School districts that can generate property tax revenues above the state’s basic per-student stipend do not have to share the excess collections with poorer districts, the Arkansas Supreme Court ruled last week in a 4-3 decision.

The state guarantees allocations of at least $6,267 per student per year. If a local district can’t provide that funding level at the district property tax of 25 mills, the state makes up the difference.

Most of the 239 school districts in Arkansas require the state subsidy, but two districts with sufficient revenues sued over a policy shift enacted in 2010 by Education Commissioner Tom Kimbrell.

Four districts were asked to return revenues to the state for allocation to poorer districts, and two complied.

However, school districts in Eureka Springs and Fountain Lake kept the disputed revenues. The districts filed suit in 2011 when the Education Department responded by withholding some of their funding and refused to approve the district budgets.

The court ruling will affect six districts that have revenues above the minimum funding level, Kimbrell said.

No decision has been reached on whether to seek a rehearing from the court or ask the Legislature to provide a new funding mechanism, he said.

“It has a negative impact on the foundation of what we’ve based all of our educational decisions over the last 15 years on,” Kimbrell said.

The revenue from the statewide 25 mill tax is collected by the state and then sent back to the district.

Justice Paul Danielson said in the majority opinion that current state law clearly stipulates that the money be returned to the district where it was collected.

Returning the excess revenues to local districts does not violate the state constitutional standard of “an adequate and substantially equal education” for all Arkansas students, he said in the ruling.

If the General Assembly wants to create a mechanism to distribute excess funds, Danielson said, “it is certainly within its purview to do so.”

The Arkansas Education Association said it would work with the 2013 General Assembly to find a legislative solution.

“The decision does not reflect the intent of the Arkansas General Assembly concerning adequacy and equity for all the students in Arkansas’ public schools,” president Donna Morey said in a statement.

“It will be necessary for the legislature to modify the statutes to clearly define the funding structures for schools, and the AEA will be an active partner in changing the appropriate laws,” she said.

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