Bailey v. Independent School Dist. No. I-29

If funds are available, the Educational Leadership Oklahoma Act (Act) provides for bonuses to eligible teachers who attain national certification. In the past, the State Board of Education provided the full amount of bonuses and any additional amounts necessary to cover the payroll withholding taxes on the bonuses. In 2010, the Board didnât pay the withholding taxes. Teachers filed suit seeking a declaratory judgment that the Board should have paid the withholding taxes on their bonuses. The trial court found that because the School District was not liable for the bonus payments under the Act, the State Department of Education was, and payment of the bonuses was conditioned on the availability of funds to pay them from State. The court determined that the School District was required to use some of the allocated bonus money from the State to fund the Districtâs tax obligations. Furthermore, the court concluded that the Teachers sued the wrong party by suing the School District, so that it could not enter a judgment in their favor. Accordingly, district court dismissed the action for lack of jurisdiction. On appeal, the Supreme Court held that because the Teachers were State employees, and State was responsible for paying employer withholding taxes for the bonuses, the School District had to pay them. However, the Court found that the State did not have enough money to pay both the bonuses and the withholding taxâit only had enough to pay the bonuses. The Court affirmed the lower courtâs decision to dismiss the case.