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Arkansas's School Finance SystemIs Ruled Illegal

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Susan Walton and Correspondent Marianne Fulk in Little Rock contributed to this report.

The Arkansas Supreme Court last week struck down the state's system of financing public schools, saying the present scheme, by relying too heavily on local property taxes, discriminates against children who live in property-poor districts.

In a 6-to-1 decision that affirmed a 1981 ruling by Judge Harrell Simpson of the Pulaski County Chancery Court, the high court said the plan for distributing state aid exacerbates disparities between districts in per-pupil spending. Some of the state's 370 school systems spend barely $1,000 per pupil, while the wealthiest spend in excess of $3,000.

The decision differs from those in many other recent school-finance cases, in that it rests on the state constitution's equal-protection clause, not its education clause. The state, the court said, could not show that it had any "compelling interest" in maintaining the disparities.

Kai L. Erickson, executive secretary of the Arkansas Education Association, said the court's reasoning might be used by plaintiffs in other states, since most have similar equal-protection clauses but widely differing education clauses.

The state, joined by a few wealthier districts, had argued that the current system preserved local control. But the court rejected that argument, saying that local control is a "cruel illusion" for poor districts. "Such a system only promotes greater opportunities for the advantaged, while diminishing the opportunities for the disadvantaged," Justice Steele Hayes wrote for the majority.

Don Roberts, state director of education, said he was pleased with the decision and hoped it would lead to a "leveling-up" of the poorest districts rather than a redistribution of exist-ing funds. "There's no question that this will have a tremendous impact on education in Arkansas," the chief state school officer said. "I'm hoping that impact will be positive. ... This is an opportunity for the state of Arkansas to move ahead if the choice is to adjust upwards."

Plaintiffs in the case, Alma v. Dupree, immediately urged Gov. Bill Clinton to call a special session of the legislature to amend the school-finance system. The General Assembly adjourned on April 10, having passed an education budget based on the current formula, and is not scheduled to meet in regular session again until January 1985.

Governor Clinton has not commented on the case, although an aide said he had long been aware of the problem and was concerned about finance reform as well as other education issues. She said he had not yet set a deadline for deciding whether to call a special session of the legislature.

No Deadline For Complying

The high court gave the state no deadline for complying with the ruling, nor did it specify the elements of a constitutional finance scheme, but the trial-court opinion said the legislature should change the system within "a reasonable time."

Mr. Erickson, whose group filed a friend-of-the-court brief in favor of overturning the system, said he would urge the plaintiffs to seek an injunction against the distribution of any state aid "if the legislature doesn't move relatively swiftly, and I'm talking about two weeks. They may have to force the issue."

(Plaintiffs in the New Jersey finance case, Robinson v. Cahill, used a similar tactic to shut down that state's schools for a week in 1976 until the legislature passed an income tax to comply with an earlier reform order.)

Charles Dyer, superintendent of the Alma school district, also expressed both elation and impatience. "We're certainly not going to wait until the next regular session for a decision on this," he said. "We have been in court six years. We have had Judge Simpson's decision for nearly two years. It really was not necessary for the state to wait on the supreme court to rule before coming to grips with the problem. This is not something which came up overnight, and the state has had adequate time to address it. Enough is enough."

Edward Kelly, superintendent of schools in Little Rock, said the decision "doesn't have to mean doom and gloom for us." But he said that he hoped any reallocation would not "come at the expense of districts that are assessed properly and who have high tax rates," as does Little Rock. In addition, Mr. Kelly urged the legislature to appropriate additional funds. If this doesn't happen, he said, "what you'll be doing is providing not for equal educational opportunities but mediocrity."

A Special Commission

In response to the trial court's 1981 decision, the legislature created a special commission to study finance reform. That group's report, released last December, recommended, among other things, that the state develop better ways of measuring local wealth; eliminate "disequalizing" categories of state support that do not take need into account; add extra state aid for the poorest districts; and increase overall aid by about $105 million annually, or nearly one-third.

The recommendations were put into the form of legislation and introduced in the General Assembly, but Governor Clinton and several lawmakers preferred to defer action pending the state supreme court's decision.

Another factor may be the recommendations of a new commission on educational standards, whose work is just getting under way. The 15-member committee was created by the legislature this year to develop new minimum educational standards to replace those enacted in 1969. The group's recommendations, due on Jan. 1, could drive the cost of education even higher.

Governor Clinton had already angered Mr. Erickson and others last month by saying that he might wait until the standards commission makes its interim report in September before calling a special session of the legislature to consider taxation measures to support educational reforms called for by the supreme court and the finance commission.

If the Governor waits to meet with the legislature until September "a whole year will be lost" in providing equitable funding for school districts and in increasing teacher salaries, Mr. Erickson said.

He estimates that a one-cent increase in the state sales tax would generate more than $120 million in additional revenue. The aea is advocating a 2-cent increase along with the elimination of the sales tax on groceries.

But Mr. Erickson, who served on the finance commission, also noted that its report, with minor modifications, provided "a ready vehicle" for compliance with the order. "Rather than get into another prolonged, laborious study of the issue, they ought to move swiftly to adopt the commission's report with minor modifications and then adjust it as experience indicates," he said.

The alternative to increasing taxes to pay for the reform, he said, would be to "level down," taking money from relatively wealthy districts and redistributing it. "That's not politically viable," he added. "The metropolitan districts simply would not tolerate, and it would lower the general level of education seriously in the state. It's already bad enough." Mr. Erickson said teachers in Arkansas earn $5,500 less than the national average.

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