A state Supreme Court opinion that will decide who has the power to fund and open public charter schools is expected by March 31, ending a constitutional challenge that threatens to derail the education of thousands of students.

The two-year legal battle launched by seven local districts over power, money and the exclusive right to open neighborhood schools has threatened Georgia’s reputation as a national leader in education reform.

The feud began in 2009 when the Georgia Charter Schools Commission, a state board, got into the business of approving and funding neighborhood schools such as Cherokee Charter Academy.

The school, which plans to open in the fall as Cherokee County’s first charter campus, received more than 1,300 applications for about 700 spots. It was denied twice by the Cherokee Board of Education.

“Local school boards are the elected body that should decide how school funds are spent, not a politically appointed commission that has its own separate agenda,” said Thomas A. Cox, an attorney representing Atlanta Public Schools in the constitutional challenge. “We will see whether the Supreme Court agrees with us.’’

Georgia’s charter school law, which allows the state to give rejected charter petitions a second look, is viewed as among the country’s most progressive. It helped Georgia to win $400 million in federal Race to the Top grant funds promoting innovation in education. And the state has attracted the National Alliance for Public Charter Schools conference in June.

"Nationally, we are watching to see what happens and what lessons can be learned from it," said Todd Ziebarth, a vice president of the alliance.

Still, leaders of some of the state’s largest school systems say the 2008 Georgia law creating the charter commission is unconstitutional. Georgia is one of only a handful of states with a constitution that gives school boards franchise authority to "establish and maintain" schools. The Georgia Constitution does allow the Legislature to create "special schools."

If the state Supreme Court sides with public school boards in the landmark case, Georgia could be the second in the nation, behind Florida, to close its alternative avenue of opening charter schools. Georgia could be the first in the nation to displace students attending charter schools due to such a move, setting a precedent on what happens next to kids in limbo. The commission has approved 17 schools -- nine of which currently serve students and anticipate a combined enrollment of more than 15,000 students in the fall.

The case pits Gwinnett, Bulloch, Candler, DeKalb, Griffin-Spalding and Henry county schools and Atlanta Public Schools against the commission, the state school board, former Georgia Schools Superintendent Kathy Cox, and several commission schools including Ivy Preparatory Academy of Norcross and Statesboro's Charter Conservatory for Liberal Arts & Technology.

"It's a huge case," said Mike Bowers, attorney for Gwinnett County Public Schools, which launched the appeal, as well as the original lawsuit.

"It's going to be messy," added William Haft, with the National Association of Charter School Authorizers. "... In Florida, [the Supreme Court ruling overturning its second authorizer] fortunately happened before any of the schools opened."

The Florida Consortium of Public Charter Schools encouraged those schools to also apply to local districts. Several of them eventually opened.

The state's 121 charter schools -- most approved by local boards -- educate more than 62,300 students, about 4 percent of all Georgia students. The public school campuses promise the state they'll produce results in student achievement in exchange for flexibility from certain state education mandates. Charter students take state standardized tests and do not pay tuition.

Robert High III, an IT director who wants his kids to attend Cherokee Charter Academy, said traditional public schools aren't meeting his academic expectations. “To go the legal route to shut down competition is self-centered. Do a better job and you don’t have to worry about people leaving."

Lawyers for the state and commission schools argue that charter schools are by definition "special" because they must receive permission to act outside the realm of traditional schools to boost student achievement. Some offer programs targeting the arts, math and science and leadership development. The nation's first charter school opened in 1992.

Bruce Brown, who represents charter schools in the case, said, “The Georgia Constitution is very clear that public education is a shared responsibility of the state and local government.”

But Bowers has argued that only schools for disabled students were considered as "special schools" in 1983 when that provision was written in the state constitution.

Brown said a favorable view of that argument, however, could open state schools, including those in the juvenile justice system, to litigation.

Mark Peevy, the commission's executive director, said he and all of the schools the board approved believe the state Supreme Court will uphold Fulton County Superior Court's May 2010 ruling that the commission is constitutional. If not, he said the commission would help get the students placed.

The Supreme Court could provide accommodations for kids caught in the middle. The charter schools also could apply for status as state special schools, which would take away the approximate local share they receive as commission charter schools. That sum is withheld from the state allocations of the districts that charter students leave. That money is added to state and federal dollars.

Lawyers for the school districts say the local share allocation -- which accounts for about half of a commission charter school's budget -- is "illegal" because it was not approved by the voters. Ivy Prep, for example, receives about $1 million from the local school districts its students left.

Nina Gilbert, head of Ivy Prep, said her students are no longer worrying about the lawsuit. Enrollment at the girls’ school is expected to climb to more than 600 next fall when a ninth grade is added. It will be the school’s fourth year open. "We are focusing on teaching and learning," she said. "Our students are achieving at high levels.’’

Charter schools

What's happening: The Georgia Supreme Court is expected to issue a decision soon in a case that questions the constitutionality of the Georgia Charter Schools Commission. In 2009, the Gwinnett school district filed a complaint alleging that the commission was illegally opening and funding charter schools with local money. This came after the Georgia Department of Education gave part of Gwinnett's state allocation to Ivy Preparatory Academy, a charter school approved by the state after being rejected by the Gwinnett school board. Ivy Prep and other commission-approved charters receive federal and state dollars, plus a hotly debated share of local matching funds. Those funds are deducted from the state allocations of the school districts students leave. Other school districts, including Atlanta city and DeKalb and Henry counties, have since joined the lawsuit.

What's at stake: Depending on the Supreme Court's decision, state-established schools that are not specifically set up to serve students with disabilities could face litigation over their constitutionality. The decision could have big financial implications for the state's 17 charter commission schools as well as local school districts, which are already facing big budget shortfalls.