New Orleans agrees to pay OPSB $20M to settle long-running suit

By Katie Jane Fernelius
Contributing Writer

(Veritenews.org) — The New Orleans City Council and Orleans Parish School Board announced last week that they have found a partial solution to the NOLA Public Schools district’s estimated $36 million budget gap. The school board will agree to dismiss a 5-year-old lawsuit against the city and, in return, the city will pay the district $20 million in new money.

Speaking at a press conference announcing the agreement, New Orleans City Councilmember Joe Giarrusso, who chairs the budget committee, said the council allocated the first part of the payment on Thursday, November 21, the day it passed the 2025 city budget.

“This has been a result of two different parties who wanted to make sure we could make something happen right now and get something done for New Orleans and to make sure there’s a good future for our children,” Giarrusso said.

The School Board’s multimillion-dollar deficit resulted from a catastrophic accounting error. It is unclear who or what was directly responsible for the error, but a miscalculation caused the board to grossly overestimate what it would collect in property and sales taxes for the 2024-2025 school year.

Schools across New Orleans were facing the possibility of dramatic cuts. The school board currently estimates a $36 million deficit, but OPSB Member Olin Parker, who chairs the board’s finance committee, said officials are still working to confirm the precise amount of the gap.

In the midst of the fallout from the error, NOLA Public Schools Superintendent Avis Williams announced last week that she will step down on Dec. 1, though she did not provide a reason for her departure. Deputy Superintendent Fateama Fulmore will serve as interim superintendent in the meantime. Chief Financial Officer Stuart Gay left his position in September before the error became public.

What was a catastrophic error for the School Board became an opportunity for the New Orleans City Council to settle the long-running lawsuit, which OPSB filed in 2019. The legal dispute was due to the city’s practice of charging a two percent administrative fee on the taxes it collected on behalf of other Orleans Parish agencies. OPSB long maintained that those fees were unconstitutional and that the city owed the city’s schools millions of dollars in back tax revenue.

The lawsuit had been ongoing for years with no end in sight. But now the city and the School Board look poised to settle it.
OPSB President Katie Baudouin, who previously worked as a staffer in Giarrusso’s office, thanked city officials for their work to resolve the legal dispute.

“This agreement will ensure that our schools get the tax revenue that they’re entitled to from now on,” she said at the press conference. “I will mention when Councilmember Giarrusso first hired me almost 8 years ago, one of the first conversations we had was how important public education is to New Orleans, and I’m very gratified to be standing with him here today.”

According to preliminary terms of the agreement, obtained by Verite News, the city has offered to pay the $20 million in two $10 million payments to the School Board. The first payment, which Giarrusso said will be approved on Thursday, will come before the end of the year, and the second payment will come before April 1, 2025.

The city has also agreed to allocate Caesars (formerly Harrah’s) casino support funds for education – which amount to slightly less than $6 million for 2025 – to the School Board over the next ten years, and the city will dedicate money to education programs supporting mental and behavioral care for students, as well as programs providing career counseling and vocational training over the next decade. Altogether, this will amount to an additional $10 million per year in allotments to NOLA Public Schools programs

The school board will agree to pull its lawsuit against the city. And the city will stop deducting fees from the sales and property taxes it collects unless the school board approves them in advance.

This article originally published in the November 25, 2024 print edition of The Louisiana Weekly newspaper.