Volume 8, Number 40 - December 25, 2008
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Sublette County wins major Supreme Court decision
In a unanimous decision Friday, the Wyoming Supreme Court ruled that both Sublette County school districts may keep 16 months of excess recapture funds that the state legislature previously claimed as its own. The decision allows Sublette County School District No. 1 (SCSD#1) and Sublette County School District No. 9 (SCSD#9) to retain over $73 million in revenues (approximately $54 million for SCSD#1 and $19 million for SCSD#9).
“This issue has been settled,” SCSD#1 Supt. Doris Woodbury said with a smile. “It’s like having a giant weight lifted.”
“(SCSD#9) is pleased that the Wyoming Supreme Court agreed with the district’s interpretation of the law…” a SCSD#9 press release said.
Opposed by the rest of the state, the two Sublette districts joined three other revenue-heavy districts on Oct. 22 to present their case to the court. Less than two months later – an unusually short amount of time – the court’s ruling was unambiguous.
The five school districts were right.
“It’s pleasing and exciting that the Supreme Court sided with us,” said SCSD#1 Business Manager Vern McAdams who learned of the ruling during oral surgery. “I feel a little vindicated that for those years, we did do the right thing.”
The ruling eliminates the state’s demand for payment of excess revenues from school years 2006-2007 and 2007-2008.
“If the ruling would have gone the other way…we would have been scrambling,” Woodbury said. “You’d have seen me in here with tears rolling down my face.”
McAdams said because the district budgeted for those revenues, much of the money has already been spent for construction, maintenance, health insurance and post-employee benefits. If the court had favored the state, SCSD#1 would owe money that it doesn’t have.
“I don’t know if we would have given (the state) the deed to the aquatic center,” Woodbury postulated.
In its statement, SCSD#9 said, “Our planning forward with these funds will be carefully thought out with a focus on the long-term benefit of meeting our students’ learning needs.”
Woodbury said there will be no further action regarding the issue, although both districts have been cut off from their excess funds since June 30.
A long cantankerous road
While school financing has been a source of contention for 30 years, this argument originated in 2006 with Amendment B.
Prior to Amendment B, school districts were allowed to keep 25 percent of their excess revenues (a per-student formula was created to rigidly establish each district’s budget).
Some poorer school districts received funding from state coffers to subsist, while others were flush with excess revenues.
In SCSD#1’s case, that excess was more than $25 million a year. SCSD#9’s excess was lower, averaging just over $9 million a year.
The disproportionate funding and animosity from poorer districts hatched a 2006 budget bill (Senate Joint Resolution 01) to amend the constitution. What would later be known as Amendment B gave the State Legislature permission to take 100 percent of a district’s excess, and with the majority of congressional districts containing poorer school districts, the resolution easily passed both chambers with a necessary two-thirds majority.
In the state referendum, Amendment B passed with 58 percent of the vote. The five school districts argued that Amendment B’s permissive language only suggested that it was possible for the legislature to capture the money, but because of one particular state statute – 21-13-102 (c) – there was no mechanism to take the money.
The State Legislature disagreed and demonstrated its confidence by failing to pass a bill during the 2007 General Session to repeal or amend 21-13-102(c).
But the 2008 General Session changed that with Senate File 54 (SF 54). It did what Amendment B could not do. It repealed 21-13-102 (c) and granted the state access to 100 percent of the excess funds.
The law also mandated revenues “for school year 2006-2007 and each school year thereafter.” In other words, the lawwas retroactive.
Not only did wealthy districts loose their right to excess funds, the state demanded money from the moment Amendment B took eff ect (Nov 15, 2006).
McAdams, who has been in front of the Supreme Court before, was expecting the ruling to take at least six months, and maybe a year.
“This was a really quick turnaround,” he said.
The court’s speed suggests it was an easy decision.
Specifically, it was asked whether Amendment B created a mechanism for collecting 100 percent of the districts’ excess revenues.
In its ruling, the court agreed with the state that “an amendment means change was intended” and suggesting the Amendment nullified 21-13-102(c). But the court sided with the school districts’ argument that the amendment did not “without further legislation… require that the (recapture) amount be changed to 100 percent.”
The court continued, “Quite simply, (21-13-102(c)) remained…in effect after the 2006 Amendment until the Legislature expressly repealed the statute in 2008.”
In other words, 21-13-102(c) was not repealed by innuendo.
The court used those two points to unanimously shoot down the state’s claim that SF 54 could be applied retroactively.
Not the bad guys
“It’s not a moral issue,” McAdams said referring to the state’s vilification of the two Sublette County school districts. “The rest of the state thinks we’re the bad guys and we’re holding money from other school districts, but that’s not the case.”
In fact, every school district is allowed a budget calculated by the same per-student formula.
What’s more, the state is a wash with school revenues mostly recaptured from Sublette County.
That money goes into the Wyoming Public School Foundation Program Account (foundation account), and it is kept there “to be redistributed to all Wyoming school districts for the education of all of Wyoming’s school children,” according to statute.
But others consider the account euphemism for the state’s general fund.
McAdams said the five school districts offered to split the excess revenues evenly with the rest of the state’s school districts, but Cheyenne dismissed the offer. Instead the money sits in the foundation account that is accessible to the legislature.
Regardless, the ruling Friday is a big financial shot in the arm for all Sublette public school students and a giant relief for administrators.
For McAdams, it was uplifting news during a sufferable experience.
“I was delirious sitting in the chair,” he said. “It certainly made an otherwise awful day turn out to be a good day.”
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