THE MISSISSIPPI LEGISLATURE

The Joint Committee on

Performance Evaluation and Expenditure Review

Report # 525

Mississippi’s Compliance with the Ayers Settlement Agreement

Executive Summary

Introduction

In 1975, Jake Ayers, the father of a student at one of Mississippi’s historically black universities, commenced a class action suit in the United States District Court for the Northern District of Mississippi. The suit was directed against the State of Mississippi and its university system alleging that Mississippi operated a dual system of universities that discriminated on the basis of race and was thereby unconstitutional under the Equal Protection Clause of the United States Constitution. This litigation came to an end approximately thirty years later with the adoption of a settlement agreement in the case of Ayers v. Fordice, infra. The Settlement Agreement set out the state’s duties with respect to the enhancement of programs and facilities at the three historically black institutions.

The Settlement Agreement

On February 15, 2002, the United States’ District Court for the Northern District of Mississippi entered final judgment approving a settlement between the Ayers plaintiffs and the State of Mississippi. In so acting, the court made note of the fact that the Settlement Agreement went beyond what the court considered would be necessary to provide a remedy for eliminating remnants of a dual, segregated system of higher education. However, the court noted that it is not illegal for the state to do more than is required by the Constitution. The settlement accomplished a full, complete, and final resolution of the plaintiffs’ claims. All pending claims were to be dismissed upon the approval of the settlement. The private plaintiffs’ appeal was dismissed on November 26, 2004.

The Settlement Agreement obligates the Legislature to fund:

• Summer Developmental Education Programs;
• academic programs;
• program enhancements,
• endowments; and,
• capital improvements.

The Board of Trustees of State Institutions of Higher Learning (IHL) and the individual institutions must implement programs and capital projects in accordance with the terms of the Settlement Agreement. The Settlement Agreement gives IHL and the institutions some flexibility in implementation.

Except for private contributions made in accordance with Section 4 of the Settlement Agreement (Private Endowments), all funds must come from either bond funds or appropriations from the Legislature.

Compliance with Terms of the Settlement Agreement

As the Settlement Agreement displaces the earlier decree of the court regarding the state’s obligations to eliminate remnants of segregation in the university system, the settlement has the effect of law. IHL must make reports to the court on progress toward fulfillment of the terms of the settlement. In view of this, PEER treats the Settlement Agreement as the basis for determining whether the state has provided the programs, funding, and facilities mandated by the court.

The Settlement Agreement places burdens on both the Legislature to fund programs and upon the IHL Board to administer programs in accordance with the terms of the agreement.

Legislative Compliance with the Ayers Settlement

Because the plaintiffs’ appeal was not dismissed until almost three years after the date on which the United States District Court entered final judgment in the matter, the Legislature’s implementation of the Ayers settlement was delayed. Consequently, some funding has not been appropriated or distributed in accordance with the schedule set out in the agreement.

The Ayers settlement anticipated implementation in FY 2002 and established a multi-year schedule for funding of programs, endowments, and capital improvements. Because under the terms of the settlement implementation was not to begin until all appeals were dismissed and the plaintiff’s appeal was not dismissed until November 26, 2004, the implementation of schedules for certain program payments was delayed.

The Legislature has complied with terms of the Settlement Agreement as follows:

• The Settlement Agreement requirement for $75 million in bond financing for the capital projects has been provided.
• The Legislature has provided $2,500,000 in attorneys’ fees as required by the settlement.
• Because the appeal was not dismissed until 2004, appropriations for the Summer Developmental Education Programs, new university programs and enhancements, and the public endowment have not occurred in accordance with the schedule set out in the Ayers settlement.
  
  While funds were not specifically appropriated for the purpose of providing financial assistance for the summer programs, the programs were nonetheless conducted in the years prior to FY 2006 (i. e., FY 2002 through FY 2005). During the period when appropriations were not made for financial assistance, the universities bore the entire burden of funding. Since FY 2006, the Legislature has funded the Summer Developmental Education Program providing all amounts that would have been required under the FY 2003 required level and proceeding in sequence.
• Despite the fact that the appeal was not dismissed until November 2004, funding for new programs and enhancements was provided in good faith during the period between FY 2002 and FY 2005.
  
  Although these amounts did not equal the amounts set out in the Settlement Agreement, there were efforts at funding the programs required in the court’s final decree and it was made clear that further funding of the programs required in the Settlement Agreement would be funded once all appeals were dismissed.
• Funding of the public endowment that was created in the Settlement Agreement did not occur on schedule but did occur after the appeal was dismissed.
  
  According to the Office of the State Treasurer, the $15 million public endowment was created in the Working Cash Balance Stabilization Fund as required by the settlement and Chapter 583, Laws of 1997, amending MISS. CODE ANN. Section 27-103-203 (1972).
  
  As in other cases, appropriations of endowment funds did not occur in FY 2002 as contemplated by the settlement, but did occur regularly from FY 2006 through FY 2009. Beginning in FY 2006 and continuing through FY 2009, the Legislature appropriated the mandatory $5 million of the total amount as contemplated by the Settlement Agreement.

Beginning in FY 2006, the Legislature began funding Ayers programs as if FY 2006 had been the first year of the settlement schedule--i. e., funding programs and other activities at the levels that would have been required in FY 2003. Assuming that the Legislature continues this practice, the Ayers Settlement Agreement will be funded in its entirety, albeit later than scheduled in the Settlement Agreement. As of October 2008, the public endowment contained a principal amount of $35 million, including $15 million invested by the Treasury.

IHL’s Compliance With the Ayers Settlement

IHL has implemented capital projects and educational programs in conformity with the Settlement Agreement.

While the Settlement Agreement made specific reference to capital projects to be funded and programs to be created or enhanced, appropriations and bond bills were generally silent as to the objects to be funded. This placed the responsibility on the IHL Board of Trustees to ensure that the funds provided were expended in a manner according to the settlement.

IHL has complied with terms of the Settlement Agreement as follows:

• IHL has managed capital improvement funds in accordance with the Settlement Agreement.
• IHL has managed the program creation and enhancement process in accordance with the Settlement Agreement.
  
  PEER notes that most programs required by the Settlement Agreement have been implemented. PEER also notes that Ayers funding has been expended on several programs that were not specifically mentioned in the settlement.

Distribution of Interest From the Endowments

Interest from the endowments has been distributed in accordance with the Settlement Agreement. PEER notes that the private endowment has not reached the amounts anticipated by the Settlement Agreement and thus has generated less interest than anticipated.

The Legislature is required to distribute interest from the endowment to the three historically black institutions. A formula was established in the settlement providing for the distribution of income. Because the settlement did not become final until FY 2006, distributions preceding that year did not follow the allocations set out in the agreement, but the institutions did receive distributions for programs totaling $60,634,000 from FY 2002 through FY 2009. (See pages 23 through 25 of the report for the distributions by institution by fiscal year.)

Since FY 2006, the $15 million trust maintained in the Treasury has generated $1,229,096 in interest, of which $605,643 has been distributed. During that same period, the private endowment has consisted of $1,000,000. This has generated $142,449 in interest, of which $68,961 has been distributed.

PEER notes that the success of the private endowment has been limited. The Settlement Agreement anticipated the creation of a $35 million private endowment that could be managed by the three historically black institutions. The target date for this goal was seven years after the adoption of the Settlement Agreement. It would appear that without major contributions by the private endowment by FY 2012, the private endowment would not reach the agreement goal of $35 million.

Recommendations

1. In view of the fact that full funding of the Ayers settlement was delayed because the plaintiff’s appeal was not dismissed until 2004, the Legislature should, at minimum, continue to make appropriations in compliance with the Settlement Agreement, as it has since FY 2006, by appropriating funds following the schedule set out in the settlement (e. g., the FY 2006 appropriation tracked the payment amount scheduled for FY 2003). The appropriations should follow the schedule set out in the following table:
   
   

   Fiscal Year	Programs	Public Endowment	Summer Enhancement
   2011	$20,200,000	$5,000,000	$750,000
   2012	13,467,000	5,000,000	750,000
   2013	13,467,000	5,000,000	750,000
   2014	13,467,000	5,000,000	750,000
   2015	13,467,000	5,000,000	500,000
   2016	13,467,000	5,000,000	0
   2017	13,467,000	0	0
   2018	6,733,000	0	0
   2019	6,733,000	0	0
   2020	6,733,000	0	0
   2021	6,733,000	0	0

   By the conclusion of FY 2021, the Legislature should also appropriate the difference in funds appropriated between FY 2002 and FY 2005 and the amounts that the settlement schedule required.

2. In view of the fact that the private endowment has not succeeded in raising the funds as envisioned by the settlement, the Board of Trustees of State Institutions of Higher Learning should recommend strategies to the historically black institutions for raising additional income. In the event that those efforts fail, the IHL Board should make recommendations to the Legislature on what additional efforts might be taken to foster interest and contributions to the private endowment.

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