St. Louis Public and Charter Schools Fight Over Desegregation Taxes

Originally published in The American Prospect on April 27, 2016.
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The St. Louis Public Schools and the St. Louis NAACP recently filed litigation in U.S. District Court for the Eastern District of Missouri against the Missouri Board of Education, claiming that state officials have diverted millions of dollars to charter schools over the past decade, in violation of a court-ordered desegregation settlement.

The suit alleges that those funds should have been allocated to traditional public school desegregation programs. Public school officials want to see more than $40 million returned to the district’s coffers. But charter school advocates argue that giving back those funds would harm their students and undermine school choice in Missouri.

The St. Louis case is unique, but it also illustrates some of the broader funding issues faced nationwide by state and local education officials as they navigate the thorny challenges posed by trying to finance two public school systems with fewer tax dollars.

The legal dispute hinges on whether public charter schools are entitled a portion of the revenues raised from a local “desegregation tax.” As part of a 1999 federal settlement, St. Louis voters approved a two-thirds of 1-cent sales tax to fund district desegregation programs. In Missouri, charters and traditional public schools are funded separately, so the independent public charters that opened in St. Louis beginning in 2000 did not receive any of these so-called “desegregation tax” revenues.

But in 2006, Missouri revamped the state education funding formula to allocate local tax revenues to charter schools on a per-pupil basis. The desegregation sales tax was included in the new local funding calculation. St. Louis public school district officials, who did not learn that desegregation tax funds were going to charter schools until two years later, argue that those funds should be allocated only to traditional public schools, not to charters.

In January, public school officials, the NAACP, and others asked the state of Missouri to return the desegregation tax revenues to the district. They also requested an additional $8.8 million in desegregation tax revenues that charters are scheduled to receive for the 2015-2016 school year. But in March, a state education department attorney told the group that the desegregation tax is, in fact, being distributed in accordance with state law and the 1999 court agreement.

In an interview with The American Prospect, St. Louis NAACP President Adolphus Pruitt says that since charter schools were not included in the 1999 court-ordered settlement, charters are not entitled to the tax revenues. Moreover, they are not obligated to use the funds for desegregation programs. Pruitt stresses that the federal litigation is not an attack on charter schools, but an effort to ensure that the state abides by its legal obligations. He adds that St. Louis voters approved the sales tax specifically to fund the district’s desegregation programs. “Let’s be clear,” Pruitt says. “We can’t continue to provide programs if the state continues to divert the money, and we cannot allow the taxpayer money to go where it was not intended.”

Since charters now educate a third of all St. Louis public school students, school choice advocates argue that the traditional public schools should receive a smaller portion of the desegregation tax revenues.Pruitt counters that current desegregation programs may end if the district cannot access the full pot of money.

Attorney Ronald Norwood of Lewis Rice, the law firm representing the St. Louis public schools, declined to comment on the case.

Charter advocates say the desegregation tax revenues belong to St. Louis public school students, not the school district. Two weeks ago, parents, students, and other supporters of the charter effort launched a social media campaign to pressure the school district and the plaintiffs to back down. Douglas Thaman, the executive director of the Missouri Charter Public School Association, has argued that if the St. Louis public schools were to prevail in federal court, then many charter schools in the city may have to close. The remaining charter school students could see their annual funding cut by more than $800 per student. Currently, St. Louis charter schools spend roughly $8,000 per student.

The city’s tumultuous school desegregation legal battles began in 1972 when a group of African American parents in St. Louis challenged certain patterns of segregation in the city’s public school system. Eleven years later, the U.S. District Court in St. Louis ordered the state to fund programs to remedy the negative effects of segregation. Under the court’s supervision, Missouri helped the St. Louis public schools finance early-childhood education, capital improvements to city school buildings, vocational education, magnets, and a voluntary inter-district transfer plan with the St. Louis County schools, a separate school system that is predominately white. The St. Louis schools are more than 80 percent black.

In 1996, Missouri officials asked the federal court to declare that St. Louis public schools had achieved “unitary status,” meaning that the school district had made reasonable progress in eliminating most of the past effects of segregation and should be released from court-ordered directives. But the U.S. District Court in St. Louis did not agree, and instead opted to restart negotiations with state and school district officials to devise an alternative agreement. Three years later, the court approved a new settlement that required the school district to continue funding desegregation programs, such as all-day kindergarten and transportation to the county schools.

School district officials agreed to use a combination of state and local funding to pursue desegregation remedies: The state would contribute at least $40 million per year and St. Louis voters approved a new sales tax to raise approximately $20 million annually to fund specific desegregation programs. According to Pruitt, since 1999, the state has contributed nearly $900 million to fund desegregation efforts. While the city continues to collect the desegregation sales tax, the state’s annual court-ordered contributions have ended.

Yet the St. Louis school system may see some additional fiscal relief. This month, St. Louis voters overwhelmingly voted to increase their property taxes, the first such increase in 25 years. Nearly $30 million annually will go to both charter and district schools. Charters expect to start receiving their share of the new funds, about one-third of the revenues, in 2019.

Pruitt, who believes he’s doing the right thing by trying to direct all the desegregation tax money to traditional public schools, insists he’s also committed to increasing funding for charters. He points to the new property tax revenues as a prime example. “I’ll fight just as hard as I am now to make sure charters get their share of that money,” says Pruitt.

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