Court filings concerning teacher retirement and health insurance remedy

District Court, advisory letter from Joshua intervenors; District Court, Little Rock School District's (LRSD's) prehearing brief on the teacher retirement and health insurance remedy; District Court, Pulaski County Special School District's (PCSSD's) pre-trial brief re: teacher retirement and health insurance remedy; District Court, order; District Court, Pulaski County Special School District (PCSSD) post-trial submission; District Court, Little Rock School District's (LRSD's) post-hearing brief on the teacher retirement and health insurance remedy; District Court, Arkansas Department of Education's (ADE's) post-hearing brief concerning remedies on the issues of teacher retirement and health insurance; District Court, Arkansas Department of Education's (ADE's) supplemental response to Pulaski County Special School District's (PCSSD's), Little Rock School District's (LRSD's), and North Little Rock School District's (NLRSD's) motions for attorneys' fees and costs; District Court, notice of filing, Arkansas Department of Education (ADE) project management tool The transcript for this item was created using Optical Character Recognition (OCR) and may contain some errors. 5013744187 WALKER LAW FIRM JOHN W. WALKER RALPH WASHINGTON MARK BURNETTE AUSTIN PORTER. JR. JQHN W. WALKER, P.A. ATTORNEY Ar LAw 1723 BROAl)WAV l,JTTl.E ROCK, Alu<..~NSAS 72206 , TEU:Pl!0:-IE (501) 374-3758 FA.\ (501) 374-4187 Via Facsimile - 324-6096 1 anuary 4, 1999 Honorable Judge Susan Webber Wright United States District Judge United States District Court 600 West Capitol Llittle Rock, AR 72201 Re: LRSD v. PCSSD Dear Judge Wright: 315 P02 '02 JAN OJ ' 99 17:02 This is to advise that the Joshua Intervenors hereby adopt by reference the Little Rock School Dsitrict's Prehearing Brief On The Teacher Retirement and Health Insurance Remedy. JWW:js cc: Mrs. Ann Brown All Counsel of Record IN TIIE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS WESTERN DMSION LI'ITLE ROCK SCHOOL DISTRICT PLAINTIFF vs. LR-C-82-866 PULASKI COUNTY SPECIAL SCHOOL DISTRICT NO. 1, ET AL DEFENDANTS INTERVENERS INTERVENERS :MRS. LORENE JOSHUA, ET AL KATHERINE KNIGHT, ET AL LITTLE ROCK SCHOOL DISTRICT'S PREHEARING BRIEF ON THE TEACHER RETIREMENT AND HEALTH INSURANCE REJMEDY I. Introduction. This hearing concerns the method for calculating the three Pulaski County school districts' damages for the State of Arkansas' violation of the 1989 Settlement Agreement with regard to the teacher retirement and health insurance programs. On July 1, 1998, the Eighth Circuit affirmed this Court's finding of liability and remanded for a detennination of the districts' damages. LRSD v. PCSSD, 148 F.3d 956 (8th Cir. 1998). In making that detennination, the Eighth Circuit offered the following guidance: On remand, it will be up to the District Court, in the first instance, to decide exactly what relief is appropriate. The three Pulaski County districts should be placed in a position no worse than they would have occupied if the previous system of funding for teacher retirement and health insurance had not been changed This does not mean that these districts are entitled to receive both an amount equivalent to what the old system would have produced for teacher retirement and health insurance, and the whole amount now paid to them as Equalization Funding. Such a result would be double recovery, a windfall. But the districts are entitled to be held hannless against any adverse effect of the funding change. This means that it will be up to the District Court, after appropriate submissions from the parties, to calculate, as near as may be, the difference between what the old system - MFP A plus teacher retirement plus health insurance - would have produced, and what the new system - Equalization Funding in one lump sum - is producing. The appellants suggest that this effort will necessarily involve speculation. Admittedly it cannot be exact, but we believe that the District Court can make a reasonable and informed estimate. LRSD v. PCSSD, 148 F.3d 956, 968 (8* Cir. 1998). As the State, LRSD, NLRSD md Joshua interpret the Eighth Circuit's opinion, the districts' damages should be calculated as follows: (1) determine the amount the districts would have received for teacher retirement and health insurance under the old Act 34 funding system; (2) determine the amount the districts actually received for teacher retirement and health insurance under the new Act 917 funding system; and (3) subtract (2) from (1). II. Discussion. A PCSSD's overall remedy argument. Although PCSSD originally agreed with the other parties' interpretation of the Eighth Circuit's decision, PCSSD now argues that the districts' damages should be based on an overall comparison between the old Act 34 funding system and the new Act 917 funding system. Compare Docket Nos. 3174 and 3187 to 3227. This argument ignores the previous findings of this Court and the opinion of the Eighth Circuit and should be rejected as a matter oflaw. First, the argument ignores the previous findings of this Court. This Court rejected this same argument when it was made by the State. The Court stated: While the state may contend that the settling districts will receive more formula money under the new funding scheme, the Court finds that because the new funding scheme does not consider the number of eligible employees but instead is based upon ADM, equalized by the wealth of the district, requiring the settling districts to pay health insurance matching from equali1,lllion or local funds is not a "fair and rational" adjustment to the funding formula. 2 Docket No. 2968, Memorandum Opinion and Order, p. 5 ( emphasis supplied). Assuming PCS SD' s calculations are correct, LRSD would recover nothing under an overall remedy. Docket No. 3227, Exhibit A Consequently, LRSD would be forced to use equalization funding or local funds to pay its teacher retirement and health insurance costs. As quoted above, that is exactly why this Court found that the Act 917 funding system violated the Settlement Agreement with regard to teacher retirement and health insurance. It would be absurd to now adopt a "remedy'' that brings about the same result. Not surprisingly, an overall remedy results in a windfall to PCSSD. PCSSD claims that the overall change from Act 34 to Act 917 decreased PCSSD's total state funding by $3,794,039 in 1996-97 and $2,781,691 in 1997-98. Docket No. 3227, Exhibit A, p. 3. PCSSD seeks to recover these amounts as its remedy for the State's liability with regard to the teacher retirement and health insurance programs. However, according to PCSSD's own calculations, its loss for teacher retirement and health insurance totaled only $1,830,003 in 1996-97 and $1,679,881 in 1997-98. Docket No. 3186, Exhibit A and B. Thus, an overall remedy results in PCSSD being awarded damages more than three million dollars in excess of its actual loss in teacher retirement and health insurance funding. The difference between PCS SD' s teacher retirement and health insurance loss and its overall loss results, at least in part, from the adverse impact on PCS SD of the change in the funding formula for distributing general state aid, what was called MFP A under Act 34 and what is now called equalization funding under Act 917. PCSSD seeks to recover this amount despite the fact that no court has found that the Act 917 funding formula per se violates the Settlement Agreement. The Settlement Agreement permits the State to make "[f]air and rational adjustments to the funding 3 formula which have general applicability blltwl,ich nd,,ce tire proportion of State aid to any of the Districts .... " Settlement Agreement ,U.L (emphasis supplied). Therefore, even if PCSSD is correct in its assertion that it received less general state aid under the Act 917 funding system compared to what it would have received under the Act 34 funding system, this does not establish that Act 917 funding formula violates the Settlement Agreement. PCSSD bears the burden of proving that Act 917 was not a fair and rational adjustment to the funding formulcl. PCSSD moved for summary judgment on this issue on September 2, 1997, while the teacher retirement and health insurance appeals were pending before the Eighth Circuit. Docket No. 3042 and 3043. This Court denied that motion on January 12, 1998 "[b ]ecause there are genuine issues of material fact in dispute regarding the state funding formula." Docket No. 3104, p. 2. Those issues of material fact remain unresolved. Second, PCSSD's argument ignores the precise issue before the Eighth Circuit. The Eighth Circuit clearly limited its opinion to the teacher retirement and health insurance programs. In the opening paragraph ofits opinion, the Eighth Circuit stated that "[t]he question presented is whether changes made by the State of Arkansas in the funmng of retirement and health insurance for teachers violated [the Settlement Agreement]." Id. at 963 ( emphasis supplied). The Eighth Circuit began its discussion stating, "This case has to do with two important categories of school operating expenses: contributions for teacher retirement and employees' health insurance." Id. ( emphasis supplied). Nothing in the Eighth Circuit's discussion indicates that the court went beyond the question presented to find that the Act 917 funding formula violated the Settlement Agreement. Third, PCSSD's argument ignores the whole of the Eighth Circuit's opinion. Taken in the context of the question presented, the remedy contemplated by the Eighth Circuit was clearly limited 4 to the districts' loss in teacher retirement and health insurance funding. the Eighth Circuit began its description of the remedy by stating that "[t]he three Pulaski County districts should be placed in a position no worse than they would have occupied if the previous system of funding for teacher retirement and health insurance had not been changed " Id. at 968 ( emphasis supplied). The Eighth Circuit recognized, however, that the districts' equalization funding included some amount for teacher retirement and health insurance. lg. at 965. Accordingly, it directed this Court to reduce the districts' damages by this amount in order to prevent a double recovery. The Eighth Circuit stated: The three Pulaski County districts should be placed in a position no worse than they would have occupied if the previous system of funding/or teacher retirement and health insurance had not been changed This does not mean that these districts are entitled to receive both an amount equivalent to what the old system would have produced/or teacher retirement and health insurance, and the whole amount now paid to them as Equalization Funding. Such a result would be double recovery, a windfall. Id. (emphasis supplied). Thus, the first step in determining the districts' damages is to calculate "what the old system would have produced/or teacher retirement and health insurance." Id. What the old Act 34 system produced for teacher retirement and health insurance was the districts' actual costs for those programs. Summarizing its explanation of the remedy, the Eighth Circuit concluded: Id. But the districts are entitled to be held harmless against any adverse effect of the funding change. This means that it will be up to the District Court, after appropriate submissions from the parties, to calculate, as near as may be, the difference between what the old system - MFP A plus teacher retirement plus health insurance - would have produced, and what the new system - Equalization Funding in one lump sum - is producing. 5 Reading these final two sentences in isolation, PCSSD contends that the Eighth Circuit's opinion calls for an overall remedy. However, the failure of the Eighth Circuit to repeat for the third time "for teacher retirement and health insurance" after the words "produced" and "producing" in no way indicates that the Eighth Circuit intended to completely depart from the rest of the opinion and the preceding sentences in the same paragraph. These final two sentences may properly be read as follows: This means that it will be up to the District Court, after appropriate submissions from the parties, to calculate, as near as may be, the difference between what the old system - MFP A plus teacher retirement plus health insurance- would have produced [for teacher retirement and health insurance], and what the new system - Equalization Funding in one lump sum - is producing [for teacher retirement and health insurance]. The Eighth Circuit most certainly would have expressly stated and explained the basis for an overall remedy if such was its intention. This it did not do. Rather, it described the logical course this Court should follow in determining the districts' damages "for teacher retirement and health insurance." The Eighth Circuit's use of the phrase ''MFP A plus teacher retirement plus health insurance" should not be construed as a mathematical equation, but rather as a general description of the old Act 34 funding system. Even if construed as a mathematical equation, however, the phrase in no way dictates an overall remedy. As discussed above, the preceding sentences make it clear that the Eighth Circuit was concerned with "what the old system would have produced for teacher retirement and health insurance." Id. Both this Court and the Eighth Circuit have recognized that, under the old Act 34 funding system, the State paid the districts' teacher retirement and health insurance costs outside of the funding formula used to distribute MFPA. See LRSD v. PCSSD,'148 F.3d at 963. 6 Thus, the tenn MFP A essentially means zero in this context. In accord with this understanding, all of the parties, including PCSSD, originally submitted a proposed remedy based on the districts' actual costs. Docket Nos. 317 4-77. Finally, the Eighth Circuit's rationale for finding that the Act 917 funding system violated the Settlement Agreement with regard to the teacher retirement and health insurance programs cannot be extended to the entire Act 917 funding system or the entire Act 917 funding fonnula. Quoting this Court's teacher retirement opinion, the Eighth Circuit explained: [I]nstead of directly funding each district based on the number of employees, the State has included funds for teacher retirement in the new funding scheme which distributes funds on a per ADM basis equalized by the wealth of the district. Just as the workers' compensation "seed money'' fonnula worked to the detriment of the employee-heavy Pulaski County districts, so too does the distribution of teacher retirement contributions though the new funding formula give the districts less money to fund teacher retirement. While the three Pulaski County school districts may fare better under the new funding scheme from a state aid perspective, there is no question that the amount of their teacher retirement funding, previously directly funded by the State based upon the eligible salaries paid to their employees, will be reduced and result in unequal state funding. Id. at 967. The change from the Act 34 funding formula to the Act 917 funding fonnula does not suffer from this same defect. While teacher retirement and health insurance funding were based on the number of employees, the Act 34 funding formula was not. To summarize, the districts' remedy must, at a minimum, place them in a position which will not require them to use equalization funding or local funds to pay their teacher retirement and health insurance costs. An overall remedy would not achieve this because LRSD would be denied any recovery, notwithstanding an obvious loss of funding under Act 917 to pay these costs. Moreover, the Eighth Circuit's opinion cannot be fairly read as calling for an overall remedy. In discussing the issue and in outlining the remedy, the opinion clearly addresses only the districts' claims as to the 7 teacher retirement and health insurance programs. The Eighth Circuit's opinion should not be read to grant relief beyond the issues before the court. Bailey v. Henslee, 309 F.2d 840 (8* Cir. 1962) Therefore, an overall remedy should be rejected, and the districts' damages should be based on their loss of teacher retirement and health insurance funding. B. Damages based on the districts' loss of teacher retirement and health insurance funding. 1. Actual costs vs. equal funding. To award the districts damages based on their loss of teacher retirement and health insurance funding, this Court must resolve three additional issues. First, the State disagrees with the districts and Joshua on the starting point for calculating the districts' damages. The State argues that the districts' damages should be based on their actual teacher retirement and health insurance costs. The districts and Joshua contend that the State should be required to pay the districts the same percentage of teacher retirement and health insurance costs paid by the State to all other school districts in Arkansas. In both the 1995-96 and 1996-97 school year, the State paid school districts outside Pulaski County 107% of their actual teacher retirement and health insurance costs.1 In order to provide equal funding to the three Pulaski County districts, the starting point for their damages should be 107% of their actual teacher retirement and health insurance costs. Docket No. 3187, Exhibit 1. 1Using Exhibit A to the Declaration of Tristan D. Greene (Docket No. 3176), this percentage may be calculated by first subtracting the actual teacher retirement and health insurance costs of the three Pulaski County districts from the statewide total to obtain the actual teacher retirement and health insurance costs of other districts in the state. The amount other districts received in excess of their actual costs is equal to the total desegregation adjustment shown in column 4. The total desegregation adjustment is then added to the actual teacher retirement costs of other districts. This equals the actual amount received by other districts in the state for their teacher retirement and health insurance costs. The percentage of costs received by other districts in the state is determined by dividing the actual amount received by other districts in the state by the actual costs of other districts in the state. In both 1996-97 and 1997-98, this percentage is 107%. 8 In the Eighth Circuit's workers' compensation opinion, the court defined the workers' compensation "program" as "equal State funding of workers' compensation for all school districts." LRSD v. PCS SD, 83 F.3d at 1018. Accordingly, the Eighth Circuit found that this Court "correctly held that the State must disburse seed money to the Pulaski County districts in the same percentage as it does statewide." Id. ( emphasis supplied). 2 Likewise, the State must disburse teacher retirement and health insurance funding to the districts "in the same percentage as it does statewide." Therefore, the starting point for determining the districts' damages should be the percentage of teacher retirement and health insurance costs paid by the State to other districts in Arkansas rather than the three Pulaski County districts' actual costs. See Docket No. 3187, Districts' Brief, for a more complete discussion of this issue. 2. The amount of equalization funding received for teacher retirement and health insurance. The second issue concerns the amount of equalization funding received by the districts to pay their teacher retirement and health insurance costs. The State, LRSD, NLRSD and Joshua disagree with PCSSD as to the appropriate method for calculating this amount. The State proposes a methodology which takes into account the equalizing effect of the Act 917 funding formula. On August 19, 1998, all three districts agreed that the State's method was appropriate. See Docket No. 2Specifically, this Court stated: [T]he Court does find that the State must assist the three Pulaski County school districts to the same degree that it is assisting the other districts in the state. Thus, the state must fund the same proportion of the cost of each of the three Pulaski County school district' workers' compensation insurance as it pays for all the other school districts in the state beginning with the 1994-95 school year. Docket No. 2337, Memorandum Opinion and Order filed Jan. 13, 1995, p. 6-7. 9 3187. However, it appears PCSSD now intends to pursue its alternative methodology, which assumes that the Act 917 funding formula distributed equalization funding based only on a district's Average Daily Membership (''ADM''). PCS SD' s methodology should be rejected because it conflicts with the findings of this Court which were affirmed by the Eighth Circuit and because it fails to take into account the equalization effect of the Act 917 funding formula. (a) The State's methodology. The State proposes that the amount of equalization funding received by the districts for teacher retirement and health insurance be determined by a simple two-step calculation. First, the total teacher retirement and health insurance costs for all school districts in the state is divided by the total amount of state aid distributed through the Act 917 funding formula to get a percentage. Next, this percentage is multiplied by the total amount of Act 917 funding received by a district, with the result being the amount of Act 917 funding the district received for teacher retirement and health insurance. The State's methodology recognizes that there is no way to trace funding for teacher retirement and health insurance through the Act 917 funding formula. As this Eighth Circuit noted, teacher retirement and health insurance funding "has been folded into the over-all Equalization Funding system .... " Id. at 965. Because money is fungible, the only reasonable assumption that can be made is that the funding for teacher retirement and health insurance was equally distributed among school districts. Therefore, the State's methodology assumes that, if 15% of equalization funding for all districts was for teacher retirement and health insurance, then 15% of LRSD's equalization funding was for teacher retirement and health insurance. 10 The present case is similar to trust cases involving the commingling of trust assets with other assets. In effect, the State has commingled the teacher retirement and health insurance funding with equalization funding. Where a trustee commingles trust assets with other assets, the trust maintains a right to the trust assets based on their proportion to the whole. See, e.:&., Restatement (Second) of Trusts, 202, comment n. Similarly, the amount of teacher retirement and health insurance funding the districts received should be based on the proportion of teacher retirement and health insurance funding to the whole of equalization funding. This is the result achieved by the State's methodology. The State currently uses this proposed methodology to detennine the amount of equalization funding school districts receive from the Education Excellence Trust Fund ("Trust Fund"). Ark. Code. Ann. 6-5-307 (Michie Supp. 1997) requires school districts to spend funding from the Trust Fund on teachers' salaries. Ark . . Code. Ann. 6-5-307 (Michie Supp. 1997). Like the teacher retirement and health insurance programs, funding from the Trust Fund was once distributed outside the funding formula. When the State began distributing the Trust Fund as a part of equalization funding, school districts still needed to know the amount of funding they received from the Trust Fund in order to determine their compliance with Ark. Code Ann. 6-5-307. The State developed the methodology it now proposes in the present case to detennine the amount of equalization funding a district received from the Trust Fund. This methodology has already been subjected to public comment and adopted by the State Board of Education. The State's regulations setting forth this methodology are attached hereto as Exhibit 1. Most importantly, the State's methodology provides the greatest benefit to desegregation in that it results in the greatest monetary award for each school district, including PCS SD. See Docket 11 No. 3187, Districts' Response, Exhibit 1. Under PCSSD's own methodology (which assumes the districts recover more than their actual costs), PCS SD damages total $3,509,884 for the 1996-97 and 1997-98 school year. Docket No. 3186, Exhibit A and B. However, using the State's methodology ( and also assuming the districts recover more than their actual costs), PCS SD' s damages total $4,142, 571. See Docket No. 3187, Districts' Response, Exhibit 1. PCSSD's method had a much more significant impact on LRSD. Under PCSSD's methodology, LRSD's damages total $10,726,693. ill Exhibit 2 attached. The State's methodology results in a damage award to LRSD of Sl 7,819,759. See Docket No. 3187, Districts' Response, Exhibit 1. (b) PCSSD Methodology. PCS SD proposes calculating the amount of equalization funding received by the districts for teacher retirement and health insurance based on the assumption that each school district received the same amount per ADM. PCS SD takes the total teacher retirement and health insurance costs for all districts and the State and divides that amount by the total state ADM. The resulting per ADM amount is then multiplied by a district's ADM to determine the amount of equalization funding received by the district for teacher retirement and health insurance. PCSSD's methodology should be rejected for several reasons. First, it assumes that all districts received the same amount per ADM and thereby fails to take into account the equalizing effect of the Act 917 funding formula. As this Court has found, "the State has included funds for teacher retirement in the new funding scheme which distributes funds on a perADM basis equalized by the wealth of the district." Docket No. 2930, Memorandum Opinion and Order, p. 9 (emphasis supplied). The equalizing effect of the Act 917 funding formula means that districts with greater local resources receive less equalization funding. For example, due to 12 differences in local resources, LRSD received $1,858.73 per ADM in equalization funding in 1997-98 and PCS SD received $2,815.47 per ADM in equaliz.ationfunding in 1997-98. See Exhibit 3 attached. PCS SD contends, however, that both districts received $428.18 per ADM for teacher retirement and health insurance. ~ Exhibit 2 attached. Thus, according to PCS SD, 23% ofLRSD' s equalization funding was for teacher retirement and health insurance while only 15% ofPCSSD's equalization funding was for teacher retirement and health insurance. No rational basis supports the assumption that a greater proportion of LRSD' s equalization funding was for teacher retirement and health insurance. PCS SD' s method would result in LRSD being forced to use equaliz.ation funding or local funds to pay its teacher retirement and health insurance costs, but this is why the change to Act 917 violated the Settlement Agreement with regard to the teacher retirement and health insurance programs in the first place. As this Court stated, "requiring the settling districts to pay health - insurance matching from equaliz.ation or local funds is not a 'fair and rational' adjustment to the funding formula." Docket No. 2968, Memorandum Opinion and Order, p. 5. PCS SD attempts to justify the use of a pure ADM calculation by making the assumption that the money for teacher retirement and health insurance was removed from the Act 917 funding formula after equalization and distributed separately. However, there is no factual basis for making this assumption. Teacher retirement and health insurance funding was not removed from equalization funding, and it was not distributed separately after distribution of equaliz.ation funding. Rather, teacher retirement and health insurance funding was commingled with equalization funding. Therefore, the State's methodology provides the only reasonable means for determining the amount of equalization funding the districts received for teacher retirement and health insurance. 13 3. PCSSD's cap argument. Finally, PCS SD argues that the Eighth Circuit's opinion requires a comparison of the overall impact of the change from Act 34 to Act 917 for the purpose of establishing a limit or cap on the districts' damages. While this would not affect PCSSD, calculations submitted by PCS SD indicate that it would bar any recovery by LRSD. Docket No. 3227. PCSSD's motive in making this argument results from a concern about the disparity in teachers' salaries betweenPCSSD and LRSD. PCSSD apparently hopes to prevent LRSD from following through on a promised pay increase contingent upon its recovery in this case. The best indicator of the lack of merit in this argument is the fact that the State itself does not make it, despite the fact that the State would be the real beneficiary if the argument prevailed. As the State concedes, however, a cap on the districts' damages in the manner suggested by PCSSD would violate the Settlement Agreement. - First, capping the districts' damages based on an overall comparison between Act 34 and Act 917 would violate Paragraphs II.E. and II.L. of the Settlement Agreement by depriving the districts of the benefit of the change in the funding formula. The final sentence of Paragraph II.E. prevents the State from using general state aid (now equalization funding) to supplant its funding obligations under the Settlement Agreement. It provides, "The funds paid by the State under this agreement are not intended to supplant any existing or future funding which is ordinarily the responsibility of the State of Arkansas." Settlement Agreement, ,i II.E. Therefore, assuming for the purpose of argument that LRSD benefitted overall from the change to the Act 917 funding system, the fact remains that the State failed to pay the same percentage ofLRSD's teacher retirement and health insurance costs as it paid to other school districts in the state, and this violates the Settlement Agreement. 14 A cap on the districts' damages as suggested by PCSSD would also violate Paragraph II.L. of the Settlement Agreement. The Eighth Circuit described this paragraph as an "anti-retaliation clause." Id. at 966, quoting LRSD v. PCSSD, 83 F.3d 1013, 1018 (8* Cir. 1996). Discussing Paragraph II.L. in the workers' compensation decision, the Eighth Circuit explained: Id. Its purpose, by its very words, is to prevent the State from cutting other programs in order to pay for its desegregation commitments. U: for example, the State had passed a statute decreasing or eliminating workers' compensation payments for the settling districts only, while maintaining its system of paying the costs to other school districts, this portion of the Settlement Agreement would have clearly been offended. The flaw in PCSSD's cap argument can also be demonstrated by consideration of a hypothetical statute. Assume the State passed a statute adopting the Act 917 funding system but continuing to directly pay school districts' teacher retirement and health insurance costs. Assume e next that the statute provided that the State would not pay the three Pulaski County districts' teacher retirement and health insurance costs to the extent they benefitted from the overall change in the funding formula. Such a statute would clearly violate the Settlement Agreement. In this hypothetical, numerous school districts in the state would receive increased state aid as a result of the change in the funding formula, but only the three Pulaski County districts would be required to use any increase in state aid to pay their teacher retirement and health insurance costs. PCS SD' s cap argument brings about the same result as the hypothetical statute. Therefore, a cap on the districts' damages would, in and of itself, violate the Settlement Agreement and should be rejected. The Eighth Circuit stated in its teacher retirement and health insurance opinion that its decision in the workers' compensation case "points the way towards a proper solution of the present appeal." The Eighth Circuit's opinion in the workers' compensation case in no way indicates that the 15 districts may only recover damages to the extent that they lost money overall due to the change in the funding system. The court simply held that "the State must disburse seed money to the Pulaski County districts in the same percentage as it does statewide." LRSD v. PCSSD, 83 F.3d at 1018. The court imposed no requirement that the districts must lost out overall as a result of the overall funding changes, and this Court should not interpret