Zuni Public School District No. 89 v. Department of Education
The Court upheld the Education Department's long-standing method for deciding which New Mexico school districts count as statistical outliers when checking whether the state fairly equalizes school funding, ruling that the method fits within the federal law's wording.
The decision means New Mexico can keep offsetting federal impact aid to school districts by cutting its own state aid, and it signals that courts can weigh a law's history and purpose alongside its text when the wording leaves room for more than one reading.
“The upshot is that the language of the statute is broad enough to permit the Secretary’s reading.”
The majority's conclusion that the statute's text does not foreclose the Department's calculation method.
How it got here: An administrative law judge and the Secretary rejected Zuni's challenge to the regulations, and the en banc Tenth Circuit affirmed by an evenly divided vote before the Supreme Court agreed to review the case.
The Case in Depth
What happened
Two rural New Mexico school districts, Zuni and Gallup-McKinley, challenged how the Department of Education decided whether New Mexico's school funding program "equalizes expenditures" among districts. Under a federal impact aid program, states normally cannot reduce state aid because a district gets federal impact aid, but an exception applies if the state's funding is already equalized. The dispute was over how to identify and exclude outlier districts when measuring equalization.
The question before the Court
Could the Secretary of Education decide which school districts to ignore as statistical outliers by counting students, not just counting districts?
The Court's answer
Yes — the Court ruled that the Education Department could identify outlier school districts by weighting for student population, not just by counting districts. The statute's instruction to disregard districts "above the 95th percentile or below the 5th percentile" of per-pupil spending does not specify which group must be ranked to find that cutoff, so it left room for the Department's existing approach.
Because the text was ambiguous, the Court looked to the provision's history and purpose: Congress adopted the language from the Secretary's own draft without objection, and the underlying goal of excluding statistical outliers is better served by accounting for how many students each district serves. Given that ambiguity, the Court deferred to the Department's method as a reasonable interpretation of the statute.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
School districts that lose state funding when they receive federal impact aid — because federal land or military families reduce the local tax base — depend on how the equalization test is calculated. Ruling for the Department keeps in place a 30-year-old calculation method affecting funding formulas nationwide, not just in New Mexico.
What changes now
The ruling is final on the merits and affirms the Tenth Circuit's judgment, so New Mexico's aid program remains certified as equalized under the Department's existing calculation method. School districts elsewhere subject to the same federal impact aid framework will continue to be evaluated under this same student-weighted percentile method unless Congress amends the statute or the agency changes its regulations.
What this does not decide
The Court did not decide that the Department's method is the only permissible one, only that it is a reasonable interpretation given the statute's ambiguity; other calculation methods consistent with the text might also have been upheld had the Department chosen them.
Concurrences and dissents
Concurrence — Justice Stevens
Justice Stevens agreed with the outcome but argued the Court did not need to strain over the statute's text at all. He would have relied directly on clear legislative history showing Congress intended to preserve the Secretary's pre-existing calculation method, and would affirm even if the literal text supported Zuni's reading.
Concurrence — Justice Kennedy
Justice Kennedy, joined by Justice Alito, agreed with the result but objected to the order in which the majority analyzed the case. He argued courts should always determine first whether the statutory text is ambiguous before considering legislative history and policy, warning that reversing that order risks making agency policy concerns look like they drive judicial interpretation.
Dissent — Justice Scalia
“The plain language of the federal Impact Aid statute clearly and unambiguously forecloses the Secretary of Education’s preferred methodology for determining whether a State’s school-funding system is equalized.”The dissent's central objection that the statute's text does not permit the Department's approach.
Justice Scalia, joined by the Chief Justice and Justice Thomas (and by Justice Souter as to Part I), argued the statute unambiguously ties per-pupil expenditures to school districts, not to individual students, so the Department's student-weighted method has no basis in the text. He accused the majority of reviving a discredited approach that lets judges override clear text based on perceived congressional intent, and would have reversed.
Dissent — Justice Souter
Justice Souter agreed that Congress probably intended the Secretary to keep using her existing method, but concluded the statutory language is unambiguous and does not actually authorize that method. He therefore joined only Part I of Justice Scalia's dissent rather than the full opinion.
How the Court got there
The legal reasoning, step by step
- The Court first looked at background and purpose rather than starting with the statute's wording, because the calculation method is a highly technical, specialized matter of the kind Congress often leaves to expert agencies rather than deciding itself.
- It found the statute's history strongly favored the Department: the current wording was drafted by the Secretary himself and adopted by Congress without change or comment, and no one at the time suggested it required abandoning the calculation method the agency had already used for nearly 20 years.
- The Court applied the purpose of the 'disregard' instruction — excluding statistical outliers — and reasoned that a method counting students, not just districts, better achieves that purpose, since counting districts alone could exclude either too many or too few students depending on how big or small the districts are.
- Turning to the statute's text, the Court concluded the phrase 'per-pupil expenditures' does not specify which population must be ranked to find the 95th and 5th percentile cutoffs, so it does not rule out a method that weights districts by the number of pupils they contain.
- The Court found additional support in statutory context, noting that both students and school districts matter to the funding law, so the ambiguity in the language could reasonably be resolved by weighting for pupil population.
- Concluding the text left room for more than one reasonable reading, the Court applied Chevron deference and held that the Department's calculation method was a permissible, reasonable interpretation of the statute.
Doctrinal impact
Cases affected by this decision
Distinguishes Church of the Holy Trinity v. United States (143 U.S. 457)
The dissent invoked this case as a cautionary example of judges overriding clear text, which the majority disputed applying here.