Court Opinion

ID: 9563818
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:47:44.627804+00
Date Added: 2024-06-11T09:18:05.009750
License: Public Domain

STEWART, Justice
(dissenting):
I submit that this case should be dismissed because the plaintiffs failed to join the State Superintendent of Public Instruction as a party defendant. I also believe that the majority errs in its construction of U.C.A., 1953, § 53-20-2 (Repl.Yol. 5B, 1981 ed., Supp.1985), and that the effect of the majority’s statutory construction will be to hamstring the budget-making procedures of the school districts, perhaps to the point of adversely affecting their ability to borrow money at the lowest possible rates.
I.
Neither the trial court nor this Court have any jurisdiction over this dispute because of the failure of the plaintiffs to name the State Superintendent of Public Instruction as an indispensable party defendant. Under the statutory scheme established by the Legislature, the State Superintendent of Public Instruction, an indispensable party, had the authority to review the budgetary procedures of the school districts and to determine whether they complied with the law. Section 53-3-4 stated that the State Superintendent’s “decisions [concerning the school law] shall be held to be correct and final until set aside by a court of competent jurisdiction or by subsequent legislation.” Although this provision has now been repealed, it was in effect at the time of the proceedings in the lower court and when the challenged acts occurred. See Laws of Utah 1985, ch. 231, p. 628, amending § 53-3-4 to delete the above-quoted language.
Pursuant to § 53-3-4, the Superintendent of Public Instruction filed an affidavit, stating:
After reviewing § 53-20-2 Utah Code Ann. (1953), it is my opinion that the Salt Lake City school district’s budgetary actions and fiscal policies regarding the handling of fund balances and undistributed reserves have been in compliance with § 53-20-2 Utah Code Ann. (1953), during each year since the 1976-1977 school year until the present.
*968In my view, the State Superintendant’s opinion is both “correct” and “final” under § 53-3-4 and not subject to judicial review because he was not made a party to the proceeding.
II.
The Court’s resolution of the substantive issue in this case, the meaning of U.C.A., 1953, § 53-20-2 (Repl.Vol. 5B, 1981 ed., Supp.1985),1 reads a term into the statute that is not there and ignores the realities of financing a school district’s operations. Section 53-20-2 provides that school districts may allocate up to 5% of their maintenance and operation budgets to an “undistributed reserve.” The State Board of Education is required to fix the actual percentage for each school district. The percentage it has fixed for the Salt Lake City School District is IV2% of its maintenance and operation budget. Section 53-20-2 says nothing at all about line item reserves or their use.
The legislative purpose in enacting § 53-20-2 is clear on the face of the statute. It was to insulaté a portion of a school board’s budgeted funds from the contract negotiations for teachers’ salaries, the largest single noncapital expense in a district’s budget. Under the statute, “undistributed reserve” monies are not on the bargaining table in the negotiation of teachers’ salaries. Experience has demonstrated that when a school district budget has set aside funds for contingencies, salary negotiators tend to draw those monies into the bargaining process, thereby threatening the soundness of the district’s budget. By excluding the “undistributed reserve” from the bargaining process, which always occurs after the budget has been fixed in June of each year, the statute assures that the school district will have the full amount of the contingency funds, especially for the purpose of offsetting an unexpected decline in revenues during the fiscal year, but also possibly to cover unanticipated increases in expenses.
Section 53-20-2 does not state that the “undistributed reserve” is the only fund that can be used for nonline item contingencies. That, however, is what the majority holds, with no support whatsoever in the language of the statute, even though the plaintiffs’ own expert witness conceded that sound budget-making required line item reserves in addition to the undistributed reserves. It is of no consequence that the Salt Lake City School Board has used line item contingency funds for some purpose other than the line item expense specified. No one has alleged in this case that the Board has misused one penny of public funds. Yet the plaintiffs seek a refund of taxes from the Board because of a budgeting practice which is sound and reasonable on its face and which the State Superintendent of Public Instruction has expressly found to be lawful.
The majority contends that the statutory limitation on the amount of the undistributed reserves implies that there can be only one budgeted reserve account for unfor-seen contingencies and that line item reserves cannot be used for any purpose other than meeting an under-budgeted line item expense, such as salaries or maintenance. In effect, the majority opinion ignores the realities that school districts are prohibited by law from spending more money than they take in, and that a deficit may occur either because of underestimated expenses or overestimated revenues. A degree of flexibility in budgeting is therefore essential. A school district cannot be run like a commercial business. If there is a 10% shortfall in the tax revenues, or a 10% increase in heating and snow removal expenses because of an unusually cold winter, for example, the district cannot cut expenses by cutting production by 10%, i.e., refuse to teach 10% of the pupils in the district. Finally, it should be noted that conservative accounting practices are important factors in the ultimate determina*969tion of what interest rate a district, and its taxpayers, must pay to borrow money, when that becomes necessary. If contingency funds are insufficient to cover debt service, should there be a shortfall, the taxpayers will have to pay additional taxes to pay unnecessary interest charges.
The district in this ease is not guilty of “padding,” as the majority suggests might happen. Perhaps the district would have been better advised to have sought a higher limit for the contingency reserve rather than doing as it did, but the State Superintendent of Public Instruction saw nothing wrong with the practice and that should be the end of the matter.

. Section 53-20-2 was repealed by the Legislature in 1986. However, the substantive portion at issue herein was reenacted as § 53-20-2.3. Since § 53-20-2 was in effect at the time of this case, I refer herein to § 53-20-2.