Glynn County Schools and the Brunswick-Glynn County Joint Water and Sewer Commission made their cases to Georgia Supreme Court justices Tuesday in a lawsuit over as much as $481,000 in unpaid bills.
The issue arose in 2014 when the school board decided that the debt service portion of its bill could not be interpreted as an educational purpose — a constitutional requirement of school expenditures.
“The issue, in this case, is whether school property tax dollars can be used to fund the payment of bonded indebtedness and the construction of capital improvements for the Brunswick-Glynn County Joint Water and Sewer (Commission), a separate governmental local entity and a separate political subdivision,” said Phillip Hartley, an attorney for the school board.
Glynn County Superior Court Judge Stephen Kelley ruled in the utility’s favor in 2018, and the Georgia Court of Appeals passed the case up the chain to the Georgia Supreme Court on appeal. The high court heard arguments from both parties on Tuesday morning.
Hartley’s case hinged on his interpretation of the Georgia Supreme Court’s 1994 ruling on Dekalb County School District v. Dekalb County, in which the court ruled that the school district was constitutionally prohibited from using school tax revenue to pay for road improvements, even if the improvements were necessary to the safety of students and residents.
The debt service charge included in JWSC water and sewer bills is used to pay off debt incurred as a result of water and sewer improvements to benefit Glynn County as a whole. As such, the school board can’t pay that portion of its bill, according to court filings. Additionally, Hartley argued the school board can’t pay the JWSC’s debt service fee because the Georgia Constitution prohibits the school board from carrying over debt from year to year. If it can’t take on debt for longer than a year, it can’t pay for other public agencies’ long-term debt either.
Because the debt service fee is presented as a separate charge from actual water and sewer usage and because the amount charged is calculated based on something other than actual usage, the school board considers the debt service fee distinct from their usage bill.
“We’re arguing strongly that there are two charges here,” Hartley said.
The school board has no qualms paying for services rendered in the form of a water and sewer usage fee, he said, but the debt service fee is an entirely different matter.
Justice Charles Bethel asked if this lawsuit would be before the court if the JWSC sent the school board lump-sum “omnibus bills.”
“It would be a much more difficult case for the school board to argue,” Hartley responded.
It is precisely because the utility does list debt service as a separate charge from actual water and sewer usage that the school board objects to it.
If such an entity existed, Justice Keith Blackwell asked if the school board could pay its water and sewer bill, debt service included, through a reseller that provided the JWSC with an omnibus bill.
“They’re paying the bill for service and the fee, and then they add 10 percent and bill you,” Blackwell said.
“Maybe so,” Hartley responded.
Justice Sarah Warren asked why it really mattered what the JWSC used its money for as long as Glynn County Schools used tax money for educational purposes.
“If you’re using it for educational purposes, why does it matter how the other agency effectuates it?” Warren said.
“Don’t disagree with the question. The question is whether paying for bonded indebtedness payments of another governmental entity is an educational purpose. We argue that it’s not. That’s the question we’re raising,” Hartley responded.
Justice Nels Peterson asked if the school board pays the fees Georgia Power charges for Plant Vogtle construction.
“Yes, but there we’re dealing with a private company rather than two public entities,” Harley said.
Whether or not the money is going to a public or private entity doesn’t matter, Peterson responded.
Hartley disagreed, saying that it did matter in the Georgia Supreme Court’s decision in the 1994 Dekalb County case.
Justice David Nahmias, however, noted that a significant reason why the Supreme Court made the decision that it did in the Dekalb County lawsuit is that the road improvements in question were to be done on county property, not because the case involved two public entities.
“Our opinion says over and over that the road was not just adjacent to the school or contiguous to the school, but was leading to the school on what was described as Dekalb County’s property, and that was the defining fact in the case,” Nahmias said.
“... More importantly, you say that the key fact in the case was that it was Dekalb County in the case and not a private road builder, and I don’t see that anywhere in the case.”
Hartley then drew a distinction between the use of school funds to pay for public services and private services. If the Dekalb County School district was caught up in the same lawsuit with a private company over who should pay for road improvements, the case would have turned out differently, he said.
“That is just a made-up distinction,” Nahmias responded.
He continued to attempt to explain the distinction, but multiple Supreme Court justices doubted his interpretation of the 1994 case.
“If the Dekalb County case says that then the Dekalb County case is wrong and it needs to be overruled today ... I don’t think it does say that,” Peterson said.
It would fling wide the doors of litigation for every school board statewide, Nahmias said. If Hartley’s argument holds, then school boards should examine the records of any public entity they pay to make sure they aren’t using school funds to pay off debt.
“It might not be on the face of the bill, but now every school district can demand the records in discovery of everyone they pay any expense to, and if any of that covers debt in a non-proportional way, you have a claim,” Nahmias said.
Hartley said that wouldn’t be true in all cases, only when debt service charges are split from usage charges and calculated based on anything other than actual usage.
Steve Bristol, an attorney representing the JWSC, said the utility doesn’t have a choice in the matter.
“The JWSC doesn’t have a choice in splitting out the amount of its debt service. It was approved by the enabling statute. It has a working agreement with the city and county as to how it is to perform its duties, how it is to bill for them. And included in the cost of providing — particularly if one is an elementary student who needs to go — the most necessary of services is paying the debt on the facilities that allow us to provide them,” Bristol said.
The school board, he said, does have a choice.
“They can contract with private contractors if they chose to for their water and sewer ... The state department of education as well as the local school district board of ed have agreed, however, that using public services is a better expenditure of resources,” Bristol said. “... Part of our cost is paying for the debt service. We have done it in a way that is rational, that is proportional and is according to the assets in use in each of the (water and sewer) districts.”
Nahmias noted, however, that the debt service fees aren’t perfectly proportional as they aren’t calculated the same way usage fees are.
Bristol acknowledged that, but said every fee is charged equally to all customers in every district.
Recalling Bethel’s earlier question, Blackwell asked if the school board could pay for the JWSC’s services through an intermediary.
Bristol said he couldn’t see any reason why it wouldn’t be able to do so.
The court had yet to issue a final judgment as of press time Friday.