Mississippi Advisory Opinions November 28, 1994: AGO 94-0793 (November 28, 1994)

Advisory Opinion Text

Mr. M.R. Cole

2015 Crescent Drive

Pascagoula, Mississippi 39567

RE: BOND ISSUE

Dear Mr. Cole:

Attorney General Mike Moore has received your letter of request and has assigned it to me for research and reply. As one of the trustees of the Pascagoula Municipal Separate School District you pose six questions which will be answered in the order presented:

The school district held a special election April 26, 1994, for the purpose of voting on a bond issue for 17 million dollars to build and equip two high schools, one in Pascagoula and one in Gautier. The bond issue passed by the required sixty percent vote. A copy of the resolution is attached.

All of the advertising and promotion of the bond issue by the school board, steering committee, etc. stated that the total project would be 17 million plus earned interest of approximately $400, 000.00, for a total project of $17.4 million dollars. See page 7 of the enclosed Report of the Finance Committee that shows these numbers.

The bond issue was also heavily promoted on the basis of no increase in taxes over the life of the bond issue payout. See pages 3 and 7 of the Report of the Finance Committee advertising no tax increase.

Question No. 1

Can the school district spend more than the $17.4 million on the project, as stipulated in the resolution and promotion. Specifically, can the district spend monies from the district maintenance fund, capital projects fund or any other school fund that was not included in the resolution and/or the promotion. Since the election, the architects and some school administrators and board members have said that the project may total $20 to $22 million dollars.

Response: Yes. Miss.Code Ann. Section 37–61–3 which in turn incorporates Miss.Code Ann. Section 37–57–105 would allow a school board under the authority of Miss.Code Ann. Section 37–7–301(d)(0) and (aa) to revise its budget in accord with Miss.Code Ann. Section 37–61–21 and use surplus district maintenance funds for construction and repair purposes. Likewise, Miss.Code Ann. Section 37–47–17 allows a school board, upon application and approval of the State Board of Education, to use State building project funds for construction.

Question No. 2

If funds are available in the capital projects fund (not bond proceeds) and/or district maintenance funds, can either or both of the above funds be re-budgeted and be spent on the project which would cause the total project expenditures to exceed 17.4 million dollars. An example is re-budgeting carry-over (surplus) funds from the previous and current year to the project from the district maintenance fund.

Response: See answer to number 1 above.

Question No. 3

Can land for the project be purchased from district maintenance funds or capital project funds (not bond funds) if the land purchase and the other project expenditures exceed $17.4 million dollars. Land purchases were not included in the resolution or promotion.

It is my understanding that this is past action and this office is authorized only to respond to questions which are prospective in nature. However, under the authorities stated above, surplus maintenance funds may be used for the purchase of land. Miss.Code Ann. Section 37–47–5 prohibits the use of public school building funds for the purchase of land and Miss.Code Ann. Section 37–59–29 prohibits the use of bond proceeds for any other purpose than that for which such bonds were authorized to be issued.

Question No. 4

Do the taxpayers have any legal or monetary recourse against the school board members (individually or collectively), who voted for the project if taxes are raised at any time during the life of the outstanding bonds with the raised taxes being used to operate the two schools and/or pay off the bonds.

Underlying all bond issues is the responsibility to pay the interest and principal on the bonds. For that purpose, taxes may be levied and for that purpose an election must be called wherein the voters who ultimately may be taxed may approve or defeat such a bond issue.

Question No. 5

Should the bond issue be declared null and void since the promotion by the school board (4 members) was strongly promoted on a promise of no tax increase to pay off the bonds and operate the additional high school. Does the promise of a no tax increase in a bond election by a school board constitute such an unfair and blatantly dubious tactic since the school board members' terms do not necessarily extend as long as the terms of the bonds, and thus the board members cannot guarantee that taxes will not be raised to pay the bonds or pay for any increased operating costs due to the second high school. Should a "no tax increase promise" be banned in bond issues, and in this instance be declared null and void since the voting public can be unduly and easily swayed by such self-serving promises by government officials that may not be in office to face the voters on not increasing taxes.

Your question contains conclusory allegations and involves a factual determination which this office is prohibited from rendering. However, for information purposes only, Miss.Code Ann. Section 37–59–11 requires that a school board adopt a resolution which must contain specific provisions. It is this document that governs the issuance and use of the bonds.

This office can only comment on the official records and cannot determine whether misrepresentations were made to the public in regard to this bond issue. If misrepresentations were made, nothing herein should be understood as condoning such practices.

Question No. 6

Can funds be used for the two high school projects from the State Public School Building Fund when these funds were not included in the promotion of the bond issue, and the application for the funds was made after the bond election.

Response: Please see answer to number 1 above.

I hope that this office has been responsive to your questions.

Sincerely,

Mike Moore, Attorney General.

Anita C. Clinton, Special Assistant Attorney General.

Attachment

M.R. Cole

2015 Crescent Drive

Pascagoula, Ms. 39567

November 2, 1994

Mr. Mike Moore, Attorney General

State of Mississippi

P.O. Box 220

Jackson, Ms. 39205

Dear Mr. Moore:

I am currently one of the trustees of The Pascagoula Municipal Separate School District.

I request an official written opinion on the following questions.

The school district held a special election April 26, 1994, for the purpose of voting on a bond issue for 17 million dollars to build and equip two high schools, one in Pascagoula and one in Gautier. The bond issue passed by the required sixty percent vote. A copy of the resolution is attached.

All of the advertising and promotion of the bond issue by the school board, steering committee, etc. stated that the total project would be 17 million plus earned interest of approximately $400, 000.00, for a total project of $17.4 million dollars. See page 7 of the enclosed Report of the Finance Committee that shows these numbers.

The bond issue was also heavily promoted on the basis of no increase in taxes over the life of the bond issue payout. See pages 3 and 7 of the Report of the Finance Committee advertising no tax increase.

Question No. 1

Can the school district spend more than the $17.4 million on the project, as stipulated in the resolution and promotion. Specifically, can the district spend monies from the district maintenance fund, capital projects fund or any other school fund that was not included in the resolution and/or the promotion. Since the election, the architects and some school administrators and board members have said that the project may total $20 to $22 million dollars.

Question No. 2

If funds are available in the capital projects fund (not bond proceeds) and /or district maintenance funds, can either or both of the above funds be re-budgeted and be spent on the project which would cause the total project expenditures to exceed $17.4 million dollars.

An example is re-budgeting carryover (surplus) funds from the previous and current year to the project from the district maintenance fund.

Question No. 3

Can land for the project be purchased from district maintenance funds or capital project funds (not bond funds) if the land purchase and the other project expenditures exceed $17.4 million dollars. Land purchases were not included in the resolution or promotion.

Question No. 4

Do the taxpayers have any legal or monetary recourse against the school board members (individually or collectively), who voted for the project if taxes are raised at any time during the life of the outstanding bonds with the raised taxes being used to operate the two schools and/or pay off the bonds.

Question No. 5

Should the bond issue be declared null and void since the promotion by the school board (4 members) was strongly promoted on a promise of no tax increase to pay off the bonds and operate the additional high school. Does the promise of a no tax increase in a bond election by a school board constitute such an unfair and blatantly dubious tactic since the school board member's terms do not necessarily extend as long as the terms of the bonds, and thus the board members cannot guarantee that taxes will not be raised to pay the bonds or pay for any increased operating costs due to the second high school. Should a "no tax increase promise" be banned in bond issues, and in this instance be declared null and void since the voting public can be unduly and easily swayed by such self-serving promises by government officials that may not be in office to face the votes on not increasing taxes.

Question No. 6

Can funds be used for the two high school project from the State Public School Building Fund when these funds were not included in the promotion of the bond issue, and the application for the funds was made after the bond election.

I shall appreciate your promptness in providing the opinions since the Board is in the process of having plans drawn, bids let, and contracts awarded.

Cordially yours, M.R. Cole, Trustee

Attachment

The Board of Trustees (the "Board") of the Pascagoula Municipal Separate School District (the "School District") of the City of Pascagoula, Jackson County, Mississippi, took up for consideration the matter of calling a special election for the purpose of submitting to the qualified electors of the School District a certain proposal for the issuance of general obligation school bonds, and after a discussion of the subject, _________________ offered and moved the adoption of the following resolution:

A RESOLUTION CALLING AND PROVIDING FOR THE HOLDING OF A SPECIAL ELECTION WITHIN THE PASCAGOULA MUNICIPAL SEPARATE SCHOOL DISTRICT OF PASCAGOULA, JACKSON COUNTY, MISSISSIPPI, IN ORDER TO DETERMINE IF THE DISTRICT SHALL ISSUE GENERAL OBLIGATION SCHOOL BONDS OF THE SCHOOL DISTRICT IN AN AGGREGATE PRINCIPAL AMOUNT NOT EXCEEDING SEVENTEEN MILLION AND NO/100 DOLLARS ($17, 000, 000.00) FOR THE PURPOSE OF CONSTRUCTING, ERECTING AND EQUIPPING TWO (2) NEW HIGH SCHOOL COMPLEXES AND RELATED FACILITIES, HOUSING GRADES NINE (9) THROUGH TWELVE (12), OF WHICH ONE SCHOOL COMPLEX WILL BE LOCATED IN PASCAGOULA AND ONE SCHOOL COMPLEX LOCATED IN GAUTIER, MISSISSIPPI, AND OTHER SUCH RELATED FACILITIES CONNECTED THEREWITH, TO INCLUDE NECESSARY AIR CONDITIONING, HEATING, UTILITIES (INCLUDING NECESSARY WATER, LIGHTS AND SEWERAGE FACILITIES) NECESSARY SITE WORK, ROADS, PARKING AREAS, WALKWAYS AND FENCES.

WHEREAS, the Board of Trustees (the "Board") of the Pascagoula Municipal Separate School District (the "School District") is the governing authority for the purpose of the issuance of bonds authorized to be issued pursuant to Section 37–59–1 et. seq., Mississippi Code of 1972, as amended;

WHEREAS, there exists a need for the construction of school facilities within the School District as described in the title of this resolution and no other funds are available in the school funds of the School District or from any other source with which to construct, erect and equip such needed school facilities;

WHEREAS, the Board of the School District does find, determine and adjudicate that it is necessary, advisable and in the best interest of the School District that certain school facilities be constructed, erected and equipped, as hereinafter set forth; and

WHEREAS, the School District has an outstanding bonded indebtedness in the aggregate amount of One Million, Two Hundred, Eleven Thousand, Four Hundred, Eighteen and No/100 Dollars ($1, 211, 418.00); and the assessed value of all property, real, personal and utility properties within the limits of the School District, as assessed for the year beginning October 1, 1992, according to the completed assessment rolls for said year is Two Hundred Eighty-two Million, Nine Hundred and Thirty–Two Thousand, Six Hundred and Sixty–Six and N0/100 Dollars ($282, 932, 666.00); and

WHEREAS, the amount of bonds of the School District herein proposed to be issued, to-wit: Not to exceed Seventeen Million and No/100 Dollars ($17, 000, 000.00), when added to the aforesaid outstanding bonded indebtedness of the School District will not in the aggregate exceed Fifteen per centum (15%) of the aforesaid assessed valuation; and

WHEREAS, the Board of the School District finds and declares that the purposes for which the proposed bonds are to be issued, as hereinafter set out in the body of this resolution are purposes authorized by Section 37–59–1 et. seq., Mississippi Code of 1972, as amended, and other related statutes, and finds and determines that the Board of the School District is authorized and required to call an election to be held in the School District for the purpose of submitting to the qualified electors thereof the proposition hereinafter set out.

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE PASCAGOULA MUNICIPAL SEPARATE SCHOOL DISTRICT, PASCAGOULA, JACKSON COUNTY, MISSISSIPPI, AS FOLLOWS:

SECTION 1. That a special election shall be and the same is hereby called and ordered to be held within the Pascagoula Municipal Separate School District of Pascagoula, Jackson County, Mississippi, on Tuesday, the 26th day of April, 1994, for the purpose of submitting to the qualified electors of the School District the following proposition:

PROPOSITION

Shall the Pascagoula Municipal Separate School District (the "School District") of Pascagoula, Jackson County, Mississippi, issue general obligation school bonds of the School District in an aggregate principal amount not exceeding Seventeen Million and No/100 Dollars ($17, 000, 000.00) for the purpose of constructing, erecting and equipping two (2) new high school complexes and related facilities, housing grades nine (9) through twelve (12), of which one school complex will be located in Pascagoula and one school complex located in Gautier, Mississippi, with other such related facilities connected therewith, to include air conditioning, heating, utilities (including necessary water, lights and sewerage facilities), necessary site work, roads, parking areas, walkways and fences (the "Project"). In no event will only one (1) high school complex be constructed if this proposition is approved.

SECTION 2. That said Special Election shall be held in the following polling places in the School District:

WITHIN CORPORATE LIMITS OF CITY OF PASCAGOULA
CITY PRECINCT	POLLING PLACES
Ward 1 Precinct	Fair Elementary School 420 Fair Street
Ward 2 Precinct	Arlington Heights Elementary School 3511 Arlington Street
Ward 3 Precinct	Unity Baptist Church 2620 Chicot Street
Ward 4 Precinct	Eastlawn United Methodist Church 2502 Ingalls Avenue
Ward 5N Precinct	Lake Elementary School Lake Avenue and Willow Street
Ward 5S Precinct	American Legion Building 1019 Market Street

ADDED TERRITORY OF DISTRICT
COUNTY VOTING PRECINCTS	POLLING PLACES
College Park	College Park Elementary School, on west side of Ladnier Road, 1/2 mile south of railroad tracks
North Gautier	Gautier Convention Center off Shamrock Court next to Jackson County Library and adjacent to the Community College campus
North Fountainbleau	Coca–Cola Company Building on Highway 57 North of the State Highway Maintenance Building
South Fountainbleau	Community House on Mississippi Highway 57 between U.S. Highway 90 and Old Spanish Trail
Bacot Park	Bacot Ballpark, on corner of C.W. Webb Road and Ladnier Road

SECTION 3. That the Superintendent of the School District shall give not less than three week's notice of said election, which notice shall be signed by the President of the Board of the School District, by publication of the notice thereof in The Mississippi Press, a newspaper published in the City of Pascagoula, Jackson County, Mississippi, and having a general circulation among the people of the aforesaid School District and qualified under Section 37–59–1 et. seq., Mississippi Code of 1972, as amended, and other related statutes. The said notice shall be published once a week for at least four (4) consecutive weeks next preceding the date of said election, the first of which publication shall be made not less than twenty-one (21) days prior to the date of said election and the last of which publication shall be made not more than seven (7) days prior to the date of said election, said publication dates being on April 1, 8, 15 and 22nd. The said notice shall be in substantially the following form, to-wit:

NOTICE OF BOND ELECTION

PASCAGOULA MUNICIPAL SEPARATE SCHOOL DISTRICT OF PASCAGOULA, JACKSON COUNTY, MISSISSIPPI

NOTICE is hereby given to the qualified electors of the Pascagoula Municipal Separate School District of Pascagoula, Jackson County, Mississippi, (the "School District") that a Special Election will be held in said School District on Tuesday, the 26th day of April, 1994, for the purpose of submitting to the qualified electors of the School District the following proposition:

PROPOSITION

Shall the Pascagoula Municipal Separate School District (the "School District") of Pascagoula, Jackson County, Mississippi, issue general obligation school bonds of the School District in an aggregate principal amount not exceeding Seventeen Million and No/100 Dollars ($17, 000, 000.00) for the purpose of constructing, erecting and equipping two (2) new high school complexes and related facilities, housing grades nine (9) through twelve (12), of which one school complex will be located in Pascagoula and one school complex located in Gautier, Mississippi, with other such related facilities connected therewith, to include air conditioning, heating, utilities (including necessary water, lights and sewerage facilities), necessary site work, roads, parking areas, walkways and fences. In no event will only one (1) high school complex be constructed if the proposition is approved.

That said election will be held in the following polling places in said School District:

WITHIN CORPORATE LIMITS OF CITY OF PASCAGOULA
CITY PRECINCT	POLLING PLACES
Ward 1 Precinct	Fair Elementary School 420 Fair Street
Ward 2 Precinct	Arlington Heights Elementary School 3511 Arlington Street
Ward 3 Precinct	Unity Baptist Church 2620 Chicot Street
Ward 4 Precinct	Eastlawn United Methodist Church 2502 Ingalls Avenue
Ward 5N Precinct	Lake Elementary School Lake Avenue and Willow Street
Ward 5S Precinct	American Legion Building 1019 Market Street

ADDED TERRITORY OF DISTRICT
COUNTY VOTING PRECINCTS	POLLING PLACES
College Park	College Park Elementary School, on west side of Ladnier Road, 1/2 mile south of railroad tracks
North Gautier	Gautier Convention Center off Shamrock Court next to Jackson County Library and adjacent to the Community College campus
North Fountainbleau	Coca–Cola Company Building on Highway 57, North of the State Highway Maintenance Building
South Fountainbleau	Community House on Mississippi Highway 57 between U.S. Highway 90 and Old Spanish Trail
Bacot Park	Bacot Ballpark, on corner of C.W. Webb Road and Ladnier Road

The polls of said election will be opened at seven o'clock in the morning (7:00 a.m.) and will be kept open until seven o'clock in the evening (7:00 p.m.) of the aforesaid date, and the said election will be held and conducted, as far as practicable in accordance with law regulating general elections in the State of Mississippi and the City of Pascagoula.

All qualified electors of said School District will be entitled to vote in the said election.

By order of the Board of Trustees of the Pascagoula Municipal Separate School District, Pascagoula, Jackson County, Mississippi, this the ______ day of ___________________________, 1994.

_ _

PRESIDENT

SECTION 4. That the said special election will be held and conducted by the City of Pascagoula and its Election Commissioners and shall be conducted, as far as practicable, in accordance with the laws regulating general elections in the State of Mississippi and the City of Pascagoula. When the said Election Commissioners shall have received the returns of said election and ascertained the result thereof, they shall, after having canvassed the same, forthwith make and return to the Board of the School District, by filing a report setting out their action in the holding of the election and the result thereof.

SECTION 5. That the ballots to be used at said special election shall be in substantially the following form, to-wit:

OFFICIAL BALLOT

SPECIAL SCHOOL BOND ELECTION

PASCAGOULA MUNICIPAL SEPARATE SCHOOL DISTRICT OF PASCAGOULA, JACKSON COUNTY, MISSISSIPPI

Tuesday, the 26th day of April, 1994

PROPOSITION

Shall the Pascagoula Municipal Separate School District (the "School District") of Pascagoula, Jackson County, Mississippi, issue general obligation school bonds of the School District in an aggregate principal amount not exceeding Seventeen Million and No/100 Dollars ($17, 000, 000.00) for the purpose of constructing, erecting and equipping two (2) new high school complexes and related facilities, housing grades nine (9) through twelve (12), of which one school complex will be located in Pascagoula and one school complex located in Gautier, Mississippi, with other such related facilities connected therewith, to include air conditioning, heating, utilities (including necessary water, lights and sewerage facilities), necessary site work, roads, parking areas, walkways and fences (the "Project"). In no event will only one (1) high school complex be constructed if this proposition is approved.

FOR THE BOND ISSUE _ _

AGAINST THE BOND ISSUE _ _

(Place a cross (X) or a check mark (√) in the square opposite your choice.

On the reverse side of each ballot there shall be printed substantially the following:

SECTION 6. That the City of Pascagoula Election Commissioners shall be and are hereby authorized and requested to have the ballots prepared and printed for use in the holding of said election, to purge the voter rolls and to otherwise prepare for the election to be held in the same manner as other general municipal elections are held.

SECTION 7. That the bonds described in the foregoing proposition shall be issued only in the event that the issuance thereof be assented to by three-fifths of the qualified electors of the School District voting thereon at said election.

SECTION 8. That the Superintendent of the School District be and he is hereby authorized and directed to forthwith prepare a true and correct copy of this resolution and to certify the same to the City Clerk, City Attorney and Election Commissioners within and for the City of Pascagoula, Mississippi, as and for their warrant and authority for the holding of said election as herein provided and required by the laws of the State of Mississippi.

_____________________________ seconded the motion to adopt the foregoing resolution, and the question being put to a roll call vote, the result was as follows:

Mrs. Patricia Terrell, President	voted _ _
Mr. M.R. Cole	voted _ _
Mrs. Dan Marks	voted _ _
Mr. Oliver Halthon	voted _ _
Mr. Julius A. Willis, Jr.	voted _ _

The motion having received the affirmative vote of the above members, the President announced the approval of the resolution this the ______ day of _______________________, 1994.

_ _

PRESIDENT

REPORT OF THE FINANCE COMMITTEE 1994 TWO HIGH SCHOOL BOND ISSUE

● SCHOOL BOND ISSUES IN MISSISSIPPI COMMUNITIES

● WHY DO WE NEED NEW HIGH SCHOOLS?

● COMMITTEE GOALS

● AVAILABLE SOURCES OF REVENUE

● BOTTOM LINE

FEBRUARY 7, 1994

SCHOOL BOND ISSUES IN MISSISSIPPI COMMUNITIES

October–December, 1993

I. DeSoto County School District

A. 35 million dollar bond issue passed by 80%

B. 5.12% interest rate for twenty years

C. One new high school in issue—1, 200 students—$8, 600, 000

D. Theme—"Our Kids First"

E. Homeowners cost—$80, 000 assessed valuation on home—$10, 000 assessed valuation on automobile—Tax increase—$60.88 per year

II. Clinton School District

A. 12.5 million dollar bond issue passed by 85%

B. One new high school in issue—1, 300 students—$9, 836, 000

C. Theme—"Excellence in Education"

D. Homeowners cost—$80, 000 assessed valuation on home—$12, 000 assessed valuation on automobile—Tax increase—$82.96.

III. Madison School District

A. 16 million dollar bond issue passed by 78%

B. 5.08% interest rate for twenty years

C. Homeowners cost—$80, 000 assessed valuation on home—$12, 000 assessed valuation on automobile—Tax increase—$65.80

IV. Hinds County School District

A. 16 million dollar bond issue passed by 77%

B. One new high school in issue—700 students—$6, 762, 000

C. Theme—"A Commitment to Help Students Be Their Best and Provide the Best for the Community"

D. Homeowners cost—$70, 000 assessed valuation on home—$12, 000 assessed valuation on automobile—Tax increase—$120.48.

V. Tupelo School District

A. Tupelo sold and refinanced bonds in December, 1993 $18, 420, 000 at 4.20% for fifteen years

WHY DO WE NEED NEW HIGH SCHOOLS?

● CHILDREN MOST VALUABLE RESOURCE

—EDUCATION, THE HOPE FOR OUR FUTURE

● EXISTING HIGH SCHOOL FACILITIES

—OVERCROWDED

—OUTDATED

—SCATTERED

● CURRENT 9–12 POPULATION TOO LARGE

—2, 067 STUDENTS TOTAL

—1, 296 FROM PASCAGOULA AREA

—771 FROM GAUTIER AREA

COMMITTEE GOALS

● NO INCREASE IN TAXES

● NO BURDEN ON EXISTING BUDGET

● CONTINUE SCHOOL IMPROVEMENTS

● FIND NEW SOURCES OF REVENUE FOR DEBT SERVICE

AVAILABLE SOURCES OF REVENUE THOUSANDS OF DOLLARS $(000)

	AVE/YR 15 YEARS	AVE/YR 20 YEARS
CHEVRON AROMAX	$ 794	$ 674
CHEVRON PRCP, IN LIEU	173	147
1973 BOND PAYOUT 1998	202	218
1987 NOTE PAYOUT 1997	227	241
SENATE BILL 3021	254	254
TOTALS	$1, 650	$1, 534

TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT DISPLAYABLE BOTTOM LINE

● NO INCREASE IN TAXES

● $17.0 MIL @ 5.0% REQUIRES $1, 638K PER YEAR

0.4 MIL INVESTMENT INCOME

_____

$17.4 MIL PROJECT TOTAL

● DOES NOT UTILIZE ALL OF $1, 650K AVAILABLE PER YEAR 1