Judge sides with Warren over funding formula intent

Our decision directly aligns with the intent of the Legislature, in that it recognizes the impact on poorer cities and towns that the Legislature sought to protect when determining state education aid. To hold otherwise would undo RIDE’s city- and town- specific calculations and would defeat the underlying purpose of the Legislature in enacting the Education Act and the Funding Formula Act. It would allow Bristol, which is more affluent than Warren, to reap the benefits of the extra aid that Warren receives from these two statutes because of its more precarious finances. We decline to construe the legislation in a way that would lead to such a result.”

Rhode Island Supreme Court Justice Francis Flaherty

The Rhode Island Supreme Court has sided with Warren in a multi-million dollar school funding suit that pitted Warren against Bristol and the Bristol Warren Regional School District.

On Friday, May 12, Judge Francis Flaherty affirmed an earlier state Superior Court ruling that upheld Warren’s interpretation of a state funding formula used to determine how much education aid each town should pay each year, based on their relative wealth.

The decision will cost Bristol several million dollars moving forward, forcing the town to "raise revenue, cut services, or both," according to Town Administrator Steven Contente. Meanwhile, Warren now has the luxury of deciding what to do with $4 million it set aside during the appeal.

Read the Rhode Island Supreme Court decision here

Superior Court Judge Luis Matos’ earlier ruling, which effectively held that poorer Warren had overpaid by about $2 million per year while more affluent Bristol underpaid by about the same amount, was immediately appealed to the Supreme Court by Bristol and the regional school district. But Judge Flaherty’s Friday ruling dismisses those appeals and affirms the Superior Court decision.

In dismissing the appeal, the Judge spoke about the importance of the funding formula’s intent — to give poorer communities equal access to the quality of education afforded by more affluent ones, regardless of whether they share a regional educational system.

Speaking for the court, he wrote: “Our decision directly aligns with the intent of the Legislature, in that it recognizes the impact on poorer cities and towns that the Legislature sought to protect when determining state education aid. To hold otherwise would undo RIDE’s city- and town- specific calculations and would defeat the underlying purpose of the Legislature in enacting the Education Act and the Funding Formula Act. It would allow Bristol, which is more affluent than Warren, to reap the benefits of the extra aid that Warren receives from these two statutes because of its more precarious finances. We decline to construe the legislation in a way that would lead to such a result.”

Judge Flaherty’s decision clears up $4 million in disputed educational funds that Warren had been setting aside pending the outcome of the appeal; conversely, the ruling effectively costs Bristol several million dollars in education funds.

“As a lawyer, you’re always happy when the court rules in your favor,” said Warren Town Solicitor Anthony DeSisto. “Judge Matos’ decision was upheld on all the points that we had argued; this case was always about fairness.”

Bristol budget woes

While Warren officials have said they would use the money set aside during the appeal to either help reduce debt or offset the cost of upcoming projects, including the $20 million wastewater treatment plant, the outcome on Bristol is more murky.

The ruling won't affect this year's Bristol budget, as Bristol withdrew the money from its surplus to fully fund the schools for fiscal 2018. However, the town owes the school district $1.4 million for the 2016-2017 school year, and must come up with about another $1 million a year moving forward, Mr. Contente said.

"We borrowed from ourselves ($550,000) to pay for it this year, but we can't continue to take from the fund balance," Mr. Contente said Friday. "We're all set this year, but from here on out, there's still a shortfall of about $1 million a year. Next year is a problem. We'll have to raise revenue, or cut services, or both."

Mr. Contente suggested the town could go to bond to pay off the $1.4 million outstanding to the school district, but will have to be creative to find the money in the budget going forward.

"We're going to work through it. The details will be worked out during the budget process next year," Mr. Contente said. "We're going to get through it. We're going to get real crafty. We need to move on for the betterment of all the students in the school district."

What happened?

The case has its genesis in 2013, when then-State Rep. Jan Malik approached the state Department of Education and questioned the state formula for educational aid, and how it was being applied in his district.

At issue was the amount of money towns should receive, taking into account their relative wealth. He and others who believed the state’s funding formula had been misconstrued believed that Warren, as the poorer of the two towns, should be allocated a greater percentage of the total state aid given to the regional school district, thus giving it the same access to quality education as its more affluent neighbor. Prior to that, state aid received by the district had been broken up and distributed on each town’s behalf based solely on the head count of students.

Warren officials said that was flawed, as Warren was due more per pupil under the funding formula than Bristol.

Judge Matos agreed, setting the state for Bristol and Warren’s appeal. Meanwhile, the Joint Finance Committee continued to use the same interpretation of the state funding formula that had been used previously, though Warren refused to pay the amount called for by the JFC. Instead, the town used the approach affirmed by Judge Matos and began setting aside the difference in an educational reserve account, pending the outcome of Bristol and the regional school department’s appeal. Last year, the town set aside $1.4 million pending the outcome of the appeal, Warren Finance Director Michael Abbruzzi said. This current year, the town has set aside $2.6 million raised through taxation, for that purpose.

Warren’s reasoning in setting aside funds, Warren Town Council member Joseph DePasquale said last year, was to “hedge (our) bets,” in that it would be easier to return the funds to the district should Bristol and the district win the appeal, than ask for those funds should Bristol and the district lose.

Neither Mr. DePasquale nor Bristol Warren Regional Superintendent Mario Andrade could be reached Friday morning. But according to Mr. DeSisto, this is the end of the line for the case.

"The Supreme Court is really the last resort" for cases like this, he said. Since there are no federal questions brought up in the case that would justifiy an appeal to the federal court system, "this is it," he said.