Judge Upholds Controversial Program To Help Okla. Districts

March 06, 1991 2 min read

Cover Deficits By Millicent Lawton

An Oklahoma judge last week upheld a controversial program designed to help school districts cover temporary budget deficits.

The ruling by District Court Judge David E. Winslow held that the cash-management program, which allows school officials to issue tax-exempt bonds to cover anticipated budget shortfalls, does not violate the state constitution.

The program came under criticism after a series of articles in The Daily Oklahoman of Oklahoma City alleged that a growing number of districts had abused it in order to earn outside investment income. (See Education Week, Feb. 20, 1991.)

Judge Winslow’s ruling came as other parts of state government were moving to curb the program.

The House is expected to vote soon on a bill that would provide some oversight to the cash-management program. Meanwhile, the state attor4ney general has asked a multicounty grand jury to investigate the program and, at the request of Superintendent of Public Instruction Sandy Garrett, is working on a legally binding opinion of the program.

The grand jury is scheduled to meet this week, but it is not known when it might issue either a report or indictments, said Gerald Adams, a spokesman for the attorney general.

The attorney general’s opinion could also come as early as this week, but it would not affect any grand-jury action, Mr. Adams said.

The legislation to establish state oversight of the program--which has not had any since 1986, when it was altered--was approved last month by the House Rules Committee without any substantive challenge, according to its sponsor, Representative Sid Hudson.

The House could vote on the measure this week or next, said Mr. Hudson, chairman of the rules panel.

Under the bill, school cash-man8agement plans would have to be submitted to the Oklahoma Commission on School and County Funds Management, which Mr. Hudson said technically exists but has been inactive since 1986.

The commission would consist of the state superintendent, the director of the state vocational-education department, and the state bond adviser.

Mr. Hudson said the bill is urgently needed to “restore some confidence in the program.”

The bill would ensure that “somebody is checking the numbers,” he said, by providing for an accurate and honest accounting when districts declare that they anticipate a funding shortfall.

The bill would also require non-collusion oaths by members of county commissions and school boards to prevent conflicts of interest in the cash-management plans and would mandate that all financial advisers in the state register with the Oklahoma securities commission.

A version of this article appeared in the March 06, 1991 edition of Education Week as Judge Upholds Controversial Program To Help Okla. Districts