Did the State of Missouri cheat the Saint Louis Public Schools out of $42 million in the sales tax money that the state has sent to charter schools in the city in the past 10 years?
The short answer is no. That may not answer the question of whether the state owes the St. Louis district money under the desegregation agreement approved in 1999, but if the St. Louis district is owed money, it is not the charter schools’ money.
The answer requires that we examine the 1998 law (Senate Bill 781) that authorized city voters to approve a sales tax in 1999 to help end the federal desegregation litigation.
The bill – which provided funding needed to make settlement of the desegregation litigation possible – included many of the features that now govern our school districts, including the provisions for appointing a special administrative board if the school district loses accreditation, additional funding for public schools that serve children in poverty, and charter schools.
Gov. Mel Carnahan, for whom I served as special counsel for this bill, supported the inclusion of public charter schools in the legislation, despite reservations by Missouri National Educational Association and other public school advocates, because without charter schools the bill would not have had sufficient Republican support to pass in the Missouri Legislature. It helped that the Clinton administration was on record in favor of charter schools, so the idea was not confined to one party.
SB 781, whose chief sponsor and strategist was state Sen. Harold Caskey, resulted from years of work with legislators, Senate and House Research, the Department of Elementary and Secondary Education, school administrators, Civic Progress, the Civic Council of Kansas City, the NAACP, and other groups and individuals.
More money for urban schools
In the 1998 bill, the Legislature wanted to increase the amount of state aid that Saint Louis Public Schools could draw under the state aid formula to replace the money that would go away after the federal court exited the Liddell desegregation case and the Kansas City case. State aid was determined by how much “local effort” was put forth in district property taxes; the higher the local property tax rate, the higher the amount of state aid.
The legislators knew that it would be unlikely to get St. Louis voters to approve an increase in property taxes, so the Legislature put in a provision allowing the St. Louis district to choose a sales tax, and the amount raised by the sales tax would be “converted” to an equivalent amount of property tax rate so as to increase the St. Louis district’s entitlement under the formula. The voters approved the sales tax in 1999, which allowed the St. Louis district to draw additional money by raising its per-pupil entitlement under the state aid formula.
Funding for charter schools
Legislators in 1998 envisioned charter schools as helping to improve education by making public schools compete for students. One can argue with the idea of competition in the public sector, but the 1998 legislation, essential to the settlement of St. Louis’ desegregation case, would not have passed without charter schools provisions.
Although there were no charter school students when the case settled in 1999, the 1998 bill established the funding as follows: For each pupil, the charter school would receive from the state the amount of money that represented the amount of state aid plus the local tax revenue. The local tax revenue paid by the state to the charter school could be deducted from the district’s state aid entitlement if the district did not pay the local tax to a charter school.
(In the Legislature’s 2005 re-write of the state school formula, this payment mechanism is explicit – the charter school gets its per-pupil state aid plus the local tax share directly from the state, which deducts the “local” amount from the district’s state aid entitlement.)
In the case of St. Louis, the local taxes included both the property tax amount and the 1999 sales tax that would be “converted” to property tax when the case settled.
Money follows students
Charter school students are public school students. The public money was intended to follow the student whether she chooses to attend a charter school, a St. Louis district public school or transfers to a county school district under the SB 781-authorized extension of the inter-district transfer program.
(County school districts have negotiated rates that may differ from aid calculations, but they receive enough of the city’s educational money to avoid the conclusion that county taxpayers are paying to educate children from the city.)
Although the sales tax money is paid directly to the Saint Louis Public School District, the money follows the child by the way the Department of Elementary and Secondary Education allocates state foundation formula aid.
Change in state aid formula
The Legislature changed the state aid formula in 2005, and the legislation provided a transition to a different way of allocating state aid. Under the old so-called “equity” formula, districts theoretically had “equal access” to state aid – i.e., a district could obtain more state aid by raising its property tax levy.
Under the new formula, the law requires the state to compute a per-pupil sum determined to be “adequate.” State aid is calculated to ensure that all districts will have this “adequate” amount to spend on each child, and the districts can be as disparate in spending as their tax-base wealth will allow.
For the sake of brevity, I will not comment on the use of words like “equity” and “adequacy” to describe Missouri educational funding. Suffice it to say, Missouri funding is neither.
Although state aid no longer is computed by the amount of local effort, the basic structure of funding for charter schools remains the same. A charter school gets its per-pupil share of state aid plus local effort, the same as the Saint Louis Public School district.
The contention that the sales tax was intended just for Saint Louis Public School District schools is historically wrong. The sales tax was passed to augment the property tax and is available to each child who resides in the district, whether she attends a SLPS school, a public school in another district, or a charter school. All are public schools in that they are supported by taxpayers of the state and the district in which the child resides.
The passage of SB 781 and the voters’ approval of the 1999 sales tax set the stage for settlement of the desegregation case. In the words of the ballot question, city voters approved the sales tax “for purposes of improving the primary and secondary educational opportunities for residents of St. Louis.” Senate Bill 781, which authorized the sales tax election, also authorized charter schools and directed payment of local tax money to support them.
The sales tax, used in lieu of an equivalent property tax rate, was to be paid to the district, as property taxes are. But that does not answer the question of whether the charter schools are to share in those local taxes.
In the 1999 settlement agreement, in which I was not involved, the state made financial commitments to the Saint Louis Public School District. Whether the state is meeting its commitment to the district under the 1999 settlement agreement may be a different question than whether the state has been improperly paying charter schools their share of local tax revenue.
Most assuredly, the state is following the law in making sure the charter schools share in the local tax revenue to educate the children of St. Louis.
I sympathize with the Liddell plaintiffs, the NAACP and the Saint Louis Public Schools’ special administrative board. The legislature changed the formula to “adequacy” and then has not fully funded it – so, by definition, the amount is inadequate, and each district loses its pro rata share of the “adequacy” amount.
That leaves the St. Louis district (and other districts and charter schools) scrambling to get as many local resources as it can. In addition to competing for students, as envisioned in the 1998 legislation, the public school district now is cast as competing for money that by state law is allocated to charter schools.
If this motion before the federal court is intended to deprive charter schools of $42 million in past sales tax proceeds, and several million dollars per year going forward, the Liddell plaintiffs and the NAACP seem to be in a particularly awkward position – many of the class of African-American children the Liddell plaintiffs represent attend public charter schools.
What is the root of this problem? Legislators, whose tax-cutting priorities deprive schools across the state of money needed to educate our children, have defined “adequacy” but cannot fund it. When legislators cannot fund “adequacy,” they simply re-define it. Their actions, however, also have re-defined competition, leaving advocates of public education, sad to say, to fight among themselves for scarce resources.
Mike Wolff, dean of Saint Louis University Law School and former Missouri Supreme Court judge, was counsel to Gov. Mel Carnahan when the 1998 law was enacted.
