Opinion ID: 1870644
Heading Depth: 1
Heading Rank: 4

Heading: the legality of the expenditures

Text: A. THE DISHAROON CONTRACTS The minutes of the Board of Education meeting for September 12, 1985, reflect the following. Mr. Bennie Knox moved, and it was seconded by Mr. Calvin Williams, that the Board enter into a contract for consulting services with State Senator James Disharoon at the rate of $75.00 per hour, from September 9, 1985, to December 31, 1985. At the same meeting Mr. Knox and Mr. Williams moved that Terri Disharoon, the Senator's wife, be employed by the school board in a contract agreement for consulting services at the rate of $50.00 per hour from September 9, 1985, until December 31, 1985. The Board minutes reflect that the vote was unanimous. The record contains warrants which show nine payments to Terri Disharoon totaling $17,000.00, and nine payments to James Disharoon totaling $34,725.00. Separate contracts were executed with the Disharoons, but the terms were identical except for the rate of pay. Both contracts describe the Disharoons as consultants for a period of September 9 through December 31, 1985. The contract payments were to be paid solely from local school district tax revenues and not from state sources. In addition to the rate of pay, the Board agreed to reimburse the Disharoons for all reasonable and necessary expenses incurred pursuant to the duties of the contract. It is to be remembered that the Disharoons were not made parties to this suit. Furthermore, neither Senator Disharoon nor Mrs. Disharoon testified at the trial in this cause. The duties in the contract were described as follows: (a) To provide public relations advice and counsel in the furtherance of the interest of the Claiborne County Public Schools; (b) To aid and assist in the development of [sic] plan to improve the quality of the education program and of the educational facilities operated by the Board; (c) To prepare and participate in public forums, debates and other similar activities in the furtherance of the strengthening of the educational programs operated by the Board; (d) To consult with and advise school officials employed by the Board with regard to programs to enhance its educational program and to improve the development of its educational facilities; (e) To advise and counsel with school officials and other consultants and agents of the Board with respect to the development of a long range school facilities plan and the financing of the same; (f) And other such duties as may be prescribed by the Board from time to time. At the trial, Dr. John Noble, Superintendent of Education for Claiborne County, testified about the Disharoon contracts. Dr. Noble stated that he could not remember what the Disharoons actually did to earn their consulting fees. Dr. Jimmy Smith, a former school board member for twelve (12) years, from January of 1975 until January of 1987, testified that Terri Disharoon was hired because she had a background in public relations and she would be an asset in the white community in promoting a bond referendum for new school buildings. There is simply nothing in the record to indicate what the Disharoons did in connection with their consulting and public relations advice to the school board other than the language of the contract itself. The school board argues that it has the statutory authority to employ consultants as non-instructional personnel under Miss. Code Ann. § 37-9-3. At the time of the Board's hiring of Jay and Terri Disharoon in September of 1985, section 37-9-3 stated the following: Within the limits of available funds, the boards of trustees of all school districts, including municipal separate school districts, may select, employ and appoint all non-instructional personnel, and may prescribe the duties and fix the compensation thereof. Such compensation may be paid either from the allotments made to the school district for `other current cost' from minimum education program funds or from any available funds of such school district other than minimum education program funds. Miss. Code Ann. § 37-9-3 (1972). (emphasis added). In September of 1985, section 37-9-1 defined a non-instructional employee as,  all employees of school districts other than superintendents, principals, teachers, and school bus drivers. Miss. Code Ann. § 37-9-1 (1972) (emphasis added). The school board rests on the argument that public relations consultants are non-instructional employees by the clear definition of the statute, and section 37-9-3 empowers and authorizes the school board to hire the Disharoons as public relations consultants. No case could be found in which this Court has interpreted or construed the term non-instructional personnel. Our research revealed that the term, non-instructional personnel, was first introduced in the 1953 session laws and was defined as, all employees of school districts other than superintendents, principals, teachers, and school bus drivers. Gen.Laws, House Bill No. 11, ch. 20, § 1 at 94, (1953 Extraordinary Session). This is the same definition that was in effect in 1985, when the consulting contracts with the Disharoons were made. In 1987, the legislature amended this definition to include, all employees of school districts other than superintendents, principals and certificated employees. Miss. Code Ann. § 37-9-1 (Revised 1990). Therefore, the legislature defined the term, non-instructional personnel, almost forty years ago and has amended this definition only once. By statutory definition, public relations consultants (being neither superintendents, principals, teachers or school bus drivers) are non-instructional personnel. Miss. Code Ann. § 37-9-1 (1972). Section 37-9-3 grants authority to the school district to employ non-instructional personnel, describe their duties, and fix the rate of compensation. Miss. Code Ann. § 37-9-3 (1972 and Revised 1990). The legislature is certainly free to narrow its scope and definition of non-instructional personnel and to place some restraints as it sees fit on a school district's utilization of such personnel. Here, we conclude nothing more than that a school district's employment of consultants as non-instructional personnel does no violence to the statutory law of this State. However, this conclusion in no way suggests that all contracts formed between school boards and consultants are valid and enforceable. Regarding the employment of the Disharoons by the Claiborne County Board of Trustees, a separate and distinct yet much larger question looms above. Could the school board enter into a valid and enforceable contract with the Disharoons in order to promote the passage of a bond referendum for new school buildings in Claiborne County? The short answer is, no. Although we do not have the benefit of the Disharoons' testimony at the trial of this case, Dr. Smith testified that the Disharoons were hired to promote and campaign for the passage of a bond referendum in Claiborne County. This record leaves no doubt and offers nothing to contradict the lower court's explicit finding of fact that the Disharoons were hired to assist with the passage of the bond referendum. [T]he State of Mississippi is entitled to recover of and from the members of the Board of Education of the Claiborne County, Mississippi who voted affirmatively in favor of expenditures hereinafter set forth, to-wit: (a) The payment of Thirty-four Thousand Seven Hundred Seventy-five Dollars ($34,775.00) to State Senator James Disharoon and Seventeen Thousand Dollars ($17,000.00) to Mrs. Terri Disharoon in that there was no statutory authority for the expenditure of these amounts which the Court finds was in furtherance of the passage of a bond issue in Claiborne County, Mississippi. Final Judgment, vol. I, pg. 87. (emphasis added). While the employment of non-instructional consultants poses no per se legal obstacle, nothing in our statutory or common law authorizes in a public entity's use of public funds to actively campaign for a favored position on a bond issue. A school board, or any public entity, has only those powers expressly provided by statute and those which are vested by necessary implication. Harrison County v. City of Gulfport, 557 So.2d 780, 784 (Miss. 1990); Williams v. State ex. rel. Attorney General, 209 Miss. 251, 266, 46 So.2d 591, 595 (1950); Morris v. Vandiver, 164 Miss. 476, 489, 145 So. 228, 232 (1933). Consequently, the chancellor correctly determined that the Board's expenditure of taxpayer funds for the Disharoon contracts was a blatant and unauthorized expenditure of public funds. It follows that we affirm the lower court's judgment against the board members as such judgment pertains to the Disharoon contracts. For reasons of continuity, we reserve comment on the Board's liability for the Disharoon contracts until part IV of this opinion. B. THE PURCHASE OF TWO ACTIVITY BUSES Dr. Jimmy Smith, a former board member for twelve (12) years, described the purchase of two activity buses by the school board. Dr. Smith emphasized that the vehicles are not traditional yellow school buses with bench seats. Both of the buses are blue and white commercial buses that are very similar to Continental Trailways vehicles. The buses are equipped with a restroom, reclining seats, radio, air conditioning and a large amount of storage space. The buses are never used to transport school children between home and the school. Rather, they are used to transport students to activities such as athletic events and field trips. Dr. Smith explained why the buses were purchased. Well, we felt like we needed the buses. Our kids have participated in events and activities all over the state. We felt like they needed comfort in going and we felt like we had the money to buy them. It would enrich their attitudes and behavior as far as whatever type of competition they were going to be in and... . Dr. Smith, Record at 257. The school board approved the purchase for the first bus at its meeting on February 4, 1985. Mr. Jennings, Mr. Knox, Mr. Williams and Dr. Smith voted in favor of the purchase, and Mr. Yarbrough voted against it. The Board paid $170,400.00 for this first bus. The approval for purchase of the second bus came only four months later in May of 1985. Yarbrough and Knox voted against the purchase, and Jennings, Williams and Smith voted in favor. The Board paid $176,254.00 for the second bus. Thus, the two purchases totaled $346,654.00. Dr. Smith stated that bids were taken on the buses prior to the purchase; however, the Board did not seek approval for the purchases from the State Department of Education. Dr. Smith testified that regular transportation money that the district received from the State was not used to purchase the buses. Dr. Smith indicated that the district had used earned interest from general monies that the Board had on deposit in high earning certificates of deposit. Chancellor Zuccaro's opinion makes a specific finding that the purchase of the buses violated Mississippi Code sections 37-41-1, -81, -85, -101. All four of these statutes have been amended since 1985. However, we obviously must look to the language of the law as it existed in February and May of 1985, when the acquisitions were made. This issue requires that we take a step by step approach in examining the purchasing laws which the chancellor concluded that the school board had violated. First of all, section 37-41-1 grants authority to the State Board of Education to promulgate rules and regulations. Promulgation of rules and regulations. The State Board of Education is authorized, empowered and directed to promulgate rules and regulations for: ..... (c) Setting standards for public school buses; ..... (i) Formulating specifications for use in purchasing public school buses; getting bids on public school buses; and fixing prices based upon said bids which school districts may not exceed in purchasing said equipment; 1981 Miss.Gen.Laws, H.B. 78, ch. 482, § 2 at 1346. See Miss. Code Ann. § 37-41-1 (Revised 1990). Section 37-41-81 is the grant of authority to local school districts to purchase transportation equipment. General grant of authority. The county boards of education of this state and the boards of trustees of all municipal separate school districts or special municipal separate school districts are hereby authorized and empowered to purchase, own and operate, under such rules and regulations as may be prescribed by the State Board of Education, motor vehicles and other equipment for the transportation of children to and from the public schools of the respective counties and school districts, and to provide for the servicing, repair, care, and maintenance of such county or district-owned motor vehicles and to employ drivers for the operation thereof, and to establish, erect and equip school bus shops or garages, and purchase land therefor, all under such rules and regulations as may be prescribed by the State Board of Education. 1982 Miss.Gen.Laws, S.B. 2364, ch. 354, § 21 at 211. (emphasis added). See Miss. Code Ann. § 37-41-81 (Revised 1990). The next statute, section 37-41-85, which is not cited or discussed by either party in their briefs, is outcome determinative on the legality of this purchase by the school board. It will be recalled that the Claiborne County Board of Education advertised for bids on the two buses. However, the Board did not seek or receive approval from the State Department of Education before making the purchases. Purchases to be in manner prescribed by regulations. No county board of education or board of trustees of a municipal separate school district shall purchase any school bus or pupil transportation service vehicle as authorized by Section 37-41-81 except in the manner prescribed in Section 37-41-101. No school bus shall be purchased or otherwise acquired which does not conform to the specifications provided by the State Board of Education. 1981 Miss.Gen.Laws, H.B. 78, ch. 482, § 3 at 1347. (emphasis added). See Miss. Code Ann. § 37-41-85 (Revised 1990). The reference in this statute to, pupil transportation service vehicle, was added by the legislature in the 1981 session; however, even before the 1981 amendment, the statute employed the all-inclusive term, transportation equipment. See Miss. Code Ann. § 37-41-85 (1972). Either term  pupil transportation service vehicle or transportation equipment  under pre-1981 or post-1981 code law, would certainly include a 48 passenger deluxe commercial vehicle used to transport students. Although this section has been amended twice since 1981, State approval of pupil transportation service vehicles is still required by the clear mandate of the statute itself. Thus, State approval for the purchase of the buses was required when the school board spent funds back in 1985, and the law remains unchanged today. See Miss. Code Ann. § 37-41-85 (Revised 1990). Therefore, we conclude that Claiborne County Board of Trustees was in violation of the law when it purchased both of the buses without State approval. The plaintiffs argue that a frolic and semantic attempt by the school board to label the vehicles activity buses rather than school buses in an attempt to circumvent the statutes simply will not wash. We find that regardless of the label the Board attaches to the vehicles, sections 37-41-1, -81, -85, and -101 [1] require State approval before purchase, which the Board did not seek. The school board argues that since only local revenues were used to purchase the deluxe buses without State assistance, then the purchases were exempted from the purchasing laws. Unfortunately for the school board, only the legislature can carve such an exception into the education transportation purchasing laws, which it has not done at this time. [2] Accordingly, we affirm that portion of the final judgment which found the activity bus purchases to be in a manner unauthorized by law and reserve discussion of the personal liability implications to part III of this opinion. We note that at the trial of this matter in Claiborne County, Mr. Leonard Cain, Director of the Division of School Buildings and Transportation, Mississippi State Department of Education, testified. Mr. Cain is primarily responsible for the administration and supervision of pupil transportation for the State. Mr. Cain stated that the state contract price for a yellow school bus ranged between $23,800.00 to $30,300.00, depending on the options. He also stated that whenever the State receives an application to purchase an activity bus, the application is returned to the district because the State does not have the authority to approve an activity bus. This is an interesting position by the State Department of Education in light of state law which imposes a clear mandate to approve all pupil transportation service vehicles. See Miss. Code Ann. § 37-41-85 (Revised 1990). C. A $266,148.00 PERFORMANCE BOND Thacker Construction Company, a Georgia corporation, had a job training and placement contract with the Claiborne County Board of Education whereby Thacker was to train 200-250 adult students for various trades in the construction industry. The school board paid for the entire cost of the training project. Near the end of the training program, Thacker was negotiating a construction project with Mt. Calm Senior Hamlet, Inc., as owner, and the United States Department of Housing and Urban Development (HUD) as the mortgagee. This job was for the construction of senior citizen housing in Minden, Louisiana, and Thacker wanted the contract. Before the deal could become final, Thacker was required to post a performance bond or $266,148.00 in escrow to assure HUD and the owner that sufficient funds would be available to complete the project lien free. This prompted Thacker to approach the school board with a proposal. Thacker would hire some of the job training graduates if the school board would agree to place $266,148.00 cash in escrow guaranteeing Thacker's performance on the job in Louisiana. At some point in time near October 1, 1985, the school board agreed to this arrangement, and a deposit in the amount of $266,148.00, evidenced by warrant # 2721, was deposited in the First National Bank of Vicksburg, such funds to be under the control of HUD. Soon after this lawsuit was filed, Mr. Roosevelt Yarbrough, board member and plaintiff, notified the bank that it was holding funds in escrow which were the object of a lawsuit alleging misapplication of public funds. Mr. Yarbrough asked the bank not to release any of the funds without an order of the Chancery Court of Claiborne County. The bank responded positively to Mr. Yarbrough's request and interpled the funds in the United States District Court, Southern District of Mississippi, Western Division. The interpleader action was styled First National Bank of Vicksburg, Mississippi v. HUD, Thacker Construction Co., Mt. Calm Senior Hamlet, Inc., members of the Claiborne County Board of Education and its Superintendent. No. W86-0112(B). However, the question before this Court is whether or not a school board can post a performance bond for a construction project in an attempt to aid county residents in obtaining employment. The school board simply references state law which authorizes a school district to introduce music, drawing and manual training into the curriculum as well as vocational training. See Miss. Code Ann. §§ 37-7-301(b), 37-7-625 (1972) (authority to establish vocational training in schools). Vocational education training is now covered in chapter 31 of sections 37-31-1 et seq. The school board's argument is a simple one. Since the school board can establish vocational training, it certainly should be able to post a performance bond in connection with its job training program. The plaintiffs respond by arguing that there is no statutory authority whatsoever for a school board to post a performance bond for the benefit of a private construction company. We begin by noting that a school board has only such powers as given by statute or those necessarily implied from those expressly given. Morris v. Vandiver, 164 Miss. 476, 489, 145 So. 228, 232 (1933). Further, there are no other powers. Morris, 164 Miss. at 496, 145 So. at 234. Powers of a school board are not to be extended by construction, and where authority is doubtful, the authority should not be exercised. 78 C.J.S. Schools and School Districts § 99(1) (1952). See Harrison County v. City of Gulfport, 557 So.2d 780, 784 (Miss. 1990) (public body has powers expressly provided and those vested by necessary implication); Williams v. State ex. rel. Attorney General, 209 Miss. 251, 266, 46 So.2d 591, 595 (1950) (Court recognized strict construction of school board's statutory authority); see also Robert W. Anderson House Wrecking and Excavating, Inc., v. Bd. of Trustees, School Dist. No. 25, Fremont County, Wyoming, 681 P.2d 1326, 1330 (Wyo. 1984) (A public body cannot do indirectly what it is without power to do directly.); Ryan v. Warren Township High School Dist. No. 121, 155 Ill. App.3d 203, 109 Ill.Dec. 843, 844, 510 N.E.2d 911, 912 (1987) (school board has express powers and those necessary to carry into effect those expressly granted); Dieck v. United School Dist., 157 Wis.2d 134, 458 N.W.2d 565, 570 (1990) (school board has express powers and those necessarily implied). While it is a fact that the Claiborne County School Board had the authority to establish vocational education training, posting $266,148.00 in escrow as a guarantee of payment for a private employer of job training graduates is quite another matter. No reasonable mind could conclude that such a move was an implied power or a necessary incident of the board's express authority to conduct vocational education training. Our laws contain nothing which would suggest that a school board could enter the arena of private employment by bestowing a $266,148.00 advantage to a private employer. The Claiborne County Board was without authority to do this and was in violation of state law when it placed the the funds in escrow. We affirm the chancellor's final judgment which found this to be an illegal expenditure. D. PAYMENT OF $9427.50 FOR A DOCUMENTARY CONCERNING A SCHOOL