The Kansas Supreme Court ruled on Thursday that the state's system of funding primary and secondary public schools falls short of an adequacy requirement in the state constitution.
The high court said it was delaying enforcement of its unanimous ruling until the end of June to give the legislature time to respond.
It warned that if the state fails to come up with a funding system that complies with the constitution by the June 30 deadline, the court will move to void the current method of school finance.
Kansas spends more than $4 billion a year on schools, with most of the money coming from the state general fund. During oral arguments before the court in September, lawyers for the four districts that filed the lawsuit claimed another $430 million to $1.4 billion would be required to meet the state constitution's requirement for adequate funding.
"It is incumbent upon the legislature to react to the ruling quickly and in a way that puts the funding levels into constitutional compliance," said a statement from Alan Rupe, an attorney representing the plaintiff school districts.
The ruling comes at a bad time for the Kansas budget. Tax cuts enacted in 2012 have gouged a hole in the budget as revenue failed to meet monthly estimates, although February marked a fourth straight month that collections met or exceeded projections.
A move in the state legislature to boost revenue by raising tax rates and eliminating a business exemption failed last week when the Senate was unable to override Governor Sam Brownback's veto.
S&P Global Ratings cited the state's structural budget pressures and reliance on one-time revenue measures when it revised the outlook on the state's AA-minus credit rating to negative from stable last month.
(Reporting by Karen Pierog and Tracy Rucinski in Chicago; Editing by Chizu Nomiyama and Matthew Lewis)
