Districts dispute facts on funding

Millage never equal, two say

— Arguing that the state didn’t accurately define the amount of money needed to provide an adequate education, two school districts that recently won a funding case asked the Arkansas Supreme Court to consider new information Friday.

On Nov. 29, the court ruled in a 4-3, decision that the state cannot force wealthier school districts to surrender property-tax revenue to subsidize poorer districts.

The attorney general’s office has said it will file a brief Monday asking the court to reconsider or clarify its decision.

The school districts’ motion, submitted to court clerks late Friday afternoon, asks the court to take Judicial Notice of Adjudicative Facts. Such facts are from reliable sources that are not in dispute. Arkansas Rules of Evidence states “judicial notice may be taken at any stage of the proceeding.”

The Fountain Lake School District in Hot Springs and the Eureka Springs School District argue that education funding has never been equal because districts receive state and federal funding above the amount the state considers necessary to provide an adequate education.

Eugene Sayre of Little Rock, the attorney representing the two districts, argues in the brief that the court was never told and never considered the amount of money that goes to Arkansas school districts.

Instead of equal funding for each student, Arkansas districts already receive substantially different amounts per pupil, the districts argue.

Sayre said he filed the motion and brief before the attorney general’s requests because he wants the information to be included in other filings presented to the court.

“We’re not asking for any action, we just want them to have this information,” he said.

The filing states that the facts will disprove the Department of Education’s legal theory on appeal and “clarify a mistaken assumption made by dissenting justices.”

Attorney general’s spokesman Aaron Sadler said the office received the documents late Friday and would review them.

Supreme Court spokesman Stephanie Harris said it is rare for the court to grant a petition for rehearing.

The court hasn’t granted a petition for rehearing since at least 2003, according to Arkansas Democrat-Gazette archives. The court did not change its opinion in any of the handful of rehearings granted between 1997 and 2003.

Each district has a uniform tax rate of 25 mills. In most places, the tax raises less than the amount per student the state deems adequate, so the state makes up for the shortfall.

In 2012-13 each district receives $6,267 per student in aid called “foundation funding.” But a few districts collect more than the mandated funding through the millage.

For a few years, state officials allowed school districts to keep property-tax revenue even if it exceeded “foundation funding.”

State officials eventually said this excess money must be surrendered. The Fountain Lake district and the Eureka Springs district refused.

State officials argued that Amendment 74, which mandates the special 25-mill education tax, authorized the state to level the playing field and provide equal funding to all districts.

But the court ruled that each school district can keep all tax revenue it collects.

The money is a “special tax,” not a state tax, and the state is not entitled to seize the money and redistribute it, the court said.

Sayre’s motion states that the Education Department and the dissenting justices “misconstrue what the Arkansas General Assembly considers as the proper measure of the amount of funds to provide for an ‘adequate’ and ‘equitable’ funding of all the students attending all of the public schools located throughout the state of Arkansas.”

While the General Assembly sets the foundation funding amount, districts also are eligible for tens of millions more for special needs based on their student population. That money is unequally distributed, the motion states.

All districts receive major funding in at least two ways; the per-pupil funding amount and special funds that are distributed based on a number of factors, such as the number of students learning to speak English; students with physical and intellectual disabilities; behavioral or social problems; and those living in poverty. There also is special funding for professional development for staff members.

The special funds can be spent only on the group of students with these special needs. There are fewer limits on how districts can choose to spend the foundation funding.

The brief asks the court to look at a statement in the adequacy study compiled every two years by the Arkansas Legislature, which looks at transportation, technology, utilities, teachers’ salaries and other expenses to determine what per-pupil amount is sufficient to provide an adequate education.

The 2012 report was released Oct. 18, 15 days after oral arguments took place. Adequacy reports released in 2008 and 2010 also referred to the use of those special funds, called categorical funds, as equalizing spending for districts with varying property values. Those reports were available before oral arguments took place.

The 2012 report states “the categorical funding districts receive ‘to compensate for socioeconomically disadvantaged districts contributes to the equalization of revenues’” and that in fiscal 2011 districts received an average of $8,215.84 per student from a combination of the sources.

Sayre’s brief argues that, contrary to what the attorney general argued, the General Assembly’s definition of adequate funding isn’t confined to foundation funding.

“The [Department] and the attorney general have intentionally and myopically concentrated their attention and presentation only upon the General Assembly’s yearly determination of a foundation funding amount as the proper measure,” it states.

Sayre argued that other districts receive more categorical funding than Fountain Lake and Eureka Springs. So, if the court were to reconsider the case, change its mind and take the excess funding raised by the 25 mills, those two districts would actually receive less per pupil than other districts.

Justices Paul Danielson, Karen Baker, Courtney Hudson Goodson and Donald Corbin made up the majority in the ruling. Chief Justice Jim Hannah, Justice Robert Brown and Special Justice George Ellis dissented.

The court has concluded its fall term. When it returns for the spring term Jan. 7, the makeup of the court will have changed.

Harris said the court will likely not act until it returns.

On Jan. 1, Brown retires and will be replaced by Court of Appeals Judge Cliff Hoofman.

Justice Jim Gunter, who recused himself, also retires Jan. 1. Court of Appeals Judge Jo Linker Hart was elected to replace him in May.

Harris said she is not aware of any rule that addresses which judges would rehear the case, or if Ellis, the special justice, would participate since the judge who recused himself had retired.

The four judges in the majority will return in 2013.

Arkansas, Pages 11 on 12/15/2012

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