USE OF FUNDS OF THE NORTHWEST KANSAS LIBRARY SYSTEM. Letter, August 9, 1972, to Dean C. Gross, State Library Advisory Commission.

As Secretary of the Kansas State Library Advisory Commission, you request our opinion upon certain questions arising between the Board of County Commissioners of Graham County and the Northwest Kansas Library System.

You advise that effective January 1, 1972, pursuant to K.S.A. 75-2550 and K.A.R. 54-1-12 and -14, Graham County has withdrawn from the Northwest System. According to documents which you enclose, there remains in the office of the Graham County Treasurer the sum of $4,039.03, being the proceeds of a levy imposed in behalf of the System after being certified by the System to the Graham County Clerk, pursuant to K.S.A. 75-2551. This sum was but a part of the proceeds from the levy imposed for the 1971 operation of the System.

On January 19, 1972, Miss Marjorie J. Pomeroy, Director of the Northwest System, wrote Mrs. Grace Fitts, Graham County Treasurer, "on behalf of the system's Executive Committee concerning the arrearage in the 1971 tax distribution from Graham County to the library system." Miss Pomeroy wrote in pertinent part as follows:

"The Executive Committee respectfully requests a statement in writing as to Graham County's intent with regard to these system funds.

"The Committee notes that a total of $7,009.44 from Graham County came to the system in March and April, 1971, with no subsequent distributions in July or October (as could have been expected).

"Further, no reply to our October 28 letter of inquiry was received, and a telephone conversation which our auditor held with you in December indicated that no further payment was intended in 1971.

"The amendatory resolution which permitted withdrawal of Graham County from this system stated that said county would no longer be subject to taxation by the system as of January 1, 1972. Therefore, the system levied no tax in Graham County in 1971 and 1972.

"Accompanying the resolution was a letter dated March 3, 1971, from the state librarian to the county attorney which further stated that Graham County should release to the system tax funds collected for the system for 1971."

Mr. Jerry M. Helberg, Graham County Attorney, responded by letter dated the following day, January 20, stating in part as follows:

"Funds allotted to the Northwest Kansas Library System have been frozen by the Graham County Commissioners until such time as the following matter can be cleared.

"It has been reported to the Graham County Commissioners that the Northwest Kansas Library System has been saving the money on time deposit. I am not referring to the investment of idle funds, but the accumulation of larger and larger amounts for later use. It is our understanding that you have approximately $20,000.00 or more in such an account. I find no legal authorization for such an accumulation.

"As Graham County is no longer within the Northwest Kansas Library System it is our intention to have our share of this unauthorized accumulation before any further payment is make by the county."

Mr. Helberg proposed the following three-fold course of action:

"1. With the commissioners approval I shall check your budget and records to determine if you have accumulated any such money. If not the problem is solved.

"2. If you have accumulated money you may show me the appropriate statutory legal authorization. If there is such a stature, the matter is settled.

"3. If no statutory authorization is found, Graham County will seek to have it's (sic) share of this money returned to the county before the books are balanced between us."

Miss Pomeroy responded on January 28 as follows:

"The only money invested by the system has been temporarily idle funds. In March 1971 a 6-months certificate of deposit was purchased, which was returned to the system account with interest in September. All of this was duly reported at system board meetings.

"Usually the first tax disbursement in January has yielded a goodly part of the anticipated annual income. In 1971 this amounted to nearly $36,000, after Graham County's late disbursement. Since the second distribution was due in April, the system could safely invest $20,000 for six months.

"Our 1970 audit (also reported to the system board) is on file at the Department of Post-Audit in Topeka, and will confirm that no funds have been 'saved.' In 1971, neither was there any accumulation of unused or unencumbered funds, but only the temporary investment of idle funds described above."

Apparently, at the March 8, 1972, meeting of the Board of the Northwest System, Graham County offered a proposed written document, styled "Settlement Agreement." Paragraph 2. thereof states thus:

"That at the present time there remains the sum of $4,039.03 in the Graham County Treasurers Office which has not been paid due to resulting questions, claims, and problems since the withdrawal of Graham County from the Northwest Kansas Library System. Both parties do hereby agree that said amount should be divided equally and is a fair and equitable compromise of all claims by both parties. Graham County is to divide said sum by two and immediately send the Northwest Kansas Library System its share at Hoxie, Kansas, and the Northwest Kansas Library System does hereby quit-claim and set over to Graham County all of it's (sic) right, title, interest and/or claim to the other one-half of said money."

By letter of March 10, from Mr. John Eland, counsel for the Board, addressed to Mr. Helberg, the Board properly rejected this part of the proposal agreement, and requested "that the balance of funds to be distributed to the system as required by law."

So far as appears from the written statements of the position of the Graham County Board of County Commissioners, it is apparently their view that the purchase of a six-month certificate of deposit in the amount of $20,000 in March. 1971, was beyond the authority of the Board of the Northwest System. K.S.A. 12-1675 commences thus:

"The governing body of any county, school district or quasi-municipal corporation is hereby authorized and empowered to invest any moneys not immediately required for the purposes for which the moneys were collected or received . . . [in enumerated investments.]

"As used in this act, the term 'quasi-municipal corporation' shall mean a drainage district, cemetery district, hospital district or other governmental subdivision having authority to levy taxes, but shall not include cities.'

The Northwest Kansas Library System is clearly a "quasi-municipal corporation" within the meaning of K.S.A. 12-1675. Indeed, K.S.A. 75-2549a specifically provides that:

"[e]ach regional system of cooperating libraries established under or governed by the provisions of this act shall constitute a body corporate and politic, possessing the usual powers of a corporation for public purposes and may contract, sue and acquire, hold and convey real and personal property in accordance with law."

Under K.S.A. 75-2551, it is expressly authorized to levy "not in excess of one-half (1/2) mill of tax to be used for library purposes on all of the taxable property within the boundaries of such regional system of cooperating libraries that is not within a district supporting a library with funds of such district." Accordingly, it is clearly withing the authority of the Northwest System to invest any moneys not immediately required for the proposes for which they were collected.

Mr. Helberg, on behalf of Graham County, chooses to characterize these moneys not as "idle funds," but as an "accumulation of larger and larger amounts for larger use." So far as concerns the authority of the Board of the Northwest System to invest the money in question, the distinction is one that makes no difference. The money in question derives from a levy which may be authorized only by the Board of the Northwest Kansas Library System. If Graham County was dissatisfied with the fiscal policies of the System, it could, as it finally did, withdraw entirely. So long as it remained a member, however, it has no authority to determine unilaterally what portion of the proceeds from the levy should be distributed to the System, and to retain the balance for itself. The levy provided for the use of the System, and not for the county.

Any attempt by the Graham County Board of County Commissioners to retain the money in question and expend it for county purposes would raise serious questions regarding compliance with the budget law. K.S.A. 79-2934 states in pertinent part thus:

"No money in any fund shall be used to pay for any indebtedness created in excess of the total amount of the adopted budget on expenditures for such fund, and any balance remaining is such fund at the end of the current budget year, shall be carried forward to the credit of said fund for the ensuing budge year. . . .

"No part of any fund shall be diverted to any other fund, whether before or after the distribution of taxes by the county treasurer, except as provided by law." [Emphasis supplied.]

K.S.A. 79-2936 state thus:

"Any member of the governing body, or any other officer or any taxing subdivision or municipality of the state, who violates any of the provisions of this act shall be subject to removal from office."

Any question regarding the ownership of books held in the name of the Northwest Kansas Library System, but which are presently housed in the Graham County Public Library, is resolved by K.A.R. 54-1-15, which states clearly that books "purchased for a library participating in a regional system of cooperating libraries and paid for from regional system or state funds shall be the property of the regional system of cooperating libraries." Upon withdrawal of a participating library from the regional system, such books which have been "purchases with regional system of cooperating libraries or state funds shall be returned to the regional system of cooperating libraries upon the demand of the regional system of cooperating libraries' board of trustees."

It should be clear from the foregoing that the funds in question belong solely and exclusively to the Northwest Kansas Library System, as a corporate body, and that neither Graham not any other county has any claim whatever to the funds now being withheld.

- Quoted from Kansas Public Library Laws, Attorney General’s Opinions and Rules and Regulations, State Library of Kansas, March 1979.


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