Oregon Advisory Opinions May 09, 1961: OAG 61-67 (May 9, 1961)
Collection: Oregon Attorney General Opinions
Docket: OAG 61-67
Date: May 9, 1961
Advisory Opinion Text
OAG 61-67.
After a final determination has been made in school district reORGAnization proceedings of an equitable adjustment of assets and liabilities, the school board of the administrative school district has no authority to grant a tax offset to one of the former component school districts or to the taxpayers therein.
State Representative
You have requested our opinion on a problem relating to assets of an administrative district in Polk County, and you state the problem in part as follows:
"We have a situation in our District resulting from the functioning of legislation which has directed school district reORGAnization. Since July 1, 1960, when District 13CJ was officially formed, there has been paid into District 13CJ the following amounts of money: Marion County District 109---$5,455.16; Polk County $4,457.51 and Benton County $640.18. These monies have come from the dissolution of the non-high districts and is a distribution of the assets back to the districts from whence it was collected. As I understand it, these funds have been raised in the non-high districts over periods of time in excess of a year and represent in general uncollected taxes.
"In the ReORGAnization Plan, District 109's share of the assumed bonded indebtedness of $40,302.00 was $7,796.70. A cash credit allowed District 109 reduced this $7,976.70 amount to $5,290.71 and a levy against 109 property in 1960 further reduced this amount to $4,893.03. * * * When we make the assumption that the Board is willing to rule that District 109 property is entitled to this credit, it appears that there is no statute or precedent established to assure that the action would be legal to the extent that would render the Board free from litigation."
Your questions are:
"* * * Is legislation needed to clarify this problem which must be common to other districts throughout the State? * * *"
"* * * Would a ruling by a school board, to grant a tax offset to an individual district, be free from litigation by taxpayers in other districts?"
In your letter you further indicate that the property owners in former School District 109 maintain that the moneys derived from the dissolution of the non-high school district represented taxes that were levied and collected on their property prior to the school district reORGAnization "and at the time of reORGAnization was non-identifiable in a way that the Polk County ReORGAnization Committee could include it in their plan of granting credits for assets in the total reORGAnization plan." It is further maintained that the bonded indebtedness assumed by former School District 109 at the time of joining School District 13CJ should be offset by the credit for the moneys derived from the dissolution of the non-high school district. In order to determine the status of the assets above mentioned, consideration
should be given to the provisions of the School District ReORGAnization Law as contained in ORS 330.505 to 330.780. This law was described in the recent case of Padberg; West v. Martin, decided by the Oregon Supreme Court November 23, 1960, 71 Adv. Sh. 747, 748-749, in part as follows:
"* * * The Act was comprehensive. It was not permissive but, as indicated, mandatory. It compelled the formation of a county committee in each county to plan for the reORGAnization of the school districts within the county. Provision was also made to include reORGAnization of those districts which overlapped into more than one county. The plan was to 'afford greater equalization of educational opportunities for the inhabitants of the county, more efficient and economical administration of public schools and more equitable distribution of public school revenues.' ORS 330.535 (9).
"When the plan was completed the Act required that various public hearings be held to permit the public to be informed. The Act also required that the plan be submitted to the State Board of Education. The approval of that board was necessary before the plan could go into effect. After the plan was approved by the state board it was necessary that it be submitted to a vote of the people within the area affected. Except, * * * in the reORGAnization of those districts where no boundaries were changed, a vote of the people was not required. Approval by the state board was sufficient. * * *"
In sustaining the validity of the Act, the court further stated, at page 750:
"Since the legislature had the power to dissolve, change or abolish districts without election the reasons for providing an election in those instances when boundaries were changed becomes apparent. A change of boundaries necessarily includes a change of any bonded or other indebtedness, or of any other contractual obligation of an existing district and a change in assets, including property subject to taxation. * * *
"This can be seen, in part, by the provisions of ORS 330.620 which limit the right of judicial review of a reORGAnization proceeding:
" '(4) No proceedings shall lie in any court on any issue in the reORGAnization of school districts under ORS 330.505 to 330.780 except the adjustment of property, assets, debts and liabilities or where the legality of the formation of the district is in question * * *'
"The classification provided by the legislature in respect to elections was reasonable. * * *"
A plan for reORGAnization prepared by a county committee must include, among other things, a proposal for an equitable adjustment of all property, assets, debts and liabilities of each existing school district which is affected by the plan. ORS 330.530. Under ORS 330.540 the committee is to determine the value and amount of all school property and all bonded and other indebtedness of the school districts affected by the reORGAnization plan and shall determine an equitable adjustment of all property, assets, debts and liabilities of each said school district. ORS 330.590 provides that the notice of election for the formation of the administrative school district shall, among other things,
"(4) Contain a statement of the terms of adjustment of property, assets, debts and liabilities applicable to the proposed administrative school district and existing school districts which contain territory to be included within the proposed administrative school district."
See also ORS 330.595 containing the ballot form which also refers to adjustment of property, debts, assets and liabilities. As previously noted, an appeal from a decision of the committee or state board is permitted under ORS 330.620 but only on the question of adjustment of property, debts and liabilities among the districts involved. The status of an administrative school district when duly formed is described in ORS 330.660, which states:
"(b) Subject to the provisions of ORS 328.555, the school districts, or parts thereof, included in the administrative school district shall be deemed to be annexed to the most populous district (or the part of the most populous district included in the administrative school district) and to become identified with it * * *.
"(3) Notwithstanding any other law, when an administrative school district comes into existence all territory included in the administrative school district is withdrawn from any other type of school district, except the rural school district, of which it may have been a part and becomes a part of the administrative school district. * * *"
For the purpose of ascertaining the status of the instant administrative school district we have examined the files of the State Board of Education pertaining to the reORGAnization of School District 13CJ, Polk County. We find that the county committee's plan for reORGAnization included the following statement:
" All property and assets of each of the existing districts is to succeed to the proposed administrative school district No. 13CJ . The total bonded indebtedness of all existing districts is apportioned to the common school districts included according to the following schedule: Net amount assumed principal and interest payable as bonds are paid. * * * District No. 109---Riverside (Marion County) $7,977.00 * * * The Polk County Committee for reORGAnization in the consideration of districts where bonded indebtedness is involved does resolve as follows: The bonded indebtedness of all consolidated districts will be pooled and the obligation prorated in accordance with the assessed valuation of the districts as shown by the latest published tax summary and there will be credited to
each second or third class district the value of their building and the equipment as shown in latest audit. Similarly cash reserves legally set up as distinguished from operational cash shall similarly be credited against each district's obligation for bonded indebtedness. The secretary will prepare statement of the indebtedness of each district and arrange details of certifying the amounts to the assessor and treasurer after a vote of approval by each district involved. * * *"
A public hearing was held on this plan by the county committee and the plan was adopted by the said committee on December 1, 1959. Thereafter a hearing was held before the State Board of Education on February 25, 1960, and on March 9, 1960, the State Board of Education reviewed the partial plan for school district reORGAnization and approved the same. Thereafter an election was held in the districts affected and the administrative school district came into being effective July 1, 1960. Evidently there was no appeal from any of the hearings to the courts as authorized by ORS 330.620.
The "assets" to which you refer in your letter were evidently funds remaining in the non-high school district account upon dissolution of the non-high school district which were required to be distributed to the component elementary districts of the former non-high school district. See chapter 119, Oregon Laws 1959; Opinions of the Attorney General, 1958-1960, pp. 338-339.
Nevertheless, in our opinion, they are assets to which the Administrative School District No. 13CJ succeeded. The school districts or parts thereof included in the administrative school districts are deemed annexed to the most populous district and identified with it. ORS 330.600. And it is the general rule that in the absence of statute to the contrary where a district is dissolved, abolished or destroyed and its territories annexed to an existing district, the latter district is entitled to all the property and rights of the old district. Opinions of the Attorney General, 1954-1956, pp. 36, 37; 78 C.J.S., Schools and School Districts, § 73, pp. 799, 800. Furthermore, as the above quoted statutes reveal, the subject of the division of all assets and liabilities is required to be considered, determined and an equitable adjustment made, at each stage in the formation of an administrative school district. After a final approval is made of the plan, and the electors have approved such a plan, including such proposed equitable adjustment of assets and liabilities, we know of no provision of law which would permit a further determination or adjustment of assets that would otherwise accrue to the newly formed administrative school district or its component parts.
Therefore, in response to your inquiry, it is our opinion that there is no authority in the administrative school board to "grant a tax offset" to one of its former component school districts or to the taxpayers therein under the situation described in your letter. The only statute of which we are aware which authorizes a refund or cancellation of a "special tax" is ORS 311.815. See Opinions of the Attorney General, 1934-1936, p. 648; 1950-1952, p. 12, interpreting this refund statute. However, in our opinion by reason of the fact that a determination of assets and liabilities among the districts affected has been fully determined, it is highly questionable whether such a refund statute would be applicable to assets above described.
We find the present law a workable piece of legislation fairly clear as to how it is to be applied. The taxpayers' rights have been protected at all stages of the reORGAnization procedure, including the right to appeal to the courts on asset distribution. We make no recommendation as to corrective legislation.
Your second question is answered in the negative.