The Orleans Parish School Board will meet Monday morning to consider a settlement offer from the city of New Orleans in a six-year-old legal battle over property taxes. School leaders hope to add money to their strained coffers, though they don’t yet know the offer’s details, they said.
Getting to this point has been a political rollercoaster. Just two weeks ago, at around 5 p.m. on the first Friday of Jazz Fest, a press release from the mayor’s communications office announced that “an agreement was reached and is pending the approval of the OPSB.”
Not quite, said school board lawyer Bill Aaron, calling the statement “premature.”
The agencies had spent hours in mediation and Aaron was “cautiously optimistic,” he said, as he prepared to present the proposal during an executive session of Monday’s board meeting. But no settlement had been reached; it was not a done deal, he said.
The PR misfire marked the latest misunderstanding in a five-month exchange that’s been punctuated by political posturing, court hearings, funding tensions in local charter schools, and debates about whether the city can skim 2% from its annual property-tax remittances to the school district.
Last fall, shortly after the district disclosed a $36 million financial deficit, the city and school board announced that they’d settled a long-lingering tax-skimming lawsuit. The city contends that it’s justified for taking a collection fee to process the property-tax money that voters designated to schools, through a millage. Though the practice has been in place for roughly 40 years, the district has tallied up the fees for less than half of that time, claiming that, since 2009, the city has illegally withheld more than $134 million in school funding.
“We need our city to not be collecting fees on the backs of kids that are totally unreasonable for the service,” FirstLine Schools CEO Sabrina Pence said.
In November, the city and district proposed a settlement that included $20 million in cash, $70 million in guaranteed education funding over the next decade, and, most importantly for school district officials, the halt of the city’s 2% collection fee. The $90 million deal was announced at a press conference in front of City Hall that included remarks from school-board members, New Orleans City Councilmembers, and Mayor Latoya Cantrell’s right-hand man, Gilbert Montaño, the city’s chief administrative officer.
But in February, Cantrell said she’d never signed off on the deal – and a civil-court judge backed up her contention, after a motion brought by the school board and joined by enraged members of the City Council.
That sent the city, school board and New Orleans City Council into two months of heated negotiations, even as school leaders tried to make plans for next year while staring down unresolved funding shortfalls.
In the interim, the city has allotted $20 million to the school board, with the judge overseeing the OPSB-City Council lawsuit ordering the city to fulfill the $10 million allotted in the 2025 municipal budget, and the City Council approving another $10 million on top of that.
That leaves a $70 million gap when compared with the proposed November settlement.
Schools tightening belts, in light of district shortfall and the end of federal COVID funding
At this point, it’s unclear to most local education leaders how the city’s offer will be structured.
Katie Baudouin, school board president, did not share details of the city’s proposal with The Lens. Pence, who oversees five FirstLine schools, said she was unaware of the city’s proposed terms, as did Rhonda Kalifey-Aluise, CEO of KIPP New Orleans, which includes 13 schools. The two charter networks run about a quarter of the city’s nearly six-dozen charter schools.
FirstLine and KIPP schools are now headed toward the end of a school year, when school leaders administer state testing, prepare for graduations, look toward summer school — and finalize their budget projections for the next school year.
Those projections have been difficult, Pence said. The school board’s faulty budget forecast left school budgets in the red because it overestimated increases in property and sales tax revenue. Events like the Taylor Swift concerts and the Super Bowl helped bring in some extra sales-tax revenue, city officials said, but not to the level of the 2024-25 district budget, which guides every charter-school budget in the city. Federal funding levels are also uncertain, as COVID-19 grants wind down and as the U.S. Department of Education comes under attack from within, school leaders say.
Because of the district’s forecast error and the ending of federal grants, Pence said Firstline had to cut 31 positions for next school year.
Most were from the network’s intervention team, a team of reading and math interventionists who work intensely with students who have fallen behind. Hired with federal pandemic money, the team was crucial to moving FirstLine Schools forward – “a main driver of our gains since COVID,” Pence said.
By using some reserves to make up for this year’s $5 million shortfall, the KIPP network won’t lose existing personnel but won’t rehire for some openings, Kalifey-Aluise said. Some cuts will hit outside the school year and affect other valued programs.
“We will no longer be able to run the robust summer school we have operated for the past few years,” Kalifey-Aluise told staff in an email. The network would “significantly reduce” summer programming and will only run mandatory high school remediation and only mandatory Extended School Year programs, for children with disabilities, she wrote.
But the one-time, $5 million infusion does not solve the issue. For 2026, KIPP will have to reduce its budget by $11 million, to cope with what Kalifey-Aluise described as “a new financial reality.”
Ending the collection fee is crucial, school leaders say
Both Pence and Kalifey-Aluise are hopeful that the proposed settlement will provide “stopgap” funding to balance the books this spring. But more importantly, they say, they’d like to see schools receive the millions of dollars that the city now skims from school funding each year.
Putting a stop to the 2% collection fee has always been the crux of the OPSB lawsuit — and the city’s offer on that remains unclear.
Anything short of ending the fee amounts to nothing more than “a payday loan” for the school district, councilman JP Morrell said in February, during a special City Council hearing on the topic. Basically, OPSB would get some money now, but the city would get that back – and more – in future years, if the 2% fee continued.
You can watch and listen live to Monday’s school board meeting at 11 a.m.