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An Arkansas judge has ordered the state education department to pay $4.8 million in back aid to 237 school districts.

A group of rural districts filed a lawsuit against the department this year after learning that the state had not been following the school-funding formula. As a result, many poor school systems were being shortchanged, the districts maintained.

State officials contend that they were following the intent of the law, rather than the specific formula.

The dispute centers around a provision in a 1983 school-finance law that effectively removes districts' incentives to increase their local property-tax rates by reducing the state aid to districts whose tax revenues increase.

State education officials say legislators had included the provision only to compensate for property-tax discrepancies between districts, a problem that was resolved years ago. They say that for that reason, they opted to ignore language in the law that relates to local wealth derived from millage increases.

After the glitch in the formula was discovered last February, legislators held a special session to revise the provision and ordered the department to start following the formula immediately.

But the judge ordered the state to reimburse the 237 districts for money they should have received from July 1, 1993, to Jan. 31, 1994. The amounts range from $211 for the Mount Pleasant district to $158,917 for the North Little Rock district.

Oregon School Aid: An Oregon judge has ruled that the state's delay in implementing changes in its school-aid-distribution formula is acceptable, given concerns that the funding changes would result in sudden budget cuts for some districts.

A coalition of 18 rural districts asked the court for a declaratory judgment forcing the state to fully institute changes approved by the legislature in 1991. Not to do so, the plaintiffs claimed, violates the state's obligation to provide equal funding to all students.

Circuit Court Judge Stephen N. Titkin ruled that there is "a rational basis for a brief delay'' in implementing funding cuts for property-rich districts and increases for poor districts.

"The real issue,'' the judge wrote, "is whether there is a rational basis for an equitable state school-funding system that will be phased in by 1995-96, rather than one that is fully operational immediately.''

"Plaintiffs will shortly have the equality they deserve, but without unduly dismantling other children's schools in the process,'' he continued.

Kiryas Joel Challenge: The executive director of the New York State School Boards Association has filed suit to challenge a new state law that allows certain towns within the state to create their own school districts. The suit is just the latest chapter in a dispute that was the subject of a recent U.S. Supreme Court case.

The school boards' group alleges that only the village of Kiryas Joel, a community of Hasidic Jews 50 miles northwest of New York City, qualifies under the law's criteria to create a new district. Thus, the group contends, the law is just as unconstitutional as the special 1989 law creating a district for Kiryas Joel that was struck down in June by the Supreme Court. (See Education Week, July 13, 1994.)

Gov. Mario M. Cuomo last month signed into law a bill that allows municipalities meeting five criteria to create their own school districts. The criteria involve student population and overall wealth of the affected communities.

Legislators acknowledged that the law was intended to help Kiryas Joel maintain its own public school for children with disabilities. But they argued that the measure is constitutional because it is a general state law under which numerous towns could create their own districts.

But the state school boards' association said its analysis shows that only the village of Kiryas Joel would meet all of the law's five criteria.

"This law has been revealed for what the association has always known it to be--a sham,'' said Louis Grumet, the group's executive director.

Virginia Pension Settlement: Virginia lawmakers have voted to limit new spending on school and prison programs as part of a settlement of a long-standing dispute with federal retirees, who had been overtaxed by the state between 1985 and 1988.

The state agreed to refund $340 million to more than 186,000 former federal workers, a move that was essentially ordered by the U.S. Supreme Court in 1989.

In Virginia, the rebates will cost a total of $713 million over the next five years because of interest that has accrued as lawyers have dealt with the issue.

Nearly two dozen other states have settled similar cases for smaller amounts.

Southern Progress: Southern schools have improved over the past decade, but the pace of change is disturbingly slow, according to a new report on education in 15 Southern states.

A number of signs point to significant education progress in the South, including higher test scores, declining dropout rates, and increased emphasis on core-curriculum subjects, the report notes.

But students in the South still lag behind the national proficiency averages. Blacks and Hispanics also continue to score well below whites.

The report covers Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

Copies of "Educational Benchmarks 1994'' are available for $10 each from the Southern Regional Education Board, 592 10th St., N.W., Atlanta, Ga. 30318-5790; (404) 875-9211.

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