The Oneida School District suffered an 11th-hour loss in court late Thursday afternoon, as an Ada County judge rejected an appeal to set aside $7.7 million in state money.
But District Judge Jason Scott urged the East Idaho district and state officials to negotiate, saying Oneida could be entitled to roughly half of the $7.7 million it is seeking.
And Scott also tipped his hand. Before he ruled on behalf of two state entities — the Idaho Department of Education and the Legislature — he suggested he’s unlikely to grant their request to dismiss Oneida’s case entirely. That means the Oneida lawsuit could remain in play, and the fate of the disputed state dollars could remain up in the air.
Oneida sued the state on July 17. The district has said it qualifies for $7.7 million from the state, to help offset the sticker price of a $29 million bond issue passed in March 2023, a voter-approved measure to build a new elementary school. Oneida was supposed to receive the money under a state bond levy equalization program — which was on the books in 2023, but repealed as part of a massive school facilities law passed by the 2024 Legislature. And the district says language in one of the new school facilities laws doesn’t protect Oneida’s $7.7 million; instead, the wording actually puts the money in jeopardy.
Which all led to Thursday afternoon’s hearing, and Scott’s unusual last-minute oral ruling.
Oneida sought an injunction, requiring the Department of Education to set aside $7.7 million until its lawsuit is resolved. Oneida wanted the state to carve the money out of a $203 million property tax relief fund, designed to offset school bonds and levies. The Education Department is scheduled to divvy up this money Friday morning, in order to meet an Aug. 31 deadline in the law.
In Thursday’s oral arguments, Oneida’s attorneys again argued that the district would suffer irreparable harm if the state spends the money elsewhere.
“Once that money is gone, it’s very difficult or impossible to get it back,” said Carsten Peterson of Hawley Troxell, a Boise-based firm that specializes in education law.
Attorney General Raúl Labrador’s office has opposed the injunction, saying it would limit the amount of money the Education Department can send to Idaho’s 114 other school districts.
And in Thursday’s oral arguments, attorneys for the state and the Legislature made a similar argument. Both said the Legislature has the prerogative to change the way it finances schools, and the prerogative to eliminate programs such as the bond levy equalization program. James Edward Monroe Craig, a deputy attorney general representing the Education Department, compared Oneida’s situation to a household scenario; if a person loses a job and loses a source of income, the debt owed on a mortgage or a car loan is unchanged.
“That’s the same situation here,” he said.
Scott did not completely reject Oneida’s case. He suggested the district has a good argument for half of the $7.7 million — a first annual installment, covering the 2023-24 budget year. Scott was more skeptical about the case for a payment for 2024-25.
And in either case, Scott wasn’t sure any of the money should come from the property tax relief fund eyed by Oneida. “I don’t think I can make that leap.”
A contingent of Oneida officials — including three employees and three of the district’s five elected trustees — drove from the remote East Idaho border district to attend Thursday’s hearing. District Superintendent Jon Abrams also was in attendance. He declined comment after Thursday’s ruling.
Lawyers will be back in court next week.
Labrador and the Legislature have asked Scott to dismiss the lawsuit, calling it premature. A hearing is scheduled for Sept. 5.
As Scott addressed the attorneys and Oneida trustees and employees Thursday, he strongly hinted at what to expect. “I am quite skeptical that the case will be dismissed.”
