STATE OF SOUTH DAKOTA
OFFICE OF
THE ATTORNEY GENERAL
April 9, 1973
Don Barnhart
State Superintendent of Public Instruction
Pierre, South Dakota 57501
OFFICIAL OPINION NO. 73-10
Fiscal limitations on the obligations of a school district.
Dear Dr. Barnhart:
You requested an opinion on the following information:
On December 16, 1973, the Attorney General's Office issued an Official Opinion, No. 72-67, relating to the financial status of the Douglas Independent School District No.3. Subsequent to this opinion Senate Bill 137 was introduced in the Forty-eighth Session of the Legislature (1973) with an emergency clause and was passed by the Legislature and became effective March 22, 1973.
Based on the above information and the current school statutes you requested an opinion on the following question:
What are the limitations on the obligations that the district may enter into for the school year 1973-74?
In addition to the answer to the above question, you requested any comments that would assist the school board.
Article XIII, Section 4 of the South Dakota Constitution reads in part as follows:
The debt of any county, city, town or civil township shall never exceed five per centum upon the assessed valuation of the taxable property therein, for the year preceding that in which said indebtedness is incurred. The debt of any school district shall never exceed ten per centum upon the assessed valuation of the taxable property therein, for the year preceding that in which said indebtedness is incurred.
In estimating the amount of the indebtedness which a municipality or subdivision may incur, the amount of indebtedness contracted prior to the adoption of the Constitution shall be included.
SDCL 13-16-22 reads as follows:
It shall be unlawful for the school board members of any school district to issue a warrant in excess of the current assets of the fund upon which such warrant is drawn at the time of its issue plus the uncollected taxes of such fund allocated for current school fiscal year for which a levy has already been spread, minus all outstanding warrants or promissory notes issiued against such fund. Provided, however, that the general fund warrants may also be issued in the amount of the anticipated uncollected receipts to be allocated to such general fund for such school fiscal year from federal, state, and county aid, and from transportation and tuition payments to be received from other school districts. The anticipated uncollected receipts shall not be greater than the actual amounts received by the district from such sources during the preceding school fiscal year.
SDCL 13-16-23 reads as follows:
It shall be unlawful for school board members to contract a debt for payment of which it would be necessary to issue a warrant in violation of § 13-16-22.
SDCL 13-16-24 reads as follows:
Every contract made Or warrant issued in contravention of the provisions of §§ 13-16-212 and 13-16-23 shall be null and void in regard 1:0 any obligation thereby imposed on the district, but every school board memeber who makes, or participates in making, or authorized the making of any such contract or the issuance of such warrant shall be held individually liable for it. Every school board member present when any such unlawful contract or warrant was made, or authorized shall be deemed to have made or to have participated in the making, or to have authorized the making of the same, as the case may be, unless he dissented therefrom and entered or caused such dissent to be entered on the records of such school district.
Nothing in this section shall make any warrant issued or contract made previously to March 5, 1955 illegal or void.
SDCL 13-18-4 reads as follows:
Any person who issues, signs or authorizes the issuance of warrants so issued. It shall be the duty of the state's attorney of district shall be guilty of a misdemeanor, and upon conviction thereof shall be fined not more than one hundred dollars, and in addition thereto shall be liable for the amount of such warrants so issued It shall be the duty of the state's attorney of the county wherein such warrants were issued to prosecute such offenders when they are called to his attention by an audit. It shall be the duty of anyone who audits the accounts of a school district and finds that warrants have been illegally issued to present a copy of the audit to the state's attorney of the county in which the school district is located.
In answer to your specific question, it is my opinion that the fiscal limitations on the obligations that a school district may enter into are as set forth in the above cited constitutional provision and statutes.
Any contractual obligation that might be entered into by the school district which would exceed the contracting capacity of SDCL 13-16-22, due to failure to receive anticipated federal moneys, should contain a contingency provision that the obligation to pay any amount which would exceed the actual receipts of moneys from federal sources would be considered void and payable only when adequate funding is received from federal sources. The contract should also contain reference to Senate Bill 137 (Chapter ,Session Laws of 1973) and be subject to the provisions contained therein.
Respectfully submitted,
Kermit A. Sande
Attorney General
