COA: School corporations can’t assert takings claims against state in charter school dispute

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Three Indiana school corporations have failed to convince the Court of Appeals of Indiana to overturn a law requiring them to sell vacant public school buildings to charter schools for $1, with the appellate court agreeing with a lower court that the corporations are prohibited from pursuing their takings clause claims.

Between 2018 and 2020, Lake Ridge School Corporation, the School City of Hammond and West Lafayette Community School Corporation each closed public school buildings in their respective communities.

None of the school corporations wanted to part with the vacant buildings despite being required to do so per Indiana Code §§ 20-26-7-1 and 20-26-7.1-4. Those statutes require any Indiana school corporation to make a closed public school building available for sale or lease to any interested charter school or state educational institution for $1.

If no interest is expressed, then the governing body may otherwise dispose of the building in accordance with Indiana law.

Lake Ridge and Hammond eventually sued the Indiana governor and attorney general in their official capacities, as well as the Indiana State Board of Education and the Indiana Department of Education, alleging the statutes violate the takings clauses of the Fifth Amendment to the United States Constitution and Article 1, Section 21 of the Indiana Constitution.

West Lafayette intervened in that case after previously suing the state over a vacant elementary school building that had closed in 2018.

At the time of West Lafayette’s suit, the vacant building at issue was being used as a city hall for West Lafayette for $1.5 million, according to The Associated Press.

Unlike Lake Ridge and Hammond, West Lafayette did notify the Department of Education of the school’s closing, but no charter school or state educational institution had expressed interest in the building.

The school corporations collectively sought declaratory and injunctive relief from the state parties, while the state argued in part that the school corporations could not assert takings claims against it.

The Lake Superior Court ultimately granted the state’s motion for summary judgment, ruling that the statutes do not constitute a taking without just compensation in violation of the state or federal constitution.

In affirming the trial court, the Court of Appeals concluded that the school corporations, as political subdivisions, could not sue the state under the takings clauses because “the U.S. Supreme Court has long held that the Takings Clause has no role to play in intragovernmental disputes between a State and one of its agencies or political subdivisions.”

In a footnote, the appellate court declined to depart from prior caselaw and conduct a separate analysis under the Indiana takings clause, per the school corporations’ suggestion.

“The School Corporations note that the U.S. Supreme Court in Gomillion v. Lightfoot, 364 U.S. 339, 342 (1960), explained a state’s power over municipalities is not ‘absolute,’” Judge Nancy Vaidik wrote for the appellate court. “While this is true, Gomillion also states the explicit holdings in (Hunter v. City of Pittsburgh, 207 U.S. 161 (1907)) and its progeny, including (City of Trenton v. State of New Jersey, 262 U.S. 182 (1923)), remain good law.

“… Indisputably, the School Corporations here are political subdivisions of the State,” Vaidik continued. “… We conclude the School Corporations may not assert takings claims against the State.”

The case is Lake Ridge School Corporation and School City of Hammond, West Lafayette Community School Corporation v. Eric Holcomb, in his official capacity as Governor of the State of Indiana; Indiana State Board of Education; Indiana Department of Education; and Todd Rokita, in his official capacity as Attorney General of the State of Indiana, 22A-PL-423.

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