### IN THE COURT OF APP EALS OF TENNESS EE AT JAC KSON Fe br ua ry 13, 200 7 S es sio n
CITYOF CO VIN GTON ED UC ATION AS SOC IATION v. C ITY O F COVING TON, ET AL 

### .
Direc t Appeal from the Circ uit Court for Tip ton County No. 5738 Joseph H. Walk er, III, Judge

No. W2006-02007-C OA-R3-C V - F iled April 5, 2007

Plaintiff Ci t y of Covington Educ ation Association filed a petition for writ of manda mus and complaint for damag es ag ainst Defe ndants City of Co v in g to n

a n d th e Covington B oard of

Education, alleg ing its member s were entitled to a pay incre ase in a ddition to t hat paid by Def endants a nd to a bonus that was approved and subsequently disapproved by the Board of Education. The trial court de nie d th e wr it a

nd e nte re d s umm ary

jud g me nt i n f

avo r o f D e fe nd ants . We a ff ir m.

Te nn. R . A pp. P . 3 App e al a s o f Rig ht ; J udgm e ntof t he Ci r c uitCo ur t A ffirm e d; and Rem anded

D AVI D R. F ARMER , J. , d e li v e r e d th e o p in io no f

th e c o ur t, in w h ic hW. F RAN K C RAW FORD , P.J ., W.S ., and A L AN E. H I G H ERS , J ., joined.

Richard L . Co l b er t an d Courtney L . Wil bert, Na shville, Tennessee , for the a ppellant, City

of Covington Educa

tion Association.

Edwar d J . McKe nney , J r., Memphis, Tenne ssee, f or the a ppellee, City

of Covington.

R. Dale Thomas a

nd J esse D. Nelson, J ackson, Tennessee , for the appellee , City of Covington B oard of Education.

Valer ie B . Speakman, Me mphis, Tennessee , for the a ppellee, T ipton Count y

Boa rd of Educ ation.

C

. B ar r y W ar d , M e mp h i s , T e n n e s s e e , f o r th e a p p e l l e e , T i p t o nC o un ty.

OP IN ION This appea l arises fr om a petition for wr it of mandamus and complaint for damag es filed by Plai n t i ff City

of Covington Educ ation Association (“ the CCEA”) a g ainst Defe ndants City of-2-

C o v i n g t o n( “ t h e C i t y” ) an d t h e C o v i n g t o nB o ar d

o f E d u c a t i o n( “ th e B o ar d ” ; c o l l e c t i v e l y, Defen d an t s ) i n May

2003. The dispute betwe en these parties c oncer ns two issues: 1) whether an a g re e d 3% inc re a se in C CEAme mbe rs ’ s a lari e s f or the 20 02 -2 00 3 s c ho ol ye ar i nc lud e d o r w a s in addition to a 1% incre ase in tea cher s’ salar ies mand ated by the Gene ral Asse mbly

in J uly 2002,
e ff e c tiv e Janu ary

1, 20 03 ; 2) wh e the r De fe nd ants are ob lig a te d to pa y CCE A me mbe rs a

on e -t ime teac hers’ bonus or termination bene fit where , in March 2003, the Boa rd voted to desig nate $254,000 for the pa y ment of seve ranc e bonuses a nd, in April 2003, voted not to pay a bonus.

Th e tr ia l c ourt de nie d the wr it of mand amus and

awa rd e d s umm ary

jud g me nt t o D e fe nd ants

. Th e CCE A f

ile d a tim e ly no tic e of a pp e a l to thi s Co ur

t. We a ff ir m.
Issues Presented

Th e CCE A p re se nts the iss ue s f or our r e vie w a s f

oll ow s: (1) Did the trial cour

t err in e ffe ctively

treating a

state-or dere d i n cr ease in the “state minimum” portion of tea cher s’ salar ies as neg otiable at the local leve l by concludingthat the City

of Covington B oard of

Education could use that inc re a se to o ff

se t a loc a lly ne g oti ate d s a lary

inc re a se fo r t e a c he rs ? (2) Did the trial cour

t err in c oncluding that once the City of C ovington B oard of Education a

pproved the pay

ment of bonuses to teac hers f or which suf

ficient fu nd s e xiste d in

the sc ho ol s y ste m’ s b ud g e t, t he loc a l g ov e rn ingbo dy

c ou ld lawfully interfe re w ith the pay

m en t of that bonus by

exercising a line item veto over the school sy stem’s expenditure.

Howeve r, althoug h the issu es as prese nted by the CCEA ref

lect the CCEA’s position, we disag ree that the trial cour t erre d in the manner

the CCEA asserts. Upon r eview of the trial cour t’s
or de r a nd the De fe nd ants ’ m oti on s f or summa ry jud g me nt, we re wo rd

the iss ue s a s f

oll ow s: (1 ) Whe the r the tr ial c ourt e rr e d in de te rm ini ngthat th e 3% sa lary inc re a se provided b y t h e contract e ntere d into by the par ties in J anuar

y 2003 and retroa ctive to the beg inning of the 2002-2003 sch ool y ear included the 1% incre ase in tea cher s ’ salar ies mandate d by the Gene ral Asse mbly

eff ective J anuar y 2003. (2 ) Whe t h er

t h e t ri al co u rt erre d

b y d et erm i n i n g th e B o ar d ’s d ec i s i o nt o wi th draw its earlier approva l of a seve ranc e bonus or termination bene fit was within the B o ar d ’ s d i s c r e t i o n ar

y a u th o r i ty. The City of Covington B oard of

Education raises the a dditional issue of whether it is a proper party to this l awsuit when it no long er e x ists and cannot func tion as a body politic.-3- Stan dard of Revie w Summary ju d g me n t i s a

p p r o p r iate o n ly

w h e nth e mo v in g p arty

c and e mo n s tr a te th a t t

h e re are no disputed issues of materia l fac t, and that it is entitl ed to judg ment as a matter of law . Tenn. R. C iv. P. 5 6. 04 ; By rd

v . H all , 847 S.W .2d 208, 214 (Tenn. 1993). The pa rty moving f or summary judgme nt must affirmatively neg ate a n essential ele ment of the n o n -m o v ing pa rty ’s claim, or conclusively

establish an af

firmative de fense

. McCarley v. W est Quality Food Serv

. , 960 S.W .2d 585, 588 (Tenn. 1998)

. I n d e te rm ini ngwh e the r t o award summa ry jud g me nt, the tr ia l c ourt

mus t vie w t he evide nc e in t

he lig ht m os t f

avo ra ble to t he no n- mov ingpa

rt y and dr aw a ll r e a so na

ble infere nces in that pa

rty ’s favor

. S

ta p l es v

. C B L & As so c s. , 15 S.W .3d 83, 89 (Tenn. 2000) . The court should awa

rd summary

judgme nt only

when a rea sonable pe rson co u l d re ach only one conclusion base d on the facts and the infe renc es dra wn from those f

acts. Id. Summary

judgme nt is n ot a pp ro pr iate if

the re is a

ny do ub t a bo ut whe the r a

g e nu ine iss ue of

mate ri a l f

a c t e xists

. McCarley , 9 60 S.W. 2d

at 58 8. We r e vie w a

n a wa rd of summa ry jud g me nt de novo , with no pr e sumpt ion of c or

re c tne ss a ff

or de d to the tr ia l c ourt

. Guy v. Mut. of Omaha Ins. Co. , 79 S.W .3d 528, 534 (Tenn. 2002)

. Anal y sis We beg in our ana ly sis by

noting the ba ckdrop a g ainst which this dispute arose. In 1999, the City of Covington passed a

resolution to cea se oper ation of the City ’s school sy stem. I n November 2000, City

residents voted pur suant to Tennesse e Code Annota ted § 49-2-1002 to tra

nsfer the administration of City schools to the Tipton County Boa rd of Educ ation. By

ag ree ment approve d by c ourt or de r i n Apr il 2 00 1, the City of Cov ing ton B oa rd of May or and Al de rm e n a g re e d to op e rate the City schools throug h J uly

2003.

Pr ior to 2 00 1, the CCE A w a s n ot a ne g oti a tin g un it; it v ote d to be c ome a ne g oti a tin g un it i n May 2001. I n May

2001, the CCEA and the Boa rd bega n neg otiating tea cher s’ contra cts. None of the CCEA neg otiating tea m members who pa

rticipated in ne g otiations reg ardingcontract s for the 2002-2003 school y ear , including CCEA president and ne g otiating tea m member Donna

Fletc her (M s. F le tc he r) , h a d p ri or c on tr a c t neg ot iatinge xpe ri e nc e . In July 20 02 , th e Ge ne ra l A sse mbl y approve d a State incr ease in teac hers’ salarie s of 1%, eff ective J anuar

y 1, 2003. At the beg inning of the 2002-2003 sc hool y ear , the B oard submitted a budg et to the B oard of Mayor and A ldermen which included a 3.5% overa ll incr ease in e mploy ee salarie s. The B oard of Mayor and A ldermen advised the B oard that it would approve the budg et conting ent on a .5% decr ease in the
rec ommended sala

ry incre ase. F ollowing f

urther ne g otiations, on J anuar y 21, 2003, the C CEA, the Boa rd, the City , and t h e T i pton County Boa rd of Educ ation and B oard of Commi ssioners enter ed an agr e e me n t th a t, b y it s te r ms , s p e c if

ic a ll y w a s n o t a c o ll e c ti v e b ar g a in in g a g r e e me n t and that provided the CCEA member s with a 3% sala ry incre ase retroa ctive to the beg inning of the school y ear

. At its March 3, 2003, mee ting, the Boa rd vot ed to pay

sever ance bonuses totaling $254,000 to sc hool sta ff. The B oard did not spec ify how the total bonus monies wer e to be distributed amongT he C C E A ha s no t ap p ea l ed t he t rial co urt’ s d en i al o f i t s p eti t i o n for w rit o f

m an d am us. 1

-4- school employ ees. A t the meeting , C o v i n gt o n City Attorney Michae l Whi taker

(Mr. Whitaker) expressed his conce rn that the pa y ment of the pro p o s ed b o n u s es would have adver se leg al and fi n ancia l conseque nces. O n Marc h 11, the B oard of Mayor and A ldermen soug ht an injunction ag ain s t p ay

me n t o f th e b o nu s e s an d p a s s e d a r e s o lu ti o n p r o h ib it in g th e p ay

me n t o f b o nuses or g ratuities beyond ordinary salarie s and allowa

nces. O n April 14, the B oard vote d to not pay
se ve ra nc e bo nu se s.
The CCEA filed a

petition for writ of mandamus and action for damag es ag ainst the Boa rd and the C i ty

on May 29, 2003. I n its complaint, the CC EA alleg ed its members wr ong fully wer e denied the State minimum salary incre ase of 1%, which it asser ted was to be paid in addition to the 3% pr ov ide d b y

the Janu ary

21 a g re e me nt. Th e CCE A a lso a sse rt e d its mem be rs we re wr on g fu lly d en i ed t h e $2 5 4 , 0 0 0 b o nu s m o n i es ap p ro v edb y th e B o ar d i nM ar ch

. W h i l e t h i s m at t er wa s p en d i n g, the oper ation of the Coving ton Cit y schools was tra

nsfer red to Tipton County eff

ective July

1, 2003, and the Coving ton Boa

rd of Educ ation was dissolved. Acc ording ly , Tipton County and the Tipton County Boa rd of Education wer e gra

nted l eave to intervene in this m atter by consent orde rs enter ed Se pte mbe r 1 2 a

nd Oc tob e r 2 , 2 00 3, re sp e c tiv e ly . We no w t ur n to wh e the r t

he tr ia l c ourt

erred in
awa rd ingsumma

ry jud g me nt t o D e fe nd ants on bo th c la ims

. 1

The Sal ar y Inc re as e
CCE A a nd B oa rd ne g oti a tor s me t thro ug h th e summ e r o f 2 00 2 a nd a g re e d o n a

n o ve ra ll salary incre ase of

3.5%. In J uly

2002, the Gene ral Asse mbly approve d a 1% incre ase in the State’s portion of teac hers sa laries, e ffe ctive January 1, 2003. On August 5, 2002, the Boa rd appr oved a 3. 5% ov e ra ll s a lary

inc re a se fo r a ll e mpl oy e e s. Th e B oa rd be g an p aying th e 3. 5% sa lary inc re a se at the beg inning of

the school y ear

. On Au g us t 27 , 2 00 2, Dr . Jer ry Woo ds (D r. Woo ds ), Di re c tor of Cov ing ton

Sc ho ols , submitt ed the B oard’ s proposed budg et, which include d the 3.5% o v er al l salary incre ase, to the Boa rd of Ma y or and A l d er m en. The Boa rd of Ma y or and A ldermen r efe rre d the budg et to the Financ e Committ ee. O n September 23, the Fi n ance Commit tee a pproved the school budg et conting ent on decr easing the salary incre ase to 3%

. Dr. Woods expl ained these chang es to the B oard at i t s Oc t o b er 7 meeting , and the minutes of that mee ting state : “since w e ar e in the proc ess of contra ct neg otiations, the new ra i s e ca nnot be paid until the contra ct document is ratified and signe d.” Ac cording ly , the salary incre ase was discontinued pending further neg otiations. Minut es of the B oard me eting of De cembe r 2, 2002, indicate that the B oard a nd CCEA neg otiating tea

ms had not rea ched a

n ag ree ment on salary

or g rieva nce pr ocedur es as of

that date.

On J anuar

y 21, 2003, the CCEA, the Covington B oard o f E d ucation, the City , the Tipton County Boa

rd of Education, and the Tipton County Boa rd of Commissioners entere d an agree ment wh ic h p ro vid e d, in p e rt ine nt p art :-5-

1. Th e City

of Cov ing ton

B oa rd of Ed uc a tio n wi ll pr oc e e d w ithpa y me nt o f i ts proposed sa lary

incre ase of

3% for teac hers a s discus s ed wi t h CEA (and retroa ctive to the date 3% incre ase cea sed to be paid). The parties ag ree that no court a ct i o n (or action of any kind) will be taken to pre vent implementation of such incr ease

. 2. CEA will discontinue any neg otiations with t he City of Covington B oard of Education over wa g es, bene fits and other ter ms and conditions of employ ment, conce rning Covington C ity teac hers, a

nd will complete the y ear under the exis tin g wa ges and ter ms and conditions without a Coll ective B arg a ini ngAg re e me nt.

. . . . 4. This Ag ree ment sets forth the e ntire under standing of the pa rties and c an be modified only

in writing, sig ned by

the par ties.

I t is undisput ed that the Coving ton Cit y teac hers a

nd all Boa

rd employ ees r ece ived a 3% salary incre ase r etroa ctive to the b eginni ng of the school year . Moreove r, despite the CCEA’s
asser tion that this ag ree ment should be viewe d as the produc t of a collective barg aining proce ss, we note that the January

21 ag ree ment, by

its terms, unambiguously is not a collective barg aining ag ree ment. We turn to the CCEA’s assertion that the City either improperly used the 1% incr ease in the state min imum sal ary to part ia lly satis fy its a g re e me nt to pay a 3% inc re a se in te a c he rs ’ s a lari e s in violation of Tennesse e Code Annotated §§ 49-3-306 a nd 49-5-609, or

simply failed to pay the 1% state min imum inc re a se

. De fe nd ants do no t conte nd that the y we re no t r e qu ir e d to pa y the 1% state minimum incre ase. Rather, they asser t the parties ag ree d to a

n overa ll 3% increa se which inc luded the 1% state- mandated minimum increa se. They submit t hat, historically , the B oard of Mayor and Alderme n ag ree d to overa ll incre ases in teac hers’ salarie s that included any incre ases mandated by the State.

Th is i ssu e , a s w e pe rc e ive it, is on e of c on tr a c t int e rp re tatio n. Th e qu e sti on be fo re us , in

its simplest terms, is whether the January 21 ag ree ment provides for a 3% incre ase in teache rs’ sala ries in addi t i o n t o the State- mandated 1% incr ease , or whe ther the a g ree ment contemplates a total incre ase of

3% inclusive of the 1% incre ase ma ndated by the State. Ha v i n g re v i ewed the entire
rec ord in this case , including the depositions of Dr. Woods and Ms. F letcher and the minutes of the B oa rd of Ed uc a tio n, F ina

nc e Com mitte e , a

nd B oa rd of M ay or

and Al de rm e n, we a g re e wi th Def endants that the January 21 ag ree ment contemplates a total overa ll incre ase of 3% that includes the 1% incr ease mandated by the State.

There is nothing in this rec ord to indicate that the State- mandated inc rea se appr oved by the Gene ral Asse mbly

in J uly 2002 was discussed spe cifica lly by the C C E A an d Boa

rd of Educ ationT he T en ne ssee C o d e P ro vid es: 2

W hen ag r eement i s r eac hed by t he r epre s ent at i ves of t he bo ar d o f

ed uca t i on an d t he r ecogn i zed pr of es s i on al e mpl oy ee s ' or g an i za t i on , t h ey s h al l j oi n t l y pr epa r e a memor an du m of u n der s t an di n g , a n d, wi t h i n f ou r t ee n ( 14) ca l en dar day s , pr es en t i t t o t h ei r a ppr opr i at e g ov er n i n g a u t h or i t i es f or r at i f i ca t i on
o r reje ct i on

. T h es e g ov er n i n g a u t h or i t i es , a s s oon a s pr ac t i ca l , s h al l c on s i der t h e memor an du m a nd t ake appropri at e a ct i on. I f ei t her gove r ni ng au t hor i t y r ej ec t s o r mo di f i es an y par t of

a pr op ose d

memor an du m, t h e mat t er s h al l be r et u r n ed t o t h e par t i es f or f u r t h er n eg ot i at i on

. T h e boar d of

e du c a t i on ma y e n t e r i n t o s u c h me mo r a n du m f or a pe r i od n ot i n e x c e s s of t h r e e ( 3) y e a r s

. An y i t e ms nego t i at ed by a b o ard o f e d ucat i o n a nd a p rof

ess i o nal e m p l o y ees’ organi zat i o n whi ch requir e f und i ng
s hal l not be cons i dere d bi ndi ng un t i l s uch t i me as t he bo dy emp ower ed t o app r op r i at e t he f un ds has ap p roved s uch ap p rop ri at i o n. In t he event t he am o unt of f und s ap p rop ri at ed i s l ess t han t he am o unt
n e g o tiate d , t h e b o a rd o r its re p r e s e n ta tive s a n d the p ro fes sio n a l em p lo ye e s’ o rg a n iz a tio n o r its

r epr es en t at i v es s h al l r en eg ot i at e an a g r ee men t w i t h i n t h e amou n t of f u n ds a ppr opr i at ed.

T enness ee C o d e A nno t at ed § 4 9

- 5

- 6 1 2 (b)(20 0 2 ).

-6- ne g oti a ti ng te ams d

ur ingthe ne g oti a tin g pr oc e ss. Ad dit ion a lly , th e re is n oth ingin t his re c or d to support an asser

tion that the CCEA e x pecte d to rec eive a total salary

incre ase of

4%. Ms. Fle tcher testified that the CCEA w as awa re that the State made a

deter mination each year

reg ardingwhether it would provide funding for incr ease d teac her sa laries. She f urther te stified that she had no pe rsonal knowledg e of whether proposed budge ted i ncre ases for teac hers’ salarie s historically included any State-funde d incre ase, b u

t t h a t b y September 2002 she was a war e of the State-mandated 1% incr ease

. Ms. Fletc h er ad d itionally testified that, duringthe extended neg otiating pr ocess f ollowing the Financ e Committ ee’ s rec ommendation of a 3% inc rea se, she ne ver indicated to CCEA members that they would rec eive a

total increa se of 4%

. Dr. Woods, moreover , testified that the B oard historica lly had a g ood relationship wit h the Boa rd of Ma y o r an d Alderme n, which g ener ally acc epted the B oard’ s rec ommended budg et. He further testified that the B oard’ s rec o mm e n d e d 3

. 5% salar

y incre ase inc luded the 1% inc rea se funde d by the State . D r. Woo ds te sti fi e d:

Wel l, ye s, it d id i nc lud e State mon e y . I f State mon ie s ha d no t c ome , the amou nt s til l would have be en paid. Tr aditionally that was the w ay

we have done it. And, a g ain, on the total salary . . . . That’s the ove rall salar y . That’s the loc al and the State.

Th e Janu ary 21 a g re e me nt w a s e xec ute d a ft e r t he 1% state mand a te d mi nim um i nc re a se beca me ef fec tive on J anuar

y 1 and contemplates a tot al i ncre ase of 3%, which D efe ndants ag ree d to p ro vid e re tr oa c tiv e to t

he be g inn ingof

the sc ho ol ye ar. Mo re ov e r, a lth ou g h the CCE A a sse rt s it s members we re e ntitled to an incre ase in Aug ust 2002 pursuant to collec tive barg aining neg otiations with the Boa

rd, their a g ree ment could not be conside re d b inding until the B oard of Mayor and Al de rm e n, the bo dy e mpo we re d to a pp ro pr iate fu

nd s, a pp ro ve d th e bu dg e t. See Tenne ssee Code 2 Anno tate d § 49 -5 -6 12 (b ); Carter County Bd. of Ed. Comm' rs v. Am. Fed’n , 609 S.W .2d 512, 517 (Tenn. Ct. App. 1980)( holding that whe re salary incre ases that ha d been ne g otiated betwe en the board of education and the union require d fundingby the county commissioners, under Te nnessee-7-

Code Annotated § 49-5512, curr ently codified at § 49-5-612, the a g ree ment could not be conside red binding until the commissioners appr oved the f unding; a nd that b eca

use the amount of funds approve d by

the cou nty

commissioners was less than the neg otiated amount, the only reme dy available under the statute was f or the boa rd of e ducation and the union to reneg otiate an a g ree ment within the funds available ).

I n this case, ther e wa s no binding a g ree ment to increa se tea cher s’ salar ies at the be g inning of th e 2 0 0 2 -2 0 03 school y ear . Rather, the B oard of May or and A ldermen r ejec ted the propose d budg et, which include d the 3.5% incre ase, and indicated that it would approve the budg et conting ent
on a re duction in the proposed i n cr ea s e t o 3%. The pa rties continued ne g otiations. W hen a f inal ag reem ent was signed on January 21, 2003, the par

ties clea rly wer e aw are that a 1% inc rea se wa s mandated by

t he State. The CCEA ag ree d to an incre ase of 3% and a g ree d to discontinue neg otiations and “complete the year under the exis ting wa g es and te rms and conditions . . . .” The parties a lso ag ree d that the J anuar y ag ree ment constituted the “e ntire under standing of the pa rties.” CCEA actions subseque n t t o ex ec ution of the J anuar y 21 ag ree ment also indicate that the CCEA acc epted that the agreed 3% inc rea se wa s a total incre ase. The minutes of the Marc h and April 2003 Boa

rd minutes ref

lect that Ms. F letcher

was pre sent at those mee tings but did not assert CCEA members we re not r ece iving the total sa lary incre ase due them. Additionally , Ms. Fletche r testified that there wer e no neg otiations with t he B oard subse quent to the J anuar y 21 ag ree ment, and that she had ne ver a dvised t h e Bo ar d o r t he B oard of Mayor and A ldermen that the City had any obligation to pay

wag es other tha

n as set for

th in the January ag ree ment. Upon revie w of the e ntire
re c or d in thi s c a se , w e fi nd

no a sse rt ion by the CCE A that it wa s e nti tle d to a tot a l sa lary

inc re a se of mor e tha n 3 % b e for e it f

ile d it s c omp la int

in M ay 20 03 , le ss t

ha n tw o mo nth s b e fo re the City
sc ho ol s y ste m wa s sc he du le d to be tr ans fe rr e d to Ti pto n County

. We a ff ir m summa ry jud g me nt t o Def endants on this issue.

Se v e ra nc eBonu s
The CCEA asser

ts Defe ndants wrong ly

deprive d its members of a severanc e bonus totaling $254,000 initially

approve d by the Boa

rd in Ma rch and subsequently reje cted in A pril. The CCEA’s argum e nt, a s w e un de rs tand it, is that th e City

wr on g fu lly

and ill e g a lly e xer c ise d a

lin e -i te m ve to
ov e r a bo nu s p ro vid e d f

or in t he a pp ro ve d 2 00 2- 20 03 bu dg e t. We beg in our ana ly sis of t h i s issue by noting that in the January 21 ag ree ment, the CCEA ag ree d to “discontinue any neg otiations with the City of Covington ove r wa g es, bene fits and other terms and c onditions of employ ment” and to “ complete t h e y ear under the exis ting wa g es and terms.” Indeed, the re is nothing in the rec ord to indicate that a seve ranc e or termination bonus was discussed or ne g otiated by the CCEA and the Bo ard e ither prior or subsequent to the January 21 ag ree ment. We theref

ore turn to the C C E A’ s contention that the bonus wa s provided for in the approve d budg et, and that the Bo ar d o f Mayor and A ldermen’ s resolution ag ainst the bonus
c on sti tut e d a

n unla wf ul l ine -i te m ve to whic h c oe rc ed th e B oa rd to r e sc ind

a pp ro va l at it s Apr il
m ee t i n g.W e a d d iti o n a lly n o te tha t t h e B o a rd ’s initial a p p ro v a l o f a se v e ra n c e b o n u s inc lud e d o n ly a lu m p s u m a m o u n t; 3

t h e B oar d di d n ot a ppor t i on t h e bon u s s u m, wh i ch bas i ca l l y con s i s t ed of t h e f u n d ba l an ce t o be t r an s f er r ed t o t h e T i pt on C ount y B oard of

E ducat i on. R at her , t he C C E A r eques t s t hat t hi s mat t er be r emanded t o t he t r i al cour t , an d t hat t he t r i al

c o u rt fulfil l t h e B o a rd fun c tio n o f ap p o rtio n m e n t o f t h e a sse rte d b o n u s m o n ie s. -8- Havingrevie wed the b u d get passed in Septembe r 2002, we do not find that bonuses wer e contemplated by or included in the school budg et submitt ed by the B oard to the B oard of Mayor and Alderme n. The line item provided f or “othe r fr inge benef

its” within “expenditures for re g ular in s tr u c ti o np r o g r am” p r o v id e s $ 0

. T h e r e s im p ly w a s n o li n e
- it e m i nth e b u d g e t f o r s ever ance bonuses. The only

possible budge tary

s o u rce from which bonuse s totaling $254,000 c ould come wa s the “F und Ba lance ” in the amount of $258,360. A lthough the F und Ba l ance ar g uably contained
su ff ic ie nt f un ds to pay the pr op os e d b onus , it is c le ar t o th is C ourt

that th e pa

rt ie s d id n ot a

nti c ipate that th is b a lanc e wo ul d be ut il iz ed for te rm inatio n b onus e s. Ms. F le tc he r t e sti fi e d th a t at no tim e be fo re Marc h 2 00 3 did the B oa rd a g re e to pay a te rm inatio n be ne fi t, t hat bo nu se s h a d n ot b e e n p a id in the past, and that she was not awar e that any thing ha d been submitted to the B oard of Mayor and Alderme n indicating the B oard’ s intention to pay a severanc e bonus. We disag ree with the CCEA that the Boa

rd of May or and Alderme n wrong fully exercised a line-item veto o v er a b u dg eted
e xpe nd iture wh e re bo nu se s w e re no t c on te mpl a te d in the a pp ro ve d b ud g e t.

Fur ther, we note that althoug h the bonus was initially approve d at the Boa rd’s Mar ch 2003 meeting , the question of whe t h er s o m e sort of bonus should be pr ovided to some staff me mbers
c le arl y aro se a s e arl y a s Au g us t 20 02

. Th e min ute s o f t he Au g us t 20 , 2 00 2, B oa

rd me e tin g ind ic a te that a B oard me mber propose d g iving bonuse s to Central Off ice Staff . The motion failed f

or lac k of a second, and the Board recommende d that the m atter be broug ht to the attention of t he budg et committee. I n Dec ember 2002, moreove r, City Attorney Whit aker advised the Boa rd i n wr i t i ng aga i n s tt h e p ay

m en to f ab o nu s , s t at i n g:
Th is “b onus ” wa s not dis c los e d in the bu dg e t pre se nte d to the City of Cov ing ton

to approve . There is clear ly a line item where “f

ri ng e bene fits” should have be en d i s cl o s ed

. W i t h o u t ap p ro v al o f th e bu d get i t em y o u t ak e to d i s p en s e, a su m th i s l ar ge is i n my op ini on ill e g a l. The pa rties do not dispute that the Boa rd could have included a bonus in the budg et or that it retained the discretion to re scind approva l of the proposed bonus at its April meeting . Clearly , the B oa rd did no t in c lud e a bo nu s in the 20 02 -2 00 3 sch oo l y e ar bud g e t, how e ve r, and the CCE A c le arl y did not anticipate re ceivingthe bonus befor e Mar ch 2003. F urther, the CCEA unamb ig u o u s ly ag ree d to co mplete the school y ear under the terms and c onditions as ex isted on J anuar y 21, 2003. Ad dit ion a lly , a lth ou g h the CCE A argue s th a t th e B oa rd wa s w ro ng fu lly

c oe rc e d into e xer c isi ngits discretion to re scind approva l of a bonus, the B oard disag ree s with the CCEA’s char acte rization of its action. Ms. Fletche r, the pre sident of the CCEA, testif i ed , m o re over, that she ag ree d that the Boa rd’s fina l determination re g ardingthe pay ment of a bonus was a

discretionar

y matter. We ag ree

3 with Defe ndants that the Board acted within its discretion at the April mee ting whe n it determined-9-

that it would not provide seve ranc e bonuses. We af firm the summary

judgme nt for De fenda

nts on this iss ue.
Hol din g

I n li g ht o f t

he fo re g oin g , th e jud g me nt o f t he tr ia l c ourt

is affirm ed. Acc or din g ly , it is
unnece ssary for us to a ddress the additional issue raised by the City of Covington B oard of

Education reg ardingwhether

it is a proper pa

rty to this action. This issue is pr eter mitted. Costs of this appeal
are taxed to the Appellant, City of Covington Educ ation Association, and its s u re t y , for whic h execution may

issue if nec essar

y

.

___________________________________

DAVI D R. FARMER, J UDGE