APPEAL from the Circuit Court of McLean County; the Hon.
LUTHER H. DEARBORN, Judge, presiding.
MR. JUSTICE GREEN DELIVERED THE OPINION OF THE COURT:
Pursuant to section 7-2.4 of the School Code (Ill. Rev. Stat. 1975, ch. 122, par. 7-2.4), plaintiffs filed a petition with the County Board of School Trustees of McLean County seeking detachment of a 40-acre tract from defendant Community Unit District No. 5 of the McLean and Woodford Counties (Unit 5) and attachment of that tract to Bloomington School District No. 87, McLean County, a special charter district (District 87). After a hearing, the Hearing Board denied the petition. Upon review pursuant to the Administrative Review Act (Ill. Rev. Stat. 1975, ch. 110, pars. 264 to 279), the Circuit Court of McLean County reversed the decision of the Hearing Board. Unit 5 appeals.
Section 7-2.6 of The School Code (Ill. Rev. Stat. 1975, ch. 122, par. 7-2.6) provides that the Hearing Board,
"(b) shall take into consideration the division of funds and assets which will result from any change of boundaries, and the will of the people of the area affected, and (c) shall determine whether it is to the best interests of the schools of the area and the educational welfare of the pupils should such change in boundaries be granted."
Upon administrative review in the circuit court, plaintiffs maintained that two of the findings of the Hearing Board were contrary to the manifest weight of the evidence and had erroneously controlled the decision. In reversing, the circuit court agreed. These findings were:
"7. That the division of funds and assets between the affected districts will not be materially affected by the granting or denying of the petition.
9. That Petitioners have not proved by a preponderance of the evidence that the proposed annexation would be in the best interests of the schools in the area or the educational welfare of the pupils."
The geographic relationship of the two districts is unique. Unit 5 has an area of 210 square miles and includes the municipalities of Normal, Carlock, Hudson, Towanda and parts of Bloomington. It completely surrounds District 87. For many years, legislation was in force which, because District 87 was a special charter district, caused territory annexed to the City of Bloomington to automatically annex to that district. In 1967, sections 7-2.3 to 7-2.7 of the School Code (Ill. Rev. Stat. 1967, ch. 122, pars. 7-2.3 to 7-2.7) were amended to delete that automatic annexation provision. Since that time, the City of Bloomington has annexed some territory which has remained in Unit 5. At the time of hearing, 220 Unit 5 pupils lived in the City of Bloomington.
The 40-acre tract in question had been annexed to the City of Bloomington but remained in Unit 5. It is in the southeast part of the city and is the south half of an 80-acre tract lying south of Lincoln Street and west of Hershey Road. The north 40 acres was in District 87. On the east side of Hershey Road, catty-cornered from the northeast corner of the 80-acre tract is the southwest corner of another 80-acre tract which is also within District 87. The entire 160 acres had been zoned for residential purposes. Witnesses testified that a partnership of which plaintiff Snyder was a member was developing or had plans to develop the entire 160 acres. Broadmoor Subdivision lying north of Lincoln Street and west of Hershey Road was already developed.
The most complicated question before the Hearing Board concerned the financial effect upon the two districts that would likely result from a change of boundaries. In cases of this nature, the concern of the courts> of review of this State has usually focused upon the relationship between the changes in assessed valuation of taxable property in the respective districts and the changes in the number of pupils that each district would be required to serve. Here, plaintiff District 87 maintains that because of the equalizer factor of section 18-8 of The School Code (Ill. Rev. Stat. 1975, ch. 122, par. 18-8), the significant issue is which district should receive the State aid that, upon residential development of the 40-acre tract, will inure to the district in which it then lies. Both districts qualified for aid under section 18-8 which, conditioned upon sufficient legislative appropriation, guaranteed each district a sufficient State supplement to provide each district with funds equal to $520 per year per pupil in "weighted average daily attendance." The effect of this formula is that if the assessed valuation of a district remains constant, each additional pupil enrolled produces for the district $520 in additional funds.
The heart of plaintiff District 87's argument in this case is that because the student population of its district has steadily declined in recent years, it needs more pupils to effectively utilize its system and that the funds that would inure to it if the 40-acre tract is residentially developed and annexation is permitted would far outweigh the burden of serving the additional pupils. On the other hand, District 87 maintains that since Unit 5 has experienced a steady increase in enrollment, its system is being fully utilized and the burden of serving additional pupils would minimize or negate any advantage from the additional revenue. Witnesses for District 87 testified that they thought that decline in enrollment occurred because people were moving from the inner city of Bloomington to the outlying areas of the community, outside of District 87 boundaries. District 87 contends that because it is completely surrounded by Unit 5, it cannot maintain an enrollment level consistent with the system it has developed unless it is permitted to annex some territory of Unit 5.
The parties agree that from the 1971-72 school year to the 1975-76 school year the enrollment in District 87 declined from 7,117 to 6,445, a loss of 672 pupils, while the enrollment in Unit 5 increased from 6,292 to 6,890, a gain of 598 pupils. Dr. Lawrence Shoaf, director of business services for District 87, testified that school administrators generally agree that "in the short run" a school district is not able to proportionately reduce its expenditures to meet a reduction in enrollment. The evidence of decreasing enrollment indicated District 87 was, nevertheless, faced with the problem of attempting to do this each year. Also supporting District 87's argument was evidence that because of overcrowding at the grade school nearest the 40-acre tract, Unit 5 would have to bus grade school pupils from the tract 4 1/2 miles to a grade school.
The parties do not dispute that the existence of the equalizer formula in section 18-8 does not completely eliminate the significance of the amount of assessed valuation in the districts because some levies are not affected by the formula. During the time that the District 87 enrollment has dropped by 672 pupils, its assessed valuation per pupil has risen from $24,409 to $35,238 and its total assessed valuation from $173,725,751 to $227,114,015. In the same period of time, Unit 5's assessed valuation per pupil has risen from $20,549 to $25,709 and its total assessed valuation from $129,244,700 to $177,135,831. It is readily apparent that District 87 is, by a substantial margin, the more favorably situated district as far as assessed valuation is concerned.
• 1, 2 From the evidence presented to us, we find merit in the argument of District 87 that the benefits to it of the additional enrollment that would likely come from permitting annexation of the tract would exceed the benefits, if any, that would inure to Unit 5 by permitting it to retain it. The principle, enunciated by Dr. Shoaf, that a school district cannot easily contract its operation to meet a reduction in enrollment is at the heart of our determination. We believe this to be generally true in regard to the use of administrative staff, special services and buildings. Where the district has been losing pupils and this is countered by the addition of pupils from newly annexed territory, the addition of these pupils would tend to bring about a fuller use of existing capacity. On the other hand, when a district is already growing in enrollment, a further addition in pupils often occasions a strain upon existing capacity. The evidence that pupils living in the 40-acre tract would have to be bused 4 1/2 miles to a grade school because the closest grade school in Unit 5 was overcrowded would indicate that Unit 5 would receive little benefit from the additional ...