Little Rock School Dist. v. Pulaski County Special School Dist., No. 1, s. 95-1481E
| Decision Date | 27 June 1996 |
| Docket Number | 95-1482EA,Nos. 95-1481E,s. 95-1481E |
| Citation | 83 F.3d 1013 |
| Parties | 109 Ed. Law Rep. 590 LITTLE ROCK SCHOOL DISTRICT; Plaintiff-Appellee, Anne Mitchell; Bob Moore; Pat Gee; Pat Rayburn; Mary J. Gage; Intervenors-Appellees, North Little Rock Classroom Teachers Association; Pulaski Association of Classroom Teachers; Little Rock Classroom Teachers Association; Intervenors, Alexa Armstrong; Karlos Armstrong; Ed Bullington; Khayyam Davis; Janice Dent; John Harrison; Alvin Hudson; Tatia Hudson; Milton Jackson; Lorene Joshua; Leslie Joshua; Stacy Joshua; Wayne Joshua; Katherine Knight; Sara Matthews; Becky McKinney; Derrick Miles; Janice Miles; John M. Miles; NAACP; Joyce Person; Brian Taylor; Hilton Taylor; Parsha Taylor; Robert Willingham; Tonya Willingham; Intervenors-Appellees, v. PULASKI COUNTY SPECIAL SCHOOL DISTRICT, # 1; North Little Rock School District; Leon Barnes; Sheryl Dunn; Mac Faulkner; Richard A. Giddings; Marianne Gosser; Don Hindman; Shirley Lowery; Bob Lyon; George A. McCrary; Bob Moore; Steve Morley; Buddy Raines; David Sain; Bob Stender; Dale Ward; John Ward; Judy Wear; Grainger Williams; Defendants-Appellees, The Arkansas State Board of Education; State of Arkansas; Defendants-Appellants, Office of Desegregation Monitor, Claimant. LITTLE ROCK SCHOOL DISTRICT; Plaintiff-Appellant, Anne Mitchell; Bob Moore; Pat Gee; Pat Rayburn; Mary J. Gage; Intervenors-Appellants, North Little Rock Classroom Teachers Association; Pulaski Association of Classroom Teachers; Little Rock Classroom Teachers Association; Intervenors, Alexa Armstrong; Karlos Armstrong; Ed Bullington; Khayyam Davis; Janice Dent; John Harrison; Alvin Hudson; Tatia Hudson; Milton Jackson; Lorene Joshua; Leslie Joshua; Stacy Joshua; Wayne Joshua; Intervenors-Appellants, Katherine Knight; Sara Matthews; Becky McKinney; Derrick Miles; Janice Miles; John M. Miles; NAACP; Joyce Person; Brian Taylor; Hilton Taylor; Parsha Taylor; Robert Willingham; Tonya Willingham; Intervenors, v. PULASKI COUNTY SPECIAL SCHOOL DISTRICT, # 1; Defendant-Appellee, North Little Rock Sc |
| Court | U.S. Court of Appeals — Eighth Circuit |
Timothy Gauger, Little Rock, AR, argued (Winston Bryant, Atty. Gen., on the brief), for appellants/cross-appellees.
Christopher John Heller, argued, Little Rock, AR (John W. Walker, on the brief), for appellee/cross-appellant Little Rock School Dist.
Samuel Jones, argued, Little Rock, AR (John W. Walker, on the brief), for appellee/cross-appellant Pulaski County Special School Dist.
John W. Walker, argued, Little Rock, AR, for intervenor Joshua.
Before RICHARD S. ARNOLD, Chief Judge, HEANEY and WOLLMAN, Circuit Judges.
In this case, we must decide whether certain actions by the State of Arkansas and the Arkansas Department of Education (collectively referred to as the State) run afoul of the Little Rock Schools Desegregation Settlement Agreement. The plaintiffs, the Little Rock School District (LRSD) and the Pulaski County Special School District (PCSSD), claim that they do, and the District Court agreed. We affirm in part and reverse in part.
This case is made up of three distinct issues with three separate sets of facts. The facts themselves are not in serious dispute. The legal consequences attaching to those facts in light of the Settlement Agreement are.
Before 1994, the State of Arkansas bore the entire burden of funding the workers' compensation programs for all school districts in the State. This approach, quite naturally, did nothing to induce individual school districts to take measures that might reduce workers' compensation exposure. Therefore, the Arkansas General Assembly changed the law to require individual school districts to provide their own coverage beginning July 1, 1994. See Ark.Code Ann. §§ 6-17-1411 to 1413 (Repl.1993).
In order to soften the blow brought about by this change, the State distributed "seed money" to all school districts for the 1994-95 school year. The amount distributed to each school district was based on the number of students in the school district, rather than the number of employees needing coverage. This approach resulted in school districts statewide receiving about one-half of the cost of their coverage, but the plaintiff districts received only about one-third of their coverage costs. Whether the State may cease funding workers' compensation insurance for the plaintiff districts, and, if so, whether the State must distribute to them one-half or one-third of the initial cost in seed money is the first issue that we must address.
The second issue involves "loss funding," and the manner in which the State computes the amount of loss funding due the Pulaski County Districts. Loss funding was created by the General Assembly in 1993, see Ark.Code Ann. § 6-20-302 (Repl.1993), for the purpose of financially assisting school districts with declining enrollments. The driving force behind the law is the notion that school districts suffering enrollment reductions are never able to reduce staff and cut expenses as quickly as students leave. Of course, when students leave a district, so does the state funding that comes with them. Loss funding helps finance the transition period.
The crux of the problem here is the manner in which the State computes the amount of loss funding due LRSD and PCSSD. Loss funding is normally computed by (and here we simplify) calculating the loss in Average Daily Membership (ADM) in a district as compared to the average ADM of the three previous years, then multiplying that number by a multiplier. However, the State, when figuring loss funding for the Pulaski County Districts, varied the standard formula where majority-to-minority (M-to-M) transfer students are concerned.
M-to-M students are peculiar to the districts that are parties to the Settlement Agreement. They are students who are of the majority race in their home districts, and who voluntarily transfer to another Pulaski County district where they are of the minority race. The State, by way of a funding formula contained in the Settlement Agreement, compensates both the home district and the receiving district for each M-to-M student. The home, or sending, district receives one-half of the state aid that it would have received if the student had remained in the district, while the receiving, or host, district receives the full cost of educating the student.
When the State computes loss funding for sending districts, it treats M-to-M students as if they were still in the district. In other words, it adds M-to-M students who transfer out of the district back into the ADM prior to calculating loss funding. It does so even though these students are no longer being educated by the sending district. This approach results in a reduction in the amount of loss funding paid to the sending district where the M-to-M students transferring out of the district outnumber those transferring in. We must decide whether the Settlement Agreement allows the State to reduce the plaintiff districts' loss funding in this manner.
The third issue arises out of the development of the Arkansas Public School Computer Network (APSCN). This statewide computer network for public schools was mandated by the General Assembly. Acts of 1989, No. 668. Eventually, after consultation with representatives of all state school districts, a plan was developed that utilizes educational cooperatives in each Arkansas county to provide APSCN services. Pulaski County is the only county in the state that does not have an educational cooperative. However, the State did offer to provide APSCN services in some form to the plaintiff districts. .
Each school district in the state was given the same three options under the plan. First, a district could relinquish control over its computer system operations and utilize the APSCN system provided through the local educational cooperative, or Pulaski County's substitute for an educational cooperative, which the State offered to create. Second, a district could purchase, at its own expense, computer hardware identical to the APSCN hardware, and software would be provided to the district free of charge. Finally, a district could use either existing or newly acquired hardware that was different from that utilized by APSCN, but no software or financial support would be provided.
Some school districts found all three of these options to be unsatisfactory. These districts were primarily those that already had substantial investments in computer systems. Thus, it would be unwise for these districts to scrap their existing systems and utilize the APSCN system. The plaintiff districts are in this group.
The District Court held that the State's actions in all three of these sets of circumstances ran afoul of the Settlement Agreement. It ordered the State to fund workers' compensation in the Pulaski County districts to the same extent that funding was provided statewide, approximately one half of the cost of coverage. It also ordered that the State must exclude those M-to-M students lost to a sending district from ADM for loss-funding purposes. Finally, it ordered the State to pay over to...
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