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The Winston-Salem, N.C., police department, not the local school system, should receive $10,000 seized from a man convicted on cocaine charges, a federal judge has ruled.

The decision marked a setback for school districts in the state, which have been battling with police departments over assets seized from convicted felons. (See Education Week, June 22, 1988.)

The Winston-Salem school board had argued that it was entitled to the money because the state constitution says that fines, penalties, and forfeitures should go to the public schools.

Douglas Punger, a lawyer for the board, said federal officials were asked to take over the seizure of assets in the case. Because of a federal policy of sharing such assets with local police agencies, the state provision was not enforced, Mr. Punger contended.

A new federal anti-drug measure prohibits the use of federal forfeiture laws to circumvent state statutes. But U.S. District Judge Eugene Gordon, ruling this month, said the case was not subject to the new law, which does not take effect until October.

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