P.A.C.E. v. Kansas City Missouri School Dist.

• Decision Date: 27 February 2008
• Docket Number: No. 06-3318.,06-3318.
• Citation: 516 F.3d 1074
• Parties: P.A.C.E., Movant Below, Chinyere Jenkins, Plaintiff-Appellee, v. KANSAS CITY MISSOURI SCHOOL DISTRICT; American Federation of Teachers, Defendants-Appellees, State Defendants, Defendant-Appellant, Linwood F. Tauheed; Missouri Charter Public School Association, Intervenor Defendant Below.
• Court: U.S. Court of Appeals — Eighth Circuit

516 F.3d 1074

P.A.C.E., Movant Below, Chinyere Jenkins, Plaintiff-Appellee, v. KANSAS CITY MISSOURI SCHOOL DISTRICT; American Federation of Teachers, Defendants-Appellees State Defendants, Defendant-Appellant Linwood F. Tauheed; Missouri Charter Public School Association, Intervenor Defendant Below.

No. 06-3318.

United States Court of Appeals, Eighth Circuit.

Submitted: November 14, 2007.

Filed: February 27, 2008.

Alana Barragan-Scott, Assistant Attorney General, argued, Jefferson City, MO, for appellant.

Arthur Benson II, argued, Kansas City, MO, for Jenkins and John Borkowski, argued, South Bend, IN, for Kansas City School District, Jamie Lansford, Fred Wickham, Brian P. Wood, Maurice A. Watson, Kirsten Byrd and Hayley E. Hanson, Kansas City, MO, and Patricia A. Brannan and Joshua I. Civin, Washington, DC, on the brief.

Before RILEY, BOWMAN, and SMITH, Circuit Judges.

BOWMAN, Circuit Judge.

This appeal arises out of the court-supervised desegregation of the Kansas City, Missouri, School District ("the District" or "the KCMSD"), which began with the filing of a lawsuit in 1977. Although the District was declared unitary and released from court supervision in 2003, some parties to the desegregation suit filed a motion in the District Court¹ on February 22, 2006, asking the court to exercise ancillary jurisdiction and enjoin the State of Missouri and state officials (collectively, "the State") from acting in a manner inconsistent with earlier court orders (including an agreement between the KCMSD and the State incorporated in court orders). The movants (the KCMSD, a class of plaintiff schoolchildren, and the American Federation of Teachers Local 691) asserted that recent legislative action by the State violated orders issued in the desegregation suit by requiring the KCMSD to use property tax levy proceeds, which were dedicated to the repayment of court-ordered desegregation bonds, to fund charter schools. The District Court agreed, granted the motion, and issued a final order enjoining the State from requiring the KCMSD to divert to the charter schools tax levy funds that were traditionally withheld under Section 160.415.2(5) of the Missouri Revised Statutes. The State appeals the District Court's order. We affirm.

I.

In 1977, the KCMSD, members of the Kansas City School Board, and four schoolchildren filed suit against the State, suburban school districts surrounding the District, and various federal agencies. The complaint alleged that the defendants caused and perpetuated a racially segregated public school system in the Kansas City, Missouri, metropolitan area. The District Court² realigned the KCMSD as a defendant and converted the suit into a class action, making a plaintiff class of all present and future KCMSD students. After a 7 ½-month trial, the District Court dismissed the case against the suburban school districts and federal defendants, but found constitutional violations by the KCMSD and the State. Jenkins v. Missouri, 593 F.Supp. 1485 (W.D.Mo.1984). The court determined that the State had mandated segregated schools for black and white children prior to 1954, id. at 1490, and held that the KCMSD and the State had not met their affirmative obligations to remove all vestiges of that dual school system, id. at 1504. We affirmed this holding in Jenkins v. Missouri, 807 F.2d 657 (8th Cir.1986) (en banc) (Jenkins I),³ cert. denied, 484 U.S. 816 (1987).

To address the vestiges of unconstitutional segregation, the District Court ordered remedial programs and capital improvements throughout the District. By the summer of 1987, the court, had approved a series of capital improvement expenditures totaling approximately $110 million. In September 1987, the District Court approved a $187 million "long-range capital improvement plan aimed at eliminating the substandard conditions present in KCMSD schools."⁴ Jenkins v. Missouri, 672 F.Supp. 400, 403 (W.D.Mo.1987). These capital improvement costs were in addition to "other desegregation costs." Id. at 412. While the court had deemed the State and the KCMSD jointly and severally liable for desegregation remedies, the court also recognized that the KCMSD lacked the resources to pay its share of the costs and had exhausted all means of raising additional revenue.⁵ Concluding that it was "left with no choice but to exercise its broad equitable powers" to effectuate a remedy, id. at 411, the District Court directed the KCMSD to issue capital improvement bonds in the amount of $150 million⁶ and ordered the property tax levy in the District increased to $4.00 per $100 of assessed valuation, id. at 412-13.⁷ The court specifically earmarked the proceeds of the property tax increase for the retirement of the capital improvement bonds and ordered that a tax increase in an amount "required to pay the interest and principal of the bond indebtedness shall remain in effect until such time as the bonds are retired or until other provisions are adopted to insure their retirement." Order of Oct. 27, 1987, at 2. On appeal, we affirmed the issuance of the bonds. Jenkins v. Missouri, 855 F.2d 1295, 1304-07 (8th Cir.1988) (Jenkins II), aff'd in relevant part, 495 U.S. 33, 110 S.Ct. 1651, 109 L.Ed.2d 31 (1990). We also affirmed the District Court's action setting aside state law that limited the District's ability to increase its tax levy. Id. at 1308-15. We required that in the future, however, the amount of the levy be set by the KCMSD school board (rather than by the court), subject to a limit set by the court. Id. at 1314. The Supreme Court then considered the issue and, while holding that the District Court abused its discretion by setting the property tax levy itself, agreed with our proposal that the District Court authorize the KCMSD to levy property taxes at a rate necessary to fund the desegregation remedy and enjoin state laws that prevent the KCMSD from exercising this power. Missouri v. Jenkins, 495 U.S. 33, 51-58, 110 S.Ct. 1651, 109 L.Ed.2d 31 (1990). Pursuant to these orders, in 1990, the KCMSD increased the levy to $4.96 per $100 of assessed valuation. See Jenkins v. Missouri, 943 F.2d 840, 842 (8th Cir.1991) (Jenkins VI).

The District Court—and our Court— continued to oversee the desegregation efforts. The case came before the Supreme Court again in 1995. In Missouri v. Jenkins, 515 U.S. 70, 115 S.Ct. 2038, 132 L.Ed.2d 63 (1995), the Supreme Court determined that the District Court had exceeded its power in ordering particular remedies. The Supreme Court found "that many goals of [the District Court's] quality education plan already have been attained," id. at 102, 115 S.Ct. 2038, and directed that on remand, the District Court "bear in mind that its end purpose is not only `to remedy the violation' to the extent practicable, but also `to restore state and local authorities to the control of a school system that is operating in compliance with the Constitution,'" id. (quoting Freeman v. Pitts 503 U.S. 467, 489, 112 S.Ct. 1430, 118 L.Ed.2d 108 (1992)). This order changed the direction of the case, refocusing the court and the parties on the goal of ending court supervision of the District.

In April 1996, the. State filed a motion asking the District Court to declare the District unitary, to dissolve all injunctions, and to relinquish jurisdiction in the case. Less than a month later, the State and the KCMSD entered into an agreement ("Agreement" or "1996 Agreement") whereby the State agreed to pay $314 million (later increased to $320 million) in desegregation funding to the KCMSD over a three-year period. The Agreement provided that upon final payment by the State and approval of the Agreement by the District Court, the State would be entitled to an order releasing it from further desegregation obligations and the jurisdiction of the court. Consistent with the State's role throughout the remedial phase of the case, the Agreement focused only on the amount of funding, not on the use of the funds. The American Federation of Teachers Local 691 ("AFT"), an intervener in the case, joined the Agreement, but the plaintiffs did not. The State then filed a second motion asking the District Court to approve the 1996 Agreement and dismiss the State from the case. After a hearing on the motions, the District Court denied the motion for unitary status except with respect to extra-curricular activities. Jenkins v. Missouri, 959 F.Supp. 115.1, 1179-80 (W.D.Mo.1997). The District Court approved the Agreement, however, stating that it was reasonable to expect the KCMSD to be unitary within three years-around the time that the State would be making final funding payments. Id. at 1179. We affirmed the District Court's order in Jenkins v. Missouri, 122 F.3d 588 (8th Cir.1997) (Jenkins XIV). The State made final payment to the KCMSD under the 1996 Agreement on December 3, 1998, and the District Court⁸ dismissed the State on January 28, 1999.

In 1998, Missouri passed legislation authorizing the creation of charter schools, i.e., "independent, publicly supported school[s]," in Kansas City and St. Louis. Mo.Rev.Stat. § 160.400. Charter schools established within the boundaries of the KCMSD are funded by diverting federal, state, and local education funding away from the KCMSD on a per-pupil basis.⁹ Id. § 160.415.2(1). Recognizing the KCMSD's financial obligations under the desegregation revenue bonds, however, the legislature swiftly amended the charterschools statute in 1999 so that "[t]he per pupil amount paid by a school district to a charter school [was] reduced by the amount per pupil ... needed ... for repayment of leasehold revenue bonds obligated pursuant to a federal court desegregation action." Id. § 160.415.2(5).

In March 2002, the District Court "declared the KCMSD unitary with regard to facilities, budget, transportation, and racial balance." Order of Mar. 29, 2002, at 22. With regard to the remaining discriminatory vestige, the student achievement...