Ms. Christina Moreno BanderaCounty Auditor Post Office Box 563 Bandera, Texas 78003

Dear Ms. Moreno: 

## KEN PAXTON ATTORNEY GENERAL OF TEXAS
May 23, 2016
OpinionNo. KP-0091 Re: Whether article III, section 52 of the Texas Constitution prohibits a county from providing financial assistance to a nonprofit organization (RQ-0079-KP)

You askwhether a countymay "enterinto an agreement withBoys and Girls Club without violating Article III, Section 52 ofthe Texas Constitution." 1 You explain that the Boys and Girls Clubs ofBandera County have "requested financial assistance," and you question whether the county has statutory authority to provide such funding. Request Letter at 2. Article III, subsection 52(a) ofthe Texas Constitution provides: Except as otherwise provided by this section, the Legislature shall have no power to authorize any county, city, town or otherpolitical corporation or subdivision ofthe State to lend its credit orto grant public money or thing of value in aid of, or to any individual, association orcorporation whatsoever

.... TEX. CONST. art. III, § 52(a). The purpose ofthis provision is "to prevent the gratuitous grant of [public] funds to any individual, corporation, or purpose whatsoever." 

### Byrdv. City of Dallas, 6 S.W.2d 738, 740 (Tex. 1928). Spending public funds for a legitimate public purpose to obtain a clear public benefit, however, is not an·unconstitutional grant ofpublic funds. 

### See Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 740 (Tex. 1995). Furthermore, an expenditure to directly accomplish a legitimate public purpose is constitutional even though it incidentally benefits a private interest 

### See Tex. Att'y Gen. Op. No. GA-0078 (2003) at 5 (concluding thatthe incidental benefit to private attorneys would not render the provision of online legal research services at a county law library unconstitutional). The Texas Supreme Court has articulated a three-part test to determine whether a transfer offunds from a public entity to a private entity satisfies the limitations ofarticle III, subsection

1Letter from Ms. Christina Moreno, Bandera Cty. Auditor, to Honorable Ken Paxton, Tex. Att'y Gen. (Nov. 24, 2015), https://www.texasattomeygeneral.gov/opinion/requests-for-opinions-rqs ("Request Letter").Ms. Christina Moreno

- Page 2 (KP-0091)

52(a). See Tex. Mun. League Intergov 'ti RiskPool v. Tex. Workers' Comp. Comm 'n, 74 S.W.3d 377, 384 (Tex. 2002). The entity making the transfer must (1) ensure that the transfer is to "accomplisha publicpurpose, notto benefitprivateparties; (2) retainpublic control overthe funds to ensure that the public purpose is accomplished and to protect the public's investment; and (3) ensure that the political subdivision receives a return benefit." Id. Relatedto the first prong, whichrequires thatthe monetarytransfer serve a public purpose, you ask whether a specific statute "would allow Bandera County to fund Boys and Girls Club of Bandera County." Request Letter at 2. A prior opinion of this office addressed a county's provision offunding to specific nonprofit corporations that provided various services to residents ofthe county. See Tex. Att'yGen. Op. No. JC-0439 (2001). Thatopinionaddressed, among other things, whether a county could provide $3,000 to Big Brothers and Sisters in exchange for the servicesthatitprovidedto childrenfrom single-parentfamilies inthe county. Id. at4. The opinion notedthat section 264.006 ofthe Family Code expressly empowers a county commissioners court to "provide for services to and support ofchildren in need ofprotection and care." TEX. FAM. CODE § 264.006; see Tex. Att'y Gen. Op. No. JC-0439 (2001) at 5. This office concluded that "section 264.006 authorizes the County to transfer funds to
... Big Brothers and Sisters" to the extentthatthe organizationprovides services to and support for children who need protection and care. Tex. Att'y Gen. Op. No. JC-0439 (2001) at 5. Attached to your request, you provide a document from the Boys and Girls Clubs of Bandera County that describes some ofthe services they provide, including, among others, afterschoolprogramsfor grade-school childrento obtainhomework assistance and supervision.2 Under particularfacts, the provision ofafter-school care for children from low-income families couldbe a statutorily-authorized service for children inneed ofprotection and care. Factfinding is beyond the scope ofanattorney general opinion, and we therefore are unable to determine whether, infact, an organization is providing the services authorized by a particular statute. See Tex. Att'y Gen. Op. No. GA-0106 (2003) at7 ("This office cannotfind facts orresolve fact questions in an attorney general opinion."). However, to the extent that the Boys and Girls Clubs of Bandera County provide services and support to children in the county in need ofprotection and care, section 264.006 ofthe Family Code could serve as authority for Bandera County to provide financial assistance to the organizations in furtherance ofa statutory public purpose ofthe county, so long as the additional constitutional requirements are met. In additionto serving apublicpurpose, acountytransferringpublic funds to aprivate entity must retain public control overthe funds to ensure that the public purpose is accomplished and to protect the public's investment. See Tex. Mun. League Intergov 'ti RiskPool, 74 S.W.3d at 384. Depending on the specific transfer of funds at issue, a contractual agreement outlining requirements that the receiving entity must comply with in exchange for the funds may provide sufficient control over the funds. See Key v. Comm 'rs Ct. of Marion Cty., 727 S.W.2d 667, 669 (Tex. App.-Texarkana 1987, no writ) (noting that the transfer at issue did not involve a contractual agreement for services to retain formal control). A countytransferringpublic funds to

2See generally Request Letter attachment from Boys & Girls Clubs of Bandera Cty. (on file with the Op. Comm.).Ms. ChristinaMoreno

- Page 3 (KP-0091)

a private entity must also ensure that the county receives a return benefit. See Tex. Mun. League Intergov 'ti RiskPool, 74 S.W.3d at 384. The return benefit received by the county need not be monetary, but could instead be the accomplishment ofa county's public purpose. See Tex. Att'y Gen. Op. No. GA-0076 (2003) at 7. The determinationofwhetheraparticularexpenditure satisfies the three-part test is for the commissioners court to make in the first instance, subject tojudicial reviewfor anabuse ofdiscretion. Tex. Att'yGen. Op. No. GA-0843 (2011) at2; see also Comm 'rs Ct. of Titus Cty. v. Agan, 940 S.W.2d77, 80 (Tex. 1997) (recognizing a districtcourt's supervisory control over a commissioners courtthat abuses its discretion).Ms. ChristinaMoreno

- Page 4 (KP-0091)

SUMMARY A county entering into an agreement with Boys and Girls Clubs to provide the organizations funding will not violate article III, subsection 52(a) ofthe Texas Constitution as long as the county (1) ensures thatthe transfer is to accomplish a public purpose ofthe county, not to benefit private parties; (2) retains public control over the funds to ensure that the public purpose is accomplished and to protect the public's investment; and (3) ensures that the county receives areturn benefit. To the extent that the Boys and Girls Clubs of Bandera County provide services and support to children in need of protection and care, section 264.006 ofthe Family Code authorizes Bandera County to provide financial assistance to the organizations infurtherance ofa statutorypublic purpose ofthe county, so long as the other constitutional requirements are met.

JEFFREY C. MATEER First Assistant Attorney General BRANTLEY STARR Deputy First Assistant Attorney General VIRGINIA K. HOELSCHER Chair, Opinion Committee Very truly yours,

# ~?~ KEN PAXTON Attorney General ofTexas