No challenges yet on millage decision

School-funding ruling under study

Saturday, December 1, 2012

— Lawmakers and education officials are not ready to try to overrule this week’s state Supreme Court ruling on school funding, they said Friday.

In a ruling Thursday, the court said Arkansas officials cannot force richer school districts to surrender property-tax revenue to subsidize poorer districts.

But the court left room for revisions.

In the majority opinion, Justice Paul Danielson wrote that “should the General Assembly wish to provide a mechanism or procedure by which excess funds may be distributed to other districts, it is certainly within its purview to do so.”

Lawmakers said Friday that they’re still analyzing the ruling.

Currently, Arkansas allocates $6,267 per student per year to ensure that school districts have enough money to provide each student an adequate education.

Some of the money comes from school district property taxes of 25 mills. The rest comes from state coffers.

Although the property-tax money is collected in local school districts, it is shipped to the state treasurer before returning to the districts.

Nearly all of Arkansas’ 239 school districts need the state subsidy. But a handful collect enough property tax revenue to allocate $6,267 per student — and have a little money left over.

For a time, the state returned all of the property-tax revenue to the school districts — even those with the most resources. But in 2010, state Education Commissioner Tom Kimbrell demanded that four school districts return $2.6 million, arguing that the money should be redistributed to poorer schools.

After Kimbrell met with officials from those four districts, Armorel and West Side school district officials returned their excess money.

But the Fountain Lake and Eureka Springs school districts filed suit, arguing they were entitled to receive all of the property tax revenue generated by the 25-mill tax.

A circuit judge agreed. And on Thursday, by a 4-3 decision, the Arkansas Supreme Court ruled in the school districts’ favor.

Kimbrell said Friday that the ruling would affect six school districts that currently generate more than the minimum funding per student through the tax.

Besides the original four school systems, the Nemo Vista and Southside-Bee Branch districts also will receive more than $6,267 per student because of their unusually strong property-tax revenue.

Kimbrell said he hasn’t made a “final determination” on whether to file a petition for rehearing or to lobby the Legislature to reverse the court’s decision.

“I think it has a negative impact on the foundation of what we’ve based all of our educational decisions over the last 15 years on,” Kimbrell said.

The case has been closely watched.

After Fountain Lake and Eureka Springs refused to return the money, the state Education Department refused to approve the districts’ budgets and withheld “categorical funding” — money for alternative education, teacher training and for improving the performance of poor children.

The districts filed a lawsuit in Pulaski County Circuit Court on May 11, 2011, asking that Judge Tim Fox intervene to prevent the department from withholding money from the districts and attempting to claim the tax revenue.

Fox issued an injunction Sept. 20 of that year, prohibiting the department “from undertaking any action” against the school districts.

Both sides appealed the ruling, with the department stating that it had the authority to “recoup and redistribute” the excess uniform-rateof-tax funds and the school districts arguing that the money should not be considered state-tax revenue.

The Supreme Court referred to the 25-mill tax as a “special tax” and said that it could not be considered state revenue in the ruling. Rep. Bruce Westerman, RHot Springs, who also previously served on the Fountain Lake School Board, said the court’s ruling was “absolutely right” and did not affect the adequacy or equity of education in the state.

“In no way, no form and no shape does that affect any other school district,” Westerman said.

During the 2011 session, Westerman co-sponsored a bill by Rep. Bryan King, RGreen Forest, that would allow the districts to keep excess funds.

The bill was later withdrawn because, King said, the lawmakers wanted to let the courts decide.

But some lawmakers say the ruling will have a negative effect on educational equity in the state.

Sen. Joyce Elliott, D-Little Rock, who is on the Senate Education Committee, said she agreed the topic would most likely be raised during the session, but that she is worried about “the whim of one Legislature to the next” affecting the school-funding formula.

“I am crestfallen that we have come to this ruling because I think it really puts so many kids in this state in a position where, if it’s not dire, it certainly changes the equation of what’s possible to be done for those students to make sure that we have a suitable and equitable education for them,” Elliott said.

At least one group already is calling for new legislation.

In a news release Friday, Arkansas Education Association President Donna Morey said her union “believes that the decision does not reflect the intent of the Arkansas General Assembly concerning adequacy and equity for all the students in Arkansas’ public schools.

“It will be necessary for the legislature to modify the statutes to clearly define the funding structures for schools, and the AEA will be an active partner in changing the appropriate laws,” she said.

Information for this article was contributed by Cynthia Howell of the Arkansas Democrat-Gazette.

Front Section, Pages 1 on 12/01/2012