HELENA – The Ennis School District improperly transferred property taxes levied to support adult education and transportation in order to build a $9 million school, Attorney General Steve Bullock wrote in a final opinion issued Friday.
Ennis officials could not immediately be reached for comment.

“Property taxes levied to support the adult education and transportation funds may be transferred to the school flexibility fund, but the transfer must be within or directly related to the purposes for which the property taxes were raised, i.e., adult education programming and transportation services.  A transfer of property taxes for any other purpose is invalid,” Bullock wrote.

Bullock issued a preliminary opinion in December saying the school district’s move goes against state law requiring that capital projects come from levies that voters approved. After a 30-day period collecting and considering public comments, Bullock issued the final opinion affirming the ruling, according to a news release.

In Montana, an attorney general’s opinion has the weight of law, meaning it can only be overturned by a district court or through the legislative process.
In July, Madison County commissioners sent a letter to Bullock, asking officials there to look into questions they had over the construction of a new elementary and junior high building – which they said cost an estimated $10 million — in which the district also planned to use for adult education. County officials reportedly questioned the amount of money the district is putting into the adult education fund.
Madison County officials noted in an earlier letter to Bullock that Ennis has the highest mill levy in the state for adult education, which grew from $236,000 in Fiscal Year 2005 to more than $4 million in Fiscal Year 2010. But during that same time expenditures from adult education declined from $30,528 in 2005 to $24,697 in 2009.
In August 2010, commissioners were told by the state Office of Public Instruction (OPI) that a special audit of the Ennis School District budget was not necessary and Ennis had acted legally when it used the funds to build its new school.
Lance Melton, executive director of the Montana School Boards Association (MSBA), issued a statement saying his organization was concerned by the failure of the attorney general to address the OPI opinion.
“OPI is the agency charged with administration of the laws in question and specifically ruled that the Ennis Public Schools’ plans for use of Adult Education and Transportation Funds for new construction were lawful in August 2010,” Melton wrote. “The attorney general’s opinion enacts a substantial change in the law by over-ruling OPI’s opinion but fails to address the existence of or the faulty reasoning in OPI’s previous opinion.”
He said if the Ennis School District should sue over the issue, the state and OPI will be pulled in as a party through cross complaint for having given Ennis an assurance in advance that their planned construction was lawful.
Melton said his organization was thankful the opinion was narrowed to the expenditure of funds on new construction as opposed to all capital projects, which includes equipment purchases and renovation projects. He said the original draft opinion had some conclusions now addressed by the MSBA comments.
Here is the full news release from Melton and the MSBA:

“We are  thankful that the scope of the opinion has been narrowed to the expenditure of funds on new construction as opposed to all capital projects, which includes equipment purchases and renovation projects.  The original draft opinion had reached some sweeping conclusions that have been addressed by our comments, specifically in terms of the removal of language from paragraph 16 in the earlier draft.
 ”We remain concerned with the faulty reasoning in the opinion and specifically with the failure of the opinion to address the existence of a formal opinion of OPI’s chief deputy in August 2010 that Ennis’ actions were lawful.  OPI is the agency charged with administration of the laws in question and specifically ruled that the Ennis Public Schools’ plans for use of Adult Education and Transportation Funds for new construction were lawful in August 2010.  The Attorney General’s opinion enacts a substantial change in the law by over-ruling OPI’s opinion but fails to address the existence of or the faulty reasoning in OPI’s previous opinion.
“We remain puzzled and disappointed regarding the complete lack of analysis in the opinion of the previous opinion of OPI and the failure to address whether the opinion applies prospectively, to future acts, which is what should occur when an attorney general’s opinion overrules an established interpretation of law to the contrary.
“Although we have not advised Ennis Public Schools regarding this matter, as they have retained private counsel, we would expect that if and when Ennis School District is required to litigate the issues surrounding its use of Adult Education and Transportation funds that the state and specifically OPI will be pulled in as a party through cross complaint for having given Ennis an assurance in advance that their planned construction was lawful.”

• We expect that all of the issues that the Attorney General chose to ignore, including the existence of OPI’s official opinion to the contrary, will be among the key issues addressed in any subsequent litigation, should it be instituted.