Supreme Court will review standing in school suit

The Oregon Supreme Court will review a lawsuit filed by Mike Morgan against the Sisters School District.

Morgan sued the district in 2007 after it borrowed $2.1 million to fund replacement of the elementary school roof and other facilities needs.

The lawsuit argued that the "full faith and credit"-backed $2.1 million in Certificates of Participation (COPs) agreed to by the school board on March 12, 2007, were in fact bonds, and the school board should not have obligated the district without a vote of the taxpayers.

The funding mechanism has been used by school districts and municipalities across the state.

The Deschutes County Circuit Court upheld the legality of the district's action. Morgan took the matter to the Oregon Court of Appeals, which found that he lacked standing to seek a judgment in the matter because he could not demonstrate a particular injury.

The question of standing is the one that will be addressed by the Supreme Court in March 2012 at Lewis & Clark Law School.

Morgan argues that he (and all other taxpayers) are injured by the issuance of COPs because they must be repaid from the general fund, meaning the taxpayers are receiving, as he puts it, "less service for the same money paid" in the classroom.

Superintendent Jim Golden told The Nugget that the district pays about $120,000 per year on the obligations from the general fund.

"If it had gone to voters as it should have, they would have had the ability to levy a new tax and it would not have had to come out of the classroom," Morgan said.

Morgan believes the question of standing is of major significance, which, he says, is why the Supreme Court review will be conducted at Lewis & Clark.

"They only do that with cases of the greatest importance," he said. "Obviously they think it's a big case. It's precedent-setting."

It appears that the Supreme Court review will focus narrowly on the question of standing; should Morgan prevail, the substance of the case would presumably be readdressed elsewhere.

Morgan said his attorneys are not sure what that venue would be.

"They're not certain if it would be remanded to the appellate court... or if it would start back at the circuit court," Morgan said.

Morgan has argued from the beginning that the Sisters School District is not his target in the lawsuit.

In an email to the school district, Morgan stated that "The form of this lawsuit recognizes that the district was given legal advice inconsistent with Oregon law. Teachers, students and taxpayers should not be harmed as a result of self-serving advice from persons who gained financially from these transactions."

Morgan argues that the district would actually benefit if he prevails, because there would be an injunction to stop the district having to pay on the full faith and credit obligations.

"That's why I question why the district is fighting," Morgan said. "They benefit if I win."

School board chair Christine Jones said that the school board has not discussed the latest developments in the case. She said that it is not clear that any outcome would relieve the district of its financial obligations.

"Mr. Morgan's premise that if he were to ultimately prevail the district would not have to pay bondholders is at this point speculative and to the best of my knowledge there has been no legal finding in the case to date supporting that premise," she said.