Opinion ID: 1869392
Heading Depth: 1
Heading Rank: 2

Heading: Constitutionality of Severance Pay

Text: Turning next to the issue of the constitutionality of Dr. Brooks's severance pay, the taxpayers claim that the payment of $656,000 [3] to Dr. Brooks for what they term to be not working is unconstitutional under three provisions of the Arkansas Constitution. First, they argue that, under Article 14, § 3, public school funds derived from ad valorem property taxes can be used only for the maintenance and operation of schools. In order to qualify, they contend, the payment of funds must be directly and immediately connected with the public school system. Paying an employee not to work, they continue, does not primarily inure to the benefit of school purposes; nor does it have a sufficient educational nexus. The taxpayers also point to the preliminary-hearing testimony of an accountant, James Williams, III, who opined that severance pay would not be classified as an operational cost under governmental accounting practices. The taxpayers argue, in addition, that the payment of severance pay violates Article 14, § 2 of the Arkansas Constitution, which provides that no money or property belonging to school districts can be used for any other reason than for the respective purposes to which it belongs. The taxpayers concede that neither party raised this issue in the proceedings before the circuit court but observe that the circuit court specifically held in its summary-judgment order that the Board's actions did not violate this provision. They contend that, in order to pass muster under Article 14, § 2, an expenditure must benefit the school district and must be absolutely necessary for the operation and maintenance of the school district. The payment to Dr. Brooks fails this test, they maintain. The taxpayers again claim that the Board has no discretion to violate the constitution. The taxpayers urge, as a final point, that the payment of public-school funds as severance pay is prohibited by the due process clause, which is found at Article 2, § 8 of the Arkansas Constitution, because it results in an expenditure of public school funds that inures primarily to private, rather than public, benefit. Although the taxpayers concede that this argument was not raised before the circuit court, they claim that, because this is a taxpayer's suit, they represent the citizens as a whole and could not waive an argument that should have been asserted. The Board points out, in response, that the final payment to Brooks was not only severance pay but also pay for retirement, attorneys' fees, taxes, and the settlement of a lawsuit. It notes that this court has previously recognized that the school board of each school district is vested with broad discretion over such matters and that only if a clear abuse of discretion is shown by clear and convincing evidence will a court interfere with the exercise of that discretion. The Board points out that the taxpayers failed to challenge the terms of the contract with Dr. Brooks when it was entered into. Nor, the Board argues, do the taxpayers contend that the School Board lacked the power to terminate Dr. Brooks. Instead, the Board maintains that the taxpayers are urging the Board to breach its contract, which could result in legal expenses for the School District. Summarizing the standard of review for constitutional interpretation, this court has said: When interpreting the constitution on appeal, our task is to read the laws as they are written, and interpret them in accordance with established principles of constitutional construction. It is this court's responsibility to decide what a constitutional provision means, and we will review a lower court's construction de novo. We are not bound by the decision of the trial court; however, in the absence of a showing that the trial court erred in its interpretation of the law, that interpretation will be accepted as correct on appeal. Language of a constitutional provision that is plain and unambiguous must be given its obvious and common meaning. Neither rules of construction nor rules of interpretation may be used to defeat the clear and certain meaning of a constitutional provision.... Just as we will not interpret statutory provisions so as to reach an absurd result, neither will we interpret a constitutional provision in such a manner. State v. Oldner, 361 Ark. 316, 326, 329, 206 S.W.3d 818, 821-22, 824 (2005) (internal citations and quotation omitted). The Arkansas Constitution contains two provisions specifically limiting the use to which public school funds can be put. Article 14, § 2 provides that [n]o money or property belonging to the public school fund, or to this State, for the benefit of schools or universities, shall ever be used for any other than for the respective purposes to which it belongs. [4] Furthermore, since its amendment in 1996, Article 14, § 3, provides that all of the money distributed to school districts as a result of the uniform ad valorem property tax of twenty-five mills is to be used solely for maintenance and operation of the schools. Ark. Const. art. 14, § 3 (as amended by Ark. Const. Amend. 74). The only definition of maintenance and operation expenses contained in section 3 is that they include such expenses for the general maintenance and operation of schools as may be defined by law. The taxpayers have made no argument on appeal that the Board has violated any statutory provision regarding school expenditures. This court has previously interpreted Article 14, § 2, and said that [t]he Constitution ... prohibit[s] the Legislature from applying the common school fund to any other branch of state expenditures except that immediately and directly connected with the establishment and maintenance of a common school system. Little River County Bd. of Educ. v. Ashdown Special Sch. Dist., 156 Ark. 549, 556, 247 S.W. 70, 72 (1923). Thus, a school board, like the legislature, is limited to spending school money for expenses immediately and directly connected with the establishment and maintenance of schools. This court has also said that the proper authorities (such as the trustees of a school district) may, in their discretion, make any expenditure of the [public school] funds which is absolutely necessary for the proper maintenance of the school intrusted to their charge. Bd. of Educ. of Lonoke County v. Lonoke County, 181 Ark. 1046, 1054, 29 S.W.2d 268, 272 (1930). It is clear, nonetheless, that, by using the term absolutely necessary, this court did not intend to limit school boards to those expenditures without which there could be no public schools. In Lonoke County , for example, this court noted: They [the proper authorities] might properly expend a portion of the money in repairing or improving the school building, or in fitting it with proper appliances and conveniences. They might insure the school property against loss by fire, and pay the premium from the school fund. By a parity of reasoning we have no hesitation in holding that funds derived from local taxation within a school district may properly be expended by the trustees of the district in protecting or preserving the right of local taxation for educational purposes by the employment of an attorney, or in other legitimate expenses necessary for presenting their rights in the adjudication of the case. Id. at 1054-55, 29 S.W.2d at 272. Given the list of expenditures that the court noted would be permissible, there can be no doubt that the court intended absolutely necessary to mean that which is convenient, useful, appropriate, suitable, proper or conducive to the proper maintenance of the schools. Moreover, this court has said that any use of school funds raised from taxation that results in benefits to school funds or property or aids in the stated purposes for which these funds may be expended would not be an unconstitutional diversion. Rainwater v. Haynes, 244 Ark. 1191, 1195, 428 S.W.2d 254, 257 (1968). We conclude from this court's precedent that exactly which expenditures should be made to benefit a school district is a matter for the School Board to determine. This court's role is merely to ensure that school money is not diverted to an unrelated purpose, such as to subsidize road improvements or to pay a county officer for duties unrelated to the operation of the schools. Special Sch. Dist. of Fort Smith No. 100 v. Sebastian County, 277 Ark. 326, 330, 641 S.W.2d 702, 705 (1982). Although this court has not previously interpreted the current version of Art. 14, § 3, we hold that it requires nothing more than Article 14, § 2. Under section 2, an expenditure must be immediately and directly connected with the establishment and maintenance of a common school system. Little River County Bd. of Educ., 156 Ark. at 556, 247 S.W. at 72. Clearly, any expenditure that meets this requirement will be one that is for maintenance and operation of the schools. Ark. Const. art. 14, § 3 (as amended by Ark. Const. Amend. 74); see Rainwater, 244 Ark. at 1195, 428 S.W.2d at 257 (analyzing together the prohibition under Article 14, § 2 against the use of money or property belonging to the state school fund for any other than the purpose to which it belongs and the prohibition under a previous version of Article 14, § 3, against the annual tax voted by the electors of the district from being used for any purpose other than the maintenance of schools, the erection and equipment of school buildings and the retirement of existing indebtedness). Without question, the payment of a salary and benefits to a superintendent is both immediately and directly connected with the establishment and maintenance of a common school system and absolutely necessary for the maintenance and operation of schools. [5] Nevertheless, the taxpayers argue in their brief that paying $656,000 to Dr. Brooks for not working benefits only Dr. Brooksnot the school. To the extent that the payment to Dr. Brooks represented severance pay, this argument overlooks the fact that the payment allowed the School Board to remove Dr. Brooks from his position and replace him with a person who, in the School Board's opinion, would be a better superintendent. The School Board, while operating and maintaining the School District's schools, determined that the School District could be operated and maintained in a better manner by a different superintendent. We have no doubt that this is a determination that falls within the broad discretion ... vested in the board of directors of each school district in the matter of directing the operation of the schools. Safferstone v. Tucker, 235 Ark. 70, 72, 357 S.W.2d 3, 4 (1962); see also Wheelis v. Franks, 189 Ark. 373, 72 S.W.2d 231 (1934). The taxpayers also contend that the payment to Dr. Brooks violated the due process clause of Article 2, § 8, of the Arkansas Constitution. Although this argument was not raised below or ruled on by the circuit court, the taxpayers argue that this court should nonetheless consider it. This court has previously addressed a like argument raised in an illegal-exaction case, saying, [w]e have no hesitancy in considering the due process clause as well [as the arguments made by the parties] for in a taxpayer's suit the plaintiff represents the citizens as a whole and cannot be permitted to waive contentions that should be asserted. Chandler v. Bd. of Trs. of Teacher Ret. Sys., 236 Ark. 256, 258, 365 S.W.2d 447, 448 (1963) (citation omitted). However, even if this court may consider the argument, it has no merit. This court has stated that [n]o principle of constitutional law is more fundamental or more firmly established than the rule that the State cannot, within the limits of due process, appropriate public funds to a private purpose.... The objects for which money is raised by taxation must be public, and such as subserve the common interest and well being of the community required to contribute. Id. at 258, 365 S.W.2d at 448-49 (citation and quotation omitted). The taxpayers' attempts to characterize the payment to Dr. Brooks as private and one solely for his benefit must fail. As already stated, the severance payment was made for the public purpose of removing Dr. Brooks to allow for the hiring of a new, and, in the School Board's judgment, a preferable superintendent to lead the Little Rock Public Schools.