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School funding suit loses first round

November 10, 2003
By: Drew Bratcher
State Capital Bureau

JEFFERSON CITY - An attempt by school districts to get more state funds lost its first court fight Monday.

A Cole County circuit judge upheld Gov. Bob Holden's power to withhold $190 million from state funding to local schools because of estimated revenue shortages.

The decision came less than a week after Judge Richard Callahan heard arguments from school districts from the Kansas City area charging that Holden's reduction of expenditures to education violated the Missouri Constitution. Attorneys for the challenging school districts said that they would appeal the decision.

"We realize that this is a necessary step in ultimately getting the Missouri Supreme Court to render a decision," said Larry Ewing, superintendent for the Fort Osage School District.

Holden used the court decision supporting his withholding to repeat his attack on the GOP-controlled legislature.

"While today's court decision resolved an important legal question, it did nothing to ease the pain of local school districts that are suffering the devastating effects of the legislature's failure to fund education," Holden said.

But Republican legislative leaders say the governor's withholdings no longer are justified because of an unexpected growth in revenue collections.

House Speaker Catherine Hanaway, R-St. Louis County, said that state revenues for the first four months of this fiscal year have been collected beyond expectations.

"This paves the way for Gov. Holden to begin reversing the devastating effects of his withholdings," Hanaway said.

Withholdings have forced some Missouri school districts to take drastic measures.

"We have reduced teachers, administrators, support staff, cut programs and services, and we're still going to deficit spend about $1.3 million," said Ewing -- the Fort Osage school superitendent.

About $3 million in state funds were withheld from Columbia schools for the 2003-04 budget year that began in July.

At issue are two sections in the state's constitution concerning the governor's budget powers.

One section prohibits the governor from reducing the public schools budget through his line-item veto powers when signing the education budget bill.

Another section of the constitution, however, gives the governor power to withhold appropriated funds when revenue collections fall below the original estimates.

The school districts argued the line-item veto restriction prohibited withholding funds from education.

However, Callahan ruled that the section in dispute applies only to the use of the governor's limited "line item veto" powers and does not undermine the governor's authority to balance the state's expenses and revenues.

The judge said that the governor had a duty in the event of revenue shortfalls "to spend less than the total amount of any appropriation ... to ensure that the state's actual expenditures do not exceed its actual revenues."

In July, Gov. Holden ordered $190 million to be withheld from the Department of Elementary and Secondary Education after administration revenue projections indicated that actual revenue collections would be several hundred million dollars below what would be necessary to finance the budget the governor had signed.