May a South Carolina charter school pay employees a flat per diem for work travel and meals instead of reimbursing actual expenses?

Plain-English summary

The South Carolina Attorney General advised charter schools to reimburse employees for actual and necessary work-travel expenses rather than pay a flat per diem for lodging and meals. Payments beyond an employee's actual entitlement could be treated as extra compensation or private financial gain.

Charter schools receive operating flexibility under section 59-40-50(A), but the opinion did not treat that flexibility as permission to ignore constitutional limits or the State Ethics Act. The charter-school statute and the annual appropriations act did not directly resolve the question.

The opinion relied on earlier Attorney General guidance requiring itemization and strict accounting. A reimbursement tied to documented actual expenses was distinguished from a per diem that could exceed what the employee spent.

What this means for you

Charter school boards and finance officers

The opinion advises paying actual, documented lodging and meal expenses. A flat allowance creates a risk that an employee receives money beyond the expense incurred.

Charter school employees

Reimbursement for actual and necessary costs incurred in official duties was not treated as extra compensation. Amounts above actual entitlement were the concern.

Auditors and education attorneys

The operational exemption for charter schools did not answer the constitutional and ethics issue. The opinion applies rules that protect public funds from personal use or extra compensation.

Common questions

Did the AG say charter schools may use flat travel per diems?

No. The office advised that payment for actual expenses excludes a per diem reimbursement.

Why are receipts or itemization important?

They help show that the payment reimburses an actual official expense rather than adding compensation or funding a personal cost.

Does charter-school flexibility avoid the State Ethics Act?

No. The opinion treated constitutional and ethics restrictions as continuing constraints on reimbursement practices.

Background and statutory framework

High Point Academy asked whether the Charter Schools Act's operational flexibility allowed a simplified per diem system for employment-related lodging and meals.

The AG considered section 59-40-50(A), the appropriations act's actual-expense language, article III's extra-compensation clause, article X's public-credit clause, and the State Ethics Act.

Citations and references

• S.C. Code Ann. § 59-40-50(A)
• S.C. Code Ann. § 8-13-700
• S.C. Const. art. III, § 30
• S.C. Const. art. X, § 11
• McNaughton v. Charleston Charter Sch. for Math & Sci., Inc., 411 S.C. 249, 768 S.E.2d 389 (2015)

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-on-whether-charter-schools-may-issue-a-per-diem-reimbursement-payment-to-employees-for-costs-associated-with-employment-related-travel-and-meals/
• Original PDF: https://www.scag.gov/media/qysdmr2z/03251359.pdf

Original opinion text

it
Alan Wilson
Attorney General

March 21, 2023

Matt Nestberg

High Point Academy

6655 Pottery Road
Spartanburg, SC 29303

Dear Mr. Nestberg:

You have requested an opinion from our office regarding whether charter schools may issue a per diem reimbursement payment to employees for costs associated with employment-related travel and meals. You provide us with the following information: As background, the South Carolina Charter Schools Act, S.C. Code Ann. § 59-40-10 et seq. (the “Act”), states that a charter

school is considered a public school “for purposes of state law and the state constitution.” S.C. Code Ann. § 59-40-40(2)(a). Further, section 59-40-50 exempts charter schools “from all provisions of law and regulations applicable to a public school, a school board, or a district” except as specifically outlined in the Act. S.C. Code Ann. § 59-40-50(A). The Act provides no specific requirements for how charter schools may reimburse employees for employment-related travel and meal expenses.

While the Act is silent on specific methods of reimbursement, the 2022-23 Appropriations Act does provide for reimbursement of travel and meal expenses to state employees. Specifically, Section

1 17.20 of the 2022-2023 Appropriations Act provides:
Travel and subsistence expenses, whether paid from
state appropriated, federal, local, or other funds,
shall be allowed in accordance with the following
provisions: (A) . . . [A] 11 employees of the State of
South Carolina . . . shall, upon presentation of a

paid receipt, be allowed reimbursement for actual
expenses incurred for lodging, not to exceed the
current maximum lodging rates .... The employee
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• Columbia, SC 2921 1-1549 « Telephone <-m?.-734-3970 .

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Matt Nestberg
Page 2

March 21, 2023

shall also be reimbursed for the actual expenses
incurred in the obtaining of meals except that such
costs shall not exceed $35 per day within the State
of South Carolina.
For travel outside of South
Carolina the maximum daily reimbursement for

meals shall not exceed $50.
The use of the term “actual expenses” in this provision of the Appropriations Act seems to discourage a per diem reimbursement for travel and meal expenses of state employees. It is my understanding that this office has previously opined that “actual expenses require documentation” and “would exclude a per diem reimbursement.” Op. S.C. Atty. Gen., 2013 WL 3479878 (July 2,

2013).

Generally, charter schools have a much smaller staff than
traditional school districts and traditional schools.
A charter
school’s finances and bookkeeping processes and procedures are often handled by only one or two full-time employees. Because of the significant duties placed on these individuals, charter schools would benefit from the simplified reimbursement procedure a per diem system offers as opposed to the submission and processing of

receipts for actual expenses. Given that charter schools are exempt from most laws applicable to public schools, except for those enumerated in the Act, we respectfully request your opinion as to whether a charter school has the flexibility to offer per diem reimbursement to its employees for travel and meal expenses. LAW/ANALYSIS

Section 5 9-40-5 0(A) provides: “[e]xcept as otherwise provided in this chapter, a charter school is exempt from all provisions of law and regulations applicable to a public school, a school board, or a district, although a charter school may elect to comply with one or more of these provisions of law or regulations.” S.C. Code Ann. § 59-40-50(A)(1976 Code, as amended). In McNaughton v. Charleston Charter Sch. for Math & Sci„ Inc., 411 S.C. 249, 768 S.E.2d 389 (2015), the Court considered whether section 59-40-50(A) exempted a charter school from

liability for attorney’s fees under section 15-77-3 00. 1 The charter school had not elected to be

1 S.C. Code Ann. § 15-77-300 (1976 Code, as amended) provides: “[i]n any civil action brought by the State, any political subdivision of the State or any party who is contesting state action, unless the prevailing party is the State or any political subdivision of the State, the court may allow the prevailing party to recover reasonable attorney’s fees to be taxed as court costs against the appropriate agency . . .”

Matt Nestberg
Page 3

March 21, 2023

covered by section 15-77-300 and the Charter School Act2 did not provide that the statute was applicable to charter schools. The Court determined that the exemption in section 59-40-50(A) did not cover section 15-77300.

Section 59-40-50(A)’s purpose was “to distinguish between charter schools and other

public schools, school boards, or school districts by providing charter schools with more flexibility in their operations.” McNaughton, 411 S.C. at 268 - 269, 768 S.E.2d at 400. A charter school could not opt out of section 15-77-300 because the statute generally applied to state actors and political subdivisions and it “was not enacted especially for public schools, school boards, or school districts.” Id.

Because the Charter School Act and the 2022-2023 Appropriations Act3 do not answer your question, we will rely on an April 24, 1987 opinion of this Office for guidance. From your letter, we understand “employment-related travel and meal expenses” to mean lodging and meal expenses and we will answer accordingly.

In the 1987 opinion, we advised that public officers and employees of a county or political subdivision can only be reimbursed for expenses that were incurred in the performance of their official duties.

See Op. S.C. Atty. Gen., 1987 WL 245448 (April 24, 1987).

We opined that
reimbursement of purely private or personal expenses would most likely violate the South Carolina Constitution and the State Ethics Act.

The South Carolina Constitution provides “[t]he General Assembly shall never grant extra compensation, fee or allowance to any public officer, agent, servant or contractor after service rendered, or contract made, nor authorize payment or part payment of any claim under any contract not authorized by law . . S.C. Const, art. Ill, § 30. It also states “[t]he credit of neither the State nor of any of its political subdivisions shall be pledged or loaned for the benefit of any individual . .

S.C. Const, art. X, § 11.

Based on these constitutional provisions, we determined in our opinion that reimbursements to a public officer or employee can be considered extra compensation if they are for personal rather than public purposes. We explained: As long as the reimbursement is made for actual and necessary expenses for such items as lodging and subsistence incurred by a public officer in the performance of his official duties, courts do not view such reimbursement as extra compensation. If the public officer is reimbursed for expenses which were in excess of the

2 S.C. Code Ann. § 59-40-10 et seq. (1976 Code, as amended). 3 Section

117.20(A) of the 2022-2023 Appropriations Act only addresses a school employee’s lodging

reimbursement that is paid solely with state funds.

Matt Nestberg
Page 4

March 21, 2023

officer's

entitlement,

such

has

been

deemed

to

be

extra

compensation, which is prohibited by constitutional provisions such as Article III, Section 30 of South Carolina's Constitution.

Op. S.C. Atty. Gen., 1987 WL 245448 at 3 (citations omitted).

The State Ethics Act prohibits a public official or employee from using his official position or office to obtain financial gain for himself. amended).

See S.C. Code Ann. § 8-13-700 (1976 Code, as

In the 1987 opinion, we cautioned that other jurisdictions required itemization and

strict accounting to ensure that a public official was reimbursed for actual money expended in his performance of official duties; moneys received in excess of his entitlement were deemed to be

extra compensation or supplements to salary and therefore illegal.

Op. S.C. Atty. Gen.. 1987

WL 245448 at 3 (citing Op. S.C. Atty. Gen., 1 986 WL 1 92053 (Sept. 9, 1 986).

CONCLUSION

To avoid a potential violation of the South Carolina Constitution or the State Ethics Act, we

advise that a charter school should reimburse its employees for actual expenses incurred for employment-related travel, such as lodging and meals.

As we stated in a prior opinion,

“[pjayment .... for actual expenses incurred would exclude a per diem reimbursement.” S.C. Atty, Gen., 2013 WL 3479878 (July 2, 2013). Sincerely,

Elinor V. Lister
Assistant Attorney General

REVIEWED AND APPROVED BY:

0^
Robert D. Cook
Solicitor General

cc: Mary Allison Caiidcll

Op.