According to the the March 5th Commission Minutes the Commissioners voted to write a letter to KCAMP (the county’s insurance company) and request that the county be reimbursed for $5,335.67 from the Treasurer’s $25,000 bond.  It appears that this amount is the amount that was underpaid by Klein Products (plus additional) interest in Terry Sercer’s report details. We previously discussed this underpayment and pointed out that if it was a computer error, there may be difficulties recovering this from the bond. It isn’t clear (at least to us) whether or not a computer mistake in calculating interest could actually be recovered from the Treasurer’s bond.

If you read  KSA 79-1703 it says:

Except as provided in subsection (b) or as otherwise provided by law, no board of county commissioners or other officer of any county shall have power to release, discharge, remit or commute any portion of the taxes assessed or levied against any person or property within their respective jurisdictions for any reason whatever.

To recover money from the bond the county will need to show that the Treasurer “released, discharged, remitted or commuted” a portion of the taxes levied against the property. What isn’t clear is whether or not an error–particularly if that error can be shown to be caused by a computer–would fall under any of those categories. It is possible that there are other laws that come into play here as well that the county is basing their action on.

However, there was $1,130 that was “forgiven” by the Treasurer on property in order to help a real estate transaction proceed. This definitely falls within the definition of KSA 79-1703, but it doesn’t appear that this amount is being included in the request for a payout from the bond. (It is possible that the requested amount includes a portion of the miscalculated interest from Klein Product as well as the full $1,130 amount, but that seems unlikely.)

Further, the law seems to indicate that the process to recover money from the bond requires a lawsuit:

Any taxes so discharged, released, remitted or commuted may be recovered by civil action from the members of the board of county commissioners or such other officer and the sureties of their official bonds at the suit of the attorney general, the county attorney, or of any citizen of the county or the board of education of any school district a part of the territory of which is in such county, as the case may be, and when collected shall be paid into the county treasury to be properly apportioned and paid to the county, municipalities, school districts and other taxing subdivisions entitled thereto

This suggests that if the county or a citizen were to sue the Treasurer to recover the $1,130 and win then the fund would be able to be recovered from the bonds. However, if such a lawsuit were to succeed, a more likely scenario would be that the Treasurer would simply pay the $1,130. In fact, if a lawsuit were filed, it might make sense to simply pay the $1,130 unless the Treasurer thought it was reasonable to expect the lawsuit to fail. Our understanding of the public bond is not that it offers a type of insurance so the public (in this case the county) can quickly recover their fund through the bond. The bonding company still has the right to recover the fund from the person bonded.

If a bonding company has to pay out for someone once, it stands to reason that it may be very difficult to get another bond on the same individual. If someone can’t be bonded, it appears that this would prohibit them from being able to occupy a public office that required a surety bond.

According the the commission minutes, the county is not suing the Treasurer. They are writing a letter to KCAMP requesting funds from the bond directly. It is possible that there is an agreement in the bond that allows this in order to prevent expensive legal proceedings, but it appears to be a different procedure than outlined in the law quoted above.