Orleans Parish School Board votes to settle 2019 lawsuit against city government

The Orleans Parish School Board voted on Tuesday to accept an agreement on a funding battle that district officials said funneled around $135 million away from schools and towards municipal expenses, settling a 2019 lawsuit filed against the city of New Orleans by the district.

The board voted 6-1 to accept the deal. Under the settlement, the city will lower collection fees for sales taxes and eliminate them for property taxes, practices that district lawyers argued are illegal. It will also stop the practice of the city skimming funding meant for the school board to fund pension obligations.

Beginning next year, the city will lower the fee it charges to collect sales taxes on OPSB’s behalf from 1.6% to 1.5%, saving an estimated $150 per student every year, according to board vice president Olin Parker. OPSB will also receive $4 million every year in lease payments from Caesar’s Casino New Orleans starting in 2030 and continuing as long as the lease exists, which had benefited from the Casino Fund for decades until the New Orleans City Council started gradually moving the money towards other initiatives.

Parker said the casino fund will help bolster initiatives to address chronic absenteeism and funding for the Travis Hill School, which educates incarcerated children.

“The students are at the forefront of our minds,” Parker said. “Protection of those fees in perpetuity is protection for the most vulnerable students in our district.”

Additionally, the city will pay the NOLA Public School district $6 million by the end of 2027, and beginning in 2027, will pay $2 million annually over the next 15 years, totaling $36 million. That money will go into the district’s fund balance, and won’t directly affect the money flowing into schools. It will replenish some of the money the district had to spend to correct a financial miscalculation that led to a $50 million deficit in 2024.

For most board members, the settlement satisfactorily addressed major funding issues.

“The city is broke — they’re having their own issues to deal with,” said school board president Leila Eames. “Lets be grateful, lets be joyful, and lets celebrate.”

The city has been working on righting an estimated $220 million deficit since Mayor Helena Moreno took office in January. As a city council member, Moreno supported a previous, multimillion-dollar settlement between the city and OPSB, which was negotiated by the council and then-Mayor LaToya Cantrell’s top deputy. Cantrell, however, later backed out of the deal. That decision drew the ire of the City Council, which joined the lawsuit with OPSB against the city.

During a press conference Tuesday afternoon, Moreno affirmed that the council, mayor’s office and school board were all on the same page, and that the deal wouldn’t fall through as it had last year.

“We thought everything had been worked out and settled,” Moreno said, referring to the deal negotiated during the Cantrell administration. “Unfortunately, all of that pretty much fell apart. But we all vowed that we would be back.”

Moreno said the settlement represents what the city is able to afford, given their budget constraints, while also giving the school board what it needs.

The settlement must still go before a City Council vote, and it won’t be finalized until it is signed by a judge. Five of the city’s seven councilmembers were present at the press conference to announce the successful deal.

OPSB member KaTrina Chantelle Griffin, the only person on the school board to vote against the deal on Tuesday, said that the settlement didn’t give the school board all of what was owed to it through the original lawsuit. Board member Nolan Marshall said the settlement was great, but not perfect.

“Fees will not be collected for anything that’s not codified anymore, period, going forward into perpetuity,” Marshall said. “We will never be in this position again. That’s the agreement we have with the city. So that is a great deal.”

Earlier this year, the administration offered the district a deal that would do away with property taxes but raise sales taxes to 7.5 %, which was rejected by OPSB.

The district has blamed some of its financial issues on the collection fees, which leaders say have routed money away from public schools. Compounded with declining enrollment, which is directly tied to school funding, the district has found itself in a position where it must close schools to save money.

Sabrina Pence, CEO of FirstLine Schools, which operates four charter schools in the city said the settlement will protect funding for children for “a long, long time.” FirstLine, along with KIPP New Orleans and ReNew Schools and the Louisiana Association of Public Charter Schools, tried in January to intervene in the lawsuit to be a part of negotiations, which ultimately never came to fruition.

The Mayor’s office was holding a press conference to celebrate the successful deal Tuesday afternoon, but the City Council won’t vote on it until Thursday.

This story was originally published by Verite News and distributed through a partnership with The Associated Press.