PROVIDENCE, R.I. (WPRI) — A long-simmering dispute between city and state leaders over how much money Providence taxpayers should allocate to the state-controlled public school district has now escalated into a court battle.
On Tuesday, Mayor Jorge Elorza and the Providence City Council filed a lawsuit in Providence Superior Court against Education Commissioner Angélica Infante-Green and the R.I. Department of Education, after General Treasurer Seth Magaziner’s office withheld nearly $5 million in state aid from the city at Infante-Green’s direction.
The suit stems from a disagreement between city leaders and the Providence Public School District — which has been run by the state since a 2019 takeover — over how much money the city was obligated to appropriate to the schools for the fiscal year that ended back on June 30. (They are also at odds over the budget for the current fiscal year.)
Elorza claims state officials are “cherry-picking” which federal coronavirus aid is being used in the calculation of the city’s obligation to the schools, during a year that the school system saw an $11 million surplus in its budget.
“They’ve been overly generous in interpreting the law to benefit and suit them,” Elorza told Target 12 in an interview Wednesday. “What’s really frustrating about this is that this has nothing to do with providing high-quality education for our kids.”
The city sends a significant chunk of its budget to the school department each year, but no longer has any control over how that money is spent because of the state takeover of the school system.
The last two city budgets passed by the Providence City Council and signed by Elorza level-funded the school district rather than providing the increase in funding, allocating roughly $130 million to PPSD.
But the Crowley Act, the state law that allowed for the takeover, says the city has to fund the schools at the same level as the prior year plus an increase of “the same percentage as the state total of school aid is increased.” The city and state signed an agreement to follow that formula in November 2019.
But the funding situation quickly got complicated. The state takeover started just months before COVID-19 hit, and a windfall of federal coronavirus relief funds flowed into Rhode Island in 2020, including millions to the Providence schools.
Both the state and city budgets were delayed months beyond their usual due dates in June 2020. But when it came time to calculate how much the city owed the school system, state leaders claimed they were due a $4.85 million increase for the 2020-21 fiscal year, raising the city appropriation from $130 million to nearly $135 million. This was based on a total increase of 3.7% in state aid to all local school districts.
City leaders balked, in part because the school district had run a surplus the year before. Plus, the calculation of the 3.7% increase took into account $41 million in funding from the federal CARES Act — a COVID relief bill — that flowed from the state to public schools, not just the state aid itself.
Negotiations behind the scenes did not bring a resolution, and the City Council passed a belated budget for fiscal year 2020-21 in April of this year that did not include the nearly $5 million increase.
Then for the 2021-22 fiscal year, which began July 1, the district said it was owed $139 million from the city per the Crowley Act calculation. The City Council once again appropriated $130 million.
Despite that, the most recent version of the school department budget for the current year presented to the Providence School Board includes the $139 million figure.
Asked in July how the school department would fill the $9 million budget hole, Providence schools spokesperson Audrey Lucas said: “We expect the full amount we are entitled to receive for both FY21 and FY22 under the Crowley Act, and will continue to make that clear in ongoing discussions with the city.”
The district has now received at least part of that amount. After holding a show-cause hearing at the R.I. Department of Education in August, Infante-Green sent an order to Magaziner on Aug. 30 demanding that he deduct $4.85 million from Providence’s state aid, not including school aid, and “deliver said funds to the commissioner for use on behalf of the PPSD.”
Magaziner’s office withheld the $4.85 million from the roughly $5 million in distressed communities aid that was scheduled to be paid to Providence, according to city spokesperson Theresa Agonia.
Infante-Green invoked a state law that says the commissioner can demand the treasurer withhold funds if there is a “violation or neglect of law or for violation or neglect of rules and regulations” by a city or town.
“Under state law, when the Commissioner of Education issues an order to withhold municipal aid, our office is required to comply,” Magaziner spokesperson Ben Smith said in an email. The distressed aid was scheduled to be paid to Providence on Aug. 31, one day after the commissioner sent her order.
Elorza’s lawsuit claims the state arbitrarily included some federal COVID relief funds in its calculations of the total state aid to schools, but left out $50 million in coronavirus relief funds that were sent to schools in fiscal year 2019-20.
If all coronavirus funding to schools was taken into account, the city claims, the total amount of state aid would have decreased in fiscal 2020-21, not increased, allowing the city to level-fund the schools.
The suit asks the court to overturn the commissioner’s order to the treasurer’s office.
“RIDE is literally sitting on millions of dollars of a surplus that they aren’t spending,” Elorza said. “This is on top of the $160 million that they have from the American Rescue Plan. So this is not about investing in kids.” (Congress enacted the American Rescue Plan Act, another COVID relief law, this past March.)
In a statement Thursday morning, a RIDE spokesperson said the city hasn’t been providing enough money to the schools for years.
“The Providence Public School District has been historically underfunded by the City through their practice of level-funding their contribution to schools,” Spokesperson Victor Morente said in an email. “In fact, funding for PPSD stayed stagnant for 6 years from 2011-2017, while the district was in clear crisis and amidst a statewide moratorium on school facility spending. This is unacceptable and at its core, and reflects an equity issue within government budgeting. Our students deserved better than this.”
“While RIDE has not been served with the complaint at this time, the Commissioner has the statutory authority to enforce violations of school law, including the Crowley Act,” Morente continued. “That includes recouping funding that should be allocated to the district under the terms of the statute.”
Morente acknowledged the $11 million surplus from fiscal 2019-20, which was realized because there were no students in the schools for three months during the start of the pandemic. But he said the money was being used for a contingency fund to cover unexpected needs, in order to avoid a deficit in the future. (It’s not yet clear if the district also ended fiscal year 2020-21 with a surplus.)
RIDE must formally respond in court within 20 days of the suit being filed.
In legal documents from August, the commissioner argued it was appropriate to include the CARES Act funding — which was used to replace general state education aid in the budget — in the total calculation of the increase in school aid, while excluding the coronavirus relief funds that were “specifically earmarked for purposes directly related to the COVID-19 pandemic.”
The lawsuit is the latest dispute between city and state leaders over the school takeover, which has become increasingly unpopular among leaders at City Hall, despite the fact that none of them formally objected to the takeover when it was first proposed. (Three members of the City Council did individually speak at a hearing expressing concern about how RIDE would be held accountable.)
Elorza slammed Gov. Dan McKee for signing a new contract with the Providence Teachers Union that he said did not constitute transformational change, and Council President John Igliozzi has also publicly questioned why the district asked for more money from city taxpayers while running a surplus.
“At this point, I don’t see any continuing reason for the state to be involved,” Elorza said Wednesday.
Infante-Green has pointed out that the school system was failing for decades under city leadership, as documented in a devastating 2019 report issued by researchers from Johns Hopkins University. The state takeover is slated to continue until 2025.