Charter school lawsuit could cost St. Louis Public Schools millions

Thursday, February 11, 2010 | 5:39 p.m. CST

ST. LOUIS — The state is preparing to rule on a feud that could force the cash-strapped St. Louis Public Schools to surrender untold millions of dollars in back pay to schools that have lured away thousands of students from the district.

The dispute centers on a lawsuit filed by a city charter school, alleging the district denied it $3.86 million in state funding over four years.

If the department rules in favor of the school — St. Louis Charter School — it is expected the ruling will apply to all city charters, potentially costing the district millions.

Mark Van Zandt, general counsel for the state education department, said staff is "very close" to completing its analysis of charter school funding. "We will probably have something for parties in a matter of days," he said.

Charter school leaders such as Tracy Garrett, head of school at St. Louis Charter, anxiously await the announcement.

"An end to this would absolutely be exciting, so we can move on and concentrate on academic things," she said. "It's been a long time coming."

St. Louis Public School leaders would not discuss the specifics of the lawsuit. They did, however, say they were troubled by any loss of revenue.

The district has already lost nearly 10,000 students to the charters — independently run, nondistrict public schools — representing roughly $100 million a year in funding.

And that exodus, in part, has left the district closing schools, chopping staff and, this year, cutting its $340 million budget by $50 million.

It must still trim $10 million more to stay in the black this year.

"We are striving to generate every dollar of revenue we possibly can, and we are striving to reduce every dollar of operating expenses we can, in a way that does not negatively impact students in St. Louis Public Schools," said Rick Sullivan, president of the district's administrative board.

Those close to the case say the impact of this decision could take from the district an additional $20 million.

There is already a second suit, filed this summer by the Lift for Life Academy charter school, claiming St. Louis Public Schools withheld $408,000 in 2006-07 alone.

State leaders expect, if St. Louis Charter is successful, at least four more of the city's dozen charter schools would also file complaints.

The issue stems from the way charter schools used to be paid.

Charter schools began operating in St. Louis in 2000. They are paid by the state per student, as are most public schools. But for the first few years their funds were sent to the St. Louis Public Schools, which then forwarded the money to the individual charters.

Then, in 2007, the state changed that structure, and began paying charter schools directly — and charters noticed the state was paying them more.

St. Louis Charter, a 900-student school on Fyler Avenue in south St. Louis, hired a financial consultant, and, in March 2007, became the first to complain to the state about the discrepancy, sending a volley of letters.

The department of education didn't argue that the charter school was wrong.

In fact, in 2007, it told all city charters "of the possibility of an underpayment," according to the suit.

But the department still didn't rule on the issue. And, in 2008, it called the matter a low priority.

Last January, the charter school filed suit, asking a judge to force the state to make a decision.

The state argued that the charter schools complained too late, and had already accepted the original payments. The law allowed the state just a year to make changes.

Besides, the state said, the city school district wasn't necessarily wrong. Education money comes from several different pots, and who gets what is open to interpretation. "Reasonable minds can differ," said the state in a letter filed in the suit.

Indeed, the city school district argued that charter schools weren't even supposed to get money from certain funding categories. It argued that the district — not charters — was shortchanged as it passed dollars to charter schools, and by nearly $19 million.

But, in November, Cole County Circuit Judge Patricia Joyce sided with the charter schools, at least in part. She didn't tell the state how to make its decision, but she did insist that it decide.

Now, other charter school leaders are watching.

"I'd love to know what (the state) says," said Paul Tice, board treasurer for the Confluence Academy charter school network. "It could be something we'd be interested in looking at."

Garrett said no matter the result, she's happy the end's in sight. Still, she said, the money would be nice.

She's already got some ideas for its use.

More reading specialists. More tutors. More one-on-one teaching.

"Those things," she said, "cost money."

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