Board of Educ. of Calloway County School Dist. v. Williams, 95-SC-299-DG
| Decision Date | 26 September 1996 |
| Docket Number | No. 95-SC-299-DG,95-SC-299-DG |
| Citation | 930 S.W.2d 399 |
| Parties | 113 Ed. Law Rep. 977 BOARD OF EDUCATION OF CALLOWAY COUNTY SCHOOL DISTRICT, Appellant, v. J.D. WILLIAMS (former) Sheriff of Calloway County, Appellee. |
| Court | United States State Supreme Court — District of Kentucky |
Robert L. Chenoweth, Frankfort, Richard W. Jones, Hurt & Jones, Murray, for Appellant.
Stephen C. Sanders, Murray, for Appellee.
Vernon Wayne Young, Frankfort, for Amicus Curiae, Kentucky Association of School Administrators.
Kevin M. Noland, Frankfort, for Amicus Curiae, Kentucky Department of Education.
J. Stephen Kirby, Frankfort, for Amicus Curiae, Kentucky School Boards Association.
Arthur L. Brooks, Brooks, Coffman and Fitzpatrick, Lexington, Joellen S. McComb, Lexington, for Amicus Curiae, Kentucky Education Association.
Annette C. Karem, Williams & Wagoner, Louisville, for Amicus Curiae, Kentucky Association of Counties, Kentucky County Judge Executive Association, Inc.
This appeal is from a decision of the Court of Appeals which reversed the judgment of the circuit court determining the reasonable expenses incurred by the Sheriff in collecting the ad valorem taxes for the Calloway County School District.
The issue is whether the allocation of the costs of collection of school taxes based on a percentage of the revenue collected violates Section 184 of the Kentucky Constitution. The specific question is the method or formula to be used for determining the costs of the Sheriff in collecting the school taxes.
A complaint was filed by the Board of Education after a disagreement arose with the now former sheriff of Calloway County regarding the proper procedure for the disbursement of school district tax money upon collection and the proper fee due to the Sheriff for having collected the school taxes. The Sheriff had been withholding four (4) percent of the total amount of taxes collected on behalf of the school district and allegedly forwarding the balance to the school district without documenting his expenses to justify his fee. The Board and the Sheriff were able to agree as to the direct and indirect cost of the collection of all taxes for all taxing districts by the sheriff. The Sheriff collected the taxes for eight other taxing districts in addition to the Calloway County School District.
The school board seeks to have this Court adopt a new formula for the allocation of the costs connected to the collection of taxes and reject the longstanding method of equitable allocation of costs as approved by prior decisions of this Court.
The circuit judge appointed a special commissioner who was directed to consider the actual and reasonable costs of collection by the Sheriff of school district taxes based on the twelve and one-half (12 1/2) percent allocation of expenses method. A special judge of the circuit court adopted the report of the special commissioner and entered judgment for the Board of Education ordering the Sheriff to reimburse the school district $77,824.00. The Court of Appeals reversed and this Court accepted discretionary review.
The Board of Education argues that the Court of Appeals was erroneous as a matter of law for having overlooked Section 184 of the Kentucky Constitution, viewed in the light of the Kentucky Education Reform Act of 1990, in adopting an artificial and insupportable formula for calculating the reasonable expenses incurred by a sheriff in collecting school taxes. The Board contends that the formula applied by the Court of Appeals to calculate the reasonable cost of collection is directly contrary to the mandate of this Court in Rose v. Council for Better Education, Inc., Ky., 790 S.W.2d 186 (1989), which resulted in the Kentucky Education Reform Act.
The former Sheriff responds by stating that the parties at trial, with the assistance of their Certified Public Accountant, determined and agreed on substantially the entire amount of the direct and indirect costs of tax collection. The Sheriff argues that the only matter before this Court is the proper, modern and equitable manner and method of allocating total costs of collection for all taxes to all taxing districts among the various taxing authorities. He claims that the Board of Education is advocating that this Court overrule established precedent by reinterpreting Section 184 of the Kentucky Constitution.
This Court affirms the decision of the Court of Appeals because it correctly determined that the circuit court committed reversible error by finding that the Board of Education's share of the actual and reasonable costs of the Sheriff in collecting all ad valorem taxes in Calloway County should be only 12 1/2 percent of the total costs to the Sheriff of all collections.
Board of Education of Lawrence County v. Workman, Ky., 256 S.W.2d 528 (1953), established a general formula in computing the cost of collection. In essence, the ratio of school tax collections to total tax collections is to be first determined and then this ratio is to be applied to the amount of compensation for personnel services allocated to the cost of collecting all taxes which will produce the amount allocable to school tax collection. The same ratio has been employed and relied upon whenever this Court has had to consider the proper method of calculating the fees of the Sheriff. See Larue County Board of Education v. Scott, Ky., 296 S.W.2d 682 (1956). Board of Education of Carter County v. Chester Greenhill, Ky., 291 S.W.2d 36 (1956); Felty v. Gay, Ky., 284 S.W.2d 81 (1955); McClain v. Board of Education of Spencer County, Ky., 275 S.W.2d 795 (1955); Hager v. McConathy, Ky., 269 S.W.2d 725 (1954); Board of Education of Caldwell County v. Lewis, Ky., 269 S.W.2d 193 (1954).
Workman, supra, recognized that tax collection costs may differ from year to year. Costs may change because of external factors such as utility charges, postage, rental, paper costs, salaries, travel, telephone and utility bills, computer charges and printing. We understand that such costs in no way diminish the constitutional command that school taxes must be appropriated to the common schools and no other purpose. Ky. Const. § 184.
These basic principles are not changed by the adoption of the Kentucky Education Reform Act of 1990. In response to Rose v. Council for Better Education, Inc., supra, the General Assembly enacted KRS 160.500. The legislature did not direct that the tax collector divide the total cost of collection by the number of taxing districts but only that the tax collector shall be entitled to a fee equal to the expense, but not less than one-half of one percent and not to exceed the rate of four percent for the collection of school taxes. The General Assembly recognized that the cost of collection may change depending on the changes in ad valorem taxes. The legislature chose to place a limit on the fee for the collection of such taxes by the sheriff.
In this case, the Board of Education asserts that it should not be required to pay more of the costs of collection than any other taxing district merely because it receives a larger share of the total tax collection because it costs no more to collect $1 than it does to collect $1,000. Such reasoning is faulty because allocating liability among all taxing districts for the total costs of collection is clearly unfair because it places a disproportionately high share of the sheriff's costs of collection on other taxing districts which receive less tax revenue. We are not persuaded that the Board of Education has presented any valid legal reason why it should not be required to pay the equitably allocated costs of collection for all the money it receives. Benson v. Board of Education of Bellevue, Ky.App., 748 S.W.2d 156 (1988), relied upon by the circuit court, involved an attempt to claim the maximum fee allowed by statute without regard to actual expense and is not applicable here.
It cannot be said that as taxes become larger, there are any directly proportional higher costs of collection. Accounting considerations would indicate that regard must be given toward the assignment of costs based on responsibility and control. As noted in Wells v. Board of Education of Menifee County, Ky., 244 S.W.2d 160 (1951), the responsibility of the sheriff is certainly affected by the amount of money collected and this fact must be taken into consideration in allocating the costs of collection and establishing the proper ratios between the amounts collected in multiple taxing counties.
In an age of accountability the use of all public funds should be entirely open so that the taxpayers know the true costs of any government service. The taxpayer should not be called upon to surreptitiously subsidize any unit of government at the expense of other legitimate government functions without appropriate legislative action. No mechanical formula will automatically succeed, but the ratio previously authorized is fair and should continue to be employed and applied in this case.
Rose v. Council for Better Education and the Kentucky Education Reform Act do not require any change in the allocation of costs for the collection of school taxes. If the General Assembly wishes to change the method for allocation of the costs of collection, then such changes should be legislative amendments pursuant to KRS 160.500 and not judicially imposed.
The applicable statutory provision which provides that school taxes shall be collected by the sheriff for the county school district and that the tax collector shall be entitled to a fee equal to the expense should not be abandoned.
In no sense does this equitable statutory provision interfere with Section 184 which reads that "the interests and dividends of said fund, together with any sum which may be produced by taxation or otherwise for purposes of common school education, shall be appropriated to the common schools and to no other purpose." The long standing ratio approved by the courts should be followed in order...
To continue reading
Request your trial
-
Nelson County Bd. of Educ. v. Forte
...a school board, or named a school district and the school board, since at least the 1940s. See, e.g., Board of Educ. of Calloway County School Dist. v. Williams, 930 S.W.2d 399 (Ky.1996); White v. Board of Educ. of Somerset Independent School Dist., 697 S.W.2d 161 (Ky.App.1985); Cooper v. B......
-
Marshall v. Com. ex rel. Hatchett
...equally to interest and dividends earned by the bond fund and by public school taxes. See, Board of Education of Calloway County School District v. Williams, Ky., 930 S.W.2d 399 (1996). ...