APPEAL FROM THE MARION SUPERIOR COURT. The Honorable Theodore M. Sosin, Judge. Cause No. 49D02-1111-PL-42082.
ATTORNEY FOR APPELLANT: IAN W. THOMPSON, Greenwood, Indiana.
ATTORNEYS FOR APPELLEE: V. SAMUEL LAURIN, III, BRYAN H. BABB, JOEL T. NAGLE, Bose McKinney & Evans LLP, Indianapolis, Indiana.
VAIDIK, Chief Judge. RILEY, J., and MAY, J., concur.
VAIDIK, Chief Judge.
Indiana's public schools lost hundreds of millions of dollars when new property-tax caps went into effect in 2010. Franklin Township Community School Corporation (" Franklin Township" )--one of a number of school corporations hit hardest by the new property-tax caps--responded by eliminating student transportation for the 2011-2012 school year. Franklin Township later contracted with an educational service center to provide student transportation for an annual fee. In November 2011 township parents filed a class-action lawsuit against the school corporation, challenging the constitutionality of its actions.
Though this case raises a number of legal questions, one is of primary importance: did Franklin Township act unconstitutionally with respect to student transportation? Applying our Supreme Court's reasoning in Nagy v. Evansville-Vanderburgh School Corp., 844 N.E.2d 481 (Ind. 2006), we conclude that it did. We affirm in part and reverse in part.
Facts and Procedural History
In 2010 the Franklin Township School Board voted to eliminate student transportation for the 2011-2012 school year. Franklin Township then transferred its transportation equipment, including its buses, to Central Indiana Educational Service Center (" CIESC" ). CIESC, in turn, offered transportation services to Franklin Township parents. Parents who signed a transportation contract with CIESC received a year of transportation to and from school for one child for $475 and a $20 non-refundable deposit. A year of transportation for each additional child cost $405. Franklin Township did not receive any of the money paid to CIESC. Signing a contract with CIESC was optional; some parents chose to utilize CIESC for student transportation while other parents made alternate arrangements.
In July 2010, in response to an inquiry from the State Examiner, the Attorney General of Indiana issued an official opinion advising that Indiana's public-school corporations were " not authorized to assess and collect a bus[-]rider fee from a student in order for that student to receive transportation to and from the student's school to receive a public education. Such a fee is unconstitutional." Appellants' App. p. 23. The Attorney General cited our Supreme Court's opinion in Nagy, 844 N.E.2d at 481, explaining that Nagy " provides the following analytical framework  for examining a fee or charge for services by a public[-]school corporation" :
Is the program, activity, project, service[,] or curricula mandated by the legislature or permitted by the legislature? If so, then " the legislature has made a policy decision regarding exactly what qualifies for funding at public expense."
Although the legislature has the authority to place appropriate condition[s] or limitations on funding for such programs, " absent statutory authority, fees or charges for what are otherwise public education cost items cannot be levied directly or indirectly against students or their parents."
Id. at 26-27 (citations omitted, formatting altered). Citing several sections of the Indiana Code, the Attorney General concluded that the Indiana General Assembly " has identified transportation of school children as a part of what would constitute a uniform system of public education in Indiana," and pursuant to Nagy, a " school[-]bus rider fee is unconstitutional" under Article 8, Section 1 of the Indiana Constitution. Id. at 30-31.
Despite this, Franklin Township proceeded with its plan to discontinue student transportation, and township parents were faced with a choice: pay the transportation fee or make alternate transportation arrangements for their children. Lora Hoagland, whose two sons qualified for the federal free-and-reduced-lunch program, opted to drive her children to and from school.
On November 10, 2011, the Attorney General issued a second official opinion addressing Franklin Township's actions directly. Again citing Nagy, the Attorney General advised that:
An [Educational Service Center] is the agent of the school corporation and may not charge parents for transporting students to and from school. Such a fee is unconstitutional.
Franklin Township Community School Corporation's transportation arrangement does not comply with state law as the school is attempting to do indirectly what it is prohibited from doing directly .
* * * *
Schools may utilize private parties for provision of student[-]transportation services, but neither the school nor the private party may charge fees to the parents for the provision of such services.
Schools may utilize [Educational Service Centers] for provision of student transportation services, but neither the school nor the [Educational Service Center] may charge fees to parents for the provision of such services.
Id. at 33 (emphasis added, formatting altered).
The next day Hoagland and Donna Chapman--a Franklin Township parent who had entered into a transportation contract with CIESC--filed a class-action lawsuit against Franklin Township and CIESC, alleging that Franklin Township had " unlawfully fail[ed] to provide transportation," and seeking declaratory, injunctive, and monetary relief. Id. at 10-11. After the lawsuit was filed, the ...