Withdrawal Buyout: Legal Ransom?

Guest Contribution by Arthur Green

Does the law impose a ransom payment against a town withdrawing from a cooperative school district?

It does not.

This issue can be argued on fairness or it can be argued on the law. I am arguing that the law is fair.

Let’s look at the wording of the RSA (195:28) dealing with facilities buyout – skipping to the part which states how much the withdrawing district is obliged to pay:

… payment by the withdrawing district of the costs of capital improvements and additions to said school building incurred by the cooperative school district, less the share which the withdrawing district has already paid toward such costs, assuming that the capital costs assessed annually to the withdrawing district are credited proportionally toward the capital improvements of all the facilities of the cooperative district….

No! Wait! That was a typo!

What the RSA actually says is:
… payment by the withdrawing district of the costs of capital improvements and additions to said school building incurred by the cooperative school district, less the share which the withdrawing district has already paid toward such costs

The first version is what TRSD claims to see in the words of the second version.

The entire issue is that the RSA does not specify how to compute “the share which the withdrawing district has already paid toward such costs”.  Nor is there established practice from previous withdrawals, which have not triggered the issue of facility buyouts.  Nor is there legal precedent.

My interpretation – that the “share which the withdrawing district has already paid toward such costs” consists of the capital costs assessed annually to the withdrawing district – is entirely consistent with the plain wording of the RSA and entirely consistent with the legislative and policy scheme for cooperative school districts.

And fair.

By contrast, the interpretation claimed by TRSD tortures the wording of the RSA to produce an absurd result.

Absurd because it presents a $6 – $9 milion bill to Sandown?  No. Absurd because it would automatically produce a multi-million dollar bill for any town wishing to withdraw from any cooperative school district which includes the elementary schools.

People not closely connected to this issue might assume that Sandown is being faced with a bill because Sandown has underpaid for some reason, and now needs to make up what is owed to the other towns.  What they would not realize is that on the TRSD’s calculation every town in the district would face the same obstacle (Plaistow being a special case because of hosting the MS/HS campus).  The arithmetic of TRSD’s claim means that it is impossible for a town to have “paid its share”, so there is always a multi-million dollar buyout by the district’s way of thinking.

Some of the counterarguments to my position

The legislature wants it to be difficult to withdraw

If so, then why is there no similar obstacle for withdrawal from a cooperative like Exeter, where the member towns like Brentwood retained separate school boards at the elementary level, and would have no facility buyout obligation upon withdrawal, just forfeiture of their contribution to the shared facilities.  If the state intended to make a near-impossible obstacle to withdraw from a district like Timberlane, is it because they wish to discourage formation of districts on this model?   An obstacle to withdraw is also a discouragement to join.  I would have thought that the state would prefer to encourage economies of scale by formation of coops.

I’ve tortured the words of the RSA

My inquiry adheres to strict Miranda rules.  I’ve shown above that TRSD waterboards the RSA to within an inch of its life.

I disregarded the words “such costs”

The RSA refers, the “share which the withdrawing district has already paid toward such costs”, “such costs” being the capital improvements to the facilities in the withdrawing district, not the facilities across the whole cooperative district.  But in my view, the costs of improvements in the withdrawing district are not in question, they are ascertainable from the district financial records.  Likewise the capital contributions of the withdrawing district are ascertainable from financial records – in this case directly from annual reports.  What is in question is how to attribute or “credit” the withdrawing district to have paid toward a specific facility.  There is no such financial record in the accounting system.  Hence the dispute.

I am not a lawyer.  Or an accountant.

True.  I am also not a doctor, dentist or an airline pilot; however, I am an employer of lawyers and accountants and doctors, dentists and many other professionals.  As their employer I evaluate their performance and replace them if I am not satisfied.  I recommend the same procedure to others, particularly those in elected positions.

I posted on this topic a few weeks ago here.  I also made a concise presentation to the Sandown Board of Selectmen on Aug. 10 .  My brief presentation is here:

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