                     United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 06-3318
                                    ___________

Chinyere Jenkins,                     *
                                      *
      Plaintiff - Appellee,           *
                                      *
      v.                              *
                                      * Appeal from the United States
Kansas City Missouri School District; * District Court for the
American Federation of Teachers,      * Western District of Missouri.
                                      *
      Defendants - Appellees,         *
                                      *
State Defendants,                     *
                                      *
      Defendant - Appellant.          *
                                 ___________

                              Submitted: November 14, 2007
                                 Filed: February 27, 2008 (Corrected: 3/27/2008)
                                  ___________

Before RILEY, BOWMAN, and SMITH, Circuit Judges.
                           ___________

BOWMAN, Circuit Judge.

       This appeal arises out of the court-supervised desegregation of the Kansas City,
Missouri, School District ("the District" or "the KCMSD"), which began with the
filing of a lawsuit in 1977. Although the District was declared unitary and released
from court supervision in 2003, some parties to the desegregation suit filed a motion
in the District Court1 on February 22, 2006, asking the court to exercise ancillary
jurisdiction and enjoin the State of Missouri and state officials (collectively, "the
State") from acting in a manner inconsistent with earlier court orders (including an
agreement between the KCMSD and the State incorporated in court orders). The
movants (the KCMSD, a class of plaintiff schoolchildren, and the American
Federation of Teachers Local 691) asserted that recent legislative action by the State
violated orders issued in the desegregation suit by requiring the KCMSD to use
property tax levy proceeds, which were dedicated to the repayment of court-ordered
desegregation bonds, to fund charter schools. The District Court agreed, granted the
motion, and issued a final order enjoining the State from requiring the KCMSD to
divert to the charter schools tax levy funds that were traditionally withheld under
Section 160.415.2(5) of the Missouri Revised Statutes. The State appeals the District
Court's order. We affirm.

                                           I.
       In 1977, the KCMSD, members of the Kansas City School Board, and four
schoolchildren filed suit against the State, suburban school districts surrounding the
District, and various federal agencies. The complaint alleged that the defendants
caused and perpetuated a racially segregated public school system in the Kansas City,
Missouri, metropolitan area. The District Court2 realigned the KCMSD as a defendant
and converted the suit into a class action, making a plaintiff class of all present and
future KCMSD students. After a 7½-month trial, the District Court dismissed the case
against the suburban school districts and federal defendants, but found constitutional
violations by the KCMSD and the State. Jenkins v. Missouri, 593 F. Supp. 1485


      1
        The Honorable Dean Whipple, United States District Judge for the Western
District of Missouri.
      2
      The late Honorable Russell G. Clark, United States District Judge for the
Western District of Missouri, presided over the case from its inception until May 1997
when the case was reassigned to Judge Whipple.

                                         -2-
(W.D. Mo. 1984). The court determined that the State had mandated segregated
schools for black and white children prior to 1954, id. at 1490, and held that the
KCMSD and the State had not met their affirmative obligations to remove all vestiges
of that dual school system, id. at 1504. We affirmed this holding in Jenkins v.
Missouri, 807 F.2d 657 (8th Cir. 1986) (en banc) (Jenkins I),3 cert. denied, 484 U.S.
816 (1987).

       To address the vestiges of unconstitutional segregation, the District Court
ordered remedial programs and capital improvements throughout the District. By the
summer of 1987, the court had approved a series of capital improvement expenditures
totaling approximately $110 million. In September 1987, the District Court approved
a $187 million "long-range capital improvement plan aimed at eliminating the
substandard conditions present in KCMSD schools."4 Jenkins v. Missouri, 672
F. Supp. 400, 403 (W.D. Mo. 1987). These capital improvement costs were in
addition to "other desegregation costs." Id. at 412. While the court had deemed the
State and the KCMSD jointly and severally liable for desegregation remedies, the
court also recognized that the KCMSD lacked the resources to pay its share of the
costs and had exhausted all means of raising additional revenue.5 Concluding that it
was "left with no choice but to exercise its broad equitable powers" to effectuate a
remedy, id. at 411, the District Court directed the KCMSD to issue capital




      3
       This Court has heard over thirty appeals in this case. Where Roman numerals
have previously been assigned to the Court's opinions, we include those numeric
designations.
      4
      The costs of capital improvements continued to multiply, and the total costs
were over $540 million in 1995. See Missouri v. Jenkins, 515 U.S. 70, 78 (1995).
      5
         Voters in the KCMSD had not approved a bond passage or tax levy increase
since 1969. See Jenkins v. Missouri, 855 F.2d 1295, 1312 (8th Cir. 1988) (Jenkins
II), aff'd in part and rev'd in part, 495 U.S. 33 (1990).

                                         -3-
improvement bonds in the amount of $150 million6 and ordered the property tax levy
in the District increased to $4.00 per $100 of assessed valuation, id. at 412–13.7 The
court specifically earmarked the proceeds of the property tax increase for the
retirement of the capital improvement bonds and ordered that a tax increase in an
amount "required to pay the interest and principal of the bond indebtedness shall
remain in effect until such time as the bonds are retired or until other provisions are
adopted to insure their retirement." Order of Oct. 27, 1987, at 2. On appeal, we
affirmed the issuance of the bonds. Jenkins v. Missouri, 855 F.2d 1295, 1304–07 (8th
Cir. 1988) (Jenkins II), aff'd in relevant part, 495 U.S. 33 (1990). We also affirmed
the District Court's action setting aside state law that limited the District's ability to
increase its tax levy. Id. at 1308–15. We required that in the future, however, the
amount of the levy be set by the KCMSD school board (rather than by the court),
subject to a limit set by the court. Id. at 1314. The Supreme Court then considered
the issue and, while holding that the District Court abused its discretion by setting the
property tax levy itself, agreed with our proposal that the District Court authorize the
KCMSD to levy property taxes at a rate necessary to fund the desegregation remedy
and enjoin state laws that prevent the KCMSD from exercising this power. Missouri
v. Jenkins, 495 U.S. 33, 51–58 (1990). Pursuant to these orders, in 1990, the KCMSD
increased the levy to $4.96 per $100 of assessed valuation. See Jenkins v. Missouri,
943 F.2d 840, 842 (8th Cir. 1991) (Jenkins VI).

       The District Court—and our Court—continued to oversee the desegregation
efforts. The case came before the Supreme Court again in 1995. In Missouri v.
Jenkins, 515 U.S. 70 (1995), the Supreme Court determined that the District Court had
exceeded its power in ordering particular remedies. The Supreme Court found "that


      6
      In 1993, the District Court approved the issuance of additional bonds totaling
$160 million.
      7
       The District Court also ordered an income tax surcharge, but that order was
reversed on appeal.

                                           -4-
many goals of [the District Court's] quality education plan already have been
attained," id. at 102, and directed that on remand, the District Court "bear in mind that
its end purpose is not only 'to remedy the violation' to the extent practicable, but also
'to restore state and local authorities to the control of a school system that is operating
in compliance with the Constitution,'" id. (quoting Freeman v. Pitts 503 U.S. 467, 489
(1992)). This order changed the direction of the case, refocusing the court and the
parties on the goal of ending court supervision of the District.

        In April 1996, the State filed a motion asking the District Court to declare the
District unitary, to dissolve all injunctions, and to relinquish jurisdiction in the case.
Less than a month later, the State and the KCMSD entered into an agreement
("Agreement" or "1996 Agreement") whereby the State agreed to pay $314 million
(later increased to $320 million) in desegregation funding to the KCMSD over a three-
year period. The Agreement provided that upon final payment by the State and
approval of the Agreement by the District Court, the State would be entitled to an
order releasing it from further desegregation obligations and the jurisdiction of the
court. Consistent with the State's role throughout the remedial phase of the case, the
Agreement focused only on the amount of funding, not on the use of the funds. The
American Federation of Teachers Local 691 ("AFT"), an intervener in the case, joined
the Agreement, but the plaintiffs did not. The State then filed a second motion asking
the District Court to approve the 1996 Agreement and dismiss the State from the case.
After a hearing on the motions, the District Court denied the motion for unitary status
except with respect to extra-curricular activities. Jenkins v. Missouri, 959 F. Supp.
1151, 1179–80 (W.D. Mo. 1997). The District Court approved the Agreement,
however, stating that it was reasonable to expect the KCMSD to be unitary within
three years—around the time that the State would be making final funding payments.
Id. at 1179. We affirmed the District Court's order in Jenkins v. Missouri, 122 F.3d
588 (8th Cir. 1997) (Jenkins XIV). The State made final payment to the KCMSD




                                           -5-
under the 1996 Agreement on December 3, 1998, and the District Court8 dismissed
the State on January 28, 1999.

        In 1998, Missouri passed legislation authorizing the creation of charter schools,
i.e., "independent, publicly supported school[s]," in Kansas City and St. Louis. Mo.
Rev. Stat. § 160.400. Charter schools established within the boundaries of the
KCMSD are funded by diverting federal, state, and local education funding away from
the KCMSD on a per-pupil basis.9 Id. § 160.415.2(1). Recognizing the KCMSD's
financial obligations under the desegregation revenue bonds, however, the legislature
swiftly amended the charter-schools statute in 1999 so that "[t]he per pupil amount
paid by a school district to a charter school [was] reduced by the amount per pupil
. . . needed . . . for repayment of leasehold revenue bonds obligated pursuant to a
federal court desegregation action." Id. § 160.415.2(5).

       In March 2002, the District Court "declared the KCMSD unitary with regard
to facilities, budget, transportation, and racial balance." Order of Mar. 29, 2002, at 22.
With regard to the remaining discriminatory vestige, the student achievement gap, the
District Court declared the KCMSD unitary and released it from court supervision on
August 13, 2003. Am. Order of Aug. 13, 2003, at 30. The KCMSD's unitary status
had no immediate effect on its funding. The property tax levy remained in place, the
KCMSD continued to make scheduled payments on the revenue bonds, and the State
continued to reduce the KCMSD's funding obligations to the charter schools under
Section 160.415.2(5).

      8
      As noted above, Judge Whipple began presiding over the case in 1997. This
was one of his first significant orders in the case.
      9
       "The school district must pay each charter school an amount based on the total
enrollment of the charter school multiplied by the tuition for each charter school
student, multiplied by the projected daily attendance of those students." Jenkins v.
Sch. Dist. of Kansas City, Mo., 73 F. Supp. 2d 1058, 1065 (W.D. Mo. 1999), rev'd,
216 F.3d 720 (8th Cir. 2000) (en banc).

                                           -6-
       Then, in 2004, the State changed the rules of the game. The Missouri
legislature enacted a new statute that authorized the Missouri Board of Fund
Commissioners ("BFC")10 to condition the KCMSD's withholding of funds under
Section 160.415.2(5) on a finding that the KCMSD did not have adequate reserves to
satisfy outstanding desegregation bonds:

      The [BFC] shall determine whether any governmental entity has
      sufficient fund balances to redeem leasehold revenue bonds obligated
      under a federal desegregation action. If the [BFC] determines that any
      governmental entity has sufficient fund balances to redeem or otherwise
      pay off such leasehold revenue bonds, the state board of education shall
      certify, under subdivision (5) of subsection 2 of section 160.415, RSMo,
      that no amount is needed by such governmental entity to repay such
      bonds.

Mo. Rev. Stat. § 33.315. Pursuant to the statute, the BFC met in April 2005 to
determine whether the KCMSD had sufficient funds to redeem the leasehold revenue
bonds. At the time, the balance owed on the bonds was approximately $160 million
and the last of the bonds was not scheduled to be fully repaid until 2014. Nonetheless,
the BFC determined that the KCMSD had sufficient funds in its reserves to
immediately pay off the bonds. The Missouri Board of Education then certified that
the KCMSD was no longer entitled to make reductions in its per-pupil payments
allocated to charter schools pursuant to Section 160.415.2(5). Two months later, the
legislature repealed Section 160.415.2(5), effective July 1, 2006. S.B. No. 287, 93rd
Gen. Assem., 1st Reg. Sess. (Mo. 2005) ("Senate Bill 287"). As a result of the State's




      10
        The BFC is comprised of Missouri's Governor, Lieutenant Governor, Attorney
General, Auditor, Treasurer, and Commissioner of Administration. Mo. Rev. Stat. §
33.300.

                                         -7-
actions, in July 2006, the KCMSD was forced to begin transferring the full per-pupil
portion of the property tax levy funds to the charter schools.11

       On February 22, 2006, the KCMSD, the class of plaintiff schoolchildren, and
intervenor AFT filed a joint motion in the District Court asking the court to exercise
ancillary jurisdiction and enforce the 1996 Agreement and court orders that
incorporated the Agreement and established the terms of the State's dismissal from the
case. The movants argued that the State's dismissal was premised on the maintenance
of the property tax levy proceeds to allow the KCMSD to repay court-ordered
desegregation bonds. According to the movants, the State violated the Agreement and
court orders by enacting Section 33.315 and Senate Bill 287, which require the
KCMSD to "use levy proceeds that are devoted to the repayment of the desegregation
bonds to fund the charter schools." Jt. Motion to Enforce Judgments at 2. The
movants asked the court to enjoin the State from "using any portion of the per-pupil
amount needed for the repayment of leasehold revenue bonds obligated pursuant to
this case for the funding of charter schools or any other purpose." Id.

       The District Court granted the motion on June 15, 2006. The court found that
"the dismissal of the State was granted subject to assurances of the existence of
adequate funding for KCMSD's operations and the repayment of court-ordered
desegregation bonds," including "the $320 million in transition payments" and "the
availability of the entire property tax levy." Order of June 15, 2006, at 1. The court
was "concerned that requiring KCMSD to transfer these funds to the charter schools
will impede its ability to fund its ongoing operations and continue to meet its debt
service obligation." Id. at 6. The court concluded that "consistent with the Eighth
Circuit's opinion approving the dismissal of the State, the State must not alter the

      11
       The District Court found that "the amount of § 160.415.2(5) withholding from
FY 2000 to FY 2005 has been in the range of $4M to $6M per year depending on the
number of charter school students and KCMSD's debt service schedule." Order of
June 15, 2006, at 6.

                                         -8-
financial status quo until KCMSD has fully repaid its court-ordered bonds." Id. at 7.
In an amended order issued on November 21, 2006, the court further clarified that "the
1996 Settlement Agreement requires the State to permit KCMSD to withhold local
property tax levy funds for repayment of court-ordered leasehold revenue bonds from
transfer to charter schools, pursuant to Mo. Rev. Stat. § 160.415.2(5), through the
respective initial retirement dates of each of the court-ordered leasehold revenue bond
obligations." Am. Order of Nov. 21, 2006, at 3. The court enjoined the State from
requiring the KCMSD to divert to the charter schools property tax levy funds that
were traditionally withheld under Section 160.415.2(5). The State appeals this order.

                                            II.
        Before reaching the merits of the District Court's order, we must address the
State's argument that the District Court had no jurisdiction to consider the motion and
enjoin the State. The District Court addressed this jurisdictional issue and determined
that it had ancillary jurisdiction to enforce prior orders in this case. Order of June 15,
2006, at 3 (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 379
(1994)). We review issues of subject matter jurisdiction de novo. Myers v. Richland
County, 429 F.3d 740, 745 (8th Cir. 2005).

       The State's argument against jurisdiction has two related prongs, both of which
we reject. First, the State asserts that because the District Court declared the District
unitary and closed the case in 2003, the court had no jurisdiction "to impose remedies
some three years after such declaration." Br. of Appellants at 51. This argument is
based on the faulty premise that the District Court imposed new obligations on the
State. As we discuss in detail below, however, the District Court did nothing more
than enforce existing obligations created by previous remedial orders in this case.12
While a district court's jurisdiction typically ends when a case is closed and judgment

      12
       Underlying all of the State's arguments on appeal is the theory that the District
Court unlawfully placed new requirements on the State when the court granted the
motion. We reject this theory at multiple points in this opinion.

                                           -9-
entered, a district court retains ancillary jurisdiction to "manage its proceedings,
vindicate its authority, and effectuate its decrees." Kokkonen, 511 U.S. at 380. The
Supreme Court has recognized that "[w]ithout jurisdiction to enforce a judgment
entered by a federal court, the judicial power would be incomplete and entirely
inadequate to the purposes for which it was conferred by the Constitution." Peacock
v. Thomas, 516 U.S. 349, 356 (1996) (internal quotation marks and citation omitted).
We affirm the District Court's determination that it had ancillary jurisdiction to
enforce previous orders in this case.

       This leads us to the second prong of the State's jurisdictional argument. The
State asserts that the District Court did not have ancillary jurisdiction to enforce the
1996 Agreement because the 1996 Agreement was simply a settlement agreement, the
terms of which were not made part of a court order. Kokkonen made clear that
federal courts do not retain authority to enforce settlement agreements unless the
dismissal order states that the district court is retaining jurisdiction over the agreement
or the court incorporates the terms of the agreement into an order. 511 U.S. at 381.
The District Court reiterated that it had approved the 1996 Agreement "as part of a
modified judicial order" and noted that "[t]he Eighth Circuit has taken the view that
the State was dismissed pursuant to an order of the Court modifying an earlier remedy
and not pursuant to an unincorporated settlement agreement." Order of June 15, 2006,
at 3 (citing Jenkins XIV, 122 F.3d at 605). The District Court thus concluded that it
had ancillary jurisdiction to enforce the terms of the Agreement as incorporated into
court orders. We reach the same conclusion.

       The opinions of both the District Court and this Court make it clear that the
1996 Agreement was incorporated into the District Court's orders. Initially, the
District Court's March 25, 1997, order approving the Agreement indicated that the
District Court was modifying its earlier injunctive decrees. Jenkins v. Missouri, 959
F. Supp. at 1172. The District Court stated that it would approve the Agreement,
thereby releasing the State upon the payment of transitional funding, because "[e]quity

                                           -10-
requires a modification of the earlier remedy." Id. In a later ruling on the plaintiffs'
motion to stay the order approving the Agreement, the District Court stated, "Properly
understood, the approval of the agreement was a court-determination to release the
State from liability over the objections of Plaintiffs—it was not a consensual
settlement agreement." Jenkins v. Missouri, 965 F. Supp. 1295, 1302 n.11 (W.D. Mo.
1997). The District Court has not varied from this view. In an October 2, 1997, order
discussing attorney fees, the District Court was called on to "defin[e] the nature of the
Agreement and the relationship between it and the Order of March 25, 1997." Order
of Oct. 2, 1997, at 5. The court stated: "The Agreement and the Order of March 25,
1997, which approved the Agreement, modified the Court's original remedial
injunction." Id. The court was persuaded "to view the court-approved Agreement as
a judicial decree, not a contract," id. at 7, and to "look to law governing judgments,
not contract law, to interpret and implement the Agreement and the Order of March
25, 1997," id. at 7–8. The District Court concluded that "once the Court approved the
Agreement, its terms transformed from a contract into a court judgment." Id. at 17.

       Our Court has also taken the view that the District Court's approval of the 1996
Agreement was a modification of the District Court's earlier orders. In affirming the
approval of the Agreement, we recognized the equitable power possessed by district
courts to modify the remedies ordered in school desegregation cases and stated that
the District Court "amended the remedy" in this case. Jenkins XIV, 122 F.3d at 603.
We rejected the plaintiffs' argument that they could not be bound by the Agreement,
stating that the District Court approved the Agreement as "an exercise of its
continuing equitable authority to devise and implement a remedy in this case" and that
the District Court's order was "not akin to a contract." Id. at 604 n.11. Finally, we
noted that the court could modify the Agreement in the future to hold the State
responsible for additional funding. Id. at 603.

     Our review of these orders convinces us that while the District Court's
March 25, 1997, order did not state explicitly that it was "incorporating the terms of

                                          -11-
the 1996 Agreement," that is exactly what the order did. See Schaefer Fan Co. v. J &
D Mfg., 265 F.3d 1282, 1287 (Fed. Cir. 2001) ("[A] district court need not use explicit
language or any magic form of words to effect a valid incorporation of an agreement
into an order." (Internal quotation marks and citation omitted)). The circumstances
here are easily distinguishable from those in Kokkonen where the Supreme Court
deemed the district court's "mere awareness and approval of the terms of the
settlement agreement" insufficient to support ancillary jurisdiction. 511 U.S. at 381.
Additionally, as is clear from our discussion below, this Court's approval of the State's
dismissal and the declaration of unitary status came only after we were confident that
the financial conditions in place at the time would provide adequate funding for the
KCMSD to meet its court-ordered bond obligations. The District Court was well
within its authority to exercise ancillary jurisdiction to enforce the terms of all of its
prior orders (including the terms of the incorporated Agreement), as well as all of the
prior orders of this Court.

                                           III.
       We proceed to consider whether the District Court, in exercising its ancillary
jurisdiction, acted appropriately in enjoining the State from requiring the District to
divert to charter schools the levy funds that had been dedicated to repayment of the
District's outstanding court-ordered desegregation bonds. The parties disagree on the
standard that we should apply in our review. The State argues that the District Court
interpreted and modified a settlement agreement and that such action is subject to de
novo review. See Little Rock Sch. Dist. v. N. Little Rock Sch. Dist., 451 F.3d 528,
531 (8th Cir. 2006). The movants argue that the District Court interpreted its previous
orders and that such interpretation is reviewed for abuse of discretion. See Steahr v.
Apfel, 151 F.3d 1124, 1126 (8th Cir. 1998) (ruling that we must defer to a district
court's construction of its own remand order). Neither characterization of the District
Court's actions is completely accurate, however. As discussed above and in more
detail below, the District Court exercised its ancillary jurisdiction by interpreting and
enforcing earlier remedial orders (including orders incorporating the Agreement) of

                                          -12-
both the District Court (including orders authored by Judge Clark) and the Eighth
Circuit. Vindicating the authority of both courts was an exercise of the District
Court's inherent power. Kokkonen, 511 U.S. at 380.13 In other contexts, we have
reviewed a district court's exercise of its inherent power for abuse of discretion. See,
e.g., K.C. 1986 Ltd. P'ship v. Reade Mfg., 472 F.3d 1009, 1017 (8th Cir. 2007)
(reviewing district court's refusal to consider party's argument); Greiner v. City of
Champlin, 152 F.3d 787, 790 (8th Cir. 1998) (reviewing district court's award of
sanctions). We believe that reviewing for abuse of the district court's discretion is
appropriate in the context of the exercise of ancillary jurisdiction as well.14

       In enjoining the State from interfering with the District's use of levy proceeds
previously withheld under Section 160.415.2(5) to repay court-ordered bonds, the
District Court indicated that it was enforcing both court orders and the terms of the
1996 Agreement that were incorporated into court orders. Our review of the
Agreement and the numerous orders in this case leads us to conclude that the District
Court acted properly.

                                            A.
       First, we find that the injunction was necessary to effectuate previous court
orders. Ensuring the KCMSD's ability to repay court-ordered funding obligations was
a priority for both this Court and the District Court throughout this litigation. Implicit
in previous orders is a clear understanding that court-ordered remedies would be fully
funded. If we look back to 1987 when the District Court first ordered the issuance of
the capital improvement bonds and the property tax levy increase, we see that the

      13
         "The cases that Kokkonen, 511 U.S. at 380, 114 S. Ct. 1673, classifies as
examples of the second head of ancillary jurisdiction do not use the term ancillary
jurisdiction, but refer to 'inherent' or 'implied' power . . . ." United States v. Meyer,
439 F.3d 855, 860 n.7 (8th Cir. 2006).
      14
       We note, however, that our ultimate conclusion would not change were we to
apply de novo review, as the District Court acted properly in all respects.

                                          -13-
District Court specifically required "that the revenues from the property tax increase
. . . be used to retire the capital improvement bonds." Order of Oct. 27, 1987, at 1.
The court directed that the portion of the tax increase "that is required to pay the
interest and principal of the bond indebtedness shall remain in effect until such time
as the bonds are retired or until other provisions are adopted to insure their
retirement." Id. at 2. Although on appeal we stated that the property tax levy should
be used to fund other desegregation expenses in addition to retiring the bonds, we did
not criticize the District Court's order regarding the repayment of the bonds. Jenkins
II, 855 F.2d at 1315.

        Ten years later, when asked to approve the Agreement between the State and
the KCMSD releasing the State from the case, the courts again considered the
property tax levy and the KCMSD's ability to fund its court-ordered desegregation
obligations. In its order approving the Agreement, the District Court recognized that
"[a]ll of the parties agree that removal of the court-ordered levy would result in 'fiscal
chaos.'" Jenkins v. Missouri, 959 F. Supp. at 1154. While noting that its approval of
the Agreement would leave in place the court-ordered $4.96 levy for the three-year
transition period contemplated by the Agreement, the District Court warned the
KCMSD that it was not the court's responsibility to ensure funding for the District and
directed the KCMSD to "plan on being entirely self-sufficient [after the three-year
period], even if that means regressing to a $2.75 levy." Id. at 1179. The State asks us
to consider this dicta as evidence that the dismissal of the State was not contingent on
the District's continued receipt of levy funds. We decline to do so, however, because
the District Court's order was not the last word on the matter. In addressing two
separate appeals of the District Court's order, our Court took a different approach to
funding.

      First, in an opinion addressing the plaintiffs' appeal of the District Court's
approval of the Agreement, we stressed that funding at the "present level" was
"unquestionably critical to the continuing success of the district's programs." Jenkins

                                          -14-
XIV, 122 F.3d at 603. We stated that the continuing operation of the schools was
dependent on the $4.96 levy, which the KCMSD was only able to establish because
the court enjoined the enforcement of state laws that set a lower levy limit. Id. We
noted, however, that the Missouri General Assembly had recently passed a joint
resolution submitting for voter approval an amendment to the Missouri Constitution
that would allow the KCMSD to maintain the levy at the $4.96 level, thereby
providing for a means of continued funding after the District was declared unitary and
no longer under court supervision. Id. Assured of the likelihood of continued
funding, we affirmed the District Court's approval of the Agreement. We concluded,
however, that should "the loss of the level of funding under the current levy . . . occur,
it would present a changed circumstance that could call for reconsideration of the
agreement." Id.

        Then, in addressing the KCMSD's separate appeal of the District Court's
determination that it was not the court's duty to ensure funding for the District, we
again recognized the KCMSD's need for sufficient funds to make payments on the
bonds. Jenkins v. Missouri, 158 F.3d 984 (8th Cir. 1998) (Jenkins XV). We found,
however, that the KCMSD's concern that "it [was] on the brink of a funding crisis
because it [was] uncertain whether it [would] have sufficient funds to retire the bonds"
was alleviated for the time being because (after the appeal was argued) "the voters of
Missouri . . . adopted a constitutional amendment that allows the board of the KCMSD
to set the tax rate at an amount up to $4.95 for $100 assessed valuation." Id. at 986
(discussing amendment to Mo. Const. Art. 10 § 11(g)). Based on this constitutional
amendment, we stated that "[i]t is now evident that KCMSD can raise funds to retire
the [court-ordered] bonds." Id. We recounted that the documents authorizing the
issuance of the bonds had declared an intent that the bonds be satisfied out of an
increase in the property tax levy, and we stated that the constitutional amendment
"now gives the KCMSD board authority to maintain that part of its levy which has
heretofore been devoted to retire its indebtedness." Id. (emphasis added). Because
the issue of funding was not ripe, we dismissed the appeal. Id. We noted, however,

                                          -15-
that should state laws interfere with the adoption of a levy in the future, "the district
court could enter injunctive orders to set aside enforcement of such state laws or
constitutional provisions." Id. And we concluded that "[s]hould efforts be made to
declare the district unitary before retirement of the [bonds], the [bond repayment]
issue can appropriately be determined at that time."15 Id. These two orders clearly
indicate that we only affirmed the District Court's order approving the Agreement
after we were assured that sufficient funding would remain in place to enable the
KCMSD to satisfy its desegregation obligations.

       After the State made its final payment to the KCMSD under the Agreement, the
District Court entered an order dismissing the State from the case. Addressing the
funding issue, the District Court stated, "The [funding] concerns expressed by the
Eighth Circuit have been addressed and eliminated by passage of H.J.R. 9[, amending
Mo. Const. Art. 10 § 11(g)], which ensures that the levy would remain at $4.95 per
$100 by simple majority vote of the school board." Order of Jan. 28, 1999, at 5 n.2.
While relinquishing jurisdiction over the State, the District Court also ordered the
State to "continue to comply with obligations, if any, that it took during the course of
this lawsuit and which are not covered by the Agreement itself." Id. at 6. The District
Court concluded with a warning: "The State should be warned by its twenty-one year
involvement in this case against taking any actions which might prevent the KCMSD
from ultimately fulfilling its court-ordered remedial goals." Id.16




      15
        While we recognize that the KCMSD did not raise the issue at that time,
nothing would have prompted it to do so. The State did not restrict the funds that the
KCMSD could withhold and use to repay the bonds until after the District was
declared unitary.
      16
        The State appears to have taken the warning to heart, as five months later it
passed Section 160.415.2(5), permitting the KCMSD to reduce its payments to charter
schools by the amount needed for repayment of the bonds.

                                          -16-
       These five orders paint a picture of the obligation that the District Court and this
Court placed on the State to refrain from taking any action that interferes with the
KCMSD's ability to retire the court-ordered bonds. In granting the movants' recent
motion, the District Court enforced this obligation by prohibiting the State from
requiring the KCMSD to transfer to charter schools tax levy funds dedicated to the
repayment of the bonds and traditionally withheld under Section 160.415.2(5). The
State's argument that the District Court's order somehow imposed new duties on the
State is without merit.

                                           B.
       In addition to stopping the State from flouting the court orders themselves, the
District Court indicated that it was enforcing the 1996 Agreement, which we have
found incorporated into court orders and thus enforceable under the court's ancillary
jurisdiction. See discussion supra at 10–12.

       The 1996 Agreement provided that the "purpose of the [lump-sum] payments
by the State to the KCMSD is to provide the KCMSD with a source of funds not only
for the next three years, but for future years." Agreement at ¶ 5. To effectuate that
purpose, "the parties agree[d] that the KCMSD shall set aside a portion of the funds
being provided by the State for use in years subsequent to fiscal year 1999." Id. The
movants assert that pursuant to this provision, a portion of the $320 million paid by
the State remains in the KCMSD's reserves. According to the movants, the State is
indirectly reclaiming funds that it transferred under the Agreement by requiring the
KCMSD to divert moneys to the charter schools. With these moneys now unavailable
to make payments on the bonds, the KCMSD will be forced to deplete its reserves to
service its bond obligations. We agree with the District Court's finding that implicit
in the Agreement was the parties' expectations that the State would not reclaim the
funds that it was transferring under the Agreement. The District Court's order
therefore appropriately gave effect to this provision.



                                           -17-
       The District Court also considered Paragraph 8 of the Agreement, which
required the parties to "jointly support existing court-ordered financing" (including
the increased property tax levy) "until such time that the District is declared unitary."
Agreement at ¶ 8. The court found that "had KCMSD not been declared unitary in
2003, the State would have had a continuing obligation to support KCMSD's
retirement of the court-ordered bonds through the original maturity dates in 2014."
Am. Order of Nov. 21, 2006, at 2–3. While the District Court recognized that this
provision per se imposed no obligation on the State after the District was declared
unitary,17 the District Court went on to quote our 1998 opinion in which we stated,
"Should efforts be made to declare the district unitary before retirement [of the bonds],
the issue can appropriately be determined at that time." Jenkins XV, 158 F.3d at 986
(dismissing the KCMSD's appeal of the District Court order approving the
Agreement). The District Court noted that while the KCMSD did not raise the issue
of funding at the unitary status proceedings, the KCMSD would have had no reason
to sound the alarm at that time because the State had not yet restricted the District's
withholding under Section 160.415.2(5). "Under these circumstances," the District
Court found the issue "appropriately raised at this time." Am. Order of Nov. 21, 2006,
at 3. The District Court thus relied on both the Agreement and an order of this Court
in finding "that the leasehold revenue bond obligations are 'court-ordered financing'
and the State has a continuing obligation to support KCMSD's efforts to retire them
within their respective initial maturation dates." Id. We find the District Court's
opinion well reasoned and conclude that the District Court did not abuse its discretion
in ordering the State not to interfere with the KCMSD's retirement of the bonds.


      17
        The State argues that the District Court should have construed Paragraph 8 as
limiting the State's obligation to support the levy. Reply Br. of Appellants at 24
(noting that the parties chose not to "set in stone the $4.96 levy for the life of the
bonds"). The State fails to note that the District Court did recognize that the plain
language of Paragraph 8 did not impose obligations on the State after the District was
declared unitary.


                                          -18-
       The State asks us to consider a third provision of the Agreement that the District
Court did not directly address. Paragraph 3 of the Agreement relieved the State,
following its payment of $320 million, from making any further payments "to fund
or otherwise provide for desegregation remedies in the KCMSD." Agreement at ¶ 3.
The State argues that the District Court's order contradicted Paragraph 3 because the
order imposed new funding requirements on the State. This is another argument that
arises from the State's mis-characterization of the District Court's action. As we stated
above, the District Court's order did not require the State to provide new funding to
the District; rather, it simply enforced the State's long-standing obligation not to
impede the District's ability to use levy proceeds to retire the bonds. Thus, we reject
the State's argument that the District Court's order unlawfully modified the
Agreement.

                                          IV.
       The District Court acted properly in exercising ancillary jurisdiction to enforce
court orders and the incorporated Agreement. We affirm the District Court's order.
                        _____________________________




                                          -19-
