The General Assembly is within its rights to divert civil forfeiture proceeds for law enforcement purposes, notwithstanding a constitutional requirement that all forfeitures be paid to the Common School Fund, the Indiana Supreme Court has ruled.
In a sharply divided opinion, a majority on the state's high court said the mandate to transfer forfeiture funds to the school account does not mean every penny of every forfeiture must be put toward education.
Rather, the Legislature is permitted to direct that some of the revenue be paid to local police and prosecutors to cover their costs of acquiring the property seized in connection with alleged criminal activity, according to the decision written by Justice Mark Massa.
In so doing, the Supreme Court affirmed both a 2011 law allowing forfeiture receipts to be used for reimbursement of case-specific "law enforcement costs," as well as a 2018 statute establishing a formula for distributing forfeiture receipts that caps any transfer to the Common School Fund at 10%.
Massa observed that the practice of diverting forfeiture funds for expenses extends well before and well after the 1851 ratification of the Indiana Constitution, including a specific grant in the 1836 law incorporating Michigan City permitting the locality to retain "all expenses incurred in prosecuting for the recovery of any penalty or forfeiture."
He also pointed to an 1852 law, crafted by some of the same men who had just written the Constitution, permitting "necessary expenses" be deducted from the proceeds of county seminary sales that also were required be paid to the Common School Fund.
"We hold that the General Assembly may decide how and when forfeiture proceeds accrue to the Common School Fund," Massa said.
Chief Justice Loretta Rush, who grew up in Munster, agreed in a separate opinion that the Legislature can permit deductions from civil forfeiture proceeds before the money is paid to the Common School Fund.
However, she said the deductions must be calculated on a case-by-case basis and reflect actual law enforcement expenses.
The distribution scheme enacted in 2018 guaranteeing a significant cut of every forfeiture to police and prosecutors is unconstitutional, Rush said.
Meanwhile, Justice Geoffrey Slaughter, a Crown Point native, said in a separate opinion that the Supreme Court should not even have considered this case, since the plaintiffs did not suffer an "individual injury" giving them standing to file suit.
The case was brought by Jeana and Jack Horner after their vehicles were seized by Indianapolis police in 2013 in connection with a marijuana investigation that ultimately resulted in no criminal charges.
They filed suit as "Indiana citizens and taxpayers" seeking to strike down what their Institute for Justice attorneys described as "Indianapolis' profit-fueled forfeiture program," which previously kept for itself all civil forfeiture proceeds and paid nothing to the Common School Fund.
Sam Gedge, an attorney at the Institute for Justice, said the Indiana Constitution is clear that all money seized by law enforcement must go to benefit the state's schools, not the police and prosecutors who seized it.
"But the court disagreed, and in doing so, preserved the perverse profit incentive baked into the state’s civil forfeiture law," Gedge said.
The Indiana Supreme Court still is weighing a separate civil forfeiture case, involving a $42,000 Land Rover seized in connection with a crime whose maximum fine is $10,000, after the U.S. Supreme Court ruled the Eighth Amendment's prohibition on "excessive fines" applies to civil forfeiture proceedings.
A ruling in that case could come by the end of the year.
Indiana's Common School Fund no longer directly supports classroom instruction.
It now operates as a revolving loan fund to help schools pay for technology upgrades and to meet emergency education needs, such as covering revenue shortfalls at the Gary Community School Corp.