For decades, tens of millions of dollars that were approved by voters for classrooms, teachers, and students have been diverted and pocketed by the City of New Orleans.
The City’s actions are unconstitutional and must end!
Since a 1941 ruling, the Louisiana Supreme Court has made it clear – repeatedly – that the City of New Orleans has no right to take a cut from the school district’s tax collections. Yet the City has done just that – diverting tens of millions of dollars approved by voters for classrooms, teachers, and students and instead pocketing the money.
The City began this practice after it lost its appeal to the Louisiana Supreme Court over pension expenses. The Morial administration quietly began taking a fraction of a percentage of OPSB’s taxes to help the City cover these pension costs. Over the years and across multiple administrations, the diversion of funds increased and now stands at 2% of property taxes and 1.6% of sales and use taxes, totaling over $8 million in 2025.
The City is NOT entitled to take any of these tax revenues:
Argument #1: The Louisiana Constitution specifies that the City must collect taxes on behalf of the Orleans Parish School Board (OPSB) and does not give the City authority to withhold or divert tax revenue to offset its tax collection costs.**
In Orleans Parish School Board v. City of New Orleans, 3 So. 2d 745 (La. 1941), the Louisiana Supreme Court declared unconstitutional a city ordinance that authorized a one-percent deduction on all real and personal property taxes for the cost of collections. The court ruled that the City had a mandatory duty to remit the entire tax amount to the School Board and that any lesser amount would be in violation of the constitutional provision.
This principle was reiterated in the 1963 case Orleans Parish Sch. Bd. v. City of New Orleans, 156 So. 2d 718 (La. Ct. App. 4th Cir. 1963) – and the following excerpt from that case was also quoted in the 2020 case, Orleans Par. Sch. Bd. v. City of New Orleans et al, No. 2020-CA-0043, 2020 La. App. (4th Cir. June 3, 2020):
Argument #2: Voters did not authorize the City to divert any of the school board’s tax revenues for collection purposes.
In 2007 in City of New Orleans v. Louisiana Assessors’ Retirement & Relief Fund, 986 So. 2d 1 (La. 2007) the Louisiana Supreme Court ruled that:
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Argument #3: There was no side agreement between the School Board and the City granting the City any authority to withhold these funds. I was on the School Board in 1994; the Board did not enter into an agreement with the City, and the City has been unable to produce an executed agreement.
Argument #4: The rationale of the drafters of the state constitution and stated in some of the previous court cases is that the City incurs minimal additional costs in collecting OPSB’s taxes as it is already expending the effort to collect its own taxes.
Attempts To Get The City To Stop!
In 2019, OPSB sued the City to stop illegally diverting tax revenues.
OPSB won this case in 2020 at the appellate court (cited above). However, the Louisiana Supreme Court reversed the ruling on procedural grounds and remanded the case to the trial court where it has languished. As of fall 2024, and with $40M+ more school board revenue lost to the city, Judge Sheppard still had not set a trial date.
In November of 2024, the New Orleans City Council, the City of New Orleans and the Orleans Parish School Board negotiated a settlement:
- The City would stop charging the School Board for tax collection.
- It would repay $20 million in cash, one $10M installment due 12/31/24 and one due 4/1/25.
- It would fund additional support for the next ten years: $3M for Thrive Kids or a similar program; $1M for career technical education; and $3M/year to OPSB from the Casino lease.
Months later, the mayor refused to honor it, prompting City Council to step in.
Councilman-at-Large JP Morrell sponsored an ordinance effective in April 2025 that prohibited the City from charging the schools any fees for tax collections through December 2026.
- Despite the ordinance, the administration continued to charge the fees.
- In late August, the KIPP, Firstline, Collegiate, and ReNEW boards filed suit and achieved a significant victory in court, securing a Temporary Restraining Order (TRO) and a consent judgement against the City. This order mandates that the City comply with the city ordinance and cease taking any portion of the OPSB’s taxes, both property and sales taxes, until the ordinance expires on December 31, 2026.
This is a win for all of NOLA Public Schools and its students. However, this is merely a temporary victory; we need a permanent solution.
Remaining Litigation
When the mayor refused to honor the settlement, the OPSB and the Council sued for enforcement. The court ruled that the City must honor the $10 million allocation the council included in its 2025 budget but disregarded the rest of the agreement. While OPSB and the Council are ready to appeal this decision, the mayor has requested a rehearing and filed another motion preventing the appeal from moving forward until Judge Sheppard rules on the pending motions. So, the suit over the enforceability of the settlement also remains in Judge Sheppard’s court.
What’s Next?
The new mayor should do what is right for children and schools by complying with the constitution and honoring the settlement agreement.
If not, OPSB and its legal team must zealously pursue with a heightened sense of urgency the original lawsuit and push Judge Sheppard to rule on the case. Once there is a ruling, the case will be appealed by whichever side loses. The Louisiana Supreme Court will ultimately have to rule on the issue.
**The constitutional language prohibiting the City from diverting has been consistent (and crystal clear) for more than 100 years.
Although Louisiana adopted a new constitution in 1974, the language regarding OPSB’s right to levy taxes and the City’s obligation to remit these taxes to the School Board remains (to this day) substantively unchanged:
ORIGINAL – 1921 Louisiana Constitution (La. Const. art. XII, § 16 (1921)), as quoted in the Supreme Court case Orleans Parish School Board v. City of New Orleans, 238 La. 748, 116 So. 2d 509 (La. Dec. 14, 1959)
CURRENT – 1974 Louisiana Constitution (La. Const. art. VIII, § 13(C) (1974))
Dear Friends and Readers,
When I stepped away seven years ago, it felt like the right time. Schools were returning to OPSB, progress was visible, and the central role Educate Now! had played as a clearinghouse for data and analysis seemed less urgent.
But here we are, twenty years after Katrina with New Orleans’ education story still unfolding, and I find there are new issues that need distilling and new information that needs to be disseminated.
So, welcome to Educate Now! 2.0.
Educate Now!
Leslie Jacobs
Founder