Opinion
No. 73-705
Decided May 1, 1974.
State expenditures — Reductions ordered by Governor — Payments under school foundation program — Reductions terminated — Section 40, Am. Sub. H.B. 475 — Payment of amounts withheld authorized — For months included in period specified — Calculation formula.
Executive officers are required to restore reductions taken from school foundation program payments to boards of education for the months of September and October 1971, since an appropriation has been made for that purpose.
APPEAL from the Court of Appeals for Franklin County.
The state of Ohio operated on a series of interim budgets from July 1, 1971, to December 20, 1971. This situation was described by the Court of Common Pleas as a "financial crisis," in that "no biennial budget had been passed, and none appeared * * * to be forthcoming."
During that time, the Governor, appellant herein, made a determination, pursuant to R.C. 125.09 , that the available revenue receipts and balances for the current fiscal year would in all probability be less than appropriations for the year.
R.C. 125.09 (now R.C. 126.08, without substantial change) in pertinent part, provided:
"If the Governor ascertains that the available revenue receipts and balances for the current fiscal year will in all probability be less than the appropriations for the year, he shall issue such orders to the respective departments, offices, and institutions as will prevent their expenditures and incurred obligations from exceeding the said revenue receipts and balances."
Based upon that determination, on August 18, 1971, the Governor followed the mandate of R.C. 125.09, which states that he "* * * shall issue such orders to the respective departments, offices, and institutions as will prevent their expenditures and incurred obligations from exceeding the said revenue receipts and balances," by directing a reduction in payments under the school foundation program by three percent, affecting, among others, the Board of Education of the Cleveland City School District, appellee herein.
Appellee qualifies for disbursement of funds under the school foundation program which was established by R.C. Chapter 3317.
According to the stipulated facts, the reduction was carried out as follows:
For the purpose of this action, the parties entered into a stipulation of facts, the pertinent provisions of which are contained in the reported opinion of the Court of Appeals, Bd. of Education v. Gilligan (1973), 36 Ohio App.2d 15, 16.
"* * * payments calculated as due to each school district in the state under the school foundation program were reduced by three percent (3%) for the months of September, 1971 and October, 1971. For the month of September, 1971, the reduction in payment to * * * [appellee] was in the amount of $51,907.66. For the month of October, 1971, the reduction in payment to the * * * [appellee] was in the amount of $51,989.54."
No further reductions were taken in payments under the school foundation program to the appellee.
Appellee instituted an action for injunctive and declaratory relief in the Court of Common Pleas of Franklin County against the Governor of the state of Ohio and other officers, appellants herein, asking, inter alia (1) that the defendants be enjoined from refusing to pay to plaintiff those amounts withheld from the September 1971 and October 1971 school foundation program payments, and (2) that an order issue declaring the right of plaintiff to receive school foundation program payments during the state fiscal year commencing July 1, 1971, in an amount which is not less than the school foundation program payments paid during the state fiscal year commencing July 1, 1970.
On December 20, 1971, by passage of Amended Substitute House Bill No. 475 (hereinafter, H.B. 475), the General Assembly enacted general appropriations for the biennium beginning July 1, 1971, and ending June 30, 1973. The measure included an appropriation sufficient to finance "the school foundation program at its full level for the two year period."
Stipulation of fact No. 8, was clarified by a letter, dated May 18, 1972, from counsel for appellant to the Court of Common Pleas.
The cause was submitted to the Court of Common Pleas upon motions for summary judgment. The court sustained appellants' motion for summary judgment, and dismissed the action, finding that: (1) R.C. 125.09 does not constitute an unlawful delegation of legislative power because "* * * the standards by which the Governor could cut back expenditures cannot be specifically set forth in a given section of the Revised Code, as his responsibility is to see to it that public goods and services to the people are provided under conditions as they develop, and to meet emergency situations as they are presented to the executive"; (2) "* * * the Governor's orders were valid under the provisions of Section 125.09, R.C."; (3) the actions of the Governor were timely in that "* * * the situation confronting the Governor prior to and on August 18, 1971 dictated his actions under the provisions of Section 125.09, R.C."; and (4) R.C. 3317.02, which provides that eligible school districts are to be allocated formula amounts of money out of appropriated funds is subject to the provisions of R.C. 125.09.
The appellee appealed to the Court of Appeals, which, in a reported opinion ( Bd. of Education v. Gilligan, 36 Ohio App.2d 15), upheld the Court of Common Pleas on findings 1 through 3, infra, but reversed the judgment upon the basis of a determination that R.C. 125.09 does not apply to R.C. Chapter 3317.
The court reasoned that the words "expenditures and incurred obligations," as used in R.C. 125.09, were not synonymous with the words "appropriated," "distributed," "calculation of the amounts receivable," and "allocated" as used in R.C. 3317.01 and 3317.02, and therefore, the Court of Appeals concluded, "* * * we can only assume the Legislature did not intend to include those amounts calculated payable, those `moneys distributed' and `moneys appropriated' under R.C. 3317.01."
The Court of Appeals summarily sustained the board's fifth assignment of error, which reads as follows:
"Even if Ohio Revised Code Section 125.09 is constitutional and applies to school foundation program payments mandated by Ohio Revised Code Chapter 3317., the amount withheld should have been restored when the General Assembly appropriated sufficient monies to fund the foundation program for the full biennium."
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Messrs. Kelley, McCann Livingstone, Mr. Walter C. Kelley and Mr. Michael L. Gordon, for appellee.
Mr. William J. Brown, attorney general, and Mr. James E. Michael, for appellants.
Originally, the object of this action was to prevent executive officers from taking continuous reductions from disbursements under the school foundation program to appellee.
However, with the termination of reductions in October 1971 and with the passage of H.B. 475 on December 20, 1971, the object of the litigation changed — presenting the question whether the amounts withheld from appellee for the months September and October of 1971 should now be restored to the school foundation program and remitted to appellee.
Appellants argue that they lack authority to make restoration upon their own initiative, and that the Revised Code contains no general provision directing the disposition of funds once withheld under R.C. 125.09, but subsequently unencumbered by operation of the abatement of fiscal strife.
On the other hand, appellee argues that the reductions ordered by appellants were without authority, and that the payments "* * * should have been restored after the Legislature had permanently and specifically appropriated funds and provided sufficient revenue therefor" by passage of H.B. 475.
Thus, all parties apparently agree that the resolution of this controversy lies in an interpretation of the pertinent provisions of H.B. 475.
Sections 40 and 41 of H.B. 475 provide, as follows:
"Section 40. Notwithstanding Chapter 3317 of the Revised Code:
"(A) A city, local, or exempted village school district which is eligible to receive payments under Section 3317.02 of the Revised Code for fiscal year 1971-72 or 1972-73, or both shall be paid in each of these years for which the district is eligible, an amount equal to the payments calculated for such district in fiscal year 1970-71 under former Section 3317.02 of the Revised Code or the amount calculated under divisions (A) through (F), inclusive, of Section 3317.02, or Section 3317.04 of the Revised Code, whichever is greater.
"(B) No school district which would not be eligible to receive payments in fiscal year 1971-72 or fiscal year 1972-73 under former Section 3317.02 of the Revised Code shall receive any payments under the Act in either of such years. [Emphasis ours.]
"Section 41. Notwithstanding any other provision of this Act or the effective date of this Act the first payment made under Sections 3317.02, 3317.06, and 3317.16 of the Revised Code, as amended by this Act shall be made during March, 1972, and beginning with such first payment, each school district, in addition to its regular payments under such sections, shall be paid from the general fund of the state in equal monthly installments for the remainder of the fiscal year 1972, such sums as the district would have been entitled to receive under Sections 3317.02, 3317.06, and 3317.16, as amended by this Act, had Sections 3317.02, 3317.06, 3317.13, and 3317.16, as amended by this Act, been effective December 1, 1971, less any amount distributed to the district between December 1, 1971, and the date upon which the first payment was made under Sections 3317.02, 3317.06, and 3317.16, as amended by this Act."
Construing those two sections together, we find that Section 41 applies to payments commencing December 1, 1971, which were to be determined by the revised formula contained in R.C. 3317.02, 3317.06 and 3317.16, as amended by H.B. 475. Section 41 therefore has no application to the funds withheld for the months of September and October 1971. However, Section 40 applies to fiscal year 1971 payments which are not provided for in Section 41 ( i. e., payments commencing July 1, 1971, and ending November 30, 1971), and, therefore, applies to the payments for September and October 1971.
Section 40 contains no specific provision for restoration of payment reductions. This omission has polarized the positions of the parties and has compelled the courts below to base their decisions upon matters collateral to the basic issue.
However, Section 40 does authorize payments to appellee in an amount calculated under R.C. 3317.02. Supported by the reasons that (1) September and October 1971 are included within the period specified in Section 40, and (2) there is money in the state fund available for the purpose for which it is sought, it is our opinion that Section 40 provides the necessary statutory authority to appellants to effectuate a restoration to appellee of payment reductions taken in September and October of 1971.
Inasmuch as we find that the amounts withheld should be restored, we affirm the judgment of the Court of Appeals, but we make no determination with respect to the validity of R.C. 125.09, to the propriety of orders issued in this case by appellants pursuant to R.C. 125.09, or to the applicability of R.C. 125.09 to R.C. Chapter 3317.
Judgment affirmed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE and P. BROWN, JJ., concur.