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Freeze of E.D. Funds for Chicago Is Upheld by Court

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The U.S. Court of Appeals for the Seventh Circuit, acting in a case that has been closely monitored across the nation, has upheld a federal district judge's order freezing $47.5-million in Education Department funds pending the Reagan Administration's payment of desegregation aid to Chicago's schools.

And in another case that has gained widespread attention, the U.S. Court of Appeals for the Eighth Circuit last week refused to delay implementation of a voluntary student-desegregation plan involving public schools in St. Louis and its suburbs.

In the Chicago case, the Seventh Circuit Court on Sept. 9 upheld U.S. District Judge Milton I. Shadur's June 30 finding that the federal government accepted a "serious and substantial obligation" to help fund Chicago's school-desegregation efforts when it signed a consent decree in the case in September 1980. (See Education Week, Aug. 24, 1983.)

The decree obligated municipal and federal officials to "make every good-faith effort to find and provide every available form of financial resources" to implement the plan.

The Chicago board, which has spent $120 million on the plan over the past three years, contends that the government violated the terms of the decree, in part, by folding the Emergency School Aid Act (esaa) into the Chapter 2 education block-grants program in 1981.

Under esaa, school districts undergoing desegregation could re-ceive grants from the government to finance practically all aspects of desegregation plans, except those that entailed student busing. The Chicago board claims that the amount of desegregation assistance it receives under Chapter 2 fails to match the amount that it previously received under the old law.

After finding the federal government in violation of the consent decree, Judge Shadur ordered the government to freeze fiscal 1983 funds earmarked for the Secretary of Education's discretionary fund, the Title IV school-desegregation assistance program, women's educational equity programs, Follow Through, special assistance for the Virgin Islands, and territorial teacher-training programs.

Those funds, he said, would remain frozen until the government provided Chicago with at least $14.6 million in desegregation aid.

Matter of Great Concern

The blocking of funds has been a matter of great concern to state and local officials who operate programs financed through Education Department offices affected by the freeze. Several officials have claimed that their programs will "go down the drain" if the freeze is carried over into fiscal 1984, which begins on Oct. 1.

The appeals court, while upholding the validity of the funding freeze, said Judge Shadur acted with "excessive dispatch" when he ordered the government to immediately provide the district with a specific amount of aid.

"Where another branch of government is found to be in violation of a court order, courts have shown a preference for allowing that branch to come into compliance voluntarily before imposing specific remedial measures," the appeals court said in its ruling in United States v. Board of Education of the City of Chicago.

Lawyers for the Justice Department and the Chicago school board said Judge Shadur was expected to hold a hearing in the case by late last week.

In the St. Louis case, all nine members of the Eighth Circuit Court agreed on Sept. 13 to turn down requests by the State of Missouri, the suburban St. Louis County government, and a group of black parents from the city to stay full implementation of the nation's largest voluntary school-desegregation plan.

The plan, approved by U.S. District Judge William L. Hungate on July 5, envisions the eventual transfer of 15,000 black students from city to suburban schools. By 1988, suburban districts that have not raised their minority enrollments to at least 15 percent could be taken back to court by either the city or the National Association for the Advancement of Colored People.

According to officials of city schools, approximately 3,000 city students have started attending suburban schools since mid-August and approximately 550 suburban students are now attending city schools.

The plan was temporarily threatened by a four-day teachers' strike in the city school district. Teachers went back to work last Tuesday after the school board threatened to fire all strikers and to start hiring replacements this week. (See related story on page XX.)

The state has argued that Judge Hungate overstepped legal bounds when he ordered it to finance a substantial portion of the plan because it has never been found liable for student segregation in the city or suburbs. It estimated that the plan may cost as much as $100 million annually. (See Education Week, Sept. 7, 1983.)

Although the state was ordered to pay the bulk of the costs, Judge Hungate also ordered the city government to defer a school-tax-rate reduction and to consider raising property taxes to help finance the plan.

The city has contested that part of his ruling.

The county government, meanwhile, argued that the plan should not be implemented until the matter of the state's liability and its responsibility to pay for the plan is settled.

The parents asked the court to reject the plan because they say it would strip the city schools of their finest black students.

The appeals court, noting that the plan is already being implemented, said it would consider the issues raised by the state, county, parents, and city when the desegregation lawsuit, Liddell v. Board of Education, is presented to them for full appeal. The court did not indicate when it would hear arguments in the case.

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