A civil lawsuit about Dale County tax distribution to schools has been settled.
Thirty-third Circuit Judge P.B. “Ben” McLauchlin accepted an agreement regarding the distribution of funds, which have been held in an escrow account, in a court order signed May 7.
Under the agreement, Enterprise City Schools will receive Dale County countywide tax funding for each student that resides in the city limits of Enterprise in Dale County, but ECS has agreed to limit the number of out of district students it will receive funding for in the future, explained Enterprise attorney James Tarbox who, with attorney Dale Marsh, represented Dale County and Daleville City Schools.
“Beginning the fall of 2022 and continuing every year thereafter, ECS has agreed to cap the number of out of district students that it receives Dale County countywide funding for at 200 total students,” Tarbox explained about the legal issue that began after an Oct. 20, 2017 directive from the State Department of Education to the Dale County Revenue Commissioner to include Enterprise City and Dothan City Schools in the distribution of Dale County school taxes.
Citing Alabama law, Interim State Superintendent of Education Ed Richardson directed Dale County Revenue Commissioner Eleanor Outlaw to include Enterprise City Schools and Dothan City Schools in the 2017-2018 distribution of countywide school taxes.
Some 600 students attending Enterprise City Schools lived in Dale County and 29 students attending Dothan City Schools lived in Dale County at that time.
About 100 of those students lived within the Enterprise city limits that are located in Dale County. The remaining students lived in areas of Dale County such as Level Plains, Daleville and Clayhatchee. Students attending ECS who lived on Fort Rucker were not included in that number.
On Nov. 17, 2017, Marsh and Tarbox representing the Dale County and Daleville City Board of Education and Ozark attorney Henry Steagall representing the Ozark Board of Education filed a lawsuit against the Dale County Revenue Commissioner, the Alabama State Department of Education, the Enterprise City and the Dothan City Boards of Education and their respective superintendents.
The lawsuit, filed in Dale County Court, asked for an “emergency temporary restraining order,” to halt distribution of the sales tax to Enterprise City and Dothan City Schools, which was granted.
McLauchlin, who was assigned the case after 33rd Circuit Judge Kimberly Clark recused herself from hearing the matter, ruled after a February 2018 hearing that Clark’s original temporary restraining order would remain in effect.
The attorney representing the Dale County Revenue Office said that immediately following the restraining order being issued, an escrow account was established to retain the funds pending resolution of the issue. Some $12,000 was immediately deposited in that account, the court was told.
Citing “irreparable harm” if the taxes are distributed to ECS and DCS, the plaintiffs had contended that the Dale County Board of Education would receive approximately $270,000 less in budgeted revenues, the Ozark City School Board would receive approximately $170,000 less in budgeted revenues and the Daleville City School Board would receive $88,000 less in budgeted revenues in Fiscal Year 2018.
“For the first time in history, the Alabama State Department of Education has directed that the Dale County school tax distribution include Enterprise City Board of Education and the Dothan City Board of Education,” said Dale County Schools Superintendent Ben Baker after the lawsuit was filed in 2017. “It is the belief of the Dale County Board of Education that this new tax distribution scheme dictated by the Alabama State Department of Education is contrary to law and will have irreparable harm to the Dale County School system if allowed to continue.”
“The state department made the directive based on the litigation in North Alabama,” Enterprise City Schools Superintendent Greg Faught explained at the time. “At issue is the tax dollar. Dale County, Ozark City and Daleville City Schools have been receiving sales tax dollars and ad valorem tax for students that are going to school in ECS.”
At the time the lawsuit was filed, ECS Assistant Superintendent Dr. Patrick Cain used the analogy of dividing a pie to explain the State Department of Education’s new formula for distribution. Whereas the “pie” was formerly split between the three school systems in Dale County, it will be split into five pieces to now include Enterprise City and Dothan City Schools, he said.
“As Superintendent Ben Baker of the Dale County Board has stated on several occasions, the plaintiff school systems believed that the tax money belonged to and should stay in Dale County” Tarbox said. “At issue throughout the litigation were a high number of students that lived out of district in Dale County but attended school in the Enterprise City Schools system.
“During the course of the litigation, the attorneys involved agreed to allow our respective superintendents to meet and try to work out an agreement to resolve this case. The superintendents reached an agreement in principle and allowed their respective attorneys to get this case to the finish line,” Marsh said.
“Had the directive from the Alabama State Department of Education been fully implemented, it would have had a tremendous negative effect on the plaintiff school systems and their ability to provide a quality education to their student populations,” he added. “With this settlement, every school system involved will be able to keep a piece of the subject funding and we feel confident that any overall negative impact on the plaintiff school systems has been mitigated.”