Hope, not optimism, for mediation in school funding suit | Delaware First Media
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Hope, not optimism, for mediation in school funding suit

Aug 28, 2020

The portion of a lawsuit seeking to change the way the state of Delaware funds it schools could come to an end earlier than expected.

The case goes to mediation Monday. 

Delaware Public Media contributor Larry Nagengast has followed this case since it was filed in 2018, and this week delves into the possibilities mediation presents and, if it fails, what could be brought up at trial later this year.


A mediation hearing scheduled for Monday in the Court of Chancery could bring a prolonged effort to resolve inequities in Delaware’s school funding practices closer to a conclusion, but even those who are seeking the mediation don’t expect that occur.

“I am not optimistic about them being willing to settle. They haven’t given me any reason to be optimistic,” says Jea Street, a member of Delawareans for Education Opportunity and the NAACP Delaware State Conference of Branches, the organizations that filed the suit in January 2018 against Gov. John Carney, Secretary of Education Susan Bunting, State Treasurer Colleen Davis and the officials responsible for collecting school property taxes in each of the state’s three counties.

The suit alleged that the state does not provide an adequate education for all students because its funding system provides more support for children who are well off than it does for those who are living in poverty or have special needs. The suit seeks reforms or improvements to the funding system so a greater proportion of education resources would be directed to children from low-income families, English learners and those in kindergarten through third grade who have special education needs.

"I am not optimistic about them being willing to settle. They haven't given me any reason to be optimistic." - Jea Street, member of Delawareans for Education Opportunity and the NAACP Delaware State Conference of Branches

In November 2018, Vice Chancellor J. Travis Laster wrote a 137-page opinion denying a defense motion to dismiss the case. He then broke the case into two tracks – one related to state funding and the other dealing with the counties’ property tax assessment systems. The county track moved forward first, with Laster ruling in May that the tax assessment systems violate the state constitution. (See related story)

The state track, if Monday’s mediation is unproductive, is scheduled for a three-week trial, starting Nov. 4.

The plaintiffs, Street said, requested the mediation “to show we’re acting in good faith.” Also, mediation would eliminate the need for a trial and the inevitable appeals that would follow – possibly putting off any resolution for several years.

Dan Rich, a University of Delaware professor of public policy who has been involved in education reform issues for many years, says he is “hopeful … but not optimistic” that mediation can be fruitful.

He points out that the plaintiffs and the state do have several areas of agreement in principle.

“They agree that schools and teachers should have the resources they need to educate the kids…. They also agree that additional resources are needed,” he says. “What we’re left with is the structure of the funding system itself. It’s been in place for 75 years or so. It’s reliable. It’s predictable – and a lot of school finance people like it for those reasons.”

But, Rich adds, there’s a big “but.”

The funding reform dilemma

That 75-year-old finance system, referred to as the “unit system,” starts with counting students. A certain number of students, which varies by grade level, creates a “unit,” which gives a school district or charter school funds to pay the state portion of the salary of one teacher. Groups of units provide districts and charter schools funds to pay the state base salary for principals, assistant principals and other administrators.

However, Rich says, this system “makes the assumption that all kids are the same and that all their needs are the same … except that they’re not.”

Student bodies, he says, “are becoming increasingly diverse – in family income, in background, in learning needs … but the funding system is not structured to meet those needs.”

The unit system, in addition to providing a structure to support schools’ salary costs, has separate formulas for providing districts with funds for non-salary items, like utilities, and for equalization, a way of providing additional funding to districts with lower property tax bases.

Over the years, new categories of students – like those in special education classes – have been added to the unit system. Special funding initiatives have also been inserted into the overall school funding mix, like the three-year, $75 million Opportunity Grants program that Carney started to provide more services for the categories of students the current lawsuit seeks to benefit.

Nevertheless, Delaware remains in a minority of states that utilize a funding system based primarily on enrollment counts rather than on student needs. Also, it is one of only four states that does not provide special recurrent funding for English learners and one of only 14 that do not have similar funding for low-income students. 

"It has to be a targeted investment and demonstrated that it is effective." - Dan Rich, University of Delaware professor of public policy

While there have been numerous calls to transform the state’s school funding system into one that is based primarily on student needs rather than on enrollment numbers, nothing has gotten past the talking stage. Carney has said in the past that he does not support needs-based funding because it would not necessarily require accountability by the schools on how the money is used.

Rich does not believe a complete overhaul is necessary. Pointing to the differing numbers used to create units for elementary, secondary and special education students, he says “you can retrofit the system” to add categories for English learners and low-income students. Needs-based funding is possible, even as an add-on to the existing system, but accountability should be required, Rich says. “It has to be a targeted investment and demonstrated that it is effective.”

Right now, the question is whether mediation can jump-start a process to reform the funding system.

Can mediation bring progress?

Several signs cast doubt on that possibility.

First, in their answer to the plaintiffs’ amended complaint, a 122-page document filed in January, attorneys for the state defendants – Carney, Bunting and Davis – offered little in the way of agreement to the more than 200 claims made by the plaintiffs. At the conclusion of the document, they offered seven “affirmative defenses,” a new set of facts used to defeat the plaintiffs’ claims even if those claims are true.

Among the defenses offered: the plaintiffs complaint fails to state a claim for which relief may be granted; implementation of the Education Clause in the state’s 1897 Constitution falls exclusively within the jurisdiction of the General Assembly; state courts do not have the authority to require an increase in taxation  because that is the province of the legislative and executive branches of government, and the suit fails to account for the unique educational needs of each student group – low-income, students with disabilities and English learners – for whom the plaintiffs are seeking relief.

With the state having raised those defenses, Street says, “I expect them to remain steadfast in opposition.”

"The money being spent by the state in its defense is money that should be spent on children." - Jea Street

In addition, earlier this year, the governor’s office hired Rocco Testani, a partner at Eversheds Sutherland, an Atlanta, Georgia law firm, to work with its local counsel, the Wilmington firm of Young, Conaway, Stargatt & Taylor, on the case. According to his firm’s website, Testani has successfully represented both Georgia and Florida in suits challenging those states’ school finance systems. Since January, the state has paid Eversheds Sutherland $510,863 for legal services, according to the state’s Delaware Checkbook database.

“The money being spent by the state in its defense is money that should be spent on children,” Street says.

Carney’s office did not respond to a request for comment on the scheduled mediation for the case. However, in an August 14 interview with Delaware Public Media, he asserted that his “biggest priority as governor is opportunity funding,” the three-year program he launched in 2018. “I started it before the case was filed and will continue to fight for it,” he said then. “We’re talking about the success and failure of those children and the communities in which they live.”

A long history of inaction

Street views the current case from the perspective of one who has advocated for the interests of low-income and minority children since the mid-1970s, when the suit the resulted in an order to desegregate public schools in northern New Castle County was in progress. Since then, he has seen, mostly during the administration of former Gov. Tom Carper, the lifting of the desegregation order in 1995, followed by the passage of three laws – the School Choice Act and Charter Schools Act in 1996 and the Neighborhood Schools Act in 2000 – that resulted in Wilmington schools once again having predominantly minority enrollments.

“The last thing [U.S. District] Judge [Susan] Robinson wrote in her order was that there was nothing in the record that says the state will return to the segregationist ways of its predecessors,” Street says, “yet that is exactly what happened.”

In the past 20 years, several state-commissioned studies have reached similar conclusions about the challenges facing schools with high populations of low-income students, primarily focusing on those in the city of Wilmington. First came a 2001 report, titled They Matter Most, mandated following passage of the Neighborhood Schools Act. The Wilmington Education Task Force followed in 2008. The Wilmington Education Advisory Committee published its report in 2015. That group’s successor, the Wilmington Education Improvement Commission, issued annual reports from 2016 through 2018.

Also, in 2006 a public-private partnership that has since evolved into the Vision Coalition published Vision 2015, a comprehensive education reform proposals whose recommendations included a call to “establish a simple and equitable funding system.”

Recommendations in those reports, Street says, included extended school days, extended school years, placing mental health and social workers in schools as well as adding math and reading specialists. For the most part, those recommendations were not adopted, at least not until Carney’s office and the Department of Education negotiated a memorandum of agreement in 2018 with the Christina School District to reform schools in the Wilmington portion of the district.

“We’ve been discussing these things for quite a long time, and we keep putting off the changes,” Rich says.

"The people who say we cannot afford it don't look at the cost of not doing anything." - Dan Rich

Yet another state-appointed body, the Redding Consortium for Educational Equity, is now charged with monitoring the educational progress and outcomes of students in Wilmington and all of northern New Castle County, with emphasis on low-income students, English learners and other students at risk. The commission’s mandate includes recommending legislation to improve educational opportunities for these students and developing a proposal for restructuring the school districts that serve Wilmington and northern New Castle County. One of the consortium’s subgroups is dedicated specifically to school funding issues.

Regardless of the outcome of the mediation, Street is hopeful that the General Assembly, where reform initiatives have stalled in the past, will be more willing to move forward after the November elections. “We have more African American legislators, more progressive legislators, than we’ve ever had before,” he says, “but there are still people there … who have no empathy for low-income children and children of color.”

“The people who say we cannot afford it don’t look at the cost of not doing anything,” Rich says, asserting that the consequence of inaction will have an impact on students, on business, on all of society. Failing to provide equity in education for all students, he says, means “we will have fewer people in the state who are prepared to take on the tasks [jobs] that we want them to assume.”

This story has been updated