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Appellate Ruling Puts Chicago Schools on Brink of Closing

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Public schools in Chicago were on the brink of closing late last week, after a federal judge was told he could not protect the district from being shut down for lack of funds.

The U.S. Court of Appeals for the Seventh Circuit ruled Nov. 10 that U.S. District Court Judge Charles P. Kocoras had overstepped his authority in keeping the district open despite an unbalanced budget.

The appellate-court decision effectively nullified a restraining order by Judge Kocoras blocking enforcement of a state law prohibiting the district from operating without a balanced budget approved by the Chicago School Finance Authority.

The appellate ruling also put the Illinois legislature, which adjourned this month without agreeing on a way to provide more money to the Chicago district, under pressure to reconvene and reach a compromise to keep the schools open.

"We have tried to resolve this situation for months. The time for action is now,'' Gov. Jim Edgar said in calling legislative leaders to an emergency meeting on the crisis.

Arguing that it needed time to notify students, parents, and staff, the Chicago school board obtained a 48-hour reprieve from the impact of the appellate court's decision, which effectively ordered the district to close immediately.

General Superintendent Argie K. Johnson announced that the district would remain in operation only through last Friday.

Desegregation Plan Cited

Some observers hoped that last week's events would force a quick resolution of the funding crisis, which has dragged on for months as a result of the district's estimated $298 million budget shortfall. The schools opened a week late in September because of the lack of money.

At the district's request, Judge Kocoras at that time issued a temporary order keeping the schools open despite state law.

The board of education had justified asking the judge to intervene on the grounds that shutting down would prevent the school system from providing minority students with the services called for in a 1980 desegregation agreement with the U.S. Justice Department.

The S.F.A., which the legislature created that same year to issue the district's bonds and oversee its budget, challenged Judge Kocoras's authority to issue the restraining order. Its lawyers noted that neither the state nor the finance authority signed the 1980 agreement, and that a consent decree was issued without any formal finding of racial discrimination.

The Justice Department and the Chicago Urban League joined the school board in submitting briefs backing the district court's move.

But a three-judge panel of the Seventh Circuit Court last week surprised the parties involved by issuing an opinion without hearing oral arguments. It ruled, with one dissent, that Judge Kocoras had exceeded his authority.

"The dispute between the school board and the finance authority is entirely a matter of state and local law and politics,'' the panel held.

Resolved in the Capital

The appellate decision was welcomed by Governor Edgar and lawmakers who had opposed the district court's involvement in the dispute.

"The appellate court has ruled this matter should be resolved in the state capital. I wholeheartedly agree,'' Mr. Edgar said.

The Governor faulted Democrats in the legislature for joining the Chicago Teachers Union in opposition to a compromise school-finance plan that he and top Republicans had offered. (See Education Week, Nov. 10, 1993.)

Democratic leaders, meanwhile, continued to attack the Republican plan as a violation of collective bargaining.

Representatives of 25 citywide school-reform groups last week called on the city to resolve the district's budget shortfall by issuing $418 million in bonds.

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