The lawsuit stems back to the 2010-2011 school year, when the school district's millage income exceeded the $6,023 allocated to each student by the state, meaning the school district had brought in more money than the state allows it to keep.
The state said at the time that the school district must pay back the funds and would have to do so every subsequent year as long as Eureka remains a "property-rich" district.
At issue for Eureka Springs, however, is the fact that while the property valuations may be considered "wealthy," 77 percent of the elementary school children in the district qualify for the Free and Reduced Lunch program, i.e., are at or near poverty level.
In February 2011, state Rep. Bryan King (R-Green Forest) filed House Bill 1435. Sponsored by nine other legislators from around the state, the bill was intended to keep the excess funds in the districts that generate them, as is stated in the enacting state code language in 1999.
"I continue to subscribe to the conclusions I reached in Opinion No. 2010-94," State Attorney General Dustin McDaniel wrote at the time, although he did acknowledge there appear to be inconsistencies in the wording of the law.
Citing Dupree v. Alma School District in 1983, McDaniel wrote that "basing educational funding upon disparities in tax revenues between property-rich and property-poor school districts is inconsistent with the constitutional requirements of equal protection ... and of adequacy and equity in education" and said that such disparities "widen the gap."
He said what the court defined as the "main issue" was that "when all counties are assessed at the proper level, the gap will still exist between the poor and wealthy districts and the mandate of the constitution will remain unfulfilled."
He did not define or make reference to a definition of "the proper level," however.
In February, the ADE informed the Eureka Springs School District it would not approve this year's school budget, because the district refused to remove the contested funds from its income line.
Speaking Thursday with the Carroll County News, Eureka Springs School District Superintendent Curtis Turner expressed relief at the decision.
"The court affirmed we had won on every point of our lawsuit," Turner said. "Obviously we feel local money should stay local. We feel we are entitled to these funds. We don't get state funding anyway, other than some specific restricted entitlement programs, so yes, we feel whatever we generate should be used to operate our schools here locally."
Turner said he was still "floating in the air" from the good news. "It's so premature that everything hasn't soaked in yet," he said. "It's a good feeling. Had we lost the lawsuit and been forced to return the money, it would have made things pretty thin here. A tough situation. Fortunately that didn't happen."