County Clerk FAQs
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)].
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)
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].