Sharing Education Capital Project Funds:
A Lesson from McMinn County
In 2011, the cities of Athens and Etowah sued McMinn County because the county had put money into an education capital projects fund and used those funds for renovations and additions to county schools, and the cities believed that those funds should have been shared with their school systems. McMinn County responded that they were not obligated to share these capital project funds with the city. The trial court agreed and entered judgment for the county.
The trial court stated, “When a county makes a tax assessment for future capital outlay projects, such an assessment is not subject to proration among all LEAs in the county.” The trial court found that the relevant statute is clear and unambiguous — it requires sharing only of funds for current operation and maintenance purposes, and funds collected for future capital projects are not for current operation and maintenance.
Predictably, the cities appealed. In December 2014, the Tennessee Court of Appeals affirmed the trial court’s decision for the county. The cities attempted a further appeal to the Tennessee Supreme Court, but that Court declined to hear the case in May 2015. There can be no other appeals. The trial court’s decision is now final.
Under this case, counties in which there are multiple school systems may make appropriations to an education capital projects fund and expend that money for school capital projects without being required to share those funds with any city or special school districts in the county. These funds can only be used for capital projects.
This case only affects money appropriated and set aside for capital expenditures for education. Any money used for current operation or maintenance purposes, as well as funds borrowed for education capital expenditures, must be shared with the other school systems in the county.
To read the case, please click HERE to view a PDF.
Source: CTAS Newsletter