New Orleans schools get a $25 million Band-Aid
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New Orleans school leaders say they figured out a way to partially plug a multimillion-dollar gap after Mayor LaToya Cantrell backed out of a deal with the school board.
Why it matters: The schools said student services and staffing would be cut if they didn't figure out a solution quickly.
The big picture: The Orleans Parish School Board last week said they will pull $25 million from their general fund reserves and operating budget to "ensure uninterrupted services for students across the district."
- The board is also getting $10 million from the city of New Orleans after a judge upheld part of a $90 million settlement.
- The city is supposed to pay the school board within 30 days, according to WWNO's Aubri Juhasz. The money will go back into the board's reserve funds.
- The full settlement with the city, which is now void, included a $20 million payout this school year and additional payments over the next decade.
What happened: The school board originally said an accounting error led to at least a $36 million budget shortfall because they mistakenly based income estimates on the calendar year and not the fiscal year.
- Superintendent Avis Williams resigned after the error became public.
- Interim superintendent Fateama Fulmore in February said it wasn't an error, putting the blame on lower-than-expected property sales tax income and other issues.
Zoom in: The lawsuit goes to trial in June.
- The school board is open to a new settlement offer from the city, but it will need the mayor's signature, says attorney Bill Aaron, who is representing the school board.
- They have a hearing next month to determine the statute of limitations. Depending on the timeframe, Aaron says the school board could request up to $208 million in damages.
Friction point: The school board also wants to permanently remove a 2% administration fee the city charges the district for collecting property taxes from residents.
- School leaders say taxpayers didn't approve the fee when they passed the millage in 1993, and they accuse the city of skimming off the top.
- City leaders say the fee is for services rendered since they are responsible for billing, collecting and disbursing the money.
- The fee is worth about $11 million annually, Aaron tells Axios.
Yes, but: When the mayor backed out of the deal earlier this year, the city's financial leaders painted a troubling picture of cash flow with a presentation slide labeled "Spending is out of control."
- City Council members expressed skepticism but also passed a ban on nonessential travel, describing it as a money-saving measure.
- Cantrell is suing the council over the travel ban. They are due back in court Friday.
What's next: The school board is now focused on filling the rest of the budget gap, according to the Times-Picayune.
- The audit is ongoing, but the hole could be as big as $50 million, the report says.