State holding tax money from Eureka schools
EUREKA SPRINGS -- In a ruling issued Feb. 9, the state Supreme Court granted a motion by the Arkansas Department of Education (ADE) to overturn a judge's demand the ADE release categorical funds it is withholding from the Eureka Springs and Fountain Lake school districts.
The ruling was in reference to the ongoing lawsuit between the ADE and the two school districts over the Uniform Rate of Taxation (URT). The dispute centers on whether school districts can keep the total amount of millage generated within their tax district for local school support. The ADE contends school districts must release funds in excess of its minimum foundation funding amount per student back to the state for distribution to districts that cannot generate the minimum funding.
The ADE has been withholding $87,629.19 from Eureka Springs and $137,790.26 from Fountain Lake for what it says are "deficient" 2010-11 school budgets after the districts refused to reduce their income figure by ADE-designated "excess" tax millage collected during the prior year.
The withheld funds are set aside as categorical grants and aids, i.e., for programs such as school lunches and English as a Second Language classes and did not come from local tax millage.
The case has gone through several motions and appeals. On Jan. 17 Pulaski County Circuit Court Judge Timothy Fox ordered ADE to release the categorical funds by Jan. 20. ADE then filed a stay motion with the Supreme Court.
The Supreme Court per curiam (ruled by the court as a whole) allows ADE to continue to withhold the money until ADE's appeal of Judge Fox's ruling is decided.
As the case involves state code, the dispute will most likely be decided by the state legislature in 2013.