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Fayette, New Franklin schools reject city’s request to return fine money

Justin Addison Editor/Publisher
Posted 5/26/20

Both Fayette and New Franklin school districts have categorically rejected appeals from the City of Fayette to return tens of thousands of dollars in fine money seized by the state that will be …

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Fayette, New Franklin schools reject city’s request to return fine money

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Both Fayette and New Franklin school districts have categorically rejected appeals from the City of Fayette to return tens of thousands of dollars in fine money seized by the state that will be distributed to area schools in June.

As was reported in the February 26 Fayette Advertiser, more than $150,000 in fines were assessed on the City of Fayette for its failure to meet state filing deadlines for annual financial statements. Robin Triplett, the city’s clerk and administrator at the time, admitted fault in not making the mandatory filings. One statement was filed nearly a year late, racking up fines of $500 per day. However, a failure of fundamental checks and balances at City Hall ultimately led to the sizable financial penalties.

The fines were assessed by the Missouri Department of Revenue out of monthly sales tax payments made to the city. In February, $151,410 was deposited with the office of the county treasurer, and will be distributed to six school districts that reside either fully or partially inside Howard County. Fayette will receive the lion’s share of the fine money with $64,484.86. New Franklin and Glasgow will be handed $45,655.95 and $31,493.72, respectively. Smaller payments of $5,887.51, $3,443.64, and $444.34 will go to Harrisburg, Higbee, and Salisbury, respectively, which have only portions of their districts in this county.

The city has been working to devise ways for schools to give back all or some of the disbursements. Initially the city asked for schools to return the money in exchange for some tangible benefits, along with the understanding that having a financially healthy city government would benefit not only the district, but also those who reside within.

The Fayette district then made a counteroffer which included returning approximately $60,000 to the city in exchange for utility rate abatements equal to that amount over a four-year period. “It would be up to the city if this is something that they think will benefit their cash flow situation. However, the city declined this offer,” explained Fayette Superintendent Jill Wiseman in an email to this newspaper.

Letters sent out last week from southwest ward alderman and acting Mayor Grafton Cook detailed plans by the city to make large donations to the school districts in exchange for a return of the money. The plan called for pledges of $15,000 to Fayette, $10,000 to New Franklin, and $6,000 to Glasgow to be earmarked for the purchases of technology for students. Payments to Harrisburg and Higbee school districts would total $2,000 combined.

In all, Fayette would have given schools about 22 percent of the total fines back to the school districts. “We were seeking a win-win situation, and that’s just not how they saw it,” said Cook.

One reason cited by the Fayette and New Franklin school districts for keeping the money, was that there is no legal way to return it. By law, the money received by school districts from such fines, must only be used in certain budget categories such as teacher salaries. “The funds the district will receive are legally restricted for certain expenditures, which does not allow us to simply return the money to the city,” Wiseman explained.

Fayette school administration and the Board of Education met in closed session with the district’s attorney, Emily Omohundro, during its regular monthly meeting on Wednesday, May 20. “This situation is really out of the hands of the district and Board of Education,” Wiseman said.

However, the city’s attorney, Nathan Nickolaus, disagrees and said that the money can be returned, from the districts’ general revenue funds. Nickolaus said he spoke with Omohundro and believed, at one point, to have struck an agreement on how it could be done. The money districts would normally take from the general fund to go toward teacher salaries, he said, could be reduced by that same amount to come out equally. “It’s really easy to get around that particular obstacle,” Nickolaus said.

Cook also met with school officials from Glasgow, but there is no word yet on whether they will take up the city’s offer.

While the funds will be windfalls for area school districts, the city finds itself saddled with the financial setback amid an already tenuous economy caused by the coronavirus pandemic. Fayette currently faces a deficit of around $135,000 in its general revenue fund, which has to be subsidized by the city’s utility department. Cook said the city is working to find a way to move money from various sinking funds to the general revenue account in order to conduct business as normal, but efforts have been stymied by a city hall steeped in decades of disorganization.

Cook also noted that the financial ramifications of the ongoing COVID-19 pandemic are likely to create further difficulties for the city. “We’re going to suffer a tremendous impact,” he said. “Economic activity is way down and subsequently our sales tax revenues are going to be down.”

Cities are funded largely by sales taxes, while schools are predominantly funded by property taxes. Property tax increases for both Fayette and New Franklin school districts were approved by voters in 2019. However, school districts have already seen revenue shortages produced from gambling and expect less income from the state over the next two years, both due to COVID-19. (See related article on page 2 of this newspaper.)

The city is currently putting together its roughly $6 million budget for the upcoming fiscal year which begins in June. And while the fines were taken out mainly over the previous year, Cook said their effects will be felt by virtually every department in one capacity or another. It is possible that the city moves away from using departmental sinking funds, and instead finances each department through more standard budgetary means.

“I’m really at a loss for the lack of consideration under the circumstances,” Cook said. “The good fortune that these school districts are going to be enjoying and receiving because of this circumstance all come at the misfortune of the City of Fayette.”

Fayette, school, fine

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