Treasurer FAQs

What is “excess commission” and is the term actually found in Arkansas code? If so, what is the basis for calculating and distributing “excess commission” and who is responsible for seeing that the task is performed?

When the term “excess commission” is used in the arena of Arkansas county government reference is being made to the amount of commission in excess of the level of commission it takes to cover the expenses of the county collector and county treasurer. For example, if a county treasurer earns $250,000 in annual commission and the cost for the operation of the office for that year is $175,000 the excess commission is $75,000. The same principal applies concerning the county collector.

Arkansas Code Annotated §§ 21-6-302 and 21-6-305 are the primary commission codes for county treasurers and county collectors respectively. These codes provide the commission formula to be charged against the funds coming through the hands of these county constitutional officers, as well as any restrictions, exclusions or anomalies to the normal commission structure.

Until recent years, the term “excess commission” was not found in the Arkansas Code. However, it was dealt with in case law dating back to the early 1900’s and in Attorney General Opinions. Since 1997 the term “excess commission” has been added to six Arkansas codes.

The term “excess commission” or “excess commissions” can be found in the following Arkansas codes with the term inserted by the referenced Arkansas Act:

§ 26-36-209(d) – Act 213 of 1997
§ 21-6-305(d) – Act 1215 of 2001 [only refers to the process]
§ 6-20-2305(C)(ii)(a) – Act 1186 of 2009
§ 6-20-2303(17)(A)(iv) – Act 1397 of 2009
§ 26-80-101(d)(3)(D) – Act 1397 of 2009
§ 21-6-302(h) – Act 420 of 2017

The prevailing authority, for many years, concerning “excess commissions” is Attorney General Opinion No. 78-112 issued during the tenure of Bill Clinton as Arkansas Attorney General. This opinion was based on: (1) case law; and (2) constitutional principal. This AG Opinion has never been refuted or overturned in a court of law; so it stands as the guide concerning “excess commissions” of county treasurers and collectors. It concisely summarizes the case law and constitutional principal by which counties have handled excess commissions for decades.

At least five (5) court cases were cited in AG Op. No. 78-112 as well as Article 16, § 11 of the Arkansas Constitution which provides that, “No tax shall be levied except in pursuance of the law, and every law imposing a tax shall state distinctly the object of the same; and no moneys arising from a tax levied for one purpose shall be used for any other purpose.”

In summarizing the opinion the Attorney General said, “From the foregoing decisions and the cases cited we are of the opinion that the excess commissions over the operating expenses of the collector’s and treasurer’s office should be returned to the taxing units pro rata.”

To prorate or pro rata is defined by Black’s Law Dictionary – “to divide or distribute proportionately; according to an exact rate”. In other words, each taxing entity or fund account that is commissioned will receive its share of the excess commission based on that fund’s percentage of the whole commission. Here is an easy way to make the calculation: Total commission earned in accordance with § 21-6-302 or § 21-6-305 less the actual office expense of the particular office = the Excess Commission. Divide the excess commission amount by the total commission earned (carried to at least 9 places). This factor will be used to multiply against the commission amount charged each entity to calculate each entity’s share of the excess commission. Here is a simplified example:

Total Treasurer or Collector Commission $224,610.50

Less Total Treasurer or Collector Office Expense $195,307.10

Excess Treasurer or Collector Commission $ 29,303.40

Excess Commission $29,303.40 / Total Commission $224,610.50 = .13046318

County General $25,305.25 X .13046318 = $ 3,301.40

Road $22,305.25 X .13046318 = $ 2,910.01

County Library $18,000.00 X .13046318 = $ 2,348.34

City #1 $ 5,000.00 X .13046318 = $ 652.31

City #2 $ 3,000.00 X .13046318 = $ 391.40

School #1 $90,000.00 X .13046318 = $11,741.69

School #2 $33,000.00 X .13046318 = $ 4,305.28

School #3 $28,000.00 X .13046318 = $ 3,652.97

Excess Commission $29,303.40

Whose responsibility is it to calculate and distribute the excess commissions? Although you will find it nowhere in “black letter law” – the same AG Opinion which we have referenced in answering these questions, AG Op. #78-112, says that it is the responsibility of the county treasurer to calculate and distribute the excess commissions. The Attorney General opined, “Since according to Arkansas Statute 84-1401[§ 21-6-302 - this was prior to the laws being codified and referenced as codes – circa 1987] all funds received by the various county officers including the County Treasurer and County Collector are required to be paid into the treasury, it would appear that the responsibility of returning the excess commissions to the respective units from which they were assessed would inure to the County Treasurer”.

When a county receives “unclaimed property proceeds” from the Auditor of State’s office, which county fund should it be receipted to, how can the money be used, and does the county have any future liability for the unclaimed proceeds?

You will find the Unclaimed Property Act codified in Arkansas Law as A.C.A. §§ 18-28-201 through 18-28-230. As you read this code section you will note that after a county (any office or department of county government) submits “unclaimed property” to the State of Arkansas the State tries to find the lawful owner of the property. At least one time each year the State transfers to the treasurer of the reporting county all funds collected from that county that have not been claimed and that have been held for a full three (3) years at the state level [§ 18-28-213(c)(i)].

The funds received by the county treasurer are to be deposited into the general fund of the county. The county may use the funds for any purpose for which it may use general revenues – which is any legal county expense [§ 18-28-213(c)(ii)(iii)].

After the State remits the “unclaimed property” from the Unclaimed Property Proceeds Trust Fund to the county, the State is released from any indemnity and the liability of payment to the rightful owner becomes a responsibility of the county. The county receiving the funds must maintain an accounting of the funds in perpetuity, unless payment upon a valid claim is made. If the rightful owner or the owner’s heirs or assigns ever appear and petition the county for the return of the funds, after providing proof of ownership, the county has to pay the rightful owner from the general fund of the county. “Proof of ownership” is defined in the law. The law says that “proof of ownership means a finding by a court of competent jurisdiction that the person petitioning the county is, in fact, the rightful owner, heir or assignee” [§ 18-28-213(B)(i)(ii)(iii)(iv)].

It is unusual for a claim of ownership to surface after the “unclaimed property” comes back to the county. By then, both the county and state have exercised “due diligence” in trying to find the rightful owner.

Note:

The disposition of “unclaimed” or “abandoned” mineral proceeds is handled separately under A.C.A. §§ 18-28-401 through 18-28-403.

All mineral proceeds that are owed by the holder and that have remained unclaimed by the owner for longer than three (3) years after the mineral proceeds became payable are presumed abandoned and are subject to the unclaimed provisions of the Uniform Disposition of Unclaimed Property Act, A.C.A. § 18-28-201 et seq., except that funds received by the Auditor of State are deposited in a special trust fund known as the “Abandoned Mineral Proceeds Trust Fund” [§ 18-28-403(a)(1)(B)].

The Abandoned Mineral Proceeds Trust Fund is used by the Auditor of State to pay the claims of persons establishing ownership of any mineral proceeds that are in the possession of the state. At least one (1) time each year, the Auditor of State transfers to the County Aid Fund in the State Treasury all funds in the Abandoned Mineral Proceeds Trust Fund in excess of an amount that the Auditor of State determines to be sufficient to pay the anticipated expenses and claims of the trust fund [§ 18-28-403(b)].

The funds that are credited to the County Aid Fund are distributed equally among the 75 counties of Arkansas by the Treasurer of State. Upon receipt, the county treasurer credits the funds to the general fund of the county [§ 18-28-403(c)(1)(2)]. This source of revenue is very volatile and is not recommended to be projected since it could be zero or a substantial amount.

What funds are devoted to the Treasurer’s Automation Fund and what are considered legal expenditures from this fund?

The Treasurer’s Automation Fund is funded with a portion of the county treasurer’s commission. The primary code addressing county treasurer commission is Arkansas Code Annotated § 21-6-302. Under § 21-6-302(e)(1), “the treasurer may set aside up to ten percent (10%) of the gross commissions collected annually to be credited to the county treasurer’s automation fund”.

Because this law is couched in a permissive context rather than mandatory the county treasurer may choose whether or not to establish the fund. If the treasurer decides to establish the fund, any percentage of annual gross commissions may be set aside in the County Treasurer’s Automation Fund – up to a maximum of 10%.

The moneys deposited in this fund are not subject to excess commission and may accumulate from year to year. The funds are to be appropriated by the quorum court at the direction of the treasurer and are to be expended for the uses designated in § 21-6-302(e)(1)(A)(B)(C)(2).

The original uses of the fund were “to purchase, maintain, and operate an automated accounting and record-keeping system”. So, the original intent was to use the funds for computerization of the office, including the acquisition and update of software. The Attorney General even opined that a portion of the funds could be used for a Deputy Treasurer’s salary. AG Opinion No. 2001-094 said, “Although the language of the statute [§ 21-6-302(e)] does not explicitly address the use of the fund to pay for salaries, its statement of the permissible use of the fund is nevertheless couched in terms that are broad enough to encompass the payment of salaries that are in compensation for duties devoted to the stated permissible use.”

Act 844 of 2003 liberalized the legal uses of the fund considerably by adding, “to operate the office of the county treasurer” and “for administrative costs”. This amendment to § 21-6-302 is very broad language. Black’s Law Dictionary defines “administrative expenses” or costs as “overhead” which would cover a multitude of expenditures. The language “to operate the office of county treasurer” is even broader terminology. Although I believe the real focus of the fund is still computerization of the county treasurer’s office, the fund can now be spent on any legal expenditure of the treasurer’s office [AG Opinion No. 2009-192].

Unlike other “automation funds” or “cost funds” where the officials have the discretion to transfer to the county general fund any moneys they deem excess and not needed for the intended purpose or purposes of the Automation Fund or Cost Fund – that is NOT so with the Treasurer’s Automation Fund. Any use of the money in the Treasurer’s Automation Fund, since it is funded by treasurer commission (much from tax collections), has to be used solely for the salaries and expenses of the County Treasurer’s office. This logic is based on Attorney General Opinion No. 78-112 which cites several court cases and constitutional law, including Article 16, Section 11 – “no moneys arising from a tax levied for any purpose shall be used for any other purpose.”

The only legal way to transfer funds from the Treasurer’s Automation Fund to the County General Fund would be to reimburse the general fund for expenditures made from the general fund for treasurer office expenses.

What is the proper method for the establishment and operation of the County Recorder’s Cost Fund?

The County Recorder’s Cost Fund was established with the enactment of Act 768 of 1995, which was the Recorders Uniform Fee Bill – amending A.C.A. 21-6-306 to increase recording fees and to include language to implement the County Recorder’s Cost Fund. This code was amended again by Act 1144 of 2001; Act 1339 of 2003; Act 615 of 2007; Act 202 of 2009; and Act 982 of 2021. These amendments of § 21-6-306 have changed both the amount of the recording fees and the uses of the County Recorder’s Cost Fund.

The next few paragraphs delineate what the law currently says about the establishment and uses of this fund.

All of the “recording fees” that are listed in § 21-6-306 are to be paid over to the County Treasurer by the County Recorder. The treasurer is to credit all of these fees to a fund in the county treasury to be known as the “County Recorder’s Cost Fund” [A.C.A. 21-6-306(b)(1)].

The moneys deposited in the County Recorder’s Cost Fund are to be appropriated by the quorum court in a line-item budget, at the direction of the recorder, for administrative costs of the recorder’s office and to purchase, maintain, and operate an automated records system [§ 21-6-306(b)(2)(3)(c)(1)].

At least 25% of the moneys collected annually in this fund are to be used to purchase, maintain, and operate an automated records system. The acquisition and update of software for the automated records system is a permitted use of these funds. This law creates a minimum of 25% of the annual fees collected to be used for the purposes just mentioned, but more than 25% of these funds can legally be used to purchase, maintain, and operate an automated records system [§ 21-6-306(c)(2)(A)].

With the passage of Act 768 of 1995 “recorder revenue” [recording fees] became “special revenue” and is credited to the special revenue fund – County Recorder’s Cost Fund.

The portion of the statute that directs the use of the funds is couched in mandatory terms, stating: “All moneys collected by the recorder as a fee as provided in this section shall be used by the recorder’s office to offset administrative costs. At least 25% of the moneys collected annually shall be used to purchase, maintain, and operate an automated records system.” According to case law the use of the term “shall” in statutory language means the legislature intended mandatory compliance (AG Opinion No. 1996-235). In other words, as first enacted, moneys in the County Recorder’s Cost Fund had to be solely used for the recorder’s office.

In 2003 the Arkansas Legislature passed Act 1339 which amended § 21-6-306(c) to allow the County Recorder to transfer unneeded funds from the County Recorder’s Cost Fund 25% portion to the County General Fund.

Act 1339 of 2003 amended A.C.A. 21-6-306(c)(2) to create (c)(2)(A) and (c)(2)(B). Subdivision (c)(2)(A) was the previous (c)(2) which was unchanged and says, “At least twenty-five percent (25%) of the moneys collected annually shall be used to purchase, maintain, and operate an automated records system. The acquisition and update of software for the automated records system shall be a permitted use of these funds.” Subdivision (c)(2)(B) is the new wording added by Act 1339 of 2003, which says, “At the discretion of the recorder, any funds not needed by the recorder for any of the purposes under this subdivision (c)(2) may be transferred to the county general fund.”

Act 615 of 2007 also amended § 21-6-307 and added (c)(2)(C) which caps the County Recorder’s Cost Fund balance at $1,000,000. Any funds in excess of one million dollars shall be transferred to the county general fund. By operation of state law the County Treasurer must transfer any balance of the County Recorder’s Cost Fund in excess of $1 million dollars at any given time to the County General Fund.

What does Arkansas law say about the establishment and use of the County Clerk’s Cost Fund?

The County Clerk’s Cost Fund, established by Act 1765 of 2003, has not been the topic of as much discussion as other cost funds or automation funds – because as a general rule the County Clerk’s office does not generate as much revenue. No Attorney General Opinions have been issued concerning the County Clerk Cost Fund – and there have been no court cases involving this fund as of late 2022.

Here is what the law says concerning the County Clerk’s Cost Fund. Fees collected by the County Clerk pursuant to §§§ 21-6-413, 21-6-415 and 16-20-407 are to be paid into the county treasury to the credit of the “county clerk’s cost fund”. In strict accordance with the law 100% of these fees are to be credited to the fund – even though only 35% of the fees are restricted and considered “special revenues”.

Many counties probably credit 35% of the fees to the County Clerk’s Cost Fund and 65% of the fees to County General. To be in full compliance with the law 100% of the fees should be credited to the County Clerk’s Cost Fund with 65% then transferred to County General as an appropriated transfer or the 65% can actually be appropriated and expended from the County Clerk’s Cost Fund for “any legitimate county purpose.”

A.C.A. § 21-6-413(e)(1)(A) says that the county clerk fees “shall be paid into the county treasury to the credit of the fund to be known as the county clerk’s cost fund.” The law goes on to say in subsection (e)(1)(B) that “with the exception of those funds referred to in subdivision (e)(2) of this section, all funds deposited into the county clerk’s cost fund are general revenues of the county and may be used for any legitimate county purpose.”

The funds referred to in subdivision (e)(2) are the 35% “special revenue” funds. These funds, in accordance with § 21-6-413(e)(2)(A)(B) “shall be used to purchase, maintain, and operate an automated records system. The acquisition and update of software for the automated records system shall be a permitted use of these funds.”

Normally “special revenues” or “restricted funds” are just that – they can be used only for the purposes set out in law…..unless there is an exception laid out in the law. In this case the exception is espoused in § 21-6-413(e)(2)(C) which says, “Funds set aside for automation may be allowed to accumulate from year to year or at the discretion of the clerk may be transferred to the county general fund by a budgeted appropriated transfer.

Special Notes concerning the County Clerk’s Cost Fund:

In those counties having combined offices of county clerk and circuit clerk/recorder or in those counties having combined offices of county clerk and recorder, the clerk must decide to utilize the county clerk’s cost fund as authorized by § 21-6-413 or the county recorder’s cost fund as established by § 21-6-306.
The clerk’s decision must be made in writing and filed in the office of the circuit clerk.
The clerk is not allowed to use both funds – except for the revenue generated under § 16-20-407(b). [The $2.00 kept locally from a $13.00 additional marriage license fee.]
In the case of a dual clerk who has chosen the County Recorder’s Cost Fund as their “automation fund” of choice – he or she will still have a County Clerk’s Cost Fund specifically and only for the $2.00 they retain from the $13.00 additional marriage license fee levied under § 16-20-407. This money (the $2.00 retained from the $13.00 additional marriage license fee) MUST be appropriated and expended exclusively for the operation of the office of county clerk [§ 16-20-407(b)(1)].

What is the proper procedure for the establishment and use of the County Collector’s Automation Fund?

The Collector’s Automation Fund is funded with a portion of the collector’s commission. In accordance with Arkansas Code Annotated § 21-6-305(c)(2)(A), “The county collector may set aside up to ten percent (10%) of the gross commissions collected annually to be credited to the county collector’s automation fund”.

Because the law concerning the establishment of a County Collector’s Automation Fund is permissive in nature – the collector may choose whether or not to establish the fund and whether or not to keep funding it. If the collector decides to establish the fund, any percentage of annual gross commissions may be set aside in the County Collector’s Automation Fund – up to a maximum of 10%. And, that percentage can change annually at the call of the collector.

The revenue credited to the Collector’s Automation Fund is not subject to the excess commission rule and may accumulate from year to year [Subdivisions (c)(3) and (d)]. The funds are to be appropriated by the quorum court at the direction of the collector for the uses designated in § 21-6-305(c)(2)(A)(i)(ii)(iii)(B).

The original uses of the fund were to “purchase, maintain, and operate an automated record-keeping system.” The acquisition and update of software for the automated accounting and record-keeping system was a permitted use of the original law for this automation fund.

Like other county automation and cost funds, the uses of the County Collector’s Automation Fund were liberalized in 2003. The Arkansas Legislature through Act 847 of 2003 added the terms “to operate the office of county collector” and “for administrative costs” to § 21-6-305. The new language of this law is very broad in nature. Black’s Law Dictionary defines “administrative expenses” or costs as “overhead” which would cover a multitude of expenditures. The language “to operate the office of the county collector” is even broader terminology. No doubt the real focus of the fund should still be “computerization” or “automation” of the collector’s office as the moniker of the fund would indicate. But, with the 2003 amendment to the law, the fund can now be spent on virtually any legal expenditure of the collector’s office [AG Opinion No. 2009-192].

Unlike other “automation funds” or “cost funds” where the officials have the discretion to transfer to the county general fund any moneys they deem excess and not needed for the intended purpose or purposes of the Automation Fund or Cost Fund – that is NOT so with the Collector’s Automation Fund. Any use of the money in the Collector’s Automation Fund, since it is collector commission, taken from local tax entities, must be used solely for the expenses of the County Collector’s office. This logic is based on Attorney General Opinion No. 78-112 which cites several court cases and constitutional law, including Article 16, Section 11 – “no moneys arising from a tax levied for any purpose shall be used for any other purpose.”

Is it a requirement of law for a county to fund a county jail operation and what are some of the main sources of revenue for county jail operations?

Arkansas Code Annotated § 12-41-502 says, “The county sheriff of each county in this state shall have the custody, rule, and charge of the jail within his or her county and all prisoners committed in his or her county,…..”. Also, § 14-14-802(a)(2) requires, “A county government, acting through the county quorum court, shall provide, through ordinance, for……..law enforcement protection services and the custody of persons accused or convicted of crimes”. There are other state laws and court case decisions that indicate that a county government should not only have a county jail, but should properly fund the jail operation.

County jail operations are one of the largest financial burdens on county governments in Arkansas – but, there are several revenue sources for the operation of a county jail that can be secured. The two largest and most common revenue sources are a dedicated sales tax (must be approved by a vote of the electorate) and general funds of the county. Other sources of jail revenue include housing fees for housing prisoners of other government jurisdictions, including state prisoners and 309’s and contracts for housing federal prisoners; and pay-for-stay fees.

The sheriff must also allocate a percentage, up to 75%, of the commissions from prisoner telephone services and profits from inmate commissary services for the maintenance and operation of the county jail in accordance with § 12-41-105(b)(2). These revenues are credited to the Sheriff’s Communications Facility and Equipment Fund – but some percentage [up to 75%] must be allocated to jail operations.

Two other sources of revenue for jail operations are the $40 booking and administrations fee and the local fine that can be levied by the quorum court to help defray the cost of incarcerating prisoners.

Let’s take a closer look at those last two sources of jail revenue mentioned and the laws that regulate them –

Booking fee - Act 117 of 2007 amended § 12-41-505 [Expense and support of the jail] to add a booking and administration fee of $20 to anyone convicted of a felony or a Class A misdemeanor. The booking fee was increased to $40 by Act 372 of 2019. The fee is assessed in one of two ways. It is assessed upon the conviction of a person and included in the judgment entered by the court – or if the court suspends imposition of a sentence on the person or places the person on probation and does not enter a judgment of conviction, the court is to impose the booking and administration fee as a cost.

Disposition of the booking fee is addressed in § 12-41-505(b)(3). Ninety percent (90%) of the booking fee is to be used exclusively for the maintenance, operation, and capital expenditures of a county jail or regional detention center or for certificate pay for law enforcement and jailer personnel. The 90% funding should be credited to a fund called the County Detention Facility Fund [Fund #3018] or if the county already has a special revenue fund for jail operations the booking fee may be credited to that fund as one of that fund’s revenue sources. A.C.A. § 12-41-505 simply says that the funds “shall be credited to a special revenue fund and used for the maintenance, operation, capital expenditures of a county jail…..”.

The remaining 10% of the booking fee is to be credited to the County Sheriff’s Office Fund as described in § 12-41-105 and then transferred by check on a monthly basis to the Treasurer of State for the Law Enforcement Training Fund. The check is to be remitted using a uniform remittance form provided by the Treasurer of State.

Local Jail Fine - Act 209 of 2009 amended § 16-17-129 so that a city and/or county could, by ordinance, levy an additional fine not to exceed $20 to be collected from defendants in District Court to be used to defray jail expenses.

A.C.A. § 16-17-129, as amended, reads in part:

(a)(1)(A) In addition to all fines now or as may hereafter be provided by law, the governing body of each town or city in which a district court is located may by ordinance levy and collect an additional fine not to exceed twenty dollars ($20.00) from each defendant upon each conviction, each plea of guilty or nolo contendere, or each bond forfeiture in all cases in the first class of accounting records as described in § 16-17-707.

(b)(1) In addition to all fines now or as may hereafter be provided by law, the quorum court of each county may by ordinance levy an additional fine not to exceed twenty dollars ($20.00) to be collected from each defendant upon each conviction, each plea of guilty or nolo contendere, or each bond forfeiture in all cases in the first and second class of accounting records as described in § 16-17-707. A county ordinance enacted under this subdivision (b)(1) applies to all district courts in the county.

As a result of this amended state law, cities may collect up to $20.00 in fine money on accounting one records, and counties may collect up to $20.00 in fine money on accounting one and two records. Accounting one records are “city cases” and accounting two records are “county cases”. Counties should assess this fine in district court on both city and county cases. However, it can only be assessed by the passage of an ordinance to levy the fine. If both the municipality and the county have an ordinance levying the additional $20.00 fine – the defendant in a municipal case would pay an additional $40 fine dedicated to the uses of this fine as outlined in the law.

The revenue collected by the assessment of this fine can be used for: (1) the construction, maintenance, and operation of the city, county, or regional jail; (2) deferring the costs of incarcerating county prisoners held by a county, a city, or any entity; (3) the transportation and incarceration of city or county prisoners; (4) the purchase and maintenance of equipment for the city, county, or regional jail; and (5) training, salaries, and certificate pay for jailers and deputy sheriff’s. The only exception to these uses is that sums collected from this fine on “city cases” cannot be used for training, salaries or certificate pay for deputy sheriffs.

As an additional note, this additional fine allowed under § 16-17-129 to be used to help defray jail expenses applies also to a seatbelt conviction in accordance with § 27-37-706. However, a seatbelt fine cannot exceed $45.00 - $25.00 for not wearing a seatbelt and the $20.00 assessed under a local ordinance pursuant to § 16-17-129 to help defray the cost of operating a jail.

Real property reappraisals are required to be conducted on a cyclical basis by county governments in Arkansas. What is the history of these reappraisals and how are the reappraisals paid for under current law?

The beginning of ad valorem taxation in Arkansas starts with the Arkansas Constitution of 1874. Article 16, Section 5 of the Constitution, as amended, provides that: “All real and tangible personal property subject to taxation shall be taxed according to its value, that value to be ascertained in such manner as the General Assembly shall direct, making the same equal and uniform throughout the State.”

Laws on property taxation in Arkansas have been in constant change throughout the years. Because of a court case in the late 1970’s that ruled that ad valorem taxation in Arkansas was not “equal and uniform throughout the State” the court ordered reassessment of all real estate in Arkansas. Amendment 59 to the Constitution was passed by the electorate in 1980 due to the court-ordered reassessment to keep real property taxes from rising exorbitantly. Act 848 of 1981 [§ 26-26-401 et. seq.] was adopted by the Arkansas legislature as the enabling legislation for Amendment 59.

Every county in the State of Arkansas is now responsible for a cyclical county-wide reappraisal. Each county is required to appraise all market value real estate normally assessed by the county assessor at its full and fair market value in accordance with Arkansas Code Annotated 26-26-1902. Depending on the real property value growth – a county is either on a 3 year or a 5 year cycle for a complete reappraisal of real property.

The reappraisal is paid for from the Arkansas Real Property Reappraisal Fund – established by Act 1185 of 1999 and codified as§ 26-26-1907. The proceeds of the fund are used to pay counties and professional reappraisal companies for the reappraisal of real property in lieu of real property reappraisal funding by the local taxing units in each county of the state.

In reality the tax entities are still paying for nearly all of the reappraisal since the funding source of $14,250,000 of the cost is withheld from state funds that would otherwise flow to schools, counties and cities. The State Treasurer withholds 76% of the amount from the Department of Education Public School Fund Account; 16% of the amount from the County Aid Fund; and 8% of the amount from the Municipal Aid Fund and credits the amounts to the Arkansas Real Property Reappraisal Fund [Part of the Arkansas Assessment Coordination Department budget act each year]. The other $1.5 million of the annual appropriation of $15,750,000 for Real Property Reappraisal comes from the State of Arkansas Miscellaneous Agencies Fund.

Funding to any county for property reappraisal is for actual appraisal cost, up to a maximum of $7 per parcel, per year. Counties must use other taxing unit sources of revenue to provide for the cost of real property reappraisals if the cost exceeds $7 per parcel.

There is nothing in the law to prohibit a county from charging each tax entity their proportionate share of the cost exceeding $7 per parcel on a monthly basis in order to keep the County Property Reappraisal Fund from running a negative balance. There is no need for the county to suffer the burden of paying the excess cost of reappraisal until the “final tax settlement” is made in December. Charge each entity their share on a monthly basis.

What sources of revenue are produced by the Sheriff and identify any Special Revenue Funds that are used for the Sheriff’s operation and how the revenue is generated for these “special revenue funds”?

The County Sheriff’s office budget is probably the largest office budget of the county constitutional officers. Although the Sheriff’s office has the ability to generate quite a bit of revenue it will not be enough to cover the cost of running the office in the vast majority of counties.

The County Sheriff may be the county official designated in your county by the quorum court to collect fines [§ 16-13-709 Responsibility for collection]. Of course, many circuit and district court fines remain at the local level and are remitted to the general fund.

The County Sheriff has several “Special Revenue” funds – such as the Communications Facility and Equipment Fund [§ 21-6-307]; the Boating Safety Enforcement Fund or Emergency Rescue Fund [§ 27-101-111]; the Drug Enforcement Fund [§ 14-21-201 through 14-21-203]; the Drug Control Fund [§ 5-64-505]; and possibly others that may have been established by county ordinance.

In addition to the special revenue funds mentioned, there is also a fund called the County Sheriff’s Office Fund as established by § 12-41-105. The county sheriff’s office fund is an agency fund, defined as a fund used to account for funds held by the county treasurer as an agent for a governmental unit until transferred by check or county court order to the county sheriff or other governmental unit for the intended uses of the fund.

Fees to be charged by the County Sheriff are set forth in § 21-6-307. The Sheriff fees are divided 75% to County General and 25% to the Communications Facility and Equipment Fund. The fees listed in § 21-6-307 are the only fees charged by the Sheriff that are subject to the 75% - 25% split.

The 25% amount of sheriff fees pursuant to § 21-6-307(a)(1)-(17) do not have to be remitted to the county treasury – and can be retained by the Sheriff for the Communications Facility and Equipment Fund. In accordance with the law, the Sheriff maintains this money and fund and it is not subject to appropriation by the quorum court [AG Opinion No. 2002-008 and AG Opinion No. 2003-074]. The funds are subject to audit by the Arkansas Legislative Audit Department. All money paid into this fund from the 25% source of sheriff fees are restricted in use for the following: (1) train operations staff; (2) operate, equip, repair, or replace existing communications equipment; (3) purchase additional communications equipment; (4) otherwise improve a communications facility or system for the sheriff’s department; or (5) purchase vehicles, weapons, or other equipment for the sheriff’s department.

However, in many counties the Communication Facility and Equipment Fund is on the books of the County Treasurer. When the Communications Facility and Equipment Fund first became a part of the law in the 1980’s [first called the Sheriff’s Radio and Equipment Repair and Replacement Fund – changed to current name by Act 662 of 1995] the Arkansas Legislative Audit did not believe it was proper county procedure for the Sheriff to maintain control of the fund and suggested that they remit it to the County Treasurer. This audit division suggestion was before Enron and when they made those types of suggestions to county government officials. There were Sheriffs also that thought it was not a good idea for them to maintain this money in their office. Therefore, in several counties – contrary to what the law says – the Communications Facility and Equipment Fund is on the books of the County Treasurer. In such case, the fund is a part of the county treasury and is subject to quorum court appropriation [A.C.A. 14-14-1102(b)(2)(C)(i) and Arkansas Constitution, Article 16, Section 12].

At the discretion of the Sheriff, any funds in the Communications Facility and Equipment Fund not needed by the Sheriff may be transferred to the county general fund.

The 25% cut of Sheriff fees is not the only source of revenue for the Communications Facility and Equipment Fund. The commissions derived from prisoner telephone services provided in the county jail and the profits from inmate commissary services end up in the Communications Facility and Equipment Fund pursuant to § 12-41-105.

Commissions on prisoner telephone services and profits on inmate commissary services must be deposited with the county treasurer on a monthly basis through the monthly financial settlements with the treasurer. The county treasurer credits these funds to the County Sheriff’s Office Fund, an agency fund on the county’s books.

The Treasurer commissions these funds [per AG Opinion No. 2015-147] and remits 100% of the net amount to the Communications Facility and Equipment Fund. If the Communications Fund is on the books of the county the Treasurer transfers the commissions and profits from the County Sheriff’s Office Fund to the Communications Facility and Equipment Fund as an interfund transfer. However, if the Communications Fund is on the books of the Sheriff the Treasurer must issue a “treasurer’s check” to the Sheriff for deposit to the Communications Fund.

Since the County Sheriff’s Office Fund is an agency fund – the movement of this money from the sheriff’s office fund to the Communications Fund, regardless of who holds the fund, does not require an appropriation.

The Sheriff must allocate a percentage of the commissions deposited to the fund for the maintenance and operation of the county jail. A specific percentage is not required but some percentage up to 75% must be allocated for jail operations. [Note: Commissions from prisoner telephone services and profits from commissary services addressed in § 12-41-105 and the provisions of that code do not apply to Benton, Pulaski and Washington counties – the three counties in Arkansas with populations in excess of 175,000.]

Another source of “special revenue” for the County Sheriff comes from boat registration fees. A percentage of those fees are credited to the County Aid Fund and remitted to the County Treasurers in the proportions thereof as between the respective counties that the total of the fees produced from each county bears to the total of the fees produced from all counties. [§ 27-101-111]

Upon receipt of these funds the County Treasurer credits the funds to the Boating Safety and Enforcement Fund – if the Sheriff has established a patrol on the waterways within the county. Otherwise, the funds are credited to the County Emergency Rescue Fund for use exclusively by either the county or the cities within the county, or both, for operating and maintaining emergency rescue services.

If neither the county nor any of the cities within the county operate emergency rescue services the fees should be deposited into the Game Protection Fund for use by the Arkansas State Game and Fish Commission.

Drug Enforcement Fund - A county may provide the Sheriff with another Special Revenue Fund – a Drug Enforcement Fund. For this fund to be established the quorum court must pass an ordinance establishing the fund and set a maximum balance for the fund – not to exceed $50,000 [amended from $10,000 by Act 154 of 2013].

There are restrictions on how the fund can be used. The law allows for these funds to be used only for direct expenses associated with the investigation of the criminal drug laws, including (1) the purchase of evidence; (2) the payment of information; (3) the relocation or security of witnesses, or both; (4) emergency supply purchases; and (5) emergency travel expenses. The funds cannot be used for (1) administrative costs associated with the sheriff’s office; or (2) equipment purchases or leasing, salaries or wages, professional services, training, or any other purpose not directly related to a criminal drug investigation.

After the quorum court has approved an ordinance establishing a Drug Enforcement Fund, set the maximum amount of the fund within the maximum threshold set by state law, and appropriated money for the fund, the county judge may approve a county claim for the initial establishment of the Drug Enforcement Fund on the books of the County Sheriff. If adequate appropriations and funds are available, the Drug Enforcement Fund may be replenished upon presentation and approval of a county claim. The total Drug Enforcement Fund dollars [both bank account and cash funds] must never exceed the maximum established by the quorum court.

Accounting records must be maintained by the sheriff’s office for the receipt, disbursement, accounting, and documentation of funds pursuant to the written procedures established by the Division of Legislative Audit. [As with the Communications Facility and Equipment Fund – this fund is on the books of the Treasurer in some counties rather than on the books of the Sheriff.]

Everything there is to know about the Drug Enforcement Fund is in Act 362 of 1997, amended for the first time by Act 154 of 2013, and codified in A.C.A. §§ 14-21-201 through 14-21-204. No AG Opinions or case law exist on these laws governing the Drug Enforcement Fund.

Drug Control Fund - Another Special Revenue Fund for use by the County Sheriff is the Drug Control Fund. Information concerning the Drug Control Fund is found in the rather extensive “Property Subject to Forfeiture” law which is codified as A.C.A. 5-64-505. Subdivision (i)(2) lays out the creation of the Drug Control Fund on the books of law enforcement agencies and prosecuting attorneys. The Drug Control Fund moneys come from the disposition of moneys in the Prosecutor’s Asset Forfeiture Fund as outlined in subdivision (i)(1).

Moneys in the Drug Control Fund shall be used only “for law enforcement and prosecutorial purposes” – which is a rather broad definition of what the moneys can be used for. The term “prosecutorial purposes” is not in itself a legal term that is defined. The definition of “prosecutorial” is relating to, or being a prosecutor or prosecution. It would appear then that “drug control funds” could be used generally for law enforcement purposes and for any legitimate expense of the prosecutor or his/her team in the process of conducting the prosecution of a defendant.

There are several Attorney General Opinions dealing with the Drug Control Fund.

In connection with the Drug Control Fund as established under A.C.A. 5-64-505 – at least one other code is worth mentioning. It is:

A.C.A. 12-17-105 – This code allows the use of Drug Control Funds to meet the local match for a grant to a multi-jurisdictional drug crime task force receiving a grant award from the State Drug Crime Enforcement and Prosecution Grant Fund.

How many years can a county legally go back to make a refund of property taxes paid in error?

As a general rule tax refunds must be made within three (3) years from the date the taxes were paid. Arkansas Code Annotated 26-35-901 is the primary state code dealing with real or personal property taxes erroneously assessed and paid. When a taxpayer provides satisfactory proof to the county court of erroneously assessed and paid taxes, the county court issues a court order directing the county treasurer to refund the person the amount of taxes erroneously assessed and paid. After an amendment to the law in 2017 by Act 729, if an erroneous assessment claim is for erroneous assessments made in two or more tax years, the county court may order that the property tax refund be made in 2 equal annual installments. [As explanation, the county court is the county judge in his/her judicial capacity with exclusive jurisdiction in all matters relating to county taxes pursuant to the Arkansas Constitution, Article 7, § 28 and Arkansas Code §14-14-1105(b)(1).]

The claim for refund at the county level has to be made within 3 years from the date the taxes were paid. And the claim of erroneously assessed and paid taxes must fall within the definition of “erroneously assessed” as defined in § 26-28-111(c).

The refund is paid from the general fund of the county and the general fund is then reimbursed by transfer from funds of the respective taxing units. The amount contributed by each taxing unit will be the amount of the erroneous payment received by the taxing unit [§ 26-35-901]. All of the pertinent information for the tax refund transaction should be contained in the county court order.

There are counties that accomplish the refund by making the appropriate transfers from each tax entity, including County General, to the Collector’s Unapportioned Account, a tax clearing fund. The county treasurer issues the county check from the Collector’s Unapportioned Account and accomplishes the same thing – with cleaner tracking of the transaction. But be sure to follow the directions of the court order.

There is a possibility that a refund could be made for up to a five (5) year period. A.C.A. § 26-39-220 [Adjustment of errors.] says the county court has the duty to reconsider and adjust the settlement of any county officer for any error discovered within 3 years from the date of the settlement. If the error in a settlement is discovered after three (3) years, but within five (5) years from the date of the settlement, the county judge (county court) has the duty to petition the chancery court (now circuit court under Amendment 80) to obtain an order to correct the error or errors. [See AG Op. #1992-357]

Counties are sometimes told they cannot pay late charges or a penalty on overdue bills. Is it true that counties cannot pay penalties on bills that are past due?

I will preface the answer to this question with the statement that a county should not get in the situation of having to pay penalties because of the late payment of a bill. County government should exercise diligence in taking care of tax payer money – including timely payment of claims so as to avoid the wasteful payment of penalties.

However, if a county finds itself in the position of paying an overdue invoice to which a penalty has been applied – I do not believe there is any law that forbids the payment of an actual “penalty”.

Some people tend to view “interest” and “penalty” in the same light – when, in fact they are different animals. A county cannot pay interest (except in certain instances)….but there is no state law prohibition against paying a penalty.

“Interest” is legally defined as “the compensation fixed by agreement or allowed by law for the use of money”. Article 16, Section 1 of the Arkansas Constitution says, “Neither the State nor any city, county, town or other municipality in this State shall ever lend its credit for any purposes whatever; nor shall any county, city or town or municipality ever issue any interest bearing evidences of indebtedness, except such bonds as may be authorized by law…….”. Amendment 78, Article 2 of the Arkansas Constitution provides for short-term financing for counties and cities allowing the payment of interest. Amendments 62, 65 and 72 also allow various types of bond issues and debt obligations, which entail interest.

However, a “penalty” is legally defined as “an extra charge against a party who violates a contractual provision.” When a county makes a purchase from a vendor they automatically agree to the terms of payment. If those terms are not met then the county is subject to paying the penalty just like anyone else. I have found no law or AG Opinion to the contrary.

The District Court system is one for which both counties and municipalities have financial responsibilities. What is the financial responsibility of county government as it concerns District Court?

The controlling law that generally sets forth the counties’ obligations to pay for district court judges is found in Arkansas Code §§ 16-17-108 & 16-17-115. It should be emphasized that the first place for the county to look is Arkansas Code Annotated § 16-17-108. This statute lists certain counties by name and lists each counties specific monetary obligation regarding the funding of district court judges’ offices. This section of code typically lists the district judge’s and chief clerk’s maximum and minimum salary.

If a county is not addressed in this statute, then absent an agreement otherwise, the obligation of the county is generally to pay one-half of the district judge and chief clerk’s salaries, not including fringe benefits such as APERS or insurance (16-17-115). Under 16-17-115, except as authorized otherwise, the county where a district court is held shall pay one-half of the salaries of the district court judge and of the chief clerk of the district court. At its annual meeting, the quorum court shall make an appropriation of the county’s portion of expenses for the district court.

Interlocal Agreements - However, if the participating cities and counties have reached an interlocal agreement in accordance with ACA 14-14-910 regarding the funding of the district court judge’s and clerk’s salaries, then that agreement shall be controlling absent a changed circumstance, breach or expiration. This section defines a “county interlocal agreement” as “any service contract entered into by the county court which establishes a permanent or perpetual relationship thereby obligating the financial resources of a county.” Further specifications about what should be included in or constitutes an interlocal agreement are set forth in 14-14-910.

Furthermore, a court order (consent decree) that sets forth the county and city obligations for expenses of a district court will be considered a binding agreement between the entities, which both are required to follow. In Lonoke County v. City of Lonoke, the Arkansas Supreme Court made clear that 2012 amendments to 16-17-115 (adding “unless otherwise agreed to by the political subdivisions which contribute to the expenses of the district court”) did not relieve the county from following a 1991 circuit court consent order that reflected and agreed upon expense-sharing arrangement between the county and city. Therefore, the court effectively construed a prior consent decree as some “other agreement” between the entities to which they are obligated to follow.

Generally, County obligation for ½ salary of one chief clerk only; not responsible for fringe benefits; Unilateral resolutions not binding agreements

Additionally, AG Opinion 2005-191 makes it clear that, except where it is otherwise contemplated in A.C.A. § 16-17-108 or by agreement otherwise, each district shall have only one chief clerk for whose salary the county shall be responsible for paying half (unless agreed otherwise), regardless of the number of departments in the district court. The county has no obligation to pay a district court chief clerk until the chief clerk is appointed and the county approves the salary fixed by the city, as provided in A.C.A. § 16-17-211. This Opinion also makes clear that the county is not responsible for paying for any fringe benefits of the district judge or chief clerk, such as APERS contributions or insurance benefits.

Absent agreement otherwise, such as by interlocal agreement between the participating cities and counties, or by being specifically addressed in 16-17-108, the obligation of the county is to pay one-half of the district judge and chief clerk’s salaries, not including fringe benefits such as APERS or insurance, as set forth in A.C.A. § 16-17-108. As stated in A.C.A. § 16-17-211, the city and county may agree upon a different salary amount. However, the city or county may not unilaterally approve a pay raise for the district clerk which would be binding upon the other local parties. Also, AG Opinion 2014-077 states that a unilateral resolution by a city or county does not constitute a binding agreement or interlocal agreement – the agreement of both entities is required to be binding.

AG Opinion 2006-055 clarifies that the county is not obligated to pay any other district court expense outside the salaries of the district court judge and the chief district clerk, absent agreement otherwise.Therefore, the county may obligate itself by agreement with the city to pay additional expenses, but it is not required nor suggested to do so.

Deputy district court clerks

Act 587 of 2015, codified under A.C.A. § 16-17-106, addresses the employment and pay of deputy district court clerks. It states that if the deputy district court clerk is paid by more than one city or county, then the local governments shall determine by written agreement the apportionment of expenses and the applicable employment policies. However, if the deputy district court clerk is employed only by one city or county, then that city or county alone is responsible for the salary and employment policies of that deputy clerk. Additionally, the salary of a deputy district court clerk may not exceed the salary paid to the chief district court clerk.

State district courts

The default 50/50 local split position covered in the previous sections regarding the pay of the district court judge and the chief district court clerk are not applicable to the state district court judges, legislatively created in 2007 by A.C.A. §§ 16-17-1101 et. seq. In Act 663 of 2007, the Arkansas legislature recognized a state interest in having a more uniform district court system statewide and sought to restructure that system. The state recognized that due to local government funding constraints, the district courts statewide were not equal and that the state has an interest in ensuring the uniformity of its judicial system. However, the legislature reasoned that a simple shift from local funding of district courts to the state was an inadequate solution, and instead began a plan to restructure the district court system and transition all existing district courts into new statutorily created state district courts.

The judges of the resulting state district courts are considered state employees whose salary and benefits shall be paid by the state pursuant to A.C.A. § 16-17-1104 & 16-17-1106. However, local governments still have an obligation to help bear the cost of the judges’ salaries. A.C.A. § 16-17-1106 states that each county and city in which a state district courtship is created shall collectively pay the state its proportionate share of one-half (1/2) of the base salary established by state law for the fiscal year 2009. The counties’ obligated amount is to remain frozen at the 2009 rate going forward.

Act 767 of 2007 set the annual salary of a state district court judge for fiscal year 2009 at $117,300. So the maximum amount that the cities and counties combined can be obligated to pay to the state for a state district court judge’s salary is 1/2 of that amount, which equals $58,650. It is worth noting that this number is deemed to be perpetual – any future salary increase, insurance costs, APERS costs, or other fringe benefit costs shall be paid by the state with no county obligations to pay more than its proportionate share of $58,650.

The city councils and county quorum courts that are part of a state district court shall calculate each entity’s proportionate share of $58,650 in accordance with the formula set forth in A.C.A. § 16-17-1106 and shall pay that amount to the state Constitutional Officers Fund, which in turn, will pay the salary of the judge. The statute provides a default proportional pay arrangement that once a state district court is created, the respective counties and cities will continue paying the proportion of the judge’s base salary that each paid under its previous district court arrangement, whether by a per capita arrangement, by caseload, a percentage split, etc. However, the statute also provides that the local governments may choose to create a new agreement in writing on the amount each county or city should pay of the state district judge’s base salary and submit that agreement to the Administration of Justice Funds Section.

The responsibility to pay for personnel other than the district judge in these state district courts will remain with the local jurisdictions and are split among them exactly as they were as set forth above, either by interlocal agreement, jurisdiction-specific arrangements found in A.C.A. § 16-17-108, or the default position for splitting costs found in A.C.A. § 16-17-115. See also AG Opinion 2014-077, Question 4.

State district courts are served by full-time judges. State district courts exercise territorial jurisdiction within judicial districts established by the General Assembly. This jurisdiction may be city-wide, countywide, or may combine more than one county into a judicial district.

These courts have subject matter jurisdiction over traffic violations, misdemeanors offenses, violations of state law and local ordinances, preliminary felony matters, and civil matters involving contracts, damage to personal property and recovery of personal property where the amount in controversy does not exceed $25,000.00. Additionally, Supreme Court Administrative Order 18 provides that a state district court judge may be referred matters pending in circuit court including but not limited to protective orders, forcible entry, and detainer, unlawful detainer, and matters of an emergency or uncontested nature.

The small claims division provides a forum for citizens to represent themselves in matters involving contracts, damage to personal property and recovery of personal property where the amount in controversy does not exceed $5,000.00. These cases are tried informally with relaxed rules of evidence.

Currently, a majority of the state’s counties are part of the state district court system. All counties of Arkansas are scheduled to become a part of the state district court system by 2025.

What is a county’s financial responsibility in the cost of the operation of a public defender’s office?

First, § 16-10-307 establishes the county administration of justice fund, whereby counties are required to contribute to partially fund certain programs and agencies. One of these programs is the public defender/indigent defense fund. When this section was enacted in 1995, the amount that each county is required to retain to the fund was frozen at the 1994 rate. Since its enactment, counties have received annually an additional amount based upon the average percentage increase in the Consumer Price Index (CPI); however, a 2001 amendment deleted the CPI for years 2002-2005. The CPI was re-enacted in 2005. Most recently, Act 282 of 2013 amended the CPI by having the counties’ received CPI, or lack thereof, dependent upon its previous two years’ collections with the county receiving the lesser of the average percentage increase in the CPI for the previous two years or the percentage of increase in collections of the State Administration of Justice Fund for the previous two years.

When the County Administration of Justice Fund was established in 1995, the county was responsible for the full funding of the public defender’s office. In 1998, the state became the employer of public defenders and responsible for the salaries of public defenders as well. However, 85% of the public defender base year revenue for the County Admin of Justice Fund was funneled to the state for the purpose of sharing the state’s burden of paying the salaries of public defenders.

1. County Obligations for public defender office expenses

Subsequently, other than the contribution to the administration of justice fund, pursuant to A.C.A. § 16-87-302, counties are not obligated to pay any portion of the salaries of public defenders, secretaries, or other support staff of the public defender’s office, and other expenses set forth in A.C.A. § 16-87-212. The only direct obligation of counties regarding the public defender’s office is for the “cost of facilities, equipment, supplies, and other office expenses necessary to the effective and efficient operation of the public defender's office.” These costs should comply with an itemized, line-item budget appropriated by the quorum court. However, the counties shall not be responsible for any compensation of personnel in the public defender’s office unless approved in advance by the quorum court. The law leaves the compensation of the office employees as an obligation of the state.

2. Public Defender Fund fee collected with bail bond payment

Additionally, each sheriff, keeper of the jail, or bail bond company shall charge and collect twenty dollars ($20.00) as a nonrefundable fee for the Arkansas Public Defender Commission, $3 of which is remitted to the counties by the Commission to defray the operating expenses of each public defender’s office. [A.C.A. § 17-19-301(e)] Otherwise, 100% of the public defender’s fee that is collected pursuant to A.C.A. § 17-19-301(e) in the collection of a bail bond payment shall be paid to the office of the public defender. It is unlawful for any of these funds designated by law for deposit into the Public Defender User Fee Fund to be used for any other purpose.

Since County General funds are transferred to other county funds to supplement the operations of particular county funds, such as the Road & Bridge Fund – is it legal to transfer Road & Bridge funds or money from other county funds to County General to supplement general operations?

Generally speaking - “no” – but there are some exceptions to the rule. There is no state law that specifically says you can transfer from General to Road but not vice versa. The law is “unwritten” and is a conclusion of deductive reasoning using the laws that are written concerning county government accounting practices, Attorney General Opinions, and case law.

The premise is this – the County General Fund is made up of “general” or unrestricted revenues of the county. General revenues of the county can be spent for any legal expenditure of the county. Therefore general funds of the county can be transferred through an appropriated transfer to the Road & Bridge Fund or any other fund of the county where those funds can then be appropriated and spent for whatever purpose the receiving fund is established for.

However, the Road Fund and many other funds on the books of the county are “Special Revenue” funds – which mean they are restricted use funds. They are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. Even general funds of the county that are transferred to a “special revenue” fund take on the persona and expenditure restrictions of that fund. Therefore, “special” or “restricted” revenue funds cannot, as a general rule, be transferred to County General for general purpose expenditures.

The only legal way that Road & Bridge funds (or other special revenue funds) could be transferred to County General would be in the event of an error. Here is an example: A legitimate road expense was inadvertently paid with general fund revenues. Upon discovery of the error a county court ordered transfer from Road to County General could be made to reimburse the general fund for the legitimate road fund expenditure. The court order should actually be written in such fashion to accomplish a reduction of expenditures in the general fund and an increase of expenditures in the road fund.

As mentioned earlier, there are a few exceptions to the rule. Normally “special revenues” or “restricted funds” are just that – they can be used only for the purposes set out in law. But, in the case of some special revenue funds the law establishing the fund(s) allows for an exception. State law allows an appropriated transfer of funds from a few of the county official special revenue funds to the general fund at the discretion of the official for whom the fund was established. Those exceptions include the:

County Clerk’s Cost Fund [A.C.A. 21-6-413(e)(2)(C)
County Recorder’s Cost Fund [A.C.A. 21-6-306(c)(2)(B)
Communications Facility & Equipment Fund [A.C.A. 21-6-307(b)(2)(D)

Can a quorum court set salaries of elected county officials as long as the salary is between the minimum and maximum set by the legislature even if they choose to decrease the salaries?

The answer to the question is answered by Section 5 of Amendment 55 which provides that “compensation of each county officer shall be fixed by the Quorum Court within a minimum and maximum to be determined by law. Compensation may not be decreased during a current term……”

The minimums and maximums have been established by the legislature in Arkansas Code § 14-14-1204 for the following county constitutional officers: (1) county judge; (2) sheriff and ex officio collector of taxes; (3) collector of taxes, where established by law; (4) circuit clerk; (5) county clerk, where established by law; (6) assessor; (7) treasurer; (8) coroner; and (9) surveyor. Also, § 14-14-1210 enacted by Act 320 of 2009 provides for a cost-of-living adjustment to be added to the minimums and maximums.

This COLA became effective with the 2011 county budget year and does NOT automatically require an increase in salary. The provisions of § 14-14-1210 simply provide a process for adjusting or indexing the minimum and maximum salaries to be paid to county officials.

The quorum court has the authority to set salaries of the elected county constitutional officials anywhere from the minimum to maximum established by law for each office and county size classification. However, under the language of Amendment 55 those salaries may not be decreased during a current term. A.C.A. § 14-14-1203(d) provides for the implementation of a legal decrease in salary stating, “Any decrease in the annual salary or compensation of a county officer shall not become effective until January 1 following a general election held after such decrease shall have been fixed by the quorum court of the county.”

Is it a requirement of state law that the County Clerk and County Treasurer jointly reconcile the expenditures of the county each month?

This practice of reconciliation makes perfect sense since both the offices of County Clerk and County Treasurer are involved in the expenditure of county funds. Reconciliation would be the monthly culminating step for check and balance. However, you will not find a state law in the Arkansas Code Annotated that specifically requires this financial reconciliation tool. But, that is not the end of the discussion.

The Division of Legislative Audit was mandated by the General Assembly through the provisions of Act 122 of 1981 [§ 14-21-101] to develop a comprehensive financial management system for county government. The Comprehensive Financial Management System was developed and the counties of Arkansas were required to implement it on or before January 1, 1983. This manual IS law. The preface of the manual says, “the accompanying manual codifies and formalizes the components of the financial management system……”

The Financial Management System manual [both the original and the revised version] contains a section called “Other General Information” that includes a subsection entitled “Reconciliation of Expenditures – Clerk’s and Treasurer’s Records”. This section of the manual says, “As the County Clerk maintains the County Court Claims Docket and Transfer Register as supporting records, it is imperative that the checks evidencing these expenditures as recorded in the Claims Docket and Transfer Register be reconciled with the checks issued by the Treasurer, who acts as the financial custodian of county funds.

The reconciliation is necessary to substantiate the recorded expenditures of county funds between the Clerk’s records and the Treasurer’s records and to determine the Treasurer’s cash balance for each operating fund based on the checks issued and redeemed.

The final answer then is “yes”. The law requires a monthly reconciliation of the Clerk and Treasurer records for county expenditures as required by the current Comprehensive Financial Management Manual developed by the Arkansas Division of Legislative Audit [§ 14-21-101].