Bullock: Ennis schools wrongly transferred funds

HELENA (AP) — The Ennis School District improperly used taxes levied for adult education and transportation to build a $9 million elementary and junior high school, Attorney General Steve Bullock said Friday.

Bullock wrote in an opinion that school funds must be used for the purposes for which they were raised, in this case adult education programming and transportation services, not construction. In Montana, an attorney general's opinion has the weight of law and can only be overturned by a District Court or through the legislative process.

The Montana School Boards Association had asked Bullock to reconsider his Dec. 9 preliminary opinion.

Attorney Debra Silk argued Bullock's ruling contradicted the advice the district received from Chief Deputy Dennis Parman of the Office of Public Instruction. Silk said in August 2010, Parman, a former Havre school superintendent, wrote that that adult education money could be used, as long as the building also was used for adult education.

The letter, written to then-Madison County Attorney Chris McConnell, twice said it did not appear Ennis Schools was violating the law in the way it was funding the building.

Parman said Friday the school never requested an opinion and noted the letter did raise some questions about spending millions of dollars from an adult education fund on a building when the district spent around $30,000 a year on adult education in recent years.

"If, in the future, the district does not provide expanded Adult Education opportunities ... in this new facility proportional to the funding the taxpayers have provided in support of that effort, there will be an issue of significant concern at that time," the letter said.

Silk suggested if Bullock upheld his opinion, it shouldn't apply to Ennis because the school was nearly built.

"If the trustees can generate non-voted property taxes for capital investments that would otherwise require voter approval, the Legislature's objective for taxpayer oversight is nullified," Bullock wrote in his preliminary opinion.

Madison County Attorney Chris Christensen requested Bullock's opinion on the construction funding after some county residents complained that the board was levying heavy taxes for adult education as a way to avoid asking taxpayers to fund a new school.

"The school board and/or the county may demand an accounting of funding sources to ensure that they were transferred, budgeted, and expended in accordance with this opinion," Bullock wrote. "Ultimately, however, the trustees (as the term implies) must answer to the taxpayers of the District, particularly where property taxes are in question. If there is a basis for liability, those remedies may be pursued by the school board, the county, or any other citizen with standing as provided by law."

A phone message left Friday at Ennis Schools for board chairman Marc Glines was not immediately returned.

The school board's next meeting is scheduled for Wednesday.

When asked what type of remedy might be available, Parman said excess revenue in some school funds could be used to provide tax relief.

"They built the school, they paid the contractor and those funds have been spent," he said. "There's no other revenue source the school district has to pay the taxpayers back the revenue that was collected to build that school. It doesn't make any sense to tax the same taxpayers money to pay them back (from) another fund."

Parman said OPI also raised concerns in mid-2009 that the district had $2.6 million in its adult education fund after having spent less than $26,000 on adult education during the previous school year.

Separately, the Montana Teachers Retirement System is seeking more than $572,000 from Superintendent Doug Walsh and $188,000 from the school district for retirement benefits that it said Walsh received after retiring in 2001 and while continuing to work for the district as a contract employee. The amount includes money the retirement system argues should have been paid into the system on behalf of Walsh while he continued to work. The district is appealing the decision.

Walsh was offered a two-year superintendent's contract at the beginning of the 2011-12 school year.