LITTLE ROCK, Ark. ― A Hot Springs man asked the Arkansas Supreme Court on Thursday to revive his lawsuit challenging a university’s $700,000 loan to the Oxford American literary magazine, arguing that the textbook revenue and other funds that were used are the public’s money.
Justices heard oral arguments in James McCafferty’s lawsuit over the University of Central Arkansas’ loan to the quarterly magazine based in Little Rock. McCafferty, a retired attorney, is asking the court to reverse a lower court’s dismissal of his lawsuit.
UCA loaned the money to the magazine between 2004 and 2008, drawing the funds from profits the school has made from its dorms, bookstore, cafeteria and other auxiliary operations. The magazine has repaid $276,000 of the loan, a spokeswoman for the school said.
A Pulaski County judge dismissed McCafferty’s lawsuit after the magazine argued he didn’t have standing to challenge the loan since the money didn’t come directly from taxpayer funds. McCafferty’s attorney told justices the loan is still considered public money since it was generated on a taxpayer-supported college campus.
“We contend that the funds that are generated by a public institution from student fees and things like that, they do arise from taxation because they are produced from public facilities, buildings and equipment that were purchased and paid for by taxpayer funds,” Attorney Ben Bancroft said.
The Oxford American has had an affiliation with UCA, located in Conway, since 2004 and had received the loans from the school as it struggled financially. The magazine began repaying the loans to the school in 2012 and last made a payment in September.
Michael Thompson, an attorney for the magazine, told the court that argument goes against past court rulings on “illegal exaction” suits that taxpayers can file over public funds. Thompson said if McCafferty wants standing to challenge the loan, then state law or the Constitution would need to be changed.
“Our case law does not require us to trace back infinitely in time through the family tree of the funds at issue to see if there’s any tax dollar ever to be found there,” Thompson said.
Thompson said any other challenge to the loan would have to come from a prosecutor, the Legislature or some other public entity. Bancroft said if justices agreed, that would mean public universities wouldn’t face any limits on how to spend such funds.
Justices did not say when they would rule. Interim Chief Justice Howard Brill indicated skepticism about McCafferty’s attempt to revive the suit.
“Your argument, perhaps, is so broad on standing that you’re opening the door to all types of lawsuits that we have not supported before,” Brill said.
