Is new fiscal practices law for South Carolina school districts constitutional?

BY BRUCE MILLS
bruce@theitem.com
Posted 5/1/19

Did the Sumter school board have a legitimate reason to appeal the state superintendent's fiscal emergency declaration to the state Board of Education earlier this month and then possibly to a state court its denied appeal?

After Monday's board …

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Is new fiscal practices law for South Carolina school districts constitutional?

Posted

Did the Sumter school board have a legitimate reason to appeal the state superintendent's fiscal emergency declaration to the state Board of Education earlier this month and then possibly to a state court its denied appeal?

After Monday's board meeting, board Chairman the Rev. Ralph Canty said in voting down the motion to appeal that the majority of the trustees knew the district doesn't have the financial resources for a lengthy legal battle. However, the board and its legal counsel still do question the constitutionality of a relatively new law and its implementation over time that partly got them into their current financial pickle.

In May 2017, Gov. Henry McMaster signed legislation creating the Statewide Program on District Fiscal Practices and Budgetary Conditions.

The legislation sets forth escalating levels of financial and budgetary concern under which the state superintendent can declare a level of concern and put into place conditions to rectify the district's financial conditions. The three levels, in escalating order, are fiscal watch, fiscal caution and fiscal emergency.

In 2018, technical changes were made to the law.

Under the state law, when the Sumter school board voted to reopen Mayewood Middle School in February, it diverted from its own fiscal caution financial recovery plan from May 2018. According to the new legislation, at that time, state Superintendent Molly Spearman had the right to declare a fiscal emergency in the district and intervene in budgetary and financial decisions.

The majority of the trustees contradicted that allowance in thinking the district had until the end of next fiscal year, June 30, 2020, to get its financial house in order before Spearman could intervene. Adhering to the new law means a district has at least one month's operating expenditures in its fund balance.

In a fiscal emergency, the state education department provides technical assistance to a district and makes recommendations, and trustees are expected to comply. The question posed in Sumter was whether that is constitutional in South Carolina, where local boards elected by the people are considered autonomous and have the right to make the decisions they think are in the best interest of the communities.

"It has not yet stood the acid test in terms of whether it's really constitutional or not," Canty said, "because a new statute has to conform, and, if it doesn't, then it runs awry of the Constitution."

Canty is a former state representative for Sumter.

"There is a question about someone not elected locally telling you how to operate and execute your responsibilities," Canty said. "I think that's the issue."

However, Canty said, the board has decided it will leave that argument to another group or school district to find out. Canty has been one of two of the nine-member board to vote against opening Mayewood and pursuing the appeal process the entire time. Six board members voted against a motion to continue the process Monday night.

The local board has decided now that its priority going forward is the education of the district's children, he said, and developing a high-quality public school system for the community.

"There is certainly the possibility of a legitimate legal challenge to the actions by the state superintendent and state Board of Education," Canty said, "but the overarching concern of this board is the education of our children. And, also, we don't have the funds or the energy to expend on a possible lengthy legal discussion or argument."

After depleting its fund balance to $106,449 in fiscal 2016 by overspending by $6.2 million, the district built its fund balance back to about $8.6 million as of June 30, 2018. It's currently projected to be about $9.4 million at the end of fiscal 2019, according to district Chief Financial Officer Jennifer Miller. Under the state legislation, Miller estimates one month's operating expenditures as of June 30, 2020, to be about $10.7 million.