While the legislature met in special session to hold down the costs of health insurance for teachers and public school personnel, other important developments in Arkansas education policy were taking place in the judicial system.

The state Supreme Court overturned a ruling by a Pulaski County judge and gave new life to a challenge of the state school funding formula, which was filed by a small and isolated school district in the Ozark Mountains.

Also, the Little Rock School District made an offer to end the long-running desegregation case and release the state from its legal obligation to pay the district about $42 million a year.

Both lawsuits have significant financial implications for every school district in Arkansas, because they potentially affect the amount of state education funding that is distributed every year.

In 2010 the Deer/Mount Judea School District filed a suit contending that the state did not provide enough funding to adequately educated students in geographically isolated districts.

A Pulaski County judge ruled that the issues in the Deer/Mount Judea case had already been litigated. But the ruling was overturned in early October by the state Supreme Court, which ruled that the lawsuit did indeed present new issues and which sent the lawsuit back to the lower court for further hearings.

The Deer/ Mount Judea District lawsuit challenges the state’s method of determining the adequacy of school funding, of equalizing teacher salaries and of providing transportation funding.

State education officials are wary that the ruling could eventually re-open the Lake View case. That lawsuit, also filed by a small, isolated school district, successfully challenged the state’s method of distributing education funds.

After years of litigation the state was released from the Lake View case, but only after raising taxes and allocating hundreds of millions of new revenue to public schools.

The Pulaski County desegregation case has been in litigation for even longer. In 1984 a federal judge ruled that state laws and policy decisions had contributed to the segregation of the three school districts in Pulaski County.

In 1989 the state agreed to provide extra money to the three districts, in addition to the usual amount of state aid they would receive under the school funding formula. Since 1989 the state has provided more than $1 billion to the Pulaski County districts and there is no end in sight, even though two of the three districts in Pulaski County have been declared substantially desegregated.

At the urging of its new superintendent, the Little Rock School offered to end the lawsuit if the state paid it $42 million a year for seven years. Its offer has several conditions, such as a stipulation that the state would not retaliate against Little Rock and would not designate it to be in financial or academic distress during the seven years.

The attorney general, who represents the state, called the offer a "non-starter." He said that the state would not agree to any conditions, because Little Rock could prolong litigation indefinitely by arguing in court that the state was out of compliance with those conditions. Also, the attorney general said any agreement should include the other two school districts in the lawsuit, which are the North Little Rock School District and the Pulaski County Special School District.