The Arkansas Supreme Court is to hear oral arguments Thursday in a case in which a citizen accuses the Oxford American Magazine of illegally spending public money.
A retired Hot Springs attorney, James McCafferty, filed a lawsuit in Pulaski County Circuit Court in 2014 accusing the Oxford American Literary Project of accepting loan money from the University of Central Arkansas that was earmarked for public use. UCA argued then that the money—about 700,000 dollars loaned between 2004 and 2008—was loaned to the magazine from its “cash funds”, which consists of money it raised on its own (i.e. from student fees, bookstore sales, etc.)—and not money provided by the state.
McCafferty filed suit against the magazine citing section 13, article 16 of the Arkansas Constitution, which states that “any citizen of any county, city or town may institute suit, in behalf of himself and all others interested, to protect the inhabitants thereof against the enforcement of any illegal exactions whatever.”
Pulaski County Judge Morgan Welch ruled in favor of the Oxford American in August 2014, agreeing with the magazine and university that the money used for the loans was not taxpayer money. But McCafferty appealed the ruling, arguing the money was collected and distributed using public assets. In the appeal process, McCafferty's lawyer argued that since UCA is a “taxpayer-supported institution,” the loans it gave out
“If a taxpayer is without standing to challenge the subject loans because the loaned funds were “cash funds,” then the adminsitration of UCA, a tax-supported institution, was free to use its cash funds in any way it chose, even to make gifts of such funds,” says an appellant brief filed by McCafferty's lawyer.
In the appellee brief, lawyers for the Oxford American argued that McCafferty has been unable to show that he can bring an illegal exaction suit over cash funds and has no authority to do so, saying there is no precedent for such a case. Furthermore, they argue the dispute over the use of cash funds should be decide through the “political process, not the courts.”
“Article 16, section 13 of the Arkansas Constitution does not reveal a public policy requiring that taxpayers be allowed to sue to recover the “cash funds” of a public university,” wrote Michael Thompson, the Oxford American's attorney. “It is likely that the General Assembly could create taxpayer standing to sue to recover “cash funds” of a public university by requiring that those funds be first deposited into the state treasury. Thus, McCafferty should be lobbying his local state representative or senator—not this Court—to change the law to allow suits like this.”
An attorney for the Oxford American declined an interview for this story. An attorney for McCafferty did not return a call requesting comment. Oral arguments in the case are to begin at 9am Thursday.