With at least $7.8 million at stake, lawyers for the state and an eastern Idaho school district will be back in court Thursday.
The state’s attorneys want Ada County District Judge Jason Scott to dismiss the Oneida School District’s lawsuit, saying local officials can and should issue voter-approved bonds to pay for a new elementary school.
Oneida’s attorneys argue that a 2024 state law stripped away millions of dollars that the district expected to have for the project, imposing an “unexpected financial burden” on local property owners.
At issue is a $29 million Oneida school project — and, paradoxically, a sweeping law designed to help pay for new schools.
Oneida voters approved a bond issue for the new elementary school in March 2023. Oneida officials say they expected money from a state school bond levy equalization fund to help offset much of the local cost. So they put the bond repayment on an accelerated three-year schedule, and used cash on hand to cover the first payment.
That’s where the story gets more complicated — and where the dispute begins.
The 2024 Legislature passed House Bill 521, an omnibus $1.5 billion school facilities law. HB 521 did many things, however. For example, it eliminated the bond levy equalization fund Oneida had been banking on.
A followup law created more problems, district officials say. It allows districts to receive the payments that they could have expected from the bond levy equalization fund — but only if they had actually used property taxes to pay off bonds in 2023-24. Since Oneida used cash on hand to make its 2023-24 payments, it doesn’t qualify for this state funding.
Oneida’s attorneys — from Hawley Troxell, a prominent Boise law firm that frequently takes on education-related lawsuits — say the district already should have received more than $7.8 million from the state.
In addition, Oneida could have expected to collect “a similar amount” of state money during the remaining two years of the bond repayment.
Arguing on behalf of the state and the Idaho Department of Education, a member of Attorney General Raúl Labrador’s legal team filed a pair of motions on Sept. 16, asking Scott to toss the case.
Changing the law — and replacing the bond levy equalization fund with a new state subsidy — doesn’t prevent Oneida from collecting property taxes to pay off the bond, said James E.M. Craig, Labrador’s civil litigation and constitutional defense chief.
“The district simply wants the court to force the state to subsidize the obligation that it chose to incur,” Craig wrote.
The Education Department should be dismissed from the case, Craig said, since the agency had nothing to do with the passage of the 2024 facilities law.
“The district simply fails to allege that the department caused an injury,” Craig wrote.
