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St. Louis Public Schools says it's owed $42 million from charter schools

St. Louis Public Schools says it's owed $42 million from charter schools

Roosevelt High School

Roosevelt High School

St. Louis Public Schools is seeking to recover more than $42 million in local sales tax revenue paid to charter schools over the past decade, threatening the survival of a system of independent public schools in the city.

The federal litigation filed by the district’s Special Administrative Board, the NAACP and others against the Missouri Board of Education centers around the millions of dollars that charter schools each year receive from the 2/3-cent sales tax that funds court-ordered desegregation programs in St. Louis Public Schools. The motion was filed on April 11 in U.S. District Court.

City voters passed the desegregation tax in 1999 to replace state funding that had paid for court-mandated desegregation programs, such as full-day kindergarten, transportation to magnet schools, and the buses that take thousands of African-American students to predominantly white schools in St. Louis County.

The current legal battle centers on whether charter schools — which are tax-funded but independent public schools — are entitled to a share of the desegregation funds.

The court petition argues that terms of the desegregation agreement are clear: Missouri promised it would “not seek in any proceeding to limit or diminish the financial relief provided for under the agreement.”

When charter schools first began appearing in St. Louis in 2000, proceeds from the desegregation tax were not used to support their operations.

But since 2006, the revenue from that tax has been included in the per-pupil allotment that the state withholds from St. Louis Public Schools and instead sends to charter schools.

In 2008, district officials became aware that the desegregation tax revenue was going to help finance charter schools, the legal petition says.

Richard Sullivan, president of the Special Administrative Board in charge of the district, wrote a letter to then-Education Commissioner Kent King and then-Attorney General Jay Nixon stating that directing the desegregation tax revenue away from the district was in violation of the settlement agreement. This was having an “adverse financial impact” on district schools, his letter stated.

In January, the district and plaintiffs involved in the motion again asked the state to return about $42 million of the desegregation revenue to the district, plus an additional $8.8 million expected to go to charter schools for the 2015-16 school year. The letter threatened legal action if the Missouri Department of Elementary and Secondary Education did not act.

On Feb. 15, attorneys representing the school district and the plaintiffs involved in the original desegregation lawsuit then met with Missouri solicitor general about the issue. On March 4, the district received a letter signed by William Thornton, an attorney for the state education department.

“We believe that the state of Missouri is distributing these funds in accordance with the Desegregation Settlement Agreement and Missouri state statutes,” it says.

If successful, the legal challenge could result in the closure of charter schools, which now educate about a third of public school students in St. Louis.

If it were to merely halt the flow of desegregation tax dollars to charters, their budgets would be reduced by about $800 per student, said Doug Thaman, executive director of the Missouri Charter Public School Association. This year, charter schools received $8,170 per student in state and local funding.

Missouri law states that if it overpays or underpays charter schools, the onus is on the district or the charter schools to remedy the situation in 12 payments over one year.

‘It would bankrupt them’

As charter schools have increased in number and enrollment, the desegregation tax revenue they receive has risen almost every year. Altogether, close to $9 million in proceeds from this tax are going to 35 charter schools each year.

Premier Charter School on Fyler Avenue, with about 900 students, is estimated to receive $752,000 from the tax this school year. St. Louis Language Immersion’s Spanish School, with about 459 students, expects to receive $354,500.

Thaman said charter schools have every right to the funding because they are public schools in the city that also participate in the desegregation program.

“We have schools that receive voluntary transfer students,” he said, referring to white students in the county who attend charter schools. “Those dollars were for the desegregation of St. Louis schools, part of which charter schools are providing.”

But not every charter school accepts transfer students from participating school districts in St. Louis County. Grand Center Arts Academy and St. Louis Language Immersion Schools are those that do. Thaman said Gateway Science schools also do when space is available.

If the district prevails, it could change the education landscape.Thaman said charter schools don’t have the financial capacity to repay the $42 million, plus the $8.8 million for this school year.

“For many, if not all, it would bankrupt them,” he said.

Fair share

Thaman called the legal challenge an attack on school choice and the families that have chosen charters over district schools or moving to the suburbs.

“For a district that has been working to restore its reputation, to turn around and assault over 10,000 students and their families who have just helped support their tax levy, it is pretty egregious,” Thaman said. “I would encourage them to drop the suit.”

This month, city voters overwhelmingly voted to increase the property tax levy for schools, which will raise more than $28 million annually for district and charters.

Charter schools are scheduled to start receiving their share of the tax — about one-third of it, depending on enrollment — in 2019. The proceeds could almost offset any potential loss in desegregation dollars to charter schools.

“One should not replace the other,” Thaman said.

Adolphus Pruitt, executive director of the St. Louis chapter of the NAACP, listed as a plaintiff, said he understands the potential disruption and impact on charter schools, which are growing in number and enrollment.

“Of course I’m always concerned about the impact of anything on the education of children in St. Louis, particularly those who come from an underserved population,” he said. “Unfortunately, in this instance, the courts asked the city to pay its fair share in the cost of desegregation. It was their intent then, and the courts’ intent then, that the tax would go to pay the costs of the desegregation program.”

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Elisa Crouch is a reporter for the St. Louis Post-Dispatch.

Related to this story

The lawsuit filed last month by St. Louis Public Schools seeking $42 million in reimbursements for desegregation funding offers a convincing and probably winnable legal argument about how the district has been short-changed for years. But that doesn’t make the lawsuit right. Officials owe an explanation to taxpayers on why this suit was necessary and how the district will deal with the extreme disruption it could cause.

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