In South Bend Community School Corporation v. Linda D. Lucas, No. 93A02-0705-EX-387, the majority of judges agreed with South Bend that Head Start institutions should be considered schools under Indiana statute and therefore, its teachers are not allowed to collect unemployment during the summer.
Lucas works as a teacher at Head Start, which operates from August to June and is a federally funded program and public entity established pursuant to an agreement among 12 public school corporations. Head Start teachers work in classrooms located inside elementary schools and work with teachers of students in other grades to help create a smooth transition for students.
Lucas filed for unemployment insurance benefits during her 2006 summer break, and the Unemployment Insurance Review Board found she was eligible for the benefits because Head Start is not a "school" as defined by Indiana Code 22-4-2-37. Employees of schools are ineligible under Indiana statute to receive unemployment benefits during summer breaks.
South Bend schools appealed the decision, arguing Head Start programs should be considered schools under Indiana statute.
The interpretation of Indiana statute is key to the outcome of the appeal. The courts have decided when a court is faced with two reasonable interpretations of a statute - one of which is supplied by an agency in charge of enforcing the statute - the court should defer to the agency.
The judges examined the dictionary definitions of "educational institution," "school," and "institution," as well as the statutory definition of school.
Head Start is a consortium of 12 educational institutions, which operates in other educational institutions, and its academic calendar is identical to that of the schools responsible for its operation, wrote Chief Judge John Baker. Even though Head Start teachers are not paid during the summer break, their health benefits do continue.
"Inasmuch as Head Start is virtually identical to a school and is inextricably intertwined with the member public school corporations, we can only conclude that the legislature intended that Head Start be treated as an educational institution for the purpose of unemployment compensation," he wrote. He was joined in the decision by Judge John Sharpnack.
In addition, the purpose of the Unemployment Act is to provide funds for people who become involuntarily unemployed because of adverse business and industrial conditions. The Court of Appeals had previously determined this did not include teachers on their summer breaks. There is no evidence Lucas was involuntarily underemployed by adverse business conditions, Chief Judge Baker wrote, and for Lucas to receive benefits would create a windfall. He reversed the lower court decision.
In a separate dissenting opinion, Judge Patricia Riley agreed with the Review Board's decision finding Head Start not to be an educational institution or school. She points out subsection 5 of I.C. Section 22-4-2-37, which states that "school" does not include "an organization offering preschool training, not part of the public or parochial school system." Head Start is not accredited by the Indiana State Board and is federally funded. It is a preschool program for both education and social development.
Judge Riley also wrote that as the majority of judges pointed out in their opinion, the quoted standard of review is to defer to the agency when the court is faced with two reasonable interpretations of a statute. She believes the majority reached the wrong result and would affirm the Review Board's decision.