Dale Court gives 45 days to settle school tax lawsuit

Forty-five is the number of days that a Dale County Circuit Judge has allowed the parties involved in a civil suit about school tax distribution to come to an agreement.

After allowing officials from the school systems involved 45 minutes to come to an agreement, Thirty-third Circuit Judge Kimberly Clark ruled Monday, Nov. 27, that Jan. 10 at 9 a.m. is the date set for a court hearing if parties cannot come to a resolution.

The dispute centers on a recent 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 in a letter dated Oct. 20 to include Enterprise City Schools and Dothan City Schools in the 2017-2018 distribution of countywide school taxes.

“The Code of Alabama…provides that receipts from countywide taxes collected for the purpose of participating in the Foundation Program shall be distributed to local boards of education within the county based on their total Foundation Program calculated costs,” Richardson said in his letter. “Unless I have approved an alternative distribution plan, the percentages given for each school system identified below should be used in distributing receipts from countywide taxes for the fiscal year Oct. 1 through Sept. 30, 2018.”

Some 600 students attending Enterprise City Schools live in Dale County and 29 students attending Dothan City Schools live in Dale County.

About 100 of those students live within the Enterprise city limits that are located in Dale County. The remaining students live in areas of Dale County such as Level Plains, Daleville and Clayhatchee. Students attending ECS who live on Fort Rucker are not included in that number.

“The state department made the directive based on the litigation in North Alabama,” Enterprise City Schools Superintendent Greg Faught explained. “At issue is the tax dollar.

“We are funded through the State Department of Education from the Foundation Program money based on the average daily membership of our school system the first 20 days after Labor Day,” Faught explained. “Prior to this decision, 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.

“Six hundred children is essentially a good sized elementary school,” Faught said. “To go out and build an elementary school big enough to hold that many kids would cost between $13 to $14 million and if we transported every one of them we are talking about hundreds of thousands of dollars just in transportation.

“The parents are paying countywide ad valorem tax where they live in Dale County but their tax dollar has never gone where their children are being served.

“We’ve always served those children but at the same time, the taxpayer in our district has been spread more thinly because of that,” Faught said.

On Nov. 17, the Dale County Board of Education, the Daleville Board of Education and the Ozark City Schools Board filed a civil suit in the Dale County court against the Dale County Revenue Commissioner, the Alabama State Department of Education, the Enterprise City Board of Education and the Dothan City Board of Education.

The lawsuit asked the court for an “emergency temporary restraining order” to halt distribution of the sales tax to Enterprise City and Dothan City Schools. Clark granted the temporary restraining order the same day, pending Monday’s court hearing.

Dothan City Schools was the only party that did not attend the hearing Monday during which the temporary restraining order was extended.

Also in Monday’s agreement was a stipulation by Enterprise City Schools that should it be apparent after 30 days of negotiations that a settlement would not be reached, the ECS reserved the right to “dissolve” the temporary restraining order.

The attorney representing the Dale County Revenue Office told the judge 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 contend 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 Nov. 17. “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 taxpayers of Dale County pay sales taxes and ad valorem taxes to benefit and support schools within Dale County,” Baker said at that time. “Surrounding school districts with open enrollments should not benefit from the taxpayers of Dale County. Tax receipts collected in Dale County— sales, property, and other ad valorem—should remain in Dale County for the purpose as described by law ‘to be distributed to local boards of education within the county.’”

What initially prompted the directive from the State Department of Education is litigation in North Alabama between Limestone County, Athens City and Madison City Schools.

Enterprise City Schools 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.

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