When Bedford School District voters rejected a new 20-year tuition agreement with the Manchester School District in the spring of 2003, the Bedford School Board was faced with the prospect of no other options for educating the district's high school students in the 2003-2004 school year.
The school board entered into a three-year contract with the Manchester School District in July 2003, which called for a per pupil tuition payment that had two components: one for operating expenses and one for capital expenses. In the spring of 2004, at the annual district meeting, voters approved a $1.8 million deficit appropriation article for the 2003-2004 school year to fund the capital component of the first year of the three-year tuition agreement. Voters also approved the general operating budget, which contained the tuition payment for the 2004-2005 school year, including $4.4 million for the capital component.
The petitioners, two Bedford taxpayers, filed suit asking the superior court to declare the appropriation votes, as well as the three-year tuition contract, invalid. The petitioners and the Bedford and Manchester school districts each motioned for summary judgment—arguing, in essence, that they should win as a matter of law. The court granted the school districts' motion and denied the petitioners' motion. The petitioners appealed to the New Hampshire Supreme Court.
The petitioners argued that RSA 194:22 required the school board to obtain voter approval before entering into the three-year tuition agreement. That statute permits a school district to contract with a New Hampshire high school and to raise and appropriate money to carry out the contract. The Court pointed out that the statute is silent about the procedure the district must follow to raise and appropriate the money to carry out the contract. “Nothing in RSA 194:22 requires voter approval before the contract may be made.” The Court also wrote:
Generally, the authority to make contracts on behalf of the school district rests with the school board, as the district's governing body. … The school board is thus ‘the managing board of the school district.' … The authority to raise and appropriate money, on the other hand, rests with the school district meeting as the district's legislative body.
The Court said the term “school district” as used in RSA 194:22 refers to both the district's school board and its voters. The school board may make the contract and the district voters may raise and appropriate the money to carry the contract into effect, the Court said.
The petitioners also argued that RSA 32:6 and 32:8, provisions of the Municipal Budget Law, required the school board to seek prior voter approval before entering into the three-year contract. RSA 32:6 requires appropriations to be made by a vote of the legislative body and prohibits appropriations that do not appear in the budget or meeting warrant. RSA 32:8 prohibits local officials from paying money or incurring financial liability for purposes for which no appropriation has been made. The petitioners argued that the three-year contract entered into by the school board was an appropriation.
The Court did not reach the issues of the applicability of RSA 32:6 and 32:8, ruling instead that voter approval of the deficit appropriation article and the general operating budget at the 2004 annual district meeting ratified the school board's action in entering into the three-year contract. Relying on the precedent of several previously decided cases, the Court said ratification by the voters “requires full knowledge of the financial terms of the [contract],” noting that the Court had previously held: “A legislative body of a municipal corporation is bound by a multi-year contract ‘only if it knew about the cost items for each year of the [contract] at the time it voted to appropriate money for the contract's first year.” Citing Appeal of Town of Rye, 140 N.H. 323, 327 (1995), the Court added:
Although voters are often apprised of the financial consequences of their actions through language in warrant articles, warrant articles are not the only mechanism for sufficiently apprising voters of subject matter upon which favorable action will bind the district to monetary obligations extending over a term of years. … Therefore, we will review all evidence that tends to establish such knowledge to see if the cost item was properly ratified.
The Court said the fact that the Bedford School Board had sent letters to “essentially every registered voter of record in Bedford” explaining the deficit appropriation article and the terms of the three-year contract was evidence that voters were informed of the financial impact of each year of the three-year agreement before the 2004 annual district meeting. Because the voters had been informed, the Court held that they had ratified the three-year contract.
The petitioners argued that ratification was invalid because the wording of the deficit appropriation article was misleading and, therefore, the intent of the voters was in doubt. They said the article was misleading because it told voters the school district was “obligated” to pay the Manchester School District $1.8 million for capital costs.
The Court said the petitioners had failed to “prove either fraud which leaves the intent of the voters in doubt or irregularities in the conduct of the election of such a nature as to affect the result.” The petitioners had not alleged election fraud and, at best, alleged “irregularities., the Court said, adding:
We will not void votes at the school district meeting ‘because of mere irregularities or technicalities in the form of a ballot, election or vote.' … The party challenging a warrant article, after its passage, bears the burden of establishing that in all likelihood, its defects affected the outcome of the vote.
The Court said the deficit appropriation article “sufficiently described the situation for voters to make a rational decision,” adding:
It is our consistent practice to construe votes passed at town and school district meetings liberally. … If such votes ‘fall within the authorized powers of the town [or school district], ingenious distinctions will not be unnecessarily resorted to when the effect would be to defeat the apparent intention of the voters in a matter admittedly within their legislative province.'
(citing Amey v. Pittsburg School District , 95 N.H. 386, 388 (1949). The Court said the evidence did not “compel the conclusion that a different result would have been reached had the warrant article been differently worded.”