Opinion
FEBRUARY 2, 1998
90 — A — 2 — PUBLIC FUNDS LOAN, PLEDGE, OR GRANTS
La. Const. Art. 7 § 14(A) La. Const. Art. 5 § 26 La. Const. Art. 7 § 14(B) LSA-R.S. 16:1 La. Const. Art. 7 § 14(C) La. C.Cr.P. Art. 61
A review of Art. 5 § 26 of the Louisiana Constitution, LSA-R.S. 16:1 and La. C.Cr.P. Art. 61 imposes no legal duty on the District Attorney to set up counseling and vocational training for middle school students who have been suspended from the public school system. Therefore, Article 7 § 14 would prohibit the donation of any funds directly or by a cooperative endeavor to the Jefferson Coalition for Alternative Schools for counseling and vocational training for middle school students who have been suspended from the public school system.
The Honorable Stephen T. Wimberly First Assistant District Attorney Twenty-Fourth Judicial District Courthouse Annex Gretna, LA 70053
Dear Mr. Wimberly:
I am in receipt of your request for an Attorney General's opinion on behalf of the Jefferson Parish District Attorney. You seek an opinion as to whether the Jefferson Parish District Attorney can contribute to the funding of the Jefferson Coalition for Alternative Schools (Charter School). You have indicated that the purpose of this school is to provide counseling and vocational training for middle school students who have been suspended from the public school system. By telephone you have indicated that this school is part of the public school system. You are concerned with the legality of such a contribution by the District Attorney based on La. Const. Art. 7, § 14 which prohibits the donation of any funds to or for any person, association, or corporation, public or private.
La. Const. Art. 7, § 14(A) provides the following:
Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. Neither the state nor a political subdivision shall subscribe to or purchase the stock of a corporation or association or for any private enterprise.
The Supreme Court has interpreted Art. 7, § 14 to be violated whenever the State or a political subdivision seeks to give up something of value when it is under no obligation to do so. City of Port Allen v. Louisiana Municipal Risk Management Agency, 439 So.2d 399 (La. 1983).
As discussed in Attorney General Opinion No. 96-109:
The jurisprudence of this state also makes it clear that the worthiness of the contemplated use of public funds is immaterial to the constitutionality of a transfer of public funds. In James v. Rapides Parish Police Jury, 113 So.2d 88 (La.App. 2nd Cir. 1959), the court interpreted La. Const. (1921) Art. IV, Sec. 12, a provision almost identical to the present Art. VII, Sec. 14(A). Therein, the court stated:
"These specific prohibitions have been wisely implanted in our fundamental law, for it is conceivable that without such prohibitions the state, or a political subdivision thereof, might so deplete the public funds by contributions to almost innumerable worthy private and semi-public enterprises as to seriously impair the necessary expense of conducting more prosaic but more important government functions." 113 So.2d at p. 93.
La. Const. Art. 7 § 14(B) provides certain exceptions to the prohibition contained in Sec. 14(A) and states the following in pertinent part:
Nothing in this Section shall prevent (1) the use of public funds for programs of social welfare for the aid and support of the needy; . . .
Although a contribution or grant to a charter school to provide counseling and vocational training for middle school students who have been suspended from the public school system appears to be for a worth while cause, it cannot be characterized as "needy". As discussed in Attorney General Opinion No. 94-157, the term "needy" typically has been interpreted as impoverished or indigent. Also, see Attorney General Opinion Nos. 87-587, 96-109 and 92-543, which are attached.
Article 7, § 14(C) of the Louisiana Constitution states the following concerning a cooperative endeavor:
For a public purpose, the state and its political subdivisions or political corporations may engage in cooperative endeavors with each other, with the United States or its agencies, or with any public or private association, corporation, or individual.
The author of Attorney General Opinion 95-109 opined:
Paragraph (C) of Section 14 authorizes the state and its political subdivisions (i.e., the city) to engage in cooperative endeavors for a public purpose with other governmental agencies, public or private associations and corporations and/or individuals. However, paragraph (C) merely supplements the prohibition against donations contained in Paragraph (A). It does not create an exemption or exception from the general constitutional norm. In other words, the cooperative endeavor must meet the general standards for the non-gratuitous alienation of public funds established in Paragraph (A). City of Port Allen v. Louisiana Risk Management, et al, 439 So.2d 399 (La. 1983) and Attorney General Opinion No. 90-651.
As stated in Attorney General Opinion 96-291:
The jurisprudence and prior opinions of this office have recognized a threefold test for cooperative endeavors to be deemed valid under our Constitution. The expenditure or transfer of public funds or property must be based on a legal obligation or duty (i.e., a valid statute, ordinance, charter or contract). The expenditure must also be for a public purpose. Finally, the expenditure must create a public benefit proportionate to its cost (i.e., the amount expended). Beard-Poulan, Inc. v. Department of Highways, 362 F. Supp. 547 (W.D. La. 1973) and Attorney General Opinion Nos. 93-787, 92-222, 92-127 and 90-651. In our opinion, cooperative endeavor agreements are constitutionally sanctioned as long as the agreements meet this three part test.
A review of Art 5, § 26 of the Louisiana Constitution, LSA-R.S. 16:1 and La. C.Cr.P. Art. 61 imposes no legal duty on the District Attorney to set up counseling and vocational training for middle school students who have been suspended from the public school system. Therefore, Article 7 § 14 would prohibit the donation of any funds directly or by a cooperative endeavor to the Jefferson Coalition for Alternative Schools for counseling and vocational training for middle school students who have been suspended from the public school system.
I hope this opinion has sufficiently addressed your concerns. If I can be of further assistance, please let me know.
Very truly yours,
RICHARD P. IEYOUB ATTORNEY GENERAL
BY: ___________________________ BETH CONRAD LANGSTON ASSISTANT ATTORNEY GENERAL
RPI/BCL/sc
Attachments
RECEIVED: October 14, 1997BR RECEIVED: October 29, 1997SH RELEASED:
BETH CONRAD LANGSTON ASSISTANT ATTORNEY GENERAL
State of Louisiana
Opinion No. 87-587
September 8, 1987
90-A-2 PUBLIC FUNDS, GRANTS OR LOANS — General discussion of Article 7 Section 14 of the Louisiana Constitution of 1974.
Art. 7, Sec. 14, Art. 7, Sec. 14 (b)
Mr. Kern A. Reese, Chairman Board of Commissioners Regional Transit Authority Suite 1600 Ten-O-One Howard Bldg. New Orleans, LA. 70113
Dear Mr. Reese:
You requested an opinion from this office concerning the legal guidelines for donations by political subdivisions. The questions raised by your correspondence were:
1. Under what circumstances may a political subdivision make donations to other government entities or charitable organizations?
2. Under the exemption concerning "use of public funds for programs of social welfare for the aid and support of the needy", does the term "funds" include property and other things of value?
3. Under the criteria for a "cooperative endeavor", what is the permissible disparity in values between the donation made and the benefit received by the political subdivision?
Donations of public funds or property is generally barred by the Louisiana Constitution of 1974 Article 7 Section 14 which provides:
(A) Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. . . .
Under this provision, the donation of public funds or property to public or private entities is unconstitutional. This includes government entities and charitable organizations. However, there are two narrow exceptions to this prohibition: programs of social welfare and cooperative endeavors serving a public purpose.
Programs of social welfare. Article 7 Section 14 (B) of the Louisiana Constitution of 1974 permits "the use of public funds for programs of social welfare for the aid and support of the needy; . . ." the term "needy" typically has been interpreted as impoverished or indigent. This provision has been construed to include the use of public property as well as finds for social welfare purposes.
Cooperative endeavors. Subpart C of Article 7, Section 14 provides:
For a public purpose, the state and its political subdivisions or political corporations may engage in cooperative endeavors with each other, with the United States or its agencies, or with any public or private association, corporation, or individual.
In Op.Atty.Gen. No. 84-832, the law was interpreted to allow contribution of funds to a non-profit corporation for a transit feasibility study. In Op.Atty.Gen. No. 83-494, we stated that political subdivisions could enter into a cooperative endeavor to provide financial assistance to the Cane River Waterway District.
However, the mere existence of a "cooperative endeavor" does not automatically justify the donation of public funds or property. The criteria for a cooperative endeavor include: (a) that the endeavor serve a public purpose, (b) that the community receive a direct benefit, and (c) that the value of the donation is commensurate with the benefit received. Op.Atty.Gen. No. 83-1044. Cooperative endeavors are determined on a case-by-case basis.
Previous opinions of this office have addressed the application of these criteria. Op.Atty.Gen. No. 85-245 concluded that the after hours use of school facilities by private individuals was unconstitutional absent a cooperative endeavor. Op.Atty.Gen. No. 83-783 and 83-1044 stated that public funds could not be used to support non-profit educational and cultural organizations unless the criteria for cooperative endeavor could be met.
While there are no specific limits on the disparity in values between the donation made and the benefit received, some correlation in values must exist for the donation to be permissible. In Op.Atty.Gen. No. 83-1044, this office concluded that those values must be commensurate. Clearly, a situation requiring a substantial donation of public funds yet realizing only nominal or limited benefit would not meet the criteria for cooperative endeavors.
In conclusion, public funds and property may not be loaned, pledged or donated for any purpose unless pursuant to a social welfare program for the indigent or a cooperative endeavor which serves a public purpose and realizes direct benefit to the community. The benefit received must be commensurate in value with the funds or property donated. These exceptions are to be determined on a case-by-case basis.
Hopefully, this opinion will render some assistance in forming your policy regarding donations. If our office can be of further assistance to you, do not hesitate to contact us.
Sincerely yours,
William J. Guste, Jr. Attorney General
By: Kendall L. Vick Assistant Attorney General Chief Counsel
Office of the Attorney General State of Louisiana