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School System Settles Funding Fight With State

PHILADELPHIA (CN) - A federal judge has approved a settlement that will infuse a cash-strapped Pennsylvania school district with desperately needed funding.

Claiming it was on the brink of financial collapse, the roughly 3,600-student Chester Upland School District sued the state in January, alleging it would be unable to make payroll without at least $7 million in emergency funds.

The parties subsequently forged an arrangement that kept the district open through the end of June.

A 10-day bench trial was held in May, but the parties notified U.S. District Judge Michaerl Baylson of a proposed settlement before closing arguments.

Under the settlement, the state must cover certain district debt with a direct payment of $20.5 million to vendors and other payees. It also must give the district $9.7 million in funding for the 2012-13 school year.

A key issue in the case was the constitutionality of the formula the state uses to apportion federal subsidies for special education among school districts.

The district said Pennsylvania changed that formula in 1994.

"The formula for funding services to students with disabilities was changed from a method based on the number and needs of the students in a school district to a system primarily based upon the number of students in the school district without regards to the number of disabled students or their disability and limiting the percentage of students for whom funding is provided," according to the amended complaint.

For districts like Chester Upland, where at least one-fifth of the students have disabilities, that change was particularly devastating, the district claimed.

In a 44-page opinion released last week, Baylson said he wasn't making any formal factual findings about the evidence presented at trial.

But under the settlement, the district has agreed to improve its special-education program by, among other things, hiring a special-education director and more special-education staff. The state has also agreed to fund a special-education officer to physically work in the district, the judge noted.

"When a trial of a case brought as a class action has taken place, and witnesses have been presented, but the trial is followed by a settlement, in some ways this is the best of all possible outcomes," Baylson wrote. "Public testimony exposed the issues, but the settlement avoids labeling one side as the winner and the other side as the loser. A class action requires the Court to scrutinize the settlement carefully to make sure that the result is fair to members of the class as they are bound by the result. In the context of a suit concerning the operation of a school system, there is obviously also a great deal of public interest and public concern, if only because there are likely to be consequences for the settlement to students, parents, teachers, and taxpayers in terms of finances, expenses, program content, etc.

"This controversy, arising out of the District's near insolvency earlier this year, has resulted in a constructive settlement that has the potential of giving thousands of school children a quality education. However, the near disaster which threatened to close the district's schools this year will be repeated if the lessons learned are forgotten, and if the conduct which led to the dire financial circumstances, including the district's own acts and omissions, is repeated."

Baylson emphasized that "there was little if any testimony to support the allegations against the department"

Though the district may well be underfunded, "funding to public schools in Pennsylvania is determined by the Legislature, and no judge has the power to require additional funds be appropriated to a school system," the 47-page decision states.

"Although the court appreciates that the parties have voluntarily reached a settlement which will result in infusion of funds into the district, money does not solve all problems," Baylson wrote. "This settlement must be accompanied by continued supervision by the department, dedication by local school officials, commitment and participation by parents and teachers, and hard work by the students."

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