants of jurisdiction along the lines of
sec.1415(i)(3)(A) do not permit courts to
reallocate loss among joint wrongdoers.
Title VII of the Civil Rights Act of 1964
authorizes suit in language similar to the IDEA.
See 42 U.S.C. sec.2000e-5(f)(3). A collective
bargaining agreement between Northwest Airlines
and a union representing some of its employees
contained provisions that were held to violate
Title VII, leading to an award of damages
exceeding $20 million. Blaming the union for this
loss, the employer sought an award of
contribution--and lost. The Supreme Court assumed
that an employer may be a person aggrieved for
the purpose of filing a charge under sec.2000e-
5(b) and later filing suit. Northwest Airlines,
451 U.S. at 90. But it held that the grant of
federal jurisdiction, understood in light of the
norm that federal courts do not adjust accounts
among wrongdoers without statutory authorization,
is not enough to authorize contribution. Only if
something else in Title VII authorized
contribution would such an award be proper. Texas
Industries reached the same conclusion for
antitrust litigation. Because sec.1415(i)(3) is
no more explicit about contribution than is
sec.2000e-5(f)(3), the state is entitled to
prevail unless something else in the IDEA requires
it to reimburse local school districts.
One possibility is sec.1403(b): "In a suit
against a State for a violation of this chapter,
remedies (including remedies both at law and in
equity) are available for such a violation to the
same extent as those remedies are available for
such a violation in the suit against any public
entity other than a State." This is the language
on which Oak Park and Palatine principally rely.
But it says only that a state is liable to the
same extent as any other public entity. It does
not say what that extent may be. If a state may
not recover contribution from a local board of
education, then under sec.1403(b) a local board
can’t recover contribution from a state. Whether
a state may recover from a board, or a board from
a state, can’t be answered from the language of
sec.1403(b).
But it can be answered, with some confidence,
by parsing sec.611 of the Act, 20 U.S.C.
sec.1411, which specifies the allocation of funds
between state and local educational entities.
Each state that receives money under the Act may
keep as much as 25% to pay for direct educational
services (a state may run schools of its own),
administration, technical assistance, training,
hearings, and subgrants for "capacity-building
and improvement". 20 U.S.C. sec.1411(f). Each
state must distribute to local educational
agencies at least 75% of the federal grant, see
sec.1411(g), under a formula that takes as its
annual base the amount each local agency received
before the 1997 amendments. That amount depended
on the number of pupils with disabilities
enrolled in each school system; a state was
required to apportion the 75% among local
districts so that each received approximately the
same amount per pupil with a special educational
program. See sec.611(d) of the former statute,
108 Stat. 3931. This system tells us two things:
first, any school district that receives less
than the allocation prescribed by sec.1411(g) is
entitled to a remedy under sec.1403(b); second,
if the local district has received its full
allocation for a given year, it is not entitled
to more.
The statutory allocation formula gives local
districts a stipend per disabled pupil. This
supplement per pupil is supposed to be 30% of the
average cost of primary education in the United
States. 20 U.S.C. sec.1411(a)(2). (The statute
specifies 40%, but the state is entitled to keep
a quarter of this for itself.) Many pupils with
disabilities can be educated for less than 130%
of the national average, but others cost
substantially more. Over time, things should
average out so that the grant covers aggregate
costs. Instead of directing the states to
calculate expenses for each pupil and distribute
funds among local districts accordingly, Congress
directed states to apply a formula to the total
number of pupils with disabilities. That system
would collapse if local districts could in
essence make a profit from some pupils with
disabilities (those for which the 30% supplement
exceeds the costs of special services) while
suing the states for more whenever the costs
exceeded the average per-pupil grant, as it did
for T.H. and Kelly. Then the states, having
distributed 75% off the top (as the statute
requires), would be required to dip into (maybe
exceed) the 25% retainage to cover the additional
expenses of the most costly pupils.
Neither Oak Park nor Palatine contends that
Illinois has distributed less than the 75% to
which the local educational agencies are
entitled. Their claims for contribution in this
case therefore boil down to arguments that each
local educational agency is entitled to an annual
base derived from 75% of the state’s grant, plus
per-pupil supplements whenever the Act requires
(or permits a parent to choose) private
education. Nothing we can find in 20 U.S.C.
sec.1411 or any other section of the IDEA supports
such double dipping. A local educational agency
that has received its share of the federal
appropriation must provide for services out of
that share; it cannot collect more from the state
by way of contribution. States may of course
agree to pay more out of their own budgets; 105
ILCS 5/14-7.02 appears to represent such a
promise. But states may set their own conditions
for this largess and, as we have observed
already, federal courts are not entitled to
enforce state laws against the states themselves.
A few words about Carter bring this opinion to
a close. Both school districts rely heavily on
this opinion, but it has nothing to do with
relative shares of state and local districts.
Carter holds that parents may be entitled to
reimbursement for private education even though
the school they select does not meet all
requirements of 20 U.S.C. sec.1401(a)(8)--and, in
particular, does not meet all standards set by
the state’s educational bureaucracy. The court
observed that officials who disagreed with the
need for private education were unlikely to give
their approval, but that they could not so easily
block parents’ entitlement to obtain a good
education for their child. According to Oak Park
and Palatine, the combination of Carter with 105
ILCS 5/14-7.02 leaves them in a bind: they can’t
get state reimbursement unless the private school
has been approved, but they also can’t use the
lack of approval to avoid reimbursing parents for
what may be a costly private placement. That may
well be so, but it does not follow that the IDEA
requires the state to contribute more than the
amount allocated under sec.1411(g). In Carter
itself the Justices had this to say about the
school district’s contention that the Court’s
holding would break the bank:
[P]ublic educational authorities who want
to avoid reimbursing parents for the
private education of a disabled child can
do one of two things: give the child a
free appropriate public education in a
public setting, or place the child in an
appropriate private setting of the State’s
choice. This is IDEA’s mandate, and school
officials who conform to it need not worry
about reimbursement claims.
Moreover, parents who, like Shannon’s,
"unilaterally change their child’s
placement during the pendency of review
proceedings, without the consent of state
or local school officials, do so at their
own financial risk." Burlington, supra, at
373-374. They are entitled to
reimbursement only if a federal court
concludes both that the public placement
violated IDEA and that the private school
placement was proper under the Act.
Finally, we note that once a court holds
that the public placement violated IDEA, it
is authorized to "grant such relief as the
court determines is appropriate." 20
U.S.C. sec.1415(e)(2). Under this
provision, "equitable considerations are
relevant in fashioning relief," Burlington,
471 U.S. at 374, and the court enjoys
"broad discretion" in so doing, id., at
369. Courts fashioning discretionary
equitable relief under IDEA must consider
all relevant factors, including the
appropriate and reasonable level of
reimbursement that should be required.
Total reimbursement will not be
appropriate if the court determines that
the cost of the private education was
unreasonable.
510 U.S. at 15-16 (emphasis in original). Neither
Oak Park nor Palatine took advantage of the
options mentioned in the first paragraph of this
passage, and neither district contends that the
cost of private education was unreasonable and
therefore should not be fully reimbursed under
the third paragraph.
Whatever assistance a state may provide, beyond
the block grant that the IDEA requires, must be
worked out through the state’s political and
judicial processes. The judgment in the Palatine
case is affirmed. The judgment in the Oak Park
case is vacated to the extent it requires the
state to pay for any of Kelly E.’s private
education, and the case is remanded for entry of
a new judgment in conformity with this opinion.
Illinois already has paid its assigned share of
Kelly E.’s private education in years past, but
it need not continue to do so and need not
reimburse Oak Park for any portion of the
attorneys’ fees awarded to Kelly’s parents.
/* A prior appeal in T.H. v. Palatine Board of
Education, No. 99-2493, was argued on December
10, 1999, and dismissed for want of jurisdiction
on December 15 after the court concluded that the
judgment appealed from did not dispose of all
claims and did not specify the relief to which
the prevailing party was entitled. After the
district court entered a final judgment on
January 26, 2000, the new appeal (No. 00-1361)
was submitted for decision on the basis of the
original briefs and argument.