BRADENTON, Fla. — Atlanta Public Schools is reviewing its options following a recent decision by the Georgia Supreme Court that prohibited the state's school districts from deducting pension costs out of payments made to charter schools.

"The fact is we're disappointed with the court ruling," said Chuck Burbridge, chief financial officer for APS. "We still believe that charter schools should participate in funding the unfunded liability of the pension fund."

Atlanta Public Schools deducted $2.8 million from its payments to local charter schools in 2012 to help fund a $38.6 million annual pension contribution payment to one of its two retirement plans. Charter schools sued and claimed the law requiring districts to pass through revenues to them does not require charter schools to fund a portion of the district's annual pension costs. On Sept. 23, the state Supreme Court agreed.

Burbridge, who stressed that APS is not anti-charter school, said the stage for the current situation was set decades ago when teachers were transferred to the state retirement fund leaving the school district the liability for school bus drivers and custodians in the general employees' pension plan maintained by the city of Atlanta. Few school districts have similar unfunded pension costs, he said.

The issue came to the forefront in recent years because of charter school enrollment growth in the state, and Governmental Accounting Standards Board pronouncements requiring local governments and school districts to show amortized unfunded pension costs on their books, according to Burbridge.

APS's unfunded pension liability in the city plan is about $550 million, he said.

About 10% of Atlanta's 49,500 public school students were enrolled in charter schools in the 2011-12 school year. Burbridge said that currently is manageable for the district though further growth is a concern.

Georgia law allows a district to carve out a portion of debt service costs from revenues sent to charter schools, but not unfunded pension costs, Burbridge said, adding that if all the district's students entered charter schools, the district would still be responsible for the pension obligation.

The recent state Supreme Court ruling is the final step in the legal process, he said, and APS is considering its options. Those include evaluating additional requirements for approving new charter schools and seeking changes in the funding law from the Legislature.

On Sept. 30, Moody's Investors Service said that the court ruling is a credit negative for Georgia school districts.

Charter school funding varies from state to state.

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