Liddell v. Board of Education

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

CRATON LIDDELL, et al., )

)

Plaintiffs, )

)

v. ) No. 4:72CV100HEA

)

BOARD OF EDUCATION OF THE )

CITY OF ST. LOUIS, MISSOURI, et )

al., )

)

Defendants. )

OPINION, MEMORANDUM AND ORDER

This matter is before the Court on Plaintiff’s Motion to Motion to Enforce

Settlement. The parties have submitted memoranda in support of their respective

positions. Additionally, the parties have provided supplemental briefs in response

to the Court’s Order of October 27, 2020. For the reasons set forth below, the

Motion is granted in part and denied in part.

Facts and Background

The Eighth Circuit Court of Appeal has set forth a succinct factual

background of this decade old case:

In 1972, Minnie Liddell, on behalf of African American school

children in St. Louis and their parents, filed suit against the St. Louis

Board of Education (the City Board). Liddell alleged that the City

Board and its administrators had perpetuated racial segregation and

discrimination in St. Louis public schools in violation of her children's

constitutional rights. See Liddell v. Bd. of Educ., 469 F.Supp. 1304

(E.D. Mo. 1979).

In 1973, the district court certified the Liddell plaintiff class. In 1976,

another group of students and parents, together with the NAACP,

intervened in the litigation. We refer to them as the Caldwell-NAACP

plaintiffs. See Liddell v. Caldwell, 546 F.2d 768, 769 (8th Cir. 1976).

In 1977, the State of Missouri, the Missouri State Board of Education,

and the State Commissioner of Education were made defendants.

Liddell, 469 F.Supp. at 1312.

In 1983, the parties agreed on a comprehensive desegregation plan

that provided for a voluntary suburban transfer program, magnet

schools, new education programs, capital improvements, and

improved vocational education in the school district. Liddell v. Bd. of

Educ., 567 F.Supp. 1037 (E.D. Mo. 1983). The State and the City

Board funded this plan.

In 1996, the State moved for a declaration that the City Board no

longer operated a segregated school system and for relief from its

funding obligations under the desegregation plan. After three years of

negotiations, the parties reached, and the court approved, the 1999

Desegregation Settlement Agreement (the Agreement).

Under the Agreement, the parties agreed that the City Board would

continue various remediation programs. In exchange, the St. Louis

Public School District (the District) would receive a minimum of $60

million in funding per year, consisting of a combination of state aid

and local tax revenue. Senate Bill 781, passed in 1998, set forth a

revised funding formula for calculating state aid to the District. The

remainder of the Agreement's funding came from a “desegregation

sales tax” that St. Louis voters approved on February 2, 1999.

Senate Bill 781, in addition to providing state funding under the

Settlement Agreement, created St. Louis charter schools and provided

for their funding. The 1998 law required the District to pay charter

schools a per pupil portion of its state aid for each resident student

who chose to attend a charter school rather than a District school.

From 1999 until 2006, however, the District did not include any

revenue raised from the desegregation sales tax in the funds that the

District transferred to the charter schools.

In 2006, the General Assembly passed Senate Bill 287, which revised

the state aid funding formula for public schools. See generally Mo.

Rev. Stat. § 163.031 (2006). Senate Bill 287 allowed charter schools

to be formed as “local educational agencies,” meaning that St. Louis

charter schools would receive aid directly from the State instead of the

District. Under the 2006 law, when a charter school declares itself a

local educational agency, the State must “reduce the payment made to

the school district by the amount specified in this subsection and pay

directly to the charter school the annual amount reduced from the

school district's payment.” Id. § 160.415.4. While Senate Bill 781 in

1998 had not required the District to pay any portion of its local tax

revenue to the charter schools, Senate Bill 287 in 2006 mandated that

charter students receive a per pupil percentage of local tax revenues

received by the District. Id. § 160.415.2(1), 160.415.4.

Liddell v. Special Admin. Bd. of Transitional Sch. Dist. of City of St. Louis, 894

F.3d 959, 963–64 (8th Cir. 2018).

Discussion

The parties are once again before the Court for a determination of whether

the State has violated the Desegregation Agreement by the mandate that charter

students receive a per pupil percentage of the local sales tax.

A district court possesses the inherent power to enforce a settlement

agreement where the terms are unambiguous. Barry v. Barry, 172 F.3d 1011, 1013

(8th Cir.1999)). It is well established that settlement agreements are governed by

principles of contract law. MLF Realty L.P. v. Rochester Ass'n, 92 F.3d 752, 756

(8th Cir. 1996). “The essential elements of a valid settlement agreement are the

involvement of parties who are competent to contract, a proper subject matter,

legal consideration, mutuality of obligation, and mutuality of agreement.”

Chaganti & Assocs., P.C. v. Nowotny, 470 F.3d 1215, 1221 (8th Cir. 2006) (citing

L.B. v. State Comm. of Psychologists, 912 S.W.2d 611, 617 (Mo. Ct. App. 1995)).

“Courts are bound to enforce a contract as written if the terms of the contract are

clear, plain and unequivocal.” Kells v. Missouri Mountain Properties, Inc., 247

S.W.3d 79, 85 (Mo. Ct. App. 2008) (citing Malan Realty Investors, Inc. v. Harris,

953 S.W.2d 624, 626–27 (Mo. banc 1997)). “The creation of a valid settlement

agreement requires a meeting of the minds and a mutual assent to the essential

terms of the agreement.” St. Louis Union Station Holdings, Inc. v. Discovery

Channel Store, Inc., 301 S.W.3d 549, 552 (Mo. Ct. App. 2009).

There is no, nor can there be, any dispute that the Charter Schools were not

an entity party to the Settlement Agreement. Charter Schools did exist at that time.

Thus, it could not be contemplated by the parties that a separate group of City

students would need to be factored into the Agreement; there were no separate

“charter school” current resident City students at the time. The Charter Schools

were created by Senate Bill 781, which also provided a portion of the funding

under the Settlement Agreement.

Plaintiffs argue the per pupil percentage violates the Settlement Agreement.

Plaintiffs contend the tax was an impetus for entering into the Settlement

Agreement in order to implement the plan for desegregation. It is, under the

Agreement, to be used solely for remediation of the segregation and discrimination

which prompted the filing of this lawsuit; since the State does not require the funds

to be used for remediation purposes, the allocation of the tax revenue to the Charter

schools is a violation of the agreement.

The State argues it has not violated the Settlement Agreement. It contends

that, reading the Settlement Agreement as a whole, rather than taking provisions

out of context, its actions in allocating the per pupil percentage to the Charter

Schools is proper under Section 11, subtitled “Funding,” of the Settlement

Agreement.

The relevant portions of Section 11 provides:

11.1 FUNDING-The parties agree that an express condition to the City

Board’s decision to accept this Agreement is that the sales tax and the

resulting State aid will produce a minimum of $60 million in additional

funding for the St. Louis Public Schools based on current SLPS enrollments

and current levels of participation in the interdistrict transfer program.

Towards this end, the signatories agree that at no time will any proration

factor affecting Line 14(a) or (b) be less than the highest proration factor

applied to Lines 1(a) or (b) of the State Foundation. The parties also agree

that with a proration factor of 1.0, the Formula will generate funds as set

forth in Appendix B, Columns 4, 5 and 6. For the 1999-2000 school year,

no revenue amounts received because of half-count transfer students during

the 1998-1999 school year will be included in lines 7, 8 or 9 of the State Aid

Formula.

11.2 The State contractually guarantees the City Board for current resident

City students after deductions that full funding of SB 781 will in fact be

provided in the future as follows: (1) the amount per pupil for 1999-2000

shall be $4,154 for a free and reduced lunch student and $2,838 for a non-

free and reduced lunch student for Lines 1 and 14 of the Formula after

deductions, and (2) for each year thereafter, the State contractually

guarantees payment of Lines 1 and 14 of the Formula after deductions of the

greater of the amount computed for the 1999-2000 or the amount calculated

for the then current year.

Without limiting any current (or future new) source of funding to which

Participating Districts or the New Entity are entitled based on services

provided, staffing or any other criteria, the State contractually guarantees the

City Board and the New Entity that full funding of SB 781 on a per pupil

basis shall be provided, and further specifically agrees as follows:

(1) For 1999-2000, the State contractually guarantees to pay to the

new entity (or its designee) for per-pupil State aid the greater of the

total amount set forth below (which is based in part on DESE

estimates and current year actuals as indicated) or the total amount

hereafter calculated based on actual year-end figures for 1999-

2000:…..Total $6,459.00

In addition, for each pupil qualifying for the free and reduced lunch

program, line 14 funding is also contractually guarantee by the State in the

following minimum amounts per pupil: …Total $1,335.94

(2) For each year thereafter (subject to the temporal limit set forth

below in this paragraph 11), the State guarantees contractually

payment of the greater of the per pupil amounts guaranteed for the

1999-2000 less $465 per pupil (which is a stipulated deduction

solely for the purpose of establishing a floor) or the amounts

calculated for the then current year. Furthermore, the State

guarantees contractually that in any future year (subject to the

temporal limit set forth below in this paragraph 11), the Formula

items in the foregoing calculations (line 1, 14a and line 14b) shall

not be reduced below the amounts guaranteed for those items for

1999-2000 (less the aforesaid stipulated $465 per pupil).

Clearly, pursuant to the specific terms of the Settlement Agreement, the

parties intended the funding to be based on a “per pupil” basis for City public

school students. It is indisputable that charter school students are public school

students. The charter school students, therefore, should be entitled to the same per

pupil funding formula as District school students. There is no violation of the

Agreement with the State reducing the amount of the tax revenue to the District

from District funds.

The violation, however, arises with the use by the Charter schools of the funds

deducted from the amount the State gives to the District. The Settlement

Agreement sets out the reasons for its creation and the reasons, compelling as they

were and are, the parties mutually agreed to forego further litigation in the class

action suit challenging the segregation of St. Louis City schools. They resolved

this case by continuing the Court ordered remediation requirements and by

agreeing to implement substantial measures to eliminate the discrimination and

segregation in the school system. They agreed to fund these measures through the

State aid and the local “desegregation” sales tax. It is curious and interesting the

State argues thaprovisions of the Settlement Agreement, with regard to its per pupil

argument, should not be taken out of context, while it chooses to ignore other

equally significant terms of the Agreement. As a result of a legislative strike on the

legislative roulette wheel the Charter schools are not providing remedial constructs

to racial segregation as contemplated and required by the settlement agreement.

The parties unambiguously set out their intent and the purpose of the

Agreement, while recognizing that the City Board was required, by previous Court

Orders, to implement remedial programs.

The parties recognize that the substantive remedial obligations of the City

Board are set forth in various court orders. These include, but are not

limited to: the District Court's Order of July 5, 1983, Liddell v. Board of

Education, 567 F. Supp. 1037 (E.D.Mo. 1983) (providing inter alia, for

magnet schools, part-time educational programs, quality education

initiatives, and other Milliken 11 programs in the public schools of the City

of St. Louis); the District Court's Order of May 21, 1980, Liddell v. Board of

Education, 491 F.Supp. 351 (E.D. Mo. 1980) (providing for a

comprehensive desegregation plan including, inter alia, student assignment,

transportation, faculty and. staff assignment, certain magnet schools, and

educational improvements); and various other subsequent remedial orders

directed to the City Board.

The Plaintiffs, the United States and the City Board recognize the need

for continuing remedial efforts to ensure that the enjoyment of full equality

of opportunity by plaintiff school children is not impaired by the effects of

past segregation.

This Agreement is intended to provide a complete substitute for and

modification of all substantive remedial obligations placed upon the City

Board by the above- referenced orders, subject to financing pursuant to

Missouri Senate Bill 781.

This Agreement is intended to serve as a final judgment as to the State

Defendants and the City Board in the Liddell litigation and to terminate the

continuing jurisdiction and supervision of the Court over the State

Defendants and City Board subject only to Section 22 of this Agreement.

The parties have entered into this Agreement to dispense with the likelihood

of further complex, lengthy and expensive litigation and to provide an

appropriate education for St. Louis children.

Section 9 of the Settlement Agreement provides:

The City Board, the SSD, the Metropolitan Cooperative and all parties

recognize that desegregation serves important remedial and educational

goals and helps children to prepare for participation in a pluralistic society.

Therefore, the City Board, the SSD, the Metropolitan Cooperative and all

parties will continue to pursue a policy of desegregation, which will

include decisions and actions relating to the assignment of students to

schools and classrooms, the construction, consolidation, closing or

renovation of school facilities and the assignment of faculty and staff to

schools.

As a substitution for the remedial Orders entered in this litigation, the City

Board continues to be obligated to use the agreed funding to implement

desegregation measures in the District schools. The same applies to the funds

allocated to the Charter public schools. But for the agreement to fund the

remediation programs, the Agreement would not have been consummated.

Plaintiffs urge the Court to order the State to repay the funds previously

withheld from the District schools and given to the Charter schools. The District,

however, did not object or otherwise challenge the violation until 2016, and the

District has failed to adequately argue that it did not relinquish its right to

challenge these payments. Moreover, there has been some suggestion that the

District did not utilize all funds for remediation purposes. That portion of the

Motion to Enforce Settlement will be denied, without prejudice upon the

justification for the delay and establishment that all funds collected through the

local tax have been utilized by the District for remediation purposes.

Conclusion

The purpose of the Settlement Agreement was to resolve the ongoing

litigation over desegregation in the St. Louis public schools. The parties, including

the State of Missouri, agreed that the Settlement Agreement was a substitution for

the remediation obligations of the City. As such, the parties agreed that the

funding of the Settlement would come from the State and a local sales tax. These

funds would be limited solely to remediation programs. In light of the current state

of affairs in our nation today, it is imperative of our collective conscience that all

discriminatory, segregationist, and otherwise divisive activities be fully and

absolutely denounced by all citizens who abide in this republic. Considering this, it

is incumbent upon those entities charged with providing the education of the public

school students to rise above and fulfill the duty to provide a nondiscriminatory

and desegregated school system. Equality and the path for opportunity extends not

only outside the public school system in St. Louis, but within it as well. The local

sales tax was intended to implement desegregation programs for all public school

students, whether they attend District public schools or Charter public school.

Ergo, the tax funds must be utilized as such in Charter schools as well as District

schools.

And, so it is.

Accordingly,

IT IS HEREBY ORDERED that the Motion to Enforce Settlement, [Doc.

No. 468], is granted in part and denied in part.

IT IS FURTHER ORDERED that from the date of this Opinion,

Memorandum and Order, all local “desegregation” tax funds, whether paid to the

District or allocated to the Charter schools through a deduction from the funds

given to the District, and provided to the Charter schools, shall be used solely for

desegregation programs.

IT IS FURTHER ORDERED that if no desegregation programs exist in

the Charter schools, the funds shall be turned over to the District to continue to

implement and fashion the programs contemplated by the Settlement Agreement.

Dated this 24 day of November, 2020.

HENRY EDWARD AUTREY

UNITED STATES DISTRICT JUDGE

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