The use of adult education funds to build the new school in Ennis was illegal, according to an opinion issued Friday by Montana Attorney General Steve Bullock.
And though Bullock’s opinion holds the weight of law under the Montana Constitution, it’s still unclear what it means for the Ennis School District.
The opinion could open the school district for a lawsuit or the district could challenge the opinion in district court, said the school district’s attorney Elizabeth Kaleva.
The opinion could also lead to a special audit of the school district’s finances, Kaleva said.
“If the county wants to ask for an audit that’s fine,” she said. “The school district isn’t worried about someone coming in and doing an accounting.”
Bullock’s opinion is fairly consistent with the draft opinion he issued on the matter in December.
Essentially, Bullock finds that adult education funds, which districts can raise with non-voted levies, cannot be used to build or acquire new buildings.
“I conclude that adult education funding sources were not intended to finance capital investments such as school buildings,” Bullock wrote. “Whether or not a certain square footage of building space is used for adult education is not determinative, since no amount of adult education funding sources can be used as capital outlay for facility acquisition or construction services.”
The Ennis School District began accumulating tax money within their adult education fund several years ago as property values in the district began to increase with the housing boom.
At the same time, the school district was faced with the need for a new school. School officials have said repeatedly they collected money in the adult education fund in part to fund the construction of the new school.
The new school construction was basically completed last week and will cost the district taxpayers about $9 million. Nearly half of that will come out of adult education funds. The district still has about $2.7 million in the adult education fund for operating the program.
The guidance district received from the Montana Office of Public Instruction from as far back as 2009 led officials to believe that funding the school with adult education money wasn’t normal, but permissible, Kaleva said.
In a letter issued to the Madison County Attorney’s office in August of 2010, OPI Deputy Superintendent Dennis Parman wrote that adult education money had to be used for the purpose it was raised.
However, the guidance this letter provided to the district on the use of adult education funds for building the school is the subject of some debate.
District officials believed the letter provided guidance on how the school should be used if it was built with adult education funds. Language in the letter seems to say that if the school is used for adult education at the proportion it was funded through adult education, then the funding strategy was fine. Ennis officials have said that about 49 percent of the new school will be used for adult education.
However, OPI officials didn’t intend for the district to take the letter as permission to construct a new school building with adult education funds, said OPI Chief of Staff, Madalyn Quinlan.
It has long been OPI’s opinion that adult education funds can be used for funding programs along with the operation and maintenance of facilities, but not for building acquisition and construction, Quinlan said.
When OPI wrote the letter about the Ennis School District’s use of adult education funds, it didn’t have the expense reports for the new school project, she said.
This prohibited OPI officials from commenting on how the school district was spending the adult education funds.
OPI provides school districts with advice on funding and budgeting issues on a regular basis, Quinlan said. However, with the controversy in Ennis the recommendation has always been to seek guidance from the attorney general’s office.
“We have always said to people that your avenue here is an attorney general’s opinion,” she said.
The problem with Bullock’s opinion is that it conflicts with OPI’s letter to the Madison County Attorney and creates confusion moving forward, said Lance Melton executive director of the Montana School Board Association.
Parman’s 2010 letter to the Madison County Attorney’s office was also sent directly to the Ennis School District and clearly answered the question of whether or not it was legal to fund the new school with adult education funds, Melton said.
Melton refers to these sentences in the letter:
“From the review of documents provided to OPI from numerous sources, official reports submitted to OPI through regular reporting processes, communications with school officials, and conversations with community members in Ennis, it appears that this facility is intended to have multiple uses, in particular K‐8 education and Adult Education. When a school facility has or will have multiple uses, especially those provided by statute, then multiple sources of revenue can be used toward the construction costs of that facility including some non‐voted revenue sources.”
OPI’s current position that spending adult education money on new school construction is illegal is contrary to what Parman said in his letter, Melton said.
“I’m not trying to pick a fight with OPI on this,” he said. “I’m flabbergasted that they contend that Dennis’ memo doesn’t say exactly what it says.”
The decision to build a school with adult education funds may have been a poor policy decision by the Ennis School Board, Melton said. That is a question for local voters and officials.
“I believe, forget about good or bad public policy, I believe that Ennis had every right to rely on Dennis’ (Parman) 2010 opinion that said go ahead and do it,” he said.
However, Quinlan believes that Bullock’s opinion keeps current school funding laws in tact by reaffirming that no matter whether the money was collected via a voter approved levy or with a non-voted levy, state laws says it must be used for the purpose in which it was raised.
And, according to Bullock, adult education funds cannot be used for new school construction or building acquisition, she said.
Typically, school funding issues are left to the control of the local school board, which is often the best source for determining whether tax money is being spent on the purpose for which it was raised, Quinlan said. However, the Ennis situation was unique.
“It’s the magnitude of the issue here with Ennis that I think has brought this to the point which it has come to,” she said.
On Tuesday, Ennis School Board Chairman Marc Glines declined to comment on Bullock’s opinion. He wanted the board to speak with Kaleva and get a sense of what the options are going to be moving forward.
For now, construction of the new school is essentially done, Glines said.
Madison County Commissioners are also expecting to discuss their options with Madison County Deputy Attorney Chris McConnell, who has been the lead on the issue with the Madison County Attorney’s Office.
“We need to consult with him as we proceed and move forward with this if we move forward with anything,” said Madison County Commissioner Dave Schulz.