Old accusations of misspending get new day in court

Print More

After a decade of waiting, low-income parents and students finally will have their day in court to argue that the Chicago Board of Education misspent hundreds of millions of dollars of state poverty money between 1978 and 1995.

Their goal is to get the city school board to provide money to compensate in some way for the misspending, and for the court to order the state to implement more effective monitoring than it allegedly did in the past.

On Sept. 1, Cook County Chancery Judge Albert Green allowed plaintiffs represented by the Mexican-American Legal Defense and Educational Fund (MALDEF) to proceed under a writ of mandamus, which is an order compelling a government body to fulfill its statutory requirements.

In a suit filed in 1988, the plaintiffs charged that the board had spent as much as $2 billion in Chapter 1 money on general expenses rather than, as the Legislature intended, on services to compensate for the hardships low-income children face.

After two previous dismissals by Green and two rounds at the Appellate Court level, the Illinois Supreme Court ruled last October that the plaintiffs could proceed with the mandamus claim. MALDEF’s amended complaint alleges that diversions of one sort or another continued until 1995, when Paul Vallas became chief executive officer. For example, the board withdrew funding for teachers’ aides, assistant principals and other staff, the complaint says, forcing local school councils, which have disbursed most Chapter 1 monies since 1989, to use these supplemental funds to pay for what had been basic services.

Subsequently, the Reform Board and the Illinois State Board of Education, named because it allegedly neglected its duty to monitor Chapter 1 spending, asked Green once again to dismiss all counts. He did strike down eight counts, including creation of a trust fund so former students allegedly deprived of the Chapter 1 monies could seek continuing education; a prejudgment interest payment, which MALDEF hoped would encourage a settlement; and a request for a full accounting of how Chapter 1 money has been spent.

Attorneys for both sides claimed victory. “The judge clearly said they’re very limited in the relief they can get,” maintains Kathleen Gibbons, the Reform Board’s senior assistant attorney. “The Supreme Court said they had mandamus-we knew that would stand. We got 99.999 percent of the complaint dismissed.” Even if MALDEF wins on the mandamus count, she adds, dismissal of the others makes it significantly tougher for the plaintiffs to recover actual damages. Nonetheless, she says, “We’ve asked several times for some kind of settlement offer. We can’t offer anything until we know what they want.”

Rosa Abreu, MALDEF staff attorney, agrees that prevailing on some or all the eight other counts would have bolstered her case-the plaintiffs may appeal some or all of them. But she says the mandamus count is “the heart of the case. … We have every reason to believe we will be entitled to recover those funds.” She adds, “They wouldn’t be discussing settlement if they thought this would only result in some symbolic victory. I have no doubt that if the statute is going to be enforced, there will be a monetary amount awarded.”

Abreu says that if her side prevails on the mandamus count, the judge still could allow for creation of a trust fund.

It would be tough for the plaintiffs to make a settlement offer without accounting for the spending, Abreu continues. In any event, she adds, such information could be sought during the discovery phase of the trial.

“Discovery rules in Illinois are pretty broad,” says Mike Radzilowsky, the attorney who filed the original suit and a board member of Parents United for Responsible Education (PURE). You can come in and basically ask for things that either are relevant or could potentially lead to relevant evidence.”

The $2 billion figure was based on a study by the Chicago Panel on Public School Policy and Finance, which found that $42 million was illegally misdirected during the 1987-88 school year alone. Gibbons dismisses the panel’s work as “one study by one person.”

In response, Fred Hess, who was executive director of the Panel at the time and is now a Northwestern University professor, says previous boards paid heed to the Panel’s work. “The Chicago Panel at that time was seen as the primary external validator of the correctness or incorrectness of the school system’s financial data. Its research helped to restore the system’s fiscal credibility in the years following the financial bankruptcy in 1980. They can’t have it both ways.”

The Panel’s 1988 study helped fuel passage of the Chicago School Reform Act, which created local school councils and gave them control over most Chapter 1 spending.

If the parents and students eventually prevail, Radzilowsky says the case could be precedent-setting. “The idea of parents and students having standing to challenge the way money is spent from a state educational allocation, that’s kind of unique.”