ATLANTA - In a case that could affect school district finances nationawide, a federal judge has ordered Georgia to pay DeKalb County's school system about $35 million to cover desegregation costs.

The ruling, released last week by Judge William C. O'Kelley of the U.S. District Court for the Northern District of Georgia, held that the state must reimburse the Atlanta area county $24.6 million that it spent to bus students as part of its effort to integrate schools between 1977 and 1992.

In addition, O'Kelley ruled that Georgia must pay for the county's desegregation busing costs since 1992. School officials estimate those expenses at $9 million.

Georgia's refusal to cover school districts' desegregation costs prompted DeKalb to file its lawsuit.

"The state's conscious decision to withhold funding for all but neighborhood school plans served to discourage the only effective means to desegregating many school districts," O'Kelley wrote.

"The court has concluded that the state defendants are liable for the transportation costs of students who attend school more than one and a half miles from their home," he wrote.

The ruling covers the costs of busing students involved in two programs offered by the county: a system of magnet schools; and a "majority to minority" effort, which seeks to equalize racial composition by providing transportation to students who wish to attend schools outside of their attendance zones.

O'Kelley, however, rejected the school system's request that Georgia cover the expenses of operating these two programs.

Senior assistant attorney general Alfred E. Evans Jr., who argued Georgia's side of the lawsuit, said Friday that the state is considering appealing O'Kelley's ruling but has not made a decision yet on whether to do so. Georgia has 30 days to file an appeal.

Evans said that Gov. Zell Miller and the State Board of Education would make the decision on the appeal, in consultation with the Attorney General's office.

"We are very pleased that the federal court has agreed with our position that the state should share the costs of bus transportation," said Frances Edwards, chairperson of the DeKalb County's Board of Education.

Edwards noted that the award will help the school system deal with an expected $11 million budget deficit this fiscal year, which ends June 30. 1995.

The system spends a total a about $15 million a year to operate its fleet of 834 buses, which transport an average of 61,000 students a day, according to spokesman Spencer Ragsdale.

O'Kelley ruling follows a decision, handed down in 1992 by federal Judge B. Avant Edenfield of Georgia's Southern District, that also forced the state to pay a county's desegregation costs. In that case, Georgia has agreed to pay about 15% of these costs in the Chatham County School District, or about $10 million.

Al Lindseth, who represented both counties in their lawsuits with the state, could not be reached for comment on Friday. But in an interview with The Bond Buyer before O'Kelley's ruling, Lindseth said if the high-profile Dekalb County won its case, he expected this to spur similar lawsuits from school districts around the country.

In April 1992, another federal court ruling involving DeKalb County was widely noted. In that ruling, the U.S. Supreme Court overturned a decision by the 11th Circuit Court of Appeals that would have required the county to implement a costly busing plan to achieve racial balance in its schools.

The Supreme Court found that DeKalb's school system was mostly desegregated and that it ought to regain the control it lost to federal authorities in 1969 over the assignment of students to schools. The ruling was widely interpreted as an indication that the Supreme Court has relaxed the standards under which school systems could be released from federal desegregation mandates.

However, the high court left implementation of the ruling up to the lower courts. Last fall, the 11th Circuit Court of Appeals affirmed the Supreme Court's ruling. The U.S. District Court in Atlanta has yet to follow through.

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