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LR district studies survival ideas if desegregation aid cut

by Cynthia Howell | October 24, 2009 at 6:29 a.m.

— The Little Rock School District says it has a better chance of offsetting the possible loss of $37 million in annual state desegregation funds if it can keep its magnet schools and interdistrict student-transfer program todraw students.

Even with the $10.3 million to $15.8 million a year that the transfer students would generate in regular state aid for the district, it would still have to cut $2 million to $3 million a year through 2019-20 and draw from reserves to remain solvent, according to long-term budget projections prepared by district officials this week.

Without students transferring from all over Pulaski County into Little Rock’s schools, including the magnet schools, the financial situation becomes more dire, said Kelsey Bailey, the district’schief financial officer.

The district would not be able to compensate for the loss of desegregation aid just by cutting its staff, reducing non-payroll expenses and drawing on reserves, that data show. The district would have to take additional steps, which could include closingone or more campuses, Bailey said.

“We have to either cut $37 million or we have to build our revenue up to match that amount of the desegregation funding,” Bailey said. “We want to keep the [transfer] kids. Otherwise, we may beshutting down schools,” he said.

The state pays up to nearly $70 million a year to the three Pulaski County school districts as part of the school desegregation case. State officials want to cut that off, and negotiations are in progress with the districts.

THE SCENARIOS

Bailey prepared various scenarios for offsetting the possible loss of Little Rock’s share of those funds. Those scenarios will be used by the Little Rock School Board and its attorneys to develop a response to the state’s recent offer on ending those payments.

Little Rock School Board members received copies of the financial analyses but did not discuss them or a counteroffer to the state at their meeting Thursday night. Copies also have been distributed to some state lawmakers and the attorney general’s office.

A spokesman for the attorney general’s office declined Friday to comment on the scenarios.

Chris Heller, an attorney for the school district, said the board could decide whether to accept the state’s offer or make a counterproposal after the board’s next meeting on Nov. 5.

“We are trying to show you what kind of cuts that would have to be made if we were to settle for $430 million instead of the current proposal for $396 million,” Heller told the board this week.

The board also will have to decide on settlement proposals not directly related to financial issues, Heller said.

Those include deciding on the design and enrollment procedures for “post-settlement” magnet schools. The district and the state would have to decide on a mechanism for interdistrict student transfers so that students from other districts could attend magnet schools, he said.

MAGNET SCHOOLS

Two of the financial scenarios assume that the popular magnet school and the majority-to-minority interdistrict student-transfer programs would continue in some form. Two of the scenarios do not.

Little Rock’s six original magnet schools and the majority-to minority transfer program were established in the late 1980s.

They enable students to voluntarily cross boundary lines to attend schools of their choice and, at the same time, help racially desegregate those schools.

The six magnet schools, each of which features an academic theme, are: Parkview High, Mann Middle, and Booker, Carver, Gibbs and Williams elementaries.

Much of the state desegregation aid over the years has gone to support the programs, including transportation for the students.

Little Rock School District leaders, including board members, have said all along that they would prefer to retain the programs and that they believe that the North Little Rock and Pulaski County Special districts would not oppose that.

State officials have pushed in recent years for an end to desegregation payments to all three Pulaski County school districts. Those payments, which stem from a 1989 financial settlement of desegregation case issues between the state and the three districts, have grown to about $68 million a year to the districts.

Act 395 of 2007 authorized state officials to negotiate aseven-year phase-out of the state payments with representatives of the school districts and the group of black students known as the Joshua intervenors.

STATE PROPOSAL

In August, state Attorney General Dustin McDaniel’s staff proposed a plan in which a total of $4 million a year to the three districts would be cut in each of the 2011-12, 2012-13 and 2013-14 fiscal years, and then $4.25 million would be cut in each of the three years after that.

The state funding then would end in 2017-18. The Little Rock district’s share of the $4 million cut would beabout $2.14 million in each year. Its share of the $4.25 million-a-year cut would be about $2.3 million.

Bailey calculated that the state plan would cost the state about $396 million over seven years.

He also developed scenarios showing the impact on the district of an alternative proposal that would cost the state $430 million over seven years.

In those scenarios, state desegregation aid would be reduced by $2.45 million each year for three years to the three districts, beginning in 2011-12. Then the annual cut to the districts would be $2.5 million in each of the following three years before it would end by 2017-18.

The Little Rock district’s share of that cut in state aid would be $1.308 million, increasing to $1.334 million.

The Little Rock district attracts 1,545 magnet school students from outside the district, while 895 district students now transfer to neighboring districts.

If the district can keep all those students over time, while losing a smaller number of students to independently run charter schools, plus reduce its staff, cut other costs and draw on reserves, the district would generate $37 million to $40 million by the 2017-18 school year.

SOME ASSUMPTIONS

Those amounts would offset the $37 million loss in state desegregation aid, according to Bailey’s scenarios using both the state’s $396 million plan and the district’s alternative $430 million plan. If the$396 million plan is used, the yearly cost cuts would have to be greater than if the $430 million plan is used.

Those plans assume a yearly district enrollment of well over 26,000 students. They also assume the loss of 265 to almost 300 certified staff members, and 156 to 170 noncertified staff members by 2017-18

The scenarios that don’t include student transfers from other districts do assume annual enrollments of about 24,800, compared with the current 25,899 student count in the Little Rock system.

With cuts of 200-240 certified staff members by 2019-20 and an annual savings in transportation costs, the district would generate about $29 million by 2019-20 - short of the $37 million lost in desegregation aid, according to the scenarios.

Bailey said there is more work to be done on the scenarios.

“These are just cuts,” he said. “We have to sit down and see how these cuts affect instruction,” he said.

The 1989 settlement agreement between the school districts and the state includes no provision for ending the payments, but state officials have argued that the payments are no longer warranted.

That’s because the Little Rock district has been declared unitary or desegregated. The North Little Rock and Pulaski County Special districts have petitioned the federal courts to be declared unitary, and court hearings on those requests are set for January.

Front Section, Pages 1 on 10/24/2009

Print Headline: LR district studies survival ideas if desegregation aid cut

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