Did Greenwood School District 50 need a referendum to issue bonds above its debt limit?

Plain-English summary

The South Carolina Attorney General said a school district seeking to incur general-obligation debt above eight percent of the assessed value of its taxable property needed authorization from a majority of district voters in a referendum. A legislator raised concerns about Greenwood School District 50’s contemplated bonds, but the AG said it could not investigate the facts or determine whether that proposal actually exceeded the constitutional limit.

The opinion identified the rule as “in order for a school district to issue bonded indebtedness in excess of the eight percent limitation, the school district must hold a referendum.” It did not declare the specific Greenwood proposal legal or illegal.

Currency note

This opinion was issued in 2006. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Does every school bond issue need a referendum?
A: This opinion required a referendum when a district sought to exceed the eight-percent constitutional debt limit. It did not say every bond issue required one.

Q: Did Greenwood School District 50’s proposed bonds exceed the limit? A: The AG did not decide. It said determining the district’s actual debt position was a factual question beyond the opinion process.

Q: What happens when proposed general-obligation debt exceeds eight percent of assessed value? A: Under the law described in the 2006 opinion, a majority of district voters had to authorize the excess debt in a referendum.

Background and statutory framework

Article X, section 15 of the state constitution authorized school-district general-obligation debt on terms prescribed by the General Assembly, subject to constitutional limits. The opinion described the ordinary ceiling as eight percent of assessed taxable value. It explained that debt approved by a majority of qualified district electors voting in a legally authorized referendum could exceed that ceiling, subject to the restrictions in the authorization, the stated issuance period and the constitutional subsection cited in the opinion. The AG deferred factual assessment of Greenwood’s proposed financing and noted that bond attorneys were better positioned to review bond issuance details.

Citations and references

• Article X, section 15 of the South Carolina Constitution
• S.C. Const. Art. X, § 15( I)
• Id. Art. X, § 15(6)

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/october-12-2006/
• Original PDF: https://www.scag.gov/wp-content/uploads/2011/03/06oct12-Pitts.pdf

Original opinion text

HENRY MCMASTER
ATIORNEY GENERAL

October 12, 2006

The Honorable Michael A. Pitts
Member, House of Representatives
372 Bucks Point Road
Laurens, South Carolina 39360
Dear Representative Pitts:
We received your letter concerning limitations on the amount ofbonded indebtedness school districts may incur. In your letter, you state: There have been a great number of school bonds authorized in South CaroJina recently. I believe these to be outside of the intent oflaws passed by the General Assembly. My concern is that they may exceed the bonding limits according to South Carolina law and, in most cases, are being authorized without referendum. I am particularly concerned about Greenwood School District 50, which is about to authorize approximately $150 million in school bonds while the district has a total assessed value of $153 million. My question is the legality of this action and does it comply with the intent of the laws as written? Law/Analysis

Article X, section 15 of the South Carolina Constitution (Supp. 2005) affords school districts the power to issue bonds. Subsection (1) of this provision states: "The school districts of the State shall have the power to incur general obligation debt only in such manner and upon such terms and conditions as the General Assembly shall prescribe by law within the limitations set forth in this section." S.C. Const. Art. X, § 15( I). Subsection (6) of this constitutional provision limits the amount of general obligation debt a school district may incur to eight percent of the assessed value of all taxable property within the school district. Id. Art. X, § 15(6). Despite this restriction, subsection (3) of section 15 allows a school district to exceed this limitation upon the majority vote of all qualified electors within the school district. Id. Art. X, § 15(5). This provision provides:

The Honorable Michael A. Pitts
Page2
October 12, 2006
If the general obligation debt be authorized by a majority vote of the qualified electors of the school district voting in a referendum authorized by law, there shall be no conditions or restrictions limiting the incurring of such indebtedness except:

(a) those restrictions and limitations imposed in the authorization to incur such indebtedness;

I

(b) such general obligation debt shall be issued within five years of the date of such referendum; and

(c) the provisions of subsection (3) hereof.
Id. (emphasis added).

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To generally to answer your question, in order for a school district to issue bonded indebtedness in excess of the eight percent limitation, the school district must hold a referendum. This Office is not in a position to investigate and determine whether or not the Greenwood School District 50 plans to issue school bonds in excess of the constitutional debt limitation and thus, is required to conduct a referendum approving such action. Op. S.C. Atty. Gen., July 19, 2006 (stating this Office does not have the authority of a court to investigate and determine factual issues). Furthermore, as we noted in a prior opinion of this Office concerning limitations on bonded indebtedness, "this Office generally defers to the bond attorneys due to their familiarity with the law relative to issuance of bonds .... " Op. S.C. Atty. Gen., August 28, 1987. Thus, we assume the bond attorneys involved have considered whether a referendum is required. Nonetheless, based on the information provided in your letter, we caution that should Greenwood School District 50 issue bonds in excess of the eight percent debt limitation, a majority of the qualified electors of that school district must authorize such an issuance. Very truly yours,

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Cy;n~y- ~lling

M.
Assistant Attorney General
REVIEWED AND APPROVED BY:

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Robert D. Cook
Assistant Deputy Attorney General

HENRY McMAsTER
ATroRNEY GENERAL.

October 13, 2006

The Honorable Olin R. Phillips
Member, House of Representatives
Post Office Box 11867
Columbia, South Carolina 29211
Dear Representative Phillips:
We understand you seek an opinion of this Office on behalf ofthe Joint Committee to Screen Candidates for Boards ofTrustees ofState Colleges and Universities concerning dual office holding.
·
Specifically, you ask:

If an individual serves on the Limestone College Board of Trustees and is elected by the General Assembly to the South Carolina State University Board of Trustees, would that be a violation of the dual office holding clause of the constitution? I'Fit?.,.

In our review of this issue, we discovered an opinion of this Office issued in March 2005 addressing your question, a copy of which we enclosed. Op. S.C. Atty. Gen., March 24, 2005. In that opinion, we discussed whether an individual serving on the Limestone CoJlege Board of Trustees who was elected by the General Assembly to the South Carolina State University Board of Trustees would be in violation of the dual office holding prohibition contained in article XVII, section 1A of the South Carolina Constitution. Id. Although this Office consistently has held a position on the South Carolina State Uni versity Board of Trustees is an office, we determined a position on the Limestone College Board of Trustees is not an office. Id. Thus, we concluded an individual holding both positions is not in violation of the dual office holding prohibition. Id. As we stated on numerous occasions, this Office "will not overrule our prior opinions unless clearly erroneous or unless applicable law has changed." Op. S.C. Atty. Gen., September 8, 2005. Finding

The Honorable Olin R. Phillips
Page2
October 13, 2006

no changes in the law and regarding our 2005 opinion as not erroneous, we believe an individual's simultaneous service in these positions would not violate the dual office holding prohibition. Very truly yours,

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Cydney M. Milling
Assistant Attorney General
REVIEWED AND APPROVED BY:

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Robert D. Cook
Assistant Deputy Attorney General