GREENVILLE, S.C. - The state Supreme Court has ruled a financing plan used by some districts to build schools after voters reject bond referendums is legal.

The Colleton County School District, which defended the plan passed earlier this year in court, transferred ownership of the schools it needed built or renovated to the South Carolina Association of Governmental Organizations, which created a corporation to fund the construction and issued bonds.

The district then bought the land back by making annual payments.

Greenville County schools and other smaller districts have used similar plans to build schools at a faster pace or get new facilities after voters reject bond referendums.

Colleton County Taxpayers Association, the South Carolina Public Interest Foundation and others had sued, saying the deal violated the state's constitutional limit on the amount of debt a district can incur.

But Monday, the state Supreme Court ruled the plan doesn't meet the current law's definition of a financing agreement, according to a decision written by Chief Justice Jean Toal.

Lawmakers have passed legislation that includes installment-purchase plans like the one in Colleton County in a law limiting school district debt. That will make the practice illegal starting Jan. 1, but school districts that have a plan in place before then can use the process.

Under the state's Constitution, school systems may not enter into financing agreements without voter approval if the agreements and the current system's debt exceed 8 percent of the assessed value of taxable property in the district.

Pickens County School District also has used a similar system to finance new schools.

"I am so happy for the community that the Supreme Court has issued a favorable ruling," School Board Chairwoman Shirley Jones said. "The district can now proceed in good faith to provide much-needed facilities for the children, the teachers and the community."

Alex Saitta, a Pickens County School Board member who opposed his district's plan, said he was disappointed with the ruling.

"By using the dummy corporation, the lawyers cooked up a legal scheme to circumvent the Constitution and take away the citizens' right to vote on all this borrowing," he said. "Despite the ruling, this scheme is still wrong and that's why the Legislature outlawed it as of Jan. 1."