The case of State ex rel. Yost v. Burns, recently decided by the Ohio Supreme Court, clarified that a public official cannot be held strictly liable for the misappropriation of public money when neither the official nor any of the official’s subordinates collects or receives, and therefore does not control, the funds.
In that case, the treasurer of an Ohio community school pled guilty to embezzlement of funds from the community school. The situation arose from an Audit Report that made a Finding for Recovery against the community school and the treasurer specifically, as well as three other individuals and one entity.
Six years after the Audit Report was closed, the Ohio Attorney General filed a lawsuit against Robert Burns, who had served as the director of the community school at the time of the misappropriation by the treasurer. While Mr. Burns was not named in the finding for recovery, the Attorney General later sought to collect the misappropriated funds from Mr. Burns based on the finding for recovery against the treasurer and others. The Attorney General maintained that Mr. Burns was responsible for approving budget expenditures through Ohio Department of Education’s accounting system, which, along with the approval of the treasurer, triggered the release of public funds from the ODE for deposit into the community school’s bank accounts. Mr. Burns reported to the community school governing board in his role as director. Mr. Burns had no authority to disburse public money from any of the school’s bank accounts, nor did he have any supervisory responsibilities over those accounts. Those duties belonged to the treasurer, who Mr. Burns did not supervise, manage, or have any authority over.
By way of background, as public officials, certain school district employees are bound by R.C. 9.39, which states that “[a]ll public officials are liable for all public money received or collected by them or by their subordinates under color of office.”
The Attorney General contended that in exercising this budget approval responsibility, Mr. Burns “collected” public money within the meaning of R.C. 9.39, and could therefore be held strictly liable for the findings for recovery made against the treasurer and others, despite the fact that Mr. Burns had no control over the funds.
The Ohio Supreme Court held that a public employee cannot collect or receive public money, let alone be held strictly liable for the misappropriation of that money within the context of R.C. 9.39 without controlling it. Accordingly, it found that Mr. Burns could not be held strictly liable for the misappropriated public money from the community school, because the funds were never in his possession and he never exerted any control over them. Even though the money could not have been received or collected without Mr. Burns requesting funds from ODE, the Court still found that Mr. Burns himself did not receive or collect those funds.
This holding limits the extension of strict liability to administrators who do not exert the requisite level of fiscal control over public funds. Here, it was the director of a community school. But a similar extension of strict liability, left unchecked, could have been made to public school district administrators with no fiscal control but who do come into contact with public funds. The Supreme Court has likely prevented such a result.