Papasan v. Allain
478 U.S. 265 (1986)

Annotate this Case

U.S. Supreme Court

Papasan v. Allain, 478 U.S. 265 (1986)

Papasan v. Allain

No. 85-499

Argued April 22, 1986

Decided July 1, 1986

478 U.S. 265

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

Syllabus

Federal school land grants to Mississippi in the early 19th century did not apply to lands in northern Mississippi that were held by the Chickasaw Indian Nation, an area that came to be the northern 23 counties in the State. The Chickasaws thereafter ceded this area to the United States by a treaty under which the lands were sold, but no lands for public schools (Sixteenth Section lands) were reserved from sale. Congress then provided for the reservation of lands in lieu (Lieu Lands) of Sixteenth Section lands not reserved in the Chickasaw Cession, and for vesting of the title to the Lieu Lands in the State for the use of schools within the Cession. These Lieu Lands were given to the State. The state legislature, however, sold the Chickasaw Cession Lieu Lands and invested the proceeds in loans to railroads that were later destroyed in the Civil War, and never replaced. Under a current Mississippi statute, remaining Sixteenth Section and Lieu Lands "constitute property held in trust for the benefit of the public schools." Another state statute provides that all funds derived from Sixteenth Section or Lieu Lands shall be credited to the school districts of the township in which such Sixteenth Section lands are located or to which any Lieu Lands belong, and shall not be expended except for the education of children of the school district to which the lands belong. Consequently, all proceeds from Sixteenth Section and Lieu Lands are allocated directly to the township in which the lands are located or to which the lands apply. With respect to the Chickasaw Cession counties, to which no lands now belong, the state legislature has paid "interest" on the lost principal acquired from the sale of those lands in the form of annual appropriations to the Chickasaw Cession schools. This dual treatment has resulted in a disparity in the level of school funds from the Sixteenth Section lands that are available to the Chickasaw Cession schools as compared to the schools in the rest of the State, the average Sixteenth Section income per pupil in the latter schools being much greater than the average income per pupil in the former schools. Petitioner local school officials and schoolchildren from the Chickasaw Cession filed suit in Federal District Court against respondent state officials, challenging the disparity in Sixteenth Section funds

Page 478 U. S. 266

and alleging (1) that the sale of the Chickasaw Cession school lands and the unwise investment of the proceeds had abrogated the State's trust obligation to hold those lands for the benefit of Chickasaw Cession schoolchildren in perpetuity and (2) that the disparity deprived those schoolchildren of a minimally adequate level of education and of the equal protection of the laws. Declaratory and other relief was sought. The District Court dismissed the complaint, holding the claims barred by, inter alia, the Eleventh Amendment. The Court of Appeals affirmed, holding that, although the equal protection claim asserted a current ongoing and disparate distribution of state funds for the support of local schools, the remedy for which would not be barred by the Eleventh Amendment, dismissal of the complaint was proper since such differential funding was not unconstitutional under San Antonio Independent School Dist. v. Rodriguez,411 U. S. 1.

Held:

1. Petitioners' trust claims are barred by the Eleventh Amendment, even if petitioners' characterization of the legal wrong as being a breach of a continuing obligation to comply with the trust obligations is accepted. There is no substantive difference between a not-yet-extinguished liability for a past breach of trust and the continuing obligation to meet trust responsibilities asserted by petitioners. Edelman v. Jordan,415 U. S. 651. In both cases, the trustee is required, because of the past loss of the trust corpus, to use its own resources to take the place of the corpus or the lost income from the corpus. Thus. petitioners' trust claim, like the claim rejected in Edelman, may not be sustained. Pp. 478 U. S. 279-281.

2. Petitioners' equal protection claim is not barred by the Eleventh Amendment. The alleged ongoing constitutional violation -- the State's unequal distribution of the benefits of school lands -- is precisely the type of continuing violation for which a remedy may permissibly be fashioned under Ex parte Young,209 U. S. 123. The essence of the equal protection claim is the present disparity in the distribution of the benefits of state-held assets, and not the State's past actions. Pp. 478 U. S. 281-282.

3. The assertion in the complaint that petitioners are being deprived of a minimally adequate education is a legal conclusion, rather than a factual allegation that must be accepted as true. Consequently, focusing only on the funding disparities properly pleaded, the Court of Appeals properly determined that Rodriguez dictates the applicable standard of review: the alleged differential treatment violates equal protection only if not rationally related to a legitimate state interest. The Court of Appeals incorrectly determined, however, that Rodriguez controlled this case. Rodriguez did not purport to validate all funding variations that might result from a State's public school funding decisions, but held merely that the variations that resulted from allowing local control over

Page 478 U. S. 267

local property tax funding of the public schools were constitutionally permissible in that case. This case is different from Rodriguez, because here the differential financing is attributable to a state decision to divide state resources unequally among school districts. Nevertheless, the question remains whether the variations in the benefits received by school districts from Sixteenth Section or Lieu Lands are, on the allegations in the complaint and as a matter of law, rationally related to a legitimate state interest, and this question should be resolved by the Court of Appeals on remand. A crucial consideration in resolving this question is whether federal law requires the State to allocate the economic benefits of school lands to schools in the townships in which those lands are located. If, as a matter of federal law, the State has no choice in the matter, whether the complaint states an equal protection claim depends on whether the federal policy is itself violative of the Equal Protection Clause. If it is, the State may be enjoined from implementing such policy. But if the federal law is valid and the State is bound by it, then it provides a rational reason for the funding disparity. Pp. 478 U. S. 283-292.

756 F.2d 1087, affirmed in part, vacated in part, and remanded.

WHITE, J., delivered the opinion of the Court, in which O'CONNOR, J., joined; in Parts I and III of which BRENNAN, MARSHALL, BLACKMUN. and STEVENS, JJ., joined; and in Part II of which BURGER, C.J., and POWELL and REHNQUIST, JJ., joined. BRENNAN, J., filed an opinion concurring in part, concurring in the judgment in part, and dissenting in part, in which MARSHALL, BLACKMUN, and STEVENS, JJ., joined, post, p. 478 U. S. 292. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, post, p. 478 U. S. 293. POWELL, J., filed an opinion concurring in part and dissenting in part, in which BURGER, C.J., and REHNQUIST, J., joined, post, p. 478 U. S. 295.

JUSTICE WHITE delivered the opinion of the Court.

In this case, we consider the claims of school officials and schoolchildren in 23 northern Mississippi counties that they

Page 478 U. S. 268

are being unlawfully denied the economic benefits of public school lands granted by the United States to the State of Mississippi well over 100 years ago. Specifically, we must determine to what extent these claims are barred by the Eleventh Amendment, and, with respect to those claims that are not barred, if any, whether the complaint is sufficient to withstand a motion to dismiss for failure to state a claim.

I

The history of public school lands in the United States stretches back over 200 years. [Footnote 1] Even before the ratification of the Constitution, the Congress of the Confederation initiated a practice with regard to the Northwest Territory [Footnote 2] which was followed with most other public lands that eventually became States and were admitted to the Union. In particular, the Land Ordinance of 1785, which provided for the survey and sale of the Northwest Territory, "reserved the lot No. 16, of every township, for the maintenance of public schools within the said township. . . ." 1 Laws of the United States 565 (1815). [Footnote 3] In 1802, when the eastern portion of the

Page 478 U. S. 269

Northwest Territory became what is now the State of Ohio, Congress granted Ohio the lands that had been previously reserved under the 1785 Ordinance for the use of public schools in the State. 2 Stat. 175. [Footnote 4]

Following the Ohio example of reserving lands for the maintenance of public schools,

"'grants were made for common school purposes to each of the public-land States admitted to the Union. Between the years of 1802 and 1846, the grants were of every section sixteen, and, thereafter, of sections sixteen and thirty-six. In some instances, additional sections have been granted.'"

Andrus v. Utah,446 U. S. 500, 446 U. S. 506-507, n. 7 (1980) (quoting United States v. Morrison,240 U. S. 192, 240 U. S. 198 (1916) (footnotes omitted)). Thus, the basic Ohio example has been followed with respect to all but a few of the States admitted since then. 446 U.S. at 446 U. S. 522-523, n. 4 (POWELL, J., dissenting). In addition to the school lands designated in this manner, Congress made provision for townships in which the pertinent section or sections were not available for one reason or another. Thus, Congress generally indemnified States for the missing designated sections, allowing the States to select lands in an amount equal to and in lieu of the designated but unavailable lands. See, e.g., ch. 83, 4 Stat. 179 (1826). See generally Andrus v. Utah, supra, at 446 U. S. 507-508; Morrison, supra, at 240 U. S. 200-202.

Page 478 U. S. 270

Although the basic pattern of school lands grants was generally consistent from State to State in terms of the reservation and grant of the lands, the specific provisions of the grants varied by State and over time. See generally B. Hibbard, A History of the Public Land Policies 314-318 (1939). For example, in Indiana and Alabama, the school lands were expressly granted to the inhabitants of the townships directly. See 3 Stat. 290 (1816) (Indiana); 3 Stat. 491 (1819) (Alabama). [Footnote 5] In most of the other grants before 1845, the school lands were given instead to the States, but were explicitly designated to be for the use of the townships in which they lay. See, e.g., 2 Stat. 233-234 (1803) (Mississippi); 3 Stat. 375 (1817) (same); 5 Stat. 58 (1836) (Arkansas). The Michigan grant in 1836, on the other hand, was simply "to the State for the use of schools." See 5 Stat. 59. After 1845, the type of grant used in Michigan, granting the lands to the State for the use of its schools generally, became the norm. See, e.g., 9 Stat. 58 (1846) (Wisconsin); 11 Stat. 383 (1859) (Oregon). Finally, the most recent grants are phrased not as outright gifts to the States for a specific use, but instead as express trusts. These grants also are stated to be to the States for the support of the schools in those States generally. In addition, though, under these grants, the State is specifically designated a trustee, there are explicit restrictions on the management and disposition of the lands in trust, and the Federal Government expressly retains an ongoing oversight responsibility. See, e.g., 36 Stat. 574 (1910) (Arizona and New Mexico).

The history of the school lands grants in Mississippi generally follows the pattern thus described. In 1798, Congress created the Mississippi Territory, which included what is now about the southern third of the States of Mississippi and Alabama.

Page 478 U. S. 271

1 Stat. 549. In 1803, Congress provided for the sale and survey of all Mississippi Territory lands to which Indian title had been extinguished, but excepted "the section number sixteen, which shall be reserved in each township for the support of schools within the same." 2 Stat. 233-234. In 1804, the Mississippi Territory was extended northward to the southern boundary of Tennessee. 2 Stat. 305. Two years later, Congress authorized the selection of lands in lieu of unavailable Sixteenth Sections in the Territory. 2 Stat. 401 (1806). Eventually, in 1817, Mississippi was admitted as a State, and a further Land Sales Act provided for the survey and sale of those lands in the northern part of the new State that had not been covered by the 1803 Act. The 1817 Act provided that these lands were to be

"surveyed and divided in the manner provided by law for the surveying of the other public lands of the United States in the Mississippi territory;"

thus, the Act required that "the section No. 16 in each township . . . shall be reserved for the support of schools therein." 3 Stat. 375 (1817). The Sixteenth Section lands and lands selected in lieu thereof were granted to the State of Mississippi. See Lambert v. State, 211 Miss. 129, 137, 51 So.2d 201, 203 (1951).

By their own terms, however, these Acts did not apply to the lands in northern Mississippi that were held by the Chickasaw Indian Nation, an area essentially comprising what came to be the northern 23 counties in the State. This land was held by the Chickasaws until 1832, when it was ceded to the United States by the Treaty of Pontitoc Creek. 7 Stat. 381. Although that Treaty provided that the land would be surveyed and sold "in the same manner and on the same terms and conditions as the other public lands," id. at 382, no Sixteenth Section lands were reserved from sale. City of Corinth v. Robertson, 125 Miss. 31, 57, 87 So. 464, 465-466 (1921). In 1836, Congress attempted to remedy this oversight by providing for the reservation of lands in lieu of the Sixteenth Section lands, and for the vesting of the title to

Page 478 U. S. 272

these lands "in the State of Mississippi, for the use of schools within [the Chickasaw Cession] in said State." 5 Stat. 116. These Chickasaw Cession Lieu Lands, some 174,555 acres, App. 36, were selected and given to the State. In 1856, however, with authority expressly given by Congress, 10 Stat. 6 (1852), the state legislature sold these lands and invested the proceeds, approximately $1,047,330, App. 36, in 8% loans to the State's railroads. 1856 Miss. Laws, ch. 56. These railroads and the State's investment in them, unfortunately, were subsequently destroyed during the Civil War, and never replaced.

From these historical circumstances, the current practice in Mississippi with regard to Sixteenth Section lands has evolved directly. Under state law, these lands, which are still apparently held in large part by the State, "constitute property held in trust for the benefit of the public schools, and must be treated as such." Miss.Code Ann. § 29-3-1(1) (Supp.1985). In providing for the operation of these trusts, the legislature has retained the historical tie of these lands to particular townships in terms of both trust administration and beneficiary status. Thus, the State has delegated the management of this property to local school boards throughout the State: where Sixteenth Section lands lie within a school district, or where Lieu Lands were originally appropriated for a township that lies within a school district, the board of education of that district has "control and jurisdiction of said school trust lands and of all funds arising from any disposition thereof heretofore or hereafter made." Ibid. In this respect, the board of education is "under the general supervision of the state land commissioner." Ibid. [Footnote 6] Further, the State has, by statute, set forth certain prescriptions for the management of these lands. See generally Miss.Code Ann. §§ 29-3-1 to 29-3-135 (1972 and Supp.1985). Most important

Page 478 U. S. 273

for purposes of this case, however, is Miss.Code Ann. § 29-3-109 (Supp.1985), which provides:

"All expendable funds derived from sixteenth section or lieu lands shall be credited to the school districts of the township in which such sixteenth section lands may be located, or to which any sixteenth sections lieu lands may belong. Such funds shall not be expended except for the purpose of education of the educable children of the school district to which they belong, or as otherwise may be provided by law."

Consequently, all proceeds from Sixteenth Section and Lieu Lands are allocated directly to the specific township in which these lands are located or to which those lands apply. With respect to the Chickasaw Cession counties, to which no lands now belong, the state legislature has, for over 100 years, paid "interest" on the lost principal acquired from the sale of those lands in the form of annual appropriations to the Chickasaw Cession schools. Originally, the rate was 8%, but, since 1890, the rate has been 6%. See Miss. Const., Art. 8, § 212. The annual amount until 1985 was $62,191. App. 37.

The result of this dual treatment has for many years been a disparity in the level of school funds from Sixteenth Section lands that are available to the Chickasaw Cession schools as compared to the schools in the remainder of the State. In 1984, for example, the legislative appropriation for the Chickasaw Cession resulted in an estimated average per pupil income relative to the Sixteenth Section substitute appropriation of $0.63 per pupil. The average Sixteenth Section income in the rest of the State, in comparison, was estimated to be $75.34 per pupil. Id. at 44. [Footnote 7] It is this disparity which gave rise to the present action.

Page 478 U. S. 274

In 1981, the petitioners, local school officials and schoolchildren from the Chickasaw Cession, filed suit in the United States District Court for the Northern District of Mississippi against the respondents, an assortment of state officials, challenging the disparity in Sixteenth Section funds. The petitioners' complaint traced the history of public school lands in Mississippi, characterizing as illegal several of the actions that resulted in there being now no Sixteenth Section lands in the Chickasaw Cession area. In particular, the petitioners asserted that the sale of the Chickasaw Cession school lands and unwise investment of the proceeds from that sale in the 1850's had abrogated the State's trust obligation to hold those lands for the benefit of Chickasaw Cession schoolchildren in perpetuity. The result of these actions, said the petitioners, was the disparity between the financial support available to the Chickasaw Cession schools and other schools in the State, which disparity in turn allegedly deprived the Chickasaw Cession schoolchildren of a minimally adequate level of education and of the equal protection of the laws.

Based on these allegations, the petitioners sought various forms of relief for breach of the trust regarding the Chickasaw Cession Sixteenth Section lands and for denial of equal protection. [Footnote 8] Specifically, the complaint sought a declaration

Page 478 U. S. 275

that the state legislation purporting to implement the sale of the Chickasaw Cession school lands was void and unenforceable; the establishment by legislative appropriation or otherwise of a fund in a suitable amount to be held in perpetual trust for the benefit of plaintiffs; or, in the alternative, making available to plaintiffs Lieu Lands of the same value as the original Chickasaw Cession Sixteenth Section lands.

The District Court dismissed the complaint, holding the claims barred by the applicable statute of limitations and by the Eleventh Amendment to the United States Constitution. The Court of Appeals for the Fifth Circuit affirmed, Papasan v. United States, 756 F.2d 1087 (1985), agreeing that the relief requested in the complaint was barred by the Eleventh Amendment. Noting that a federal court should not dismiss a constitutional complaint because it "seeks one remedy rather than another plainly appropriate one," Holt Civic Club v. Tuscaloosa,439 U. S. 60, 439 U. S. 65 (1978), however, the Court of Appeals deemed the equal protection claim to assert a current, ongoing, and disparate distribution of state funds for the support of local schools, the remedy for which would not be barred by the Eleventh Amendment. Even so, it found dismissal of the complaint to be proper, since such differential funding was not unconstitutional under this Court's decision in San Antonio Independent School Dist. v. Rodriguez,411 U. S. 1 (1973). [Footnote 9]

We granted certiorari, 474 U.S. 1004 (1985), and now vacate the judgment of the Court of Appeals and remand for further proceedings.

Page 478 U. S. 276

II

We first consider whether the Eleventh Amendment bars the petitioners' claims and required dismissal of the complaint.

A

The Amendment provides:

"The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."

This language expressly encompasses only suits brought against a State by citizens of another State, but this Court long ago held that the Amendment bars suits against a State by citizens of that same State as well. See Hans v. Louisiana,134 U. S. 1 (1890).

"[I]n the absence of consent, a suit in which the State or one of its agencies or departments is named as the defendant is proscribed by the Eleventh Amendment."

Pennhurst State School and Hospital v. Halderman,465 U. S. 89, 465 U. S. 100 (1984). [Footnote 10] This bar exists whether the relief sought is legal or equitable. Id. at 465 U. S. 100-101.

Where the State itself or one of its agencies or departments is not named as defendant, and where a state official is named instead, the Eleventh Amendment status of the suit is less straightforward. Ex parte Young,209 U. S. 123 (1908), held that a suit to enjoin as unconstitutional a state official's action was not barred by the Amendment. This holding was based on a determination that an unconstitutional state enactment is void, and that any action by a state official that is purportedly authorized by that enactment cannot be taken in an official capacity, since the state authorization for such action is a nullity. As the Court explained in Young itself:

Page 478 U. S. 277

"If the act which the state Attorney General seeks to enforce be a violation of the Federal Constitution, the officer proceeding under such enactment comes into conflict with the superior authority of that Constitution, and he is in that case stripped of his official or representative character, and is subjected in his person to the consequences of his individual conduct. The State has no power to impart to him any immunity from responsibility to the supreme authority of the United States."

Id. at 209 U. S. 159-160. Thus, the official, although acting in his official capacity, may be sued in federal court. See also Pennhurst, supra, at 465 U. S. 102, 465 U. S. 105; Hutto v. Finney,437 U. S. 678, 437 U. S. 692 (1978).

Young, however, does not insulate from Eleventh Amendment challenge every suit in which a state official is the named defendant. In accordance with its original rationale, Young applies only where the underlying authorization upon which the named official acts is asserted to be illegal. See Cory v. White,457 U. S. 85 (1982). And it does not foreclose an Eleventh Amendment challenge where the official action is asserted to be illegal as a matter of state law alone. See Pennhurst, supra, at 465 U. S. 104-106. In such a case, federal supremacy is not implicated, because the state official is acting contrary to state law only.

We have also described certain types of cases that formally meet the Young requirements of a state official acting inconsistently with federal law, but that stretch that case too far and would upset the balance of federal and state interests that it embodies. Young's applicability has been tailored to conform as precisely as possible to those specific situations in which it is

"necessary to permit the federal courts to vindicate federal rights and hold state officials responsible to 'the supreme authority of the United States.'"

Pennhurst, supra, at 465 U. S. 105 (quoting Young, supra, at 209 U. S. 160). Consequently, Young has been focused on cases in which a violation of federal law by a state official is ongoing as opposed to cases in which federal

Page 478 U. S. 278

law has been violated at one time or over a period of time in the past, as well as on cases in which the relief against the state official directly ends the violation of federal, law as opposed to cases in which that relief is intended indirectly to encourage compliance with federal law through deterrence, or directly to meet third-party interests such as compensation. As we have noted:

"Remedies designed to end a continuing violation of federal law are necessary to vindicate the federal interest in assuring the supremacy of that law. But compensatory or deterrence interests are insufficient to overcome the dictates of the Eleventh Amendment."

Green v. Mansour,474 U. S. 64, 474 U. S. 68 (1985) (citation omitted).

Relief that in essence serves to compensate a party injured in the past by an action of a state official in his official capacity that was illegal under federal law is barred even when the state official is the named defendant. [Footnote 11] This is true if the relief is expressly denominated as damages. See, e.g., Ford Motor Co. v. Department of Treasury of Indiana,323 U. S. 459 (1945). It is also true if the relief is tantamount to an award of damages for a past violation of federal law, even though styled as something else. See, e.g., Green v. Mansour, supra, at 474 U. S. 69-70; Edelman v. Jordan,415 U. S. 651, 415 U. S. 664-668 (1974). On the other hand, relief that serves directly to bring an end to a present violation of federal law is not barred by the Eleventh Amendment, even though accompanied by a substantial ancillary effect on the state treasury. See Milliken v. Bradley,433 U. S. 267, 433 U. S. 289-290 (1977); Edelman, supra, at 415 U. S. 667-668.

For Eleventh Amendment purposes, the line between permitted and prohibited suits will often be indistinct:

"[T]he difference between the type of relief barred by the Eleventh Amendment and that permitted under Ex parte Young will not, in many instances, be that between day and night."

Edelman, supra, at 415 U. S. 667. Compare, e.g., 440 U. S. Jordan, 440

Page 478 U. S. 279

U.S. 332 (1979), with Green v. Mansour, supra. In discerning on which side of the line a particular case falls, we look to the substance, rather than to the form, of the relief sought, see, e.g., Edelman, supra, at 415 U. S. 668, and will be guided by the policies underlying the decision in Ex parte Young.

B

The petitioners claim that the federal grants of school lands to the State of Mississippi created a perpetual trust, with the State as trustee, for the benefit of the public schools. Relying on Alamo Land & Cattle Co. v. Arizona,424 U. S. 295 (1976), and Lassen v. Arizona ex rel. Arizona Highway Dept.,385 U. S. 458 (1967), the petitioners contend that

"[s]chool lands trusts impose specific burdens and obligations on the states, as well as the state officials who act as trustees, which include preserving the corpus, maximizing income, and, where the corpus is lost or converted wrongfully, continuing the payment of appropriate income indefinitely."

Brief for Petitioners 13. The idea that this last obligation exists is gleaned not from any prior judicial construction of school lands grants, but instead from alleged federal common law rules that purportedly govern such trusts. The petitioners rely on this asserted continuing obligation in contending that they seek only a prospective, injunctive remedy, permissible under Ex parte Young, requiring state officials to meet that continuing federal obligation by providing the Chickasaw Cession schools with appropriate trust income.

To begin with, it is not at all clear that the school lands grants to Mississippi created a binding trust. The respondents, in fact, contend that the school lands were given to the State in fee simple absolute, and that no binding federal obligation was imposed. See Alabama v. Schmidt,232 U. S. 168 (1914); Cooper v. Roberts, 18 How. 173 (1856). [Footnote 12] But even

Page 478 U. S. 280

if the petitioners' legal characterization is accepted, their trust claims are barred by the Eleventh Amendment. The distinction between a continuing obligation on the part of the trustee and an ongoing liability for past breach of trust is essentially a formal distinction of the sort we rejected in Edelman. There, the Court of Appeals had upheld an award of "equitable restitution" against the state official, requiring the payment to the plaintiff class of "all AABD benefits wrongfully withheld." 415 U.S. at 415 U. S. 656. We found, to the contrary, that the

"retroactive award of monetary relief . . . is, in practical effect, indistinguishable in many aspects from an award of damages against the State."

Id. at 415 U. S. 668.

The characterization in that case of the legal wrong as the continuing withholding of accrued benefits is very similar to the petitioners' characterization of the legal wrong here as the breach of a continuing obligation to comply with the trust

Page 478 U. S. 281

obligations. We discern no substantive difference between a not-yet-extinguished liability for a past breach of trust and the continuing obligation to meet trust responsibilities asserted by the petitioners. In both cases, the trustee is required, because of the past loss of the trust corpus, to use its own resources to take the place of the corpus or the lost income from the corpus. Even if the petitioners here were seeking only the payment of an amount equal to the income from the lost corpus, [Footnote 13] such payment would be merely a substitute for the return of the trust corpus itself. That is, continuing payment of the income from the lost corpus is essentially equivalent, in economic terms, to a one-time restoration of the lost corpus itself: it is, in substance, the award, as continuing income, rather than as a lump sum, of "an accrued monetary liability.'" Milliken v. Bradley, 433 U.S. at 433 U. S. 289 (quoting Edelman, 415 U.S. at 415 U. S. 664). Thus, we hold that the petitioners' trust claim, like the claim we rejected in Edelman, may not be sustained.

C

The Court of Appeals held, however, that the petitioners' equal protection claim was not barred by the Eleventh Amendment. We agree with that ruling. The complaint asserted:

"By their aforesaid past, present and future deprivations of and to Plaintiffs and the Plaintiff class of the use and benefits of their Sixteenth Section Lands, while at the same time granting to and securing to all other school districts and school children in the State of Mississippi in perpetuity the use and benefit of their Sixteenth Section Lands, the State Defendants have deliberately, intentionally, purposefully, and with design denied to Plaintiffs and the Plaintiff class the equal protection of

Page 478 U. S. 282

the laws in violation of their rights secured by the Fourteenth Amendment to the Constitution of the United States."

App. 20. The petitioners also alleged that these same actions denied them "their rights to an interest in a minimally adequate level of education, or reasonable opportunity therefor," id. at 21, while assuring such right to the other schoolchildren in the State. Thus, the complaint alleged a present disparity in the distribution of the benefits from the State's Sixteenth Section lands.

This alleged ongoing constitutional violation -- the unequal distribution by the State of the benefits of the State's school lands -- is precisely the type of continuing violation for which a remedy may permissibly be fashioned under Young. It may be that the current disparity results directly from the same actions in the past that are the subject of the petitioners' trust claims, but the essence of the equal protection allegation is the present disparity in the distribution of the benefits of state-held assets, and not the past actions of the State. A remedy to eliminate this current disparity, even a remedy that might require the expenditure of state funds, would ensure "compliance in the future with a substantive federal-question determination,'" rather than bestow an award for accrued monetary liability. Milliken, supra, at 433 U. S. 289 (quoting Edelman, supra, at 425 U. S. 668). This claim is, in fact, in all essential respects the same as the equal protection claim for which relief was approved in Milliken. Consequently, we agree with the Court of Appeals that the Eleventh Amendment would not bar relief necessary to correct a current violation of the Equal Protection Clause, and that this claim may not properly be dismissed on this basis. [Footnote 14]

Page 478 U. S. 283

III

The question remains whether the petitioners' equal protection claim, although not barred by the Eleventh Amendment, is legally insufficient and was properly dismissed for failure to state a claim. See Fed.Rule Civ.Proc. 12(b)(6). We are bound, for the purposes of this review, to take the well-pleaded factual allegations in the complaint as true. Miree v. DeKalb County,433 U. S. 25 (1977); Kugler v. Helfant,421 U. S. 117 (1975); Scheuer v. Rhodes,416 U. S. 232 (1974); Cruz v. Beto,405 U. S. 319 (1972); Gardner v. Toilet Goods Assn.,387 U. S. 167 (1957). Construing these facts and relevant facts obtained from the public record in the light most favorable to the petitioners, we must ascertain whether they state a claim on which relief could be granted.

A

In Rodriguez, the Court upheld against an equal protection challenge Texas' system of financing its public schools, under which funds for the public schools were derived from two main sources. Approximately half of the funds came from the Texas Minimum Foundation School Program, a state program aimed at guaranteeing a certain level of minimum education for all children in the State. 411 U.S. at 411 U. S. 9. Most of the remainder of the funds came from local sources -- in particular, local property taxes. Id. at 411 U. S. 9, n. 21. As a result of this dual funding system, most specifically as a result of differences in amounts collected from local property taxes, "substantial interdistrict disparities in school expenditures [were] found . . . in varying degrees throughout the State." Id. at 411 U. S. 15.

In examining the equal protection status of these disparities, the Court declined to apply any heightened scrutiny

Page 478 U. S. 284

based either on wealth as a suspect classification or on education as a fundamental right. As to the latter, the Court recognized the importance of public education, but noted that education "is not among the rights afforded explicit protection under our Federal Constitution." Id. at 415 U. S. 35. The Court did not, however, foreclose the possibility

"that some identifiable quantum of education is a constitutionally protected prerequisite to the meaningful exercise of either [the right to speak or the right to vote]."

Id. at 415 U. S. 36. [Footnote 15] Given the absence of such radical denial of educational opportunity, it was concluded that the State's school financing scheme would be constitutional if it bore "some rational relationship to a legitimate state purpose." Id. at 415 U. S. 44.

Applying this standard, the dual Texas system was deemed reasonably structured to accommodate two separate forces:

"'[T]he desire by members of society to have educational opportunity for all children, and the desire of each family to provide the best education it can afford for its own children.'"

". . . While assuring a basic education for every child in the State, it permits and encourages a large measure of participation in and control of each district's schools at the local level."

Id. at 415 U. S. 49 (quoting J. Coleman, Foreword

Page 478 U. S. 285

to G. Strayer & R. Haig, The Financing of Education in the State of New York vii (1923)).

Given this rational basis, the Court concluded that the mere "happenstance" that the quality of education might vary from district to district because of varying property values within the districts did not render the system "so irrational as to be invidiously discriminatory." 411 U.S. at 411 U. S. 55. In particular, the Court found that

"any scheme of local taxation -- indeed the very existence of identifiable local governmental units -- requires the establishment of jurisdictional boundaries that are inevitably arbitrary."

Id. at 411 U. S. 53-54.

Almost 10 years later, the Court again considered the equal protection status of the administration of the Texas public schools -- this time in relation to the State's decision not to expend any state funds on the education of children who were not "legally admitted" to the United States. Plyler v. Doe,457 U. S. 202 (1982). The Court did not, however, measurably change the approach articulated in Rodriguez. It reiterated that education is not a fundamental right, and concluded that undocumented aliens were not a suspect class. 457 U.S. at 457 U. S. 223-224. Nevertheless, it concluded that the justifications for the discrimination offered by the State were "wholly insubstantial in light of the costs involved to these children, the State, and the Nation." Id. at 457 U. S. 230.

B

The complaint in this case asserted not simply that the petitioners had been denied their right to a minimally adequate education, but also that such a right was fundamental, and that, because that right had been infringed, the State's action here should be reviewed under strict scrutiny. App. 20. As Rodriguez and Plyler indicate, this Court has not yet definitively settled the questions whether a minimally adequate education is a fundamental right, and whether a statute alleged to discriminatorily infringe that right should be accorded heightened equal protection review.

Page 478 U. S. 286

Nor does this case require resolution of these issues. Although, for the purposes of this motion to dismiss, we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation. See, e.g., Briscoe v. LaHue, 663 F.2d 713, 723 (CA7 1981), aff'd on other grounds,460 U. S. 325 (1983). See generally 2A J. Moore & J. Lucas, Moore's Federal Practice

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