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Eighth Circuit rules St. Louis public, charter schools must share tax funds

A three-judge panel rejected the argument that the sales tax portion of a settlement agreement to fund desegregation programs should go solely to the public school district.

ST. LOUIS (CN) — In a loss for the city's public schools, the Eighth Circuit ruled on Thursday that St. Louis-area charter schools are entitled to a per-student portion of a special sales tax that is part of a decades-old settlement agreement to fund desegregation programs.

At issue is an agreement made in 1999 that settled a decades-long school desegregation case. Under the deal, the St. Louis Public School District – also known as SLPS, for St. Louis Public Schools – agreed to continue operating various intra-district desegregation programs while funding for the programs was to come from sales tax and amendments to Missouri's school funding mechanism, with a floor of $60 million a year.

But in 2006, the state began diverting the sales tax revenue away from SLPS to nonparty charter schools.

In 2016, the school system filed a motion to enforce the settlement, seeking to force Missouri to send the sales tax revenue solely to St. Louis public schools.

A federal judge found in favor of Missouri in 2020, ruling that the charter schools were entitled to the funds if they were operating desegregation programs, which prompted the SLPS appeal to the Eighth Circuit.

In a September hearing, SLPS attorney William A. Douthit argued that any delay or decrease in funding would critically harm the district’s students.

Missouri Solicitor General John Sauer countered that what SLPS is seeking goes against the plain language of the settlement.

The three-judge panel, in a unanimous opinion, sided with the state of Missouri.

U.S. Circuit Judge David R. Strauss, a Donald Trump appointee, noted that while the statutory background in this case is complicated, the arguments in this matter are not.

“The plaintiffs start with the premise that, under the settlement agreement, the parties must ‘disregard[]’ any ‘statutory or administrative change[]’ that has a ‘disproportionate adverse financial impact’ on the St. Louis Public School District,” Strass wrote in the 11-page opinion. “In their view, the change to the funding formula falls squarely within that prohibition. And Missouri’s position is that charter schools had a right to that money from the moment they came into existence.”

The appeals court agreed with the latter view.

“There is no doubt that the St. Louis Public School District was entitled to keep some of it,” Strass wrote. “But so were the charter schools, which had a right to a per-pupil ‘pay[ment],’ that included any ‘sales tax equivalent’ passed by St. Louis voters. And that right has existed from day one, which means later changes to the charter-school funding formula had no ‘adverse financial impact’” on SLPS.

The appeals court went a step further in holding that the charter schools were able to spend the funds as they wished, vacating part of the district court's decision finding that the charter schools had to spend the money on desegregation programs.

“An obvious problem is that charter schools, which did not exist at the time, were not a party to the settlement agreement,” Strass wrote.” So it could not have obligated them to do anything, much less foot the bill for desegregation measures they did not need. Indeed, the Missouri Legislature created charter schools to offer students a non-segregated alternative to an already-segregated public-school system.”

Neither Douthit nor representatives for the state immediately responded to a request for comment.

U.S Circuit Judges Steven M. Colloton, a George W. Bush appointee, and Roger L. Wollman, a Ronald Reagan appointee, rounded out the panel and concurred with the ruling. 

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Categories / Appeals, Education, Government, Regional

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