SCHOOL DIST. NO. I-20 v. DEPT. OF EDUC.
| Decision Date | 04 March 2003 |
| Docket Number | No. 95,684.,95,684. |
| Citation | 2003 OK 18,65 P.3d 612 |
| Parties | INDEPENDENT SCHOOL DISTRICT NO. I-20 OF MUSKOGEE COUNTY, Plaintiff/Appellee, v. OKLAHOMA STATE DEPARTMENT OF EDUCATION, Defendant/Appellant. |
| Court | Oklahoma Supreme Court |
D.D. Hayes, Muskogee, OK, for Plaintiff/Appellee.
Kay Harley, General Counsel, Department of Education, Oklahoma City, OK, Scott D. Broughton, Assistant Attorney General, Oklahoma City, OK, for Defendant/Appellant.
¶ 1 We granted certiorari to address three issues: 1 whether the State Department of Education may withhold future payments to a school district pursuant to 70 O.S.2001 § 18-1181 to recoup funds which it overpaid because of a computer error; 2) whether recovery of the overpayment would violate the constitutional debt limitations of the Okla. Const. art. 10, § 262; and 3) whether venue is proper in the county where the school district is located. We hold that: 1) pursuant to 70 O.S.2001 § 18-118,3 the State Department of Education may withhold future payments to a school district to recoup funds which it overpaid because of a computer error; 2) the constitutional debt limitations of the Okla. Const. art. 10, § 26 do not preclude the Department's recovery of the overpayment; and 3) venue is proper in the county where the school district is located.
¶ 2 Title 70 O.S.2001 § 18-118 provides for the recoupment of state monies which have been "illegally apportioned to, or illegally disbursed or expended by," a school district.5 School districts receive state aid from money appropriated by the Legislature and allocated by the appellant, the State Department of Education (Department).6 A large factor in determining the amount of state aid a school district receives is the average daily membership of the school district.7 This cause concerns a dispute over the application of § 18-118 to school districts which mistakenly report inflated attendance figures as a result of computer errors.
¶ 3 Since 1988, the appellee, the Independent School District No. I-20 of Muskogee County (school district/district) has used computer software provided by National Computer Systems (NCS) to compute student statistical attendance reports which are used to determine the district's average daily membership.8 The software is approved for use by the Department. In February of 1996, NCS sent the school district an upgrade for the computer software which was intended to improve reported errors in the student attendance software program. The district installed the upgrade on April 10, 1996.
¶ 4 Apparently unbeknownst to the district, the upgrade created a glitch which erroneously changed how the software calculated the district's annual statistical reports. On May 24, 1996, NCS sent the district another upgrade which could have corrected problems caused by the first upgrade. However, this upgrade was not installed on the system until after the district ran the annual statistical reports which were used by the Department to calculate the district's average membership. Consequently, the district's annual statistical report, which was produced for filing at the end of May in 1996, showed inflated student attendance numbers.
¶ 5 Because state aid is calculated, in part, by using the higher of the past two years' average daily membership figures of a school district,9 the district received additional state aid in both the 1996-97 and the 1997-98 school years based on the erroneously inflated attendance figures. According to the Department, the overpayment totaled $3,551,356.00.
¶ 6 Sometime in early 1998, the Department became aware that the school district had received a large increase in state aid. The Department asked the State Auditor and Inspector to audit the school district's attendance figures for the years involved. On August 11, 1998, the State Auditor released the audit which confirmed inflated attendance figures. The Department verified the State Auditor's figures and requested a formal opinion from the Attorney General asking for a determination of: 1) whether the Department was obligated to recover the excess money paid to the school district; and 2) whether the Okla. Const. art. 10, § 2610 prohibited recovery of a previous year's overpayment.
¶ 7 On July 20, 1999, in response to the inquiry,11 the Attorney General issued Opinion No. 99-36, holding that: 1) the Department has an affirmative obligation to recover a prior year overpayment of state aid once it is verifies that an overpayment has occurred; and 2) because the recoupment statute, 70 O.S.2001 § 18-118,12 does not require any tax levy to satisfy a prior year's obligation, it is not the type of debt precluded by the Okla. Const. art. 10, § 26.13 On January 20, 2000, the State Board of Education (Board) met to discuss the Attorney General's opinion, the audit, and overpayment. The school district attended the meeting and read a statement from their legal counsel which expressed opposition to the Attorney General's opinion. The Board voted to follow the Attorney General's opinion and it adopted a ten-year recoupment plan for withholding future state aid to recover the overpayment that was made to the school district.
¶ 8 Subsequently, the school district requested a hearing pursuant to the Administrative Procedures Act.14 On March 1, 2000, the Department denied the request for a hearing, arguing that: 1) no rule was promulgated; 2) the only action that was taken was to approve a ten-year repayment plan; and 3) it was bound to follow the Attorney General's opinion.15 The school district filed an action in the district court of Muskogee County on March 8, 2000. It alleged that it was entitled to a declaratory judgment pursuant to 75 O.S.2001 § 30616 of the Oklahoma Administrative Procedures Act (the Act) and judicial review of the order, decision, rule or policy of the Department pursuant to §§ 30717 and 31818 of the Act. The school district argued that 70 O.S.2001 § 18-11819 is inapplicable when overpayments to a school district are caused by a computer error, and alternatively, if § 18-118 were applicable, recouping the money is a violation of art. 10, § 26 of the Oklahoma Constitution.20
¶ 9 The Department sought to dismiss the action, arguing that venue was not proper in Muskogee County. On June 12, 2000, the trial court entered an order establishing venue in Muskogee County. A non-jury trial was held on November 17, 2000; and on December 1, 2000, the trial court entered judgment for the school district. The Department appealed, and on September 10, 2002, the Court of Civil Appeals affirmed in part and vacated in part. We granted certiorari on November 18, 2002.
¶ 10 PURSUANT TO 70 O.S.2001 § 18-118, THE STATE DEPARTMENT OF EDUCATION MAY WITHHOLD FUTURE PAYMENTS TO A SCHOOL DISTRICT TO RECOUP FUNDS WHICH IT OVERPAID BECAUSE OF A COMPUTER ERROR.
¶ 11 Title 70 O.S.2001 § 18-11821 requires the Board to audit the funds of public school districts, and it provides for joint and several liability of school district officers and employees who divert state money from the purpose for which it was apportioned. The statute also provides that if an audit discloses that state monies have been "illegally apportioned to, or illegally disbursed or expended by, a school district or any of its officers or employees," the Board must either demand that the money be returned or it must withhold the unreturned amount from subsequent allocations of state funds.
¶ 12 The school district argues that there is no evidence of any bad faith, dishonesty, wrongdoing, fraud or malice on the part of the school district's officers or employees, thus the Board has no authority under § 18-118 to recoup state money which was disbursed as a result of a computer error. The Department asserts that: 1) the overpayment was illegally apportioned because the district received funding for which it did not qualify under the law; and 2) it is under an affirmative duty to recover state monies which have been illegally apportioned regardless of how the overpayment occurred. It also insists that allowing the district to keep the erroneous apportionment would be tantamount to the state making a gift to the school district in violation of art. 10, § 15 of the Okla. Const.22
¶ 13 In determining whether a statute applies to a given set of facts, we focus on legislative intent23 which controls statutory interpretation.24 Intent is generally ascertained from the whole act, considering its general purpose and objective.25 Relevant portions of an act are considered together, wherever possible, to give full force and effect to each other.26 When statutory intent cannot be ascertained from the statutory language, ie., in cases of ambiguity or conflict, rules of statutory construction are employed.27
¶ 14 The purposes of the state aid program include providing the best possible educational opportunities to every child in Oklahoma and creating a beneficial use of public funds expended for education.28 Funds are to be apportioned objectively, and state support should work to assure equal educational opportunities among the school districts.29 Article 18 of the Oklahoma School Code (the Code) is to be liberally construed to attain these goals.30
¶ 15 The State Department of Education, through the State Board of Education, is responsible for administration of the public school system in the state.31 The Board is responsible for apportioning and disbursing annual appropriations to school districts which meet qualifications to receive state aid.32 If the Board ascertains that any of the factors on which apportionment or allocations are based have changed so as to disqualify the district or reduce its aid, the Board has an affirmative duty to adjust the apportionment or collect an overpayment.33 Forfeiture of state aid and recovery of overpayments are governed by 70 O.S.2001 §§ 18-116-118.34
¶ 16 Section 18-116 provides penalties for knowing and wilful violations of the...
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