Request By:
Mr. William E. Sloan
Attorney at Law
Wylie and Sloan
Security Trust Building
Lexington, Kentucky 40507
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
As attorney for the Fayette County Board of Education, you have a problem relating to the Sheriff's fees for collecting school taxes.
As you wrote, KRS 160.500 provides a fee of up to 4% of the school taxes collected, provided that the fee does not exceed the reasonable cost of collection. Board of Education of Madison County v. Wagers, Ky., 239 S.W.2d 48 (1951).
KRS 64.350 provides that the fees of the sheriff collected each calendar year must be turned into the State Treasury. Out of the total fees paid in to the State Treasury 25% goes to Urban County Government in this situation.
Your question is whether or not this payment of 25% of such school tax collection fee paid to the Sheriff constitutes an unlawful diversion of school money as envisioned by §§ 180 and 184 of the Kentucky Constitution, which sections prohibit the use of school taxes for any purposes other than school purposes. We do not think so.
Of course, the reasonable cost of collecting such school taxes is based upon a proper determination of the cost of collecting all taxes, and then the determination of the cost of collecting school taxes. See OAG 62-335, copy enclosed, which shows an analytical table of such computation. That percentage of the total time allocable to school tax collection is really the percentage of all taxes collected represented by school taxes. Suppose the cost of collecting all taxes is $11,000, and the amount of all taxes collected is $400,000, and the amount of school taxes collected is $200,000. Then the percentage of all taxes collected represented by school taxes would simply be $200,000 / $400,000 = 50%. Thus the cost of collecting school taxes is 50% of $11,000 = $5,500.
The Sheriff has certified to the Board of Education that the actual expenses of collecting school taxes would be substantially reduced if he were not required to turn over 25% of the sheriff's fee to Urban County Government.
To begin, the Sheriff has no authority to turn over any part of his fees to anybody except the State Treasury. The distribution of the 25% to Urban County Government occurs solely, under the law, at the state level [through the Department for Finance and Administration]. See KRS 64.350 and § 106, Kentucky Constitution. In addition, the Sheriff can only be concerned with his total fee, which is a fee percentage, subject to the reasonable cost of collection. Thus the Sheriff's reasoning that this 25% of the sheriff's fee represents a cost that should not be included in the constitutional "sheriff's cost of collection" is simply erroneous. The fee required under Board of Education of Madison County v. Wagers, above, is the sheriff's statutory fee, i.e., all of it, nothing more or nothing less, but subject to the criterion of "reasonable cost of collection. " Now what the General Assembly does with the sheriff's fee, once it is correctly computed and paid into the sheriff and finally into the State Treasury in no way bears on the question of unlawful diversion of school money. Under § 106, Constitution, any excess of 75% of total fees is properly subject to legislative determination, as is the case of KRS 64.350. The point is that once the sheriff's total fee for collecting school taxes is properly computed as aforementioned, the constitutional test of diversion, as outlined in the Madison County case, is met. The Madison County case makes it abundantly clear that the constitutional diversion occurs no sooner than the reasonable cost of collection is exceeded, regardless of how much the excess is. The Court is saying in effect that school money is being spent for school purposes so long as the fee does not exceed the reasonable cost of collection. The total cost of collecting school taxes (prior to the 75% and 25% distribution at state level) is strictly constitutional as being an expenditure for school purposes. In essence school money is really being paid for a cost of collection strictly allocable to school taxes. The fact that the recouped cost is used in the state distributive machinery relating to sheriff's fees is in the constitutional sense incidental (§§ 180 and 184, Constitution). We repeat the essence of the Madison County case holding at page 50:
"To the extent, however, that the fee is used for some purpose other than paying the reasonable cost of collection, it is unconstitutionally diverted from a school purpose."
The redefining of the concept "reasonable cost of collection" would be purely up to the courts. But we see nothing in the pertinent decisions which would cause the courts to vary from their previously stated principle. To put it concisely, under this principle school money is being used to pay the reasonable costs of collection of school taxes. We need look no further.