The Cost Trap: How Excessive Fees Lock Oklahomans Into the Criminal Justice System without Boosting State Revenue: Part III

[Download the full report as a pdf.]

Part III. Fee revenue funds many government functions, but criminal fee revenue has leveled off

The fees that the courts collect on criminal and civil cases range from relatively large sums that fund the courts to small fees of a few dollars that are distributed to agencies like the Department of Human Services, the Department of Public Safety, and the District Attorneys Council. Over time, as we shall see, as traditional tax dollars have become increasingly scarce, this fee revenue has grown in importance as the funding base for many state agencies. This section examines how the courts and other agencies have grown to depend on that revenue. It also presents evidence that new court fee revenue has come almost exclusively from civil, not criminal cases, raising serious questions about the utility of criminal fees as revenue generators.

Judicial functions

The Court Clerk in each county receives collections, uses a portion to pay some court expenses, and distributes the rest to other agencies and funds as required by law. The allocation of funds for judicial branch agencies is illustrated in Figure A. About half of the total amount collected goes towards the maintenance of District Court facilities and paying court employees, including judges, bailiffs, and court reporters.¹ In 2014, $74 million of the $152 million collected by court clerks funded the District Courts.

Beyond the District Courts, much of the judicial system is funded wholly or partly by court fines and fees. The Administrative Office of the Courts, which oversees Oklahoma’s District Courts, Appellate Courts and the Supreme Court, receives about $18 million in total, and the Court Clerk Revolving Fund receives fees totaling over $5 million. The amounts collected for each entity are listed in Appendix I. As former Oklahoma County Court Clerk Tim Rhodes testified at a 2014 interim study hearing, the Court Clerk’s office operates as a revenue center that is required to pursue collections to fund the court and the court clerk, as well as collecting the fees that are passed along to other agencies.

Other functions

In addition to the judicial functions outlined above, the Court Clerks charge and collect fees on behalf of dozens of other entities for various purposes. While there is sometimes a logical connection between the origin of the fee and its use, in other cases it is far from clear. A list of agencies and purposes of fees is included in Appendix I.

Fee revenue, for example, supports the District Attorneys Council, which oversees the 27 District Attorneys across the state. The DAC received about $2.6 million in 2013 collected from a Prosecution Fee and 10 percent of the costs of incarceration charged by the court.² The Prosecution Fee, which is assessed on all traffic, misdemeanor, and felony cases, was doubled during the 2016 legislative session. As their names suggest, these fees are levied for specific purposes: to incarcerate and prosecute offenders.

Other fees have a far more tenuous relationship with the offense to which they are attached. In 2011, the Legislature passed HB 1414, which places a $5 fee on all civil case filings that provides revenue to fund the Oklahoma Court Appointed Special Advocates (CASA) program. CASA trains volunteers to “represent the best interests of children who are abused/neglected and are active cases in the juvenile court system.”³ While this program surely plays a critical role in the court system, there is little logic in funding it through a fee on every lawsuit, divorce, name change, adoption, judicial birth certificate filing, and so on.

Further, fees must, by law, be related to the case to which they are attached. The CASA fee, enacted in 2010, is similar to three fees that were struck down by the Oklahoma Supreme Court the same year. In Fent v. State ex rel. Department of Human Services, the Court ruled that three fees connected to civil cases were unconstitutional because they went to non-court state agencies for their general operations and thus constitute an illegal tax that violates open access to the courts.⁴ Two of the stricken fees were attached to all civil lawsuits filed in District Courts and were directed to the Child Abuse Multidisciplinary Account and the Attorney General Victim Services Unit; another fee in adoption cases was distributed to another agency. As a result of these fees being ruled unconstitutional, the revenue generated by the courts for the Child Abuse Multidisciplinary Account fell from $2.9 million in FY 2010 to $525 thousand in FY 2011; the Attorney General Victim Services Unit received $475 thousand in FY 2011 compared to $1.1 million the year before.

As noted in Section II, the Child Abuse Multidisciplinary Account fee is still collected on nearly all criminal cases, including traffic tickets. Jerry Fent, the attorney who successfully challenged the civil fees, said that he wanted to keep his lawsuit narrowly targeted, but that he believed the same principles could be used to successfully challenge the constitutionality of fees attached to criminal cases that are used for purposes not related to the case.⁵ However, until someone files that lawsuit or the Legislature acts to change them, these possibly unconstitutional fees will remain in place.

Fee revenue makes up a large share of funding for several agencies

Many court fees play a critical role in the budgets of the entities for which they are collected. Most notably, this includes the court system itself. District Courts have collected about $75 million per year for their own operations while receiving a fraction of that in General Revenue appropriations. District Courts depend on these fees to cover most of their budgets. In Fiscal Year 2015, District Courts received nearly $56 million in transfers from the State Judicial Fund and only $8.6 million from General Revenue appropriations.⁶ General Revenue made up less than five percent of appropriations to the District Courts in FY 2016, down from a recent high of 44 percent in FY 2003. The revenue retained in county court funds is used for other court purposes, while maintenance is provided by the county.

Court Clerks receive $5 million through the Court Clerk Revolving Fund; the rest of their funding comes from the counties and, in some cases, the general Court Fund. The Administrative Office of the Courts, which is housed within the Oklahoma Supreme Court, receives $18 million for specific functions, most notably $14.6 million in FY 2014 for maintaining the Oklahoma Court Information System. The Supreme Court received about $17 million in appropriations in FY 2014.

Even outside the courts, some agencies are almost entirely reliant on court fees. The Council on Law Enforcement Education and Training (CLEET) is charged with providing training, continuing education, and licensing for all state, county, and city peace officers, either through its own programs or the city and agency academies that it oversees. CLEET is almost entirely reliant on revenue generated by a $9 fee attached to all felony, misdemeanor, and moving traffic violations. In FY 2015, the agencies received about $6.4 million in funding, of which about $5.5 million – almost 85 percent of their total revenue – was collected from Municipal and District Court fees.⁷ Only $1.7 million of the fee revenue was generated by District Courts, however, down from over $2 million in 2007 (see Appendix I). The agency has come under heavy criticism for its difficulty in fulfilling its duties to oversee the vast number of private security guards throughout the state, with Director Steve Emmons arguing that his staff is far too small and overworked. Just one CLEET staff member is tasked with investigating all complaints, which Emmons says “has been a problem for CLEET for probably its entire existence.”⁸

For other agencies, the courts are one of several sources of critical fee revenue. In addition to the fees collected by the Court Clerk totaling about $2.6 million, District Attorneys receive fees directly from defendants for various purposes including supervision (usually $40 per month for one or two years, generating $14.5 million in FY 2016) and bogus checks (as described above, totaling $4.8 million in FY 2016). With various other sources of funding, including federal grants and drug asset forfeiture, District Attorneys received less than half of their funding through state appropriations.⁹ In FY 2015, District Attorneys received $38 million in state appropriations, while their expenditures totaled $79 million.

In the face of consistent budgetary stress in recent years, even small amounts of fee revenue can become essential to an agency’s operation. General appropriations to state agencies fell by about 15.1 percent between FY 2009 and FY 2017 after adjusting for inflation, even though agencies served a growing population and received new legislative mandates each year.¹⁰ To cope, agencies are forced to find ways to stretch every dollar further, so even for large agencies like the Department of Human Services, the relatively small sums brought in by court fees – about $516,000 compared to a $631 million appropriation in 2014 — can be seen as essential to staving off deeper cuts to services.¹¹

When fees get added

The timing of and debate around legislation to add or raise court fees is telling. In recent years, legislators have typically passed such bills when there is a need for revenue, either for existing functions during budget shortfalls or for new functions when the need arises. Legislators rarely give much discussion to how the fee will impact the people who are paying it or to the cumulative effect of the fees that have already been put into place. During the 2014 interim study meeting, one Representative asked how the list of fees had been brought about, unsure or unaware that the Legislature itself had passed every one of them at some point.

Budget shortfalls

Consistent revenue shortfalls in recent years have all public agencies operating on shoestring budgets. Responding to an Oklahoma Policy Institute survey of state agencies about budget cuts, DA offices across the state expressed frustration at insufficient staffing, low salaries, and layoffs of administrative staff. One respondent explained, “We are forced to prioritize where our resources are directed. This effectively delays or denies justice to the citizens that I was elected to serve.”

With Oklahoma confronting a $1.3 billion budget shortfall during the 2016 legislative session, the District Attorneys Council approached legislative leaders to ask for additional funding. A spokesman for the DA Council said that District Attorneys across that state had been cut by 12 to 14 percent since the beginning of FY 2016 and that the agency badly needed greater revenue to avoid devastating cuts.¹²

In response, legislators introduced a bill to double the Prosecution Fee. After it failed in the House, an identical bill – SB 1610 – was introduced and quickly passed late in the session. It is expected to raise another $2.2 million for the District Attorneys Revolving Fund.

HB 3220, also approved in 2016, increased civil fees on divorce, custody, alimony, and other proceedings from $143 to $183 and added a surcharge of 15 percent of fees collected for other agencies to cover collection expenses. Together they are projected to add $11.2 million to the District Court Revolving Fund. Rep. Chris Kannady explained during a committee hearing on the bill:

“Over the past few years, the [District] Courts have been about $10 million short in funding. The way we’ve been able to fix that problem is take money out of the IT fund [i.e., Oklahoma Court Information System Revolving Fund]. The bottom line is that that money isn’t there anymore. . . . We have to find another way to fund the court without going in and dipping into General Revenue. And this is a fix.”

These examples show how as General Revenues available for appropriations have declined, the Legislature has turned to raising court fees to fund critical functions of government.

Specific needs

In addition to raising fees to supplement revenue to core functions of government, the Legislature has created new court fees as they seek to solve public problems that arise. The Trauma Care Assistance Revolving Fund provides an example. The fund was created in 1999 to reimburse health providers for uncompensated costs from trauma care; it distributed $2 million to $4 million each year from FY 2001 to FY 2005. This level of funding proved to be insufficient. In November 2003, the state’s only Level 1 trauma unit, housed at the OU Medical Center, announced it had lost $9 million in three years and could only continue to operate if compensation for uninsured and underinsured patients significantly increased.¹³

In response, Governor Brad Henry proposed and the Legislature passed a package of bills in the 2004 legislative session that added several revenue streams to the Trauma Care Fund. These included a $200 fee for failure to maintain motor vehicle insurance, $100 for drug offenses, $100 for open container offenses, $100 for driving under the influence, and $10 for other misdemeanor cases, which together were expected to raise over $14 million per year. Another bill sent a tobacco tax increase to voters, which was expected to raise another $17 million for the Trauma Care Fund.¹⁴ The plan significantly increased collections, allowing the Trauma Care Fund to distribute $15.5 million in FY 2007, nearly four times greater than its level in FY 2005.¹⁵ However, the initial revenue estimates were overly optimistic. In FY 2008, the cigarette tax provided $10.5 million rather than the $17 million projected. The additional court fees raised $8.7 million, far short of the $14 million projected.

While legislators scrambled to raise money through fees, they also cut taxes that could have provided the funding needed. Most notably, they passed HB 2660, which placed State Question 713 on the 2004 general election ballot. SQ 713 raised the tobacco tax, but also made permanent a previous cut to the highest individual income tax rate to 6.65 percent and exempted some capital gains from income tax. This was the first of several income tax cuts that eventually lowered the top rate to 5 percent in 2016. Combined, these income tax cuts since 2004 have reduced state revenues by over $1 billion every year.¹⁶

These decisions by Oklahoma lawmakers have directly resulted in a shift to reliance on court fees rather than broad-based taxes to fund critical functions of government. In a final twist, the Legislature moved $5 million from the Trauma Fund¹⁷ to the General Revenue Fund in 2014 as lawmakers sought to cover a $188 million budget shortfall.¹⁸ Over the course of ten years, lawmakers deeply cut general revenues through income tax cuts, raised much smaller amounts for specific purposes through fees, then diverted those smaller amounts back to general revenues to patch major budget shortfalls.

Court fund collections from criminal cases remained flat between 2003 and 2015

When Legislators have added civil and criminal court fees, they have done so with the intention of raising revenue. But District Court financial records provide evidence that criminal court fees, which are charged to defendants after their case is resolved, have not raised new revenues, while civil fee collections have doubled. If this is the case, any new fee on criminal cases is likely to change the distribution of collections among the courts and the various agencies that revenue is directed to, but unlikely to increase overall collections.

Although the picture is incomplete without more comprehensive data, reports obtained from the Administrative Office of the Courts (AOC) reveal clear trends in collections. Each District Court is required to submit a Court Fund Quarterly Report that details expenses and collections for that period. The AOC generously provided a sample of these reports for our analysis, covering 9 counties for Fiscal Years 2000, 2003, 2006, 2009, 2012, and 2015; annual data is provided in Appendix II. Starting in 2003, the reports include a breakdown of collections received from 17 categories of court filings, including misdemeanor, felony, traffic, civil, and various others including small claims and probate cases.

The reports reveal that collections from civil cases nearly doubled between 2003 and 2015, but collections from criminal cases remain essentially unchanged. In FY 2003, the counties in the sample collected $5.9 million from felony cases, $3.9 million from misdemeanor cases, and $4.8 million from traffic cases; in FY 2015, those numbers remained similar, at $5.6 million for felonies, $4.0 million for misdemeanors, and $4.6 million for traffic violations. Collections on civil and other types of cases, meanwhile, increased by nearly 50 percent, from $9.5 million in FY 2003 to $15.5 million in 2015, having peaked in FY 2012 at $18.0 million [An earlier version of this report included incorrect numbers in this paragraph; the correct numbers in Table D and Appendix II have not changed].

The fees associated with civil cases must be paid at the time of filing, so they are collected on all cases. This is reflected in higher collections in 2012 than 2015, when there were about a third more civil case filings in the counties studied.¹⁹

In contrast to rapidly rising civil collections, the stability of criminal case collections over 12 years is remarkable. In 2005, the Legislature passed SB 684, which allowed county sheriffs to use contractors to serve misdemeanor warrants and collect court costs. Shortly after, Court Clerk offices began entering into contracts with collection agencies in an attempt to improve collections; in 2010, the law was amended to allow contractors to also serve failure-to-pay warrants and increased the collection fee from 20 to 30 percent. District courts – at least those in our sample – have not increased collections through this arrangement, but individuals with failure-to-pay warrants now owe significantly more as a result.

Between 2003 and 2015, the Legislature made no significant changes to court fee schedules that would affect the amount of court fund assessments; the fees that were added during this time were collected for specific purposes outside the courts.²⁰ This suggests that the difference in the trends in collections is mainly due to stagnant collection rates for criminal cases rather than rising amounts assessed on civil cases. Although they have been intended as revenue measures, it’s clear that criminal court assessments are at best very inefficient in achieving that purpose. The courts continue to collect a significant amount of money each year from criminal fines and fees, and many state agencies rely ever more on those collections as appropriations are cut each year. But with collections for the courts stagnant for at least 12 years, it appears as though the state is near its limit in raising revenue through criminal fines and fees.

Footnotes

1.  Court Clerks pay some expenses related to the maintenance of the courts directly from the Court Fund, then transfer the rest to the State Judicial Revolving Fund, which in turn pays the judges and other court employees.
2. 22 OK Stat § 22-979a (2015)
3. Court Appointed Special Advocates for Children, “About CASA,” http://www.oklahomacasa.org/about-us.html
4. Fent v. State ex rel. Dept. of Human Services (2010 OK 2 236 P.3d 61), http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=457988
5. Personal communication with Jerry Fent, August 16, 2016
6. District Courts, “FY 2016 Budget Performance Review,” http://appropriation.oksenate.gov/SubPSnJ/Agencies/2015/FY16_Budget_Performance_Review_District_Court.pdf
7. Oklahoma Center for Law Enforcement Education and Training, “ 2015 Annual Report,” https://www.ok.gov/cleet/documents/Annual%20Report_2015.pdf
8. Marty Kaspar, News On 6, “Unguarded: State Agency Struggles to Regulate Security Guards,” August 17, 2016, http://www.newson6.com/story/32785359/unguarded-state-agency-struggles-to-regulate-security-guards
9. District Attorneys Council, “2016 Budget Presentation,” http://www.oksenate.gov/Committees/Cmte_Meeting_Notices%20-%202016/2016%20Budget%20Presentation%20SMA%20update%2012-11-15.pdf
10. Oklahoma Policy Institute, “Budget Trends and Outlook – November 2016,” November 18, 2016, https://okpolicy.org/budget-trends-outlook-november-2016/
11. Oklahoma Policy Institute, “FY 2017 Appropriations to Ten Largest Agencies,” June 2016, https://okpolicy.org/issues/responsible-budget-taxes/
12. Personal communication with Trent Baggett, August 16, 2016
13. Jim Killackey, The Oklahoman, “Trauma unit closing causes concern: OU Medical Center has lost $9 million in three years,” November 7, 2003, http://newsok.com/article/1954381
14. Oklahoma Office of State Finance, “Oklahoma 2004 Comprehensive Annual Financial Report,” https://www.ok.gov/OSF/documents/04cafr.pdf
15. Oklahoma State Department of Health, “Trauma Fund 2008 April Distribution Report,” https://www.ok.gov/health2/documents/NewReport-TF%202008%20Apr%2012172010.pdf
16. David Blatt, Oklahoma Policy Institute, “The Cost of Tax Cuts in Oklahoma,” January 2016, https://okpolicy.org/wp-content/uploads/cost-of-tax-cuts-issue-brief.pdf?997616
17. Jaclyn Cosgrove, The Oklahoman, “Oklahoma lawmakers move money used to pay for uncompensated trauma care from state fund,” July 9, 2014, http://newsok.com/article/4986881
18. Office of Management and Enterprise Services, “BOE approves $6.9B for appropriations,” February 18, 2014, http://content.govdelivery.com/accounts/OKOMES/bulletins/a60ef9
19. Supreme Court of Oklahoma, “2015 Annual Report,” http://www.oscn.net/static/annual-report-2015.pdf and Supreme Court of Oklahoma, “2012 Annual Report,” http://www.oscn.net/static/AnnualReport2012.pdf
20. Supreme Court of Oklahoma, “Civil Filing Fees (Effective July 1, 2003),” http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=436363 and Supreme Court of Oklahoma, “Uniform Oklahoma Fee Schedule (Effective July 1, 2014),” http://www.oscn.net/applications/oscn/DeliverDocument.asp?CiteID=474311

Go on to Part IV >>