Opinion ID: 1381085
Heading Depth: 1
Heading Rank: 2

Heading: the status of federal and state funds which stand deposited in the state treasury

Text: The Attorney General contends that both federal and private funds, when accepted by the Department and deposited in the state treasury, become state funds subject to the proscriptions of Art. 10 § 15, Okl.Const. This is also the view he expressed in three of his opinions in which the Department was cautioned that disbursement of federal or private funds to any company, association or corporation was a violation of the proscriptions in Art. 10 § 15, Okl.Const. [9] We reject this view. Federal money deposited in the state treasury pursuant to some grant-in-aid program is held in trust for a specific purpose. Like other custodial funds, it retains its original legal character. [10] The legislature wields no authority over such funds. It may not subvert congressional policy by diverting the money to another purpose. [11] Once accepted by the state, federal funds stand burdened with a trust which follows them from the moment of the deposit. Private funds, when accepted by and paid into the state treasury for the purpose of matching federal funds, become similarly burdened with the very same trust terms. This is so because the conditions of the federal grant also affect, and impress themselves upon, the expenditure of matching funds. [12] The terms of 62 O.S.Supp. 1979 § 41.8, cited by the Attorney General as authority for his position, provide that federal funds deposited in the state treasury shall be subject to the other fiscal controls in the budget act. This phrase doubtless refers to a course of procedure which governs the state treasurer  as custodian of the fund  in keeping records and making payments to claimants. The agency responsible for receiving and disbursing the funds does not, by virtue of this procedure, lose control over the federal funds for which it is responsible, nor over the manner in which they are expended or managed. When this cause was initially commenced here, the terms of Okla.Sess.L. 1980, Ch. 349 § 17 [13]  the statute then in force  prohibited the Department from contributing to, subsidizing, or giving away any real or personal property to a railroad or any other association that is not owned by the State of Oklahoma. [Emphasis added]. The quoted interdiction was withdrawn and excised from the law when it was left out of the version passed in 1981. The 1981 Act, which re-enacted, with major enlargements, nearly all the provisions of the prior Act, was doubtless intended to be all-inclusive. It contained a repealer of all laws or part of laws in conflict herewith. [14] Thus the 1981 Act presently in effect does not contain a restriction on the use of state funds in the programs to be launched. We so hold.