School Board defies state

by Alecia Warren

Sublette County School Board members stand by their decision to spend the excess property tax revenue the state demanded they turn over in accordance with the constitutional mandate Amendment B, which Wyoming voters passed in November.

The state legislature just as rigidly insists that the Sublette County School District No. 1 is breaking the law, as well as the Campbell, Fremont, Lincoln and SCSD No. 2 school districts, which are refusing to relinquish the funds.

The amendment was one of the state legislature’s efforts to equalize funding for all Wyoming public schools and required the state’s mineral-rich districts to turn over 100 percent of excess tax revenues that exceed the allowable funding level specified on a cost-based state-funding model.

State legislators said the amendment was immediately effective upon passing, and the districts had to pay the new rebate amount by the regular June 25 deadline for turning over funds to the state.

Although Carbon County School District No. 1 conceded to paying the new amount, the remaining five school districts refused, pointing out that the legislature failed to repeal pre-existing laws that prohibited the state from requiring school districts to turn over more than 75 percent of recapture funds.

Each of the school districts did comply with the pre-existing statute and turned over the funds required by the state before Amendment B, but Sublette County has already spent the remaining $22.63 million in excess tax revenue on business contracts that were budgeted before the amendment passed.

The contracts include construction for the new aquatic center and middle school expansion. “I think the board did the right thing,” said Vern McAdams, director of business and finance for SCSD No. 1. McAdams said the Sublette County school board argues that the state can’t interfere with the school budget that was decided before the amendment’s passing, nor can the state end business contracts the district was already involved in.

“We had no reason to second guess what voters would do when we passed our budget,” McAdams said of the budget decisions made by the Sublette County school board last July. “The money was already committed.”

Sen. Henry “Hank” Coe, R-Cody and chairman of the Senate Education Committee who sponsored the resolution that put Amendment B on the ballot in 2006, said that in fact the school boards had good reason to second-guess the voters.

“It was no secret that the amendment would be on the ballot, so they should’ve known if they encumbered those funds that the amendment could become part of the constitution,” he said.

The passage of a constitutional amendment “trumps” already existing statues, he added, so the legislature didn’t need to repeal the previous recapture laws to make the amendment effective.

Sen. Kit Jennings, R-Casper, another member of the education committee, also said that the amendment became law as soon as the voters passed it, and it’s impossible to delay its effects, regardless of what the school budgeted.

The school districts chose the worst way to fight, Jennings added, by not turning over the funds required by the amendment by the June deadline.

“Here’s a similar example: in the military, if you think you’re given an order that’s out of line, you obey the order and then go back and argue, you don’t give the guy giving you the order the ability to say, ‘he disobeyed a direct order,’” Jennings said. “That’s kind of the same thing you’re looking at here. The law of the land is clear now about what you’re supposed to do, so by holding that money, you’re breaking the law. It’s their misfortune that they decided as a school board to spend that money, knowing that amendment was up in election. They’re the ones that rolled the dice and lost.”

The question of equalizing excess tax revenue has been a “gigantic issue” since Wyoming citizens voted against an amendment similar to the Amendment B in 2003, said Rep. Monte Olsen, R-Daniel. When the second attempt at the amendment passed, the legislature argued over how to ease it into practice.

“There were some of us from these (mineral-rich) school districts who really wanted to compromise and say, ‘yes, the people have spoken, but let’s keep these school districts whole for this year for what they budgeted for, and then move on from there,” he said, acknowledging that under current legal statues, the districts did have every right to spend the funds they budgeted.

When Olsen helped form a joint house and senate committee to create a compromise bill to prolong the amendment’s effect, however, senators like Coe refused to discuss the possibility, Olsen said.

“They had caught wind that there could be some litigation over this, so they said, ‘here’s the way it is, we’re not going to negotiate, they owe the money,’” he said.

The funds, if turned over by the school districts, will be earmarked for the state’s school foundation program, a fund used to collect revenue for the public school system. Legislators can take money from the fund for other purposes, however.

A cost-based funding model first established in 1995 by the state legislature defines how much money each school district needs for its annual budget based on population. The districts either turn over revenue that exceeds what the model assigns them, or receive entitlements from the state education foundation if their funds are lacking. McAdams said this model has become obsolete, however, and Sublette County actually needs much of the funds the state is requiring it to turn over.

“Since 1995, there have been no costbased studies on what to do about booming districts and what they need to be doing with funding,” he said.

Olsen said he understands why the school districts want to hold onto more funding. School districts like Sublette County have experienced dramatic population surges in their school districts along with the new mineral wealth, he said, and this growth needs to be compensated with proportional funding. And perhaps Sublette County can at least finish the projects it deemed necessary while planning last year’s budget, he said. “I’m an attorney, I think they have a pretty strong case,” he said. “But I don’t think they have a case that this could go on forever. The people of Wyoming have spoken, and they have to abide by that.”

Pinedale attorney Doug Mason is representing the SCBD No. 1, and said that the superintendents, business managers and attorneys from all five school districts have discussed the issue regularly since the amendment passed and agreed if the issue goes to court, the districts will file one lawsuit together.

“I think our school board has done good job of acting within the current law,” Mason said.

Coe said the state is prepared to fight all the way to the Supreme Court. “I’m disappointed that we’re back in a litigation process over an issue like this, I’d rather have this money go towards education than litigation,” he said. “But we think from the state perspective that our case is almost bulletproof.”