School board asks for legal advice on lottery

  • Posted: Wednesday, May 22, 2013 1:17 a.m.

SALISBURY — The Rowan-Salisbury Board of Education is asking for a legal opinion about how much say it has in the way lottery money is spent.

But control of those funds might cost the schools their state sales tax money.


Chairman Richard Miller, who is serving his first term on the board, said he raised this question after being asked to sign off on the drawdown of about $1.5 million in lottery funds from the state.

Miller’s predecessors as school board chairman signed this document every year since the lottery began in 2005. But Miller said he doesn’t want to sign it if that means he agrees with the way the county plans to use the funds.

Rowan County currently pays down school bond debt with the capital expense portion of lottery money from the state.

Miller said that goes back to an informal agreement between the two boards’ then-chairmen, Bryce Beard and Commissioner Arnold Chamberlain, shortly after the lottery began. He said people who witnessed this agreement have confirmed it, but he has found nothing in the minutes of the school board or county commission making that agreement official.

After some discussion, the school board unanimously voted Monday to ask for a legal opinion about what the chairman’s signature means on the lottery funding authorization.

“Why do you want the school board’s signature on drawing down lottery monies if we don’t get any iota of consideration? Why waste my time?” Miller said.

He said he met earlier Monday with Jim Sides, chairman of the Rowan County Board of Commissioners, to talk about the issue.

Sides told Miller that if he refused to sign off on the drawdown of lottery funds, the county could hold back roughly the same amount in state sales taxes instead.

That money normally goes to the schools’ capital expense fund for building projects.

“At this point, I said I thought I was being bullied and brow-beaten and had no intention of tolerating that, and we adjourned the meeting,” Miller said.

On Tuesday, Sides said Miller is just “not used to somebody standing up to him.”

He said bond debt must be paid whether lottery money is received or not. When the state cut the county’s lottery funds in half, the county paid for the difference, raising its annual school bond debt service to $6.5 million.

Sides said he isn’t speaking for the full Board of Commissioners, but counties do have the authority to use sales tax money for debt service. The decision about how to make those payments is up to the county, and so is the way it uses lottery funds.

He said it doesn’t matter what the chairmen agreed to in the past, because such an agreement wouldn’t be binding on future boards anyway.

“The legislature gives county commissioners the authority to decide whether the lottery money is used for current capital needs or for debt service,” Sides said. “It is not a revenue stream for the schools. It’s a revenue stream for the county to meet a mandate of the state to provide for the capital needs of the schools.”

According to the state statute that addresses the lottery funds, counties may use the money “to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects.”

The county is clearly following the law as written, Sides said.

But Miller points to a paragraph that appears earlier in the statute: “In the event a county finds that it does not need all or part of the funds allocated to it for capital outlay projects ... the unneeded funds allocated to that county may be used to retire any indebtedness incurred by the county for public school facilities.”

He said the system’s capital needs have not been met, and the lottery money is being used to replace other capital funding rather than as an addition to it. Other parts of the statute mention situations where local Boards of Education must give their consent, so it makes sense that the school board has some say in the decision.

Miller also said that when the most recent school bond was issued in 2002, the county told the public it would raise taxes 6.5 cents to cover the cost. The voters heard this and still approved the bond referendum, but commissioners chose to levy only part of the tax increase.

Sides said the county did not have a public mandate to raise taxes 6.5 cents, because that wording was not included on the ballot. Commissioners found other ways to pay the cost with responsible budgeting, he said.

At the school board meeting Monday, the board also agreed to ask about the legal implications of the county withholding sales tax money.

Miller said the board chairman’s signature on a legal document should have some meaning.

School board member Chuck Hughes said it seems likely that the chairman’s signature would have meaning if the board agreed to it.

“You would not be able, in my opinion, to make a commitment without board consensus,” Hughes said.

Josh Wagner said he agrees that the school board should find out how much weight the chairman’s signature holds.

“But even if someone comes back and says yes, it does, the county can still withhold other money in place of the lottery money,” Wagner said.

Lately, he said, it seems as though no matter what the school board asks for, the county tries to take something away in return. Miller agreed.

“When is that going to stop?” Wagner said.

One of the main issues, he said, is the original intent of the lottery money. He and Miller both said that in their understanding, it was meant to add to existing capital funding, not to take its place.

Wagner said he would like to see the school board ask the state legislature why this is happening and see if there’s a policy solution to the problem.

Kay Wright Norman said the law seems to contradict itself and gives a number of other intended uses of the money before mentioning debt service. She said it’s probably a good idea to ask an attorney about how the lottery funds are spent and whether the school board has any say in that.

“It may not offer a solution,” Norman said, “but it will give us a legal interpretation.”

Contact reporter Karissa Minn at 704-797-4222.

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