A state Supreme Court that just two years ago ruled in favor of local school boards fighting against charter school advocates on Monday was unanimous in siding against Atlanta Public Schools in a dispute with its charter schools.
At issue was about $550 million owed to APS' employee pension fund. When the school system announced last year that it would take some of the money it had been expected to send to individual schools and instead put it into the pension fund, the charter schools cried foul.
On Monday, the Georgia Supreme Court said the charter schools were correct that a state statute that sets the charter school funding formula does not allow APS to reduce the charter schools' distribution based on the pension liability.
Lawyers on both sides of the case said the ruling may have little impact beyond APS' particular fight with its charter schools. But of note is a brief concurring opinion by Justice David Nahmias. He suggested that the court's ruling in the APS dispute may be somewhat at odds with the court's 2011 ruling striking down a state commission that could approve charter schools even when local school boards opposed them.
APS' pension shortfall dates back to at least the 1980s, when significant amounts of money were transferred from the city of Atlanta's general employee pension plan as a condition of APS teachers joining the state Teachers Retirement System, according to a brief filed by APS. Some teachers who were employed at the time of the transition, as well as other school employees, continued to participate in the city's pension plan, and the APS plan remained underfunded for years.
In May 2012, the school system announced it planned to give $38.6 million to the pension fund before distributing its revenue for the fiscal year to all of its schools—traditional and charter. The net impact on the charter schools altogether was a loss of about $2.8 million for the 2012-2013 school year.
In August 2012, a group of charter schools sued APS in Fulton County Superior Court seeking to force the school system to distribute its local revenue without the reduction. They pointed to Georgia's Charter Schools Act of 1998, which establishes the formula for distribution of local funds to charter schools.
Fulton Superior Court Judge Wendy Shoob ruled in the charter schools' favor, ordering the school system to disburse the amounts it had withheld from its local revenue. The judge ruled that the statute's formula does not allow the subtraction of the $38.6 million from the money to be distributed to charter schools.
The Atlanta school system appealed to the Georgia Supreme Court. It argued that because the state statute was silent as to how system-wide expenses, such as APS' unfunded pension liability, may be assessed against charter schools, APS was allowed to deduct the expense in determining the distribution to charters. APS pointed to language in the statute that said "local revenue shall be allocated to a local charter school on the same basis as for any local school." The school system estimated that, were Shoob's ruling to stand, each student enrolled in the charter schools would generate about $900 more in local revenue for her charter school than a student who attends a traditional APS school, a disparity that would continue to grow over time even if APS approves no new charter schools.
APS also pointed to the state Supreme Court's 4-3 decision in the 2011 case, Gwinnett County School District v. Cox, for the idea that the state constitution gives local boards of education exclusive control over K-12 public schools.
Voters last year approved a state constitutional amendment that to some extent overruled the high court's decision, allowing the creation of a new state commission as an alternative to local board approval of charter schools.
Monday's unanimous opinion by Chief Justice Hugh Thompson didn't mention the Cox decision. Instead, he focused on the language in the state statute, telling APS it would need to persuade the Legislature to amend the statute to get what it wanted.
"Despite appellants' protestations, we are without authority to re-write the statute to demand an equal allocation of local revenue funds when it is clear from a reading of the statute as a whole that the intention of the General Assembly was to fund local schools unequally with regard to local revenue," wrote Thompson. "Had the General Assembly intended to apply the same formula for calculating local revenue to all schools within a local school system or to exempt unfunded pension liabilities from the calculation of local revenue, it could have expressly done so in the Act."
Thompson said that "[w]hile local boards of education have authority [under the state constitution] to manage and control the school system within their territory … they must do so in compliance with applicable constitutional and statutory laws."
Joined by Justice Keith Blackwell, Nahmias wrote a one-paragraph concurrence saying he agreed with Thompson's opinion and that statement in particular. By way of comparison, he quoted the 2011 decision saying that the state constitution "embodies the fundamental principle of exclusive local control of general primary and secondary ('K-12') public education." Nahmias italicized the word "exclusive."
He also noted that he had refuted that assertion of exclusive local control in his own 75-page dissent in that case.
Thomas Cox of Carlock, Copeland & Stair, who was one of the winning lawyers in the 2011 case but represented APS in the loss on Monday, said, as far as he knew, the pension issue was unique to Atlanta. "My concern on a policy level is as long as this funding discrepancy exists, and in fact will be increased every time a charter school is approved, it may put board members in a position of having to basically deny charter school applications," said Cox, who cautioned he hadn't had the chance to talk to his client about the ruling.
But Cox's former partner at Sutherland Asbill & Brennan who won the case for the Atlanta charter schools, Rocco Testani, questioned whether APS board members would really turn down charter school applications on that basis. He noted that, despite Shoob's ruling on the pension fund issue, the APS board recently approved a new charter, the Atlanta Classical Academy, in Buckhead.
Testani said the Atlanta charter schools' position had been that the 2011 ruling didn't apply to their case because APS had agreed to charter their schools. "I never saw that case, frankly, come into play here," said Testani.
In a statement released by an APS media contact, APS Superintendent Erroll Davis Jr. said the district was examining the ruling. "We are disappointed in the decision because it perpetuates a funding inequity to the detriment of traditional school students," said Davis. "Atlanta Public Schools will continue to pursue other options to resolve this growing disparity in funding for our school district."
The case is Atlanta Independent School System v. Atlanta Neighborhood Charter School Inc., S13A0987.