The City of New Orleans won't have to pay a $90 million settlement to its school board, but it's still on the hook for $10 million, a judge ruled on Wednesday.
Civil District Court Judge Nicole Sheppard said the agreement isn't binding since both sides didn't finalize it.
City and school officials held a joint press conference announcing the deal in October and later exchanged a contract, but Mayor LaToya Cantrell never signed the document.
Gilbert Montano, the city's chief administrative officer who led negotiations for the city, did not have the authority to agree to a settlement, Sheppard said.
It's a loss for the school board, which needs to fill a $50 million gap in funding this year. But Sheppard did give them a small win.
The city must pay the school board $10 million in the next 30 days, she said, since Cantrell approved the first settlement payment in this year's budget.
That money will help refill the district's reserves if the school board approves a plan to use $25 million in savings to cover the first half of its deficit.
The settlement would have ended a years-long lawsuit over how the city collects tax revenue for schools. The city keeps 2% of revenue as a service fee. District officials argue the practice is illegal and that schools need every dollar.
Both parties have said the collection fee is why they've been unable to settle. The fee generates over $10 million in revenue yearly, and neither side wants to give it up.
Sheppard set a June trial date for the lawsuit, which the school board filed in 2019.
"We wanted a trial all along," William Aaron, a lawyer for the school board, said after the hearing, adding that there's still a chance parties could settle then.
"The evidence is overwhelming in our favor that, over a decade, the school board's money was basically skimmed off the top by the city, to the detriment of school children," he said.
