Court Opinion

ID: 4130470
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:04:42.457214+00
Date Added: 2024-06-11T14:34:13.755765
License: Public Domain

December     28, 1988

Mr. Alfred F. Hurley                         Opinion    No.   JM-999
Chancellor
University  of North Texas                   Re:   Use of Higher Education
Texas College of Osteopathic                 Assistance    Fund established
   Medicine                                  by   article VII, section 17,
P. 0. BOX 13737                              of the Texas Constitution     to
Denton, Texas    76203-3737                  renovate   facilities   at  the
                                             University   of North Texas
                                             (RQ-1475)

Dear   Mr.    Hurley:

      you ask several questions       involving  the    interpretation
of article VII, section 17, of the Texas Constitution,            which
creates the Higher Education       Assistance   Fund.    Article    VII,
section 17, of     the Texas     Constitution   was   adopted by     the
voters in 1984.      &=   H.J.R.   19, 0 1, Acts 1983, 68th       Leg.,
at 6701.     It   appropriates     $100 million     per   year   for    a
college construction      fund for    26 specified   institutions     of
higher education     including    the University     of North    Texas.
The eligible    institutions    may use these funds

             for the purpose of acquiring         land either with
             or   without      permanent     improvements,       con-
             structing    and   equipping    buildings     or   other
             permanent     improvements,       major    repair      or
             rehabilitation        of    buildings      or      other
             permanent    improvements,      and   acquisition      of
             capital equipment,       library books and       library
             materials.

Tex.   Const.     art.   VII,   g 17(a).

       This provision     also permits     the governing     board    of
each institution    to issue    bonds and notes      for most of     the
purposes   for which the fund may be used.        Id. 5 17(e).       The
institutions   designated    to benefit from the fund may not, as
a general rule,     receive additional     funds   from the     general
revenue of the     state "for    acquiring   land   with or     without
permanent    improvements,     for    constructing     or    equipping
.buildings or   other    permanent   improvements,     or   for   major
repair and rehabilitation       of buildings     or other    permanent

                                           P. 5121
Mr.    Alfred    F. Hurley        - Page   2     (JM-999)

improvements."       Id.  5 17(j).   There    are exceptions     for
appropriations    made to replace an uninsured    loss due to fire
or natural     disaster  and   for appropriations    by  two-thirds
vote of the legislature      in cases of demonstrated   need.

       Your     questions     concern    the   interpretation       of
subsection     (f) of     the   constitutional   provision      which
restricts   the use of the Higher Education     Assistance    Fund as
follows:

               (f) The     funds     appropriated     by    this
           section may not      be used for    the purpose     of
           constructing,       equiphx-f,     repairing,
           rehabilitating     buildings    or other   per-mane::
           improvements    that are to.be used for       student
           housing,      intercollegiate      athletics,       or
           auxiliary   enterprises.

Tex.    Const.     art.    VII,    § 17(f).

        Your     first    question    is as follows:

           May   the   University     use   Higher     Education
                                                                               .-
           Assistance    Fund (HEAF) dollars to reno vats
           portion of a building used          for both     educaf
           tional    and   general      (E&G)   and     auxiliary
           purposes   when that portion which is renovated
           with HEAF     funds is    a separate     area of     the
           building   and    is used     exclusively     for    E&G
           purposes   100%    of   the time;    e.cr.8 renovate
           available   space     in a dormitory     into    class-
           rooms, labs, or faculty offices?

      The educational     and general     functions   for which        state
colleges   and universities      receive legislative      appropriations
are defined     at length     in the instructions         for    preparing
and submitting      appropriations      requests     published      by   the
Legislative     and   Executive      Budget    Offices.      See    General
Appropriations    Act, Acts 1987, 70th         Leg., 2d C.S., ch.        78,
at 726.    Included are      expenditure     items relevant to       giving
instruction,    administering      the institution,       and    providing
support    necessary     to   operate     an   institution      of   higher
education.     Excluded   are student services       for which fees are
authorized   under section 54.503 of the Texas Education                Code
and all auxiliary       enterprise    operations     and costs      related
thereto.    Governor's      Budget    Office    & Legislative        Budget
Office,    Detailed   Instructions     for Preparing     and    Submitting
Requests   for   Legislative      Appropriations     for   the     Biennium
Beginning   Sept. 1, 1987,       Supplement    A, "Definitions      of   the

                                               P. 5122
Mr. Alfred    F. Hurley   - Page   3     (JM-999)

Elements of    Institutional   Costs.U'    See also V.T.C.S.     art.
6252-5c,   5 l(1)    (defining    "auxiliary    enterprise"   as
business   activity    conducted      at  institution    of   highez
education  that provides    a service to institution     but is   not
funded through appropriated      funds).

      A former    constitutional   provision   also  designated     as
article VII, section 17, was adopted in 1947 and repealed           in
1982.   See   S.J.R. No.     4, Acts 1947,    50th Leg.    at   1184;
H.J.R. No. 1,     5 3, Acts 1982,    67th Leg., 2d    C.S., at     52.
This provision    established    a state property   tax to    finance
construction   at 17 universities.      The tax was used to create
a special   fund

          for the   purpose of      acquiring,     constructing
          and initially      equipping   buildings     or   other
          permanent     improvements     at    the   designated
          institutions     of   higher    learning      provided
          that none of the DrOCeedS
                                 . *        of  this tax    shall
          be   used   f                   enterDriseg     . . . .
          (Emphasis azieda)

S.J.R. No. 24, Acts       1965, 59th Leg.,        at 2197.     The   under-
lined language      was   added by     a   1965 amendment       to   former
article VII,      section 17,     of   the Texas      Constitution.       It
imposed    a restriction       on    the   expenditure      of   constitu-
tionally   authorized    tax revenues similar to the restrictions
currently    imposed by subsection       (f) of article VII,        section
17, of    the Texas     Constitution.        Opinions   of   this    office
which discussed     the restriction      under the former version         of
article VII, section 17, assist           us in answering      your   first
question.

      The phrase "buildings      or other permanent       improvements@'
as used in former article        VII,.section   17, includes a wing
        building         other    permanent    structure.       Attorney
gkezal    Opinion V?427     at 8 (1952). Attorney      General Opinion
H-1248   (1978)   established     that   a stadium     and   a special
events    center   for   intercollegiate      athletic     events    were
auxiliary   enterprises   within the constitutional        restriction.
It then considered      whether the constitutionally         authorized
tax funds could be used to pay for a portion of a stadium or
special events center       designated   for educational       purposes,
such as classrooms.      The opinion stated as follows:

          We believe that     these funds may   be used         to
          fund a part     of   a building,    if there          is
          actually    a  separation     of auxiliary           and
          educational   uses.   How this actually will          be

                                       P- 5123
Mr.   Alfred    F. Hurley   - Page    4     (JM-999)

                                                                              -.

           accomplished   in a given     case will depend      on
           facts as to the     design and operation      of   the
           building.     Since   we   do   not   resolve    fact
           questions   in the   opinion process, we       cannot
           give a comprehensive     answer to your question.

Attorney      General   Opinion    H-1248   at 2 (1978).

      The University    may use Higher Education        Assistance    Fund
dollars to construct,      repair,     or rehabilitate     buildings     or
other permanent     improvements,    which    may include a wing,        an
addition,   or other     portion of     a building     used for     educa-
tional purposes.      Tex.    Const. a*.      VII, 5 17(a):      Attorney
General Opinion      H-1248     (1978); see also      Attorney    General
Opinion MW-101     (1979).    Accordingly,    these funds may be used
to renovate   a separate portion of a building           into facilities
used exclusively     for educational      and general purposes,       such
as classrooms,      labs,    or   faculty    offices.      Although     the
renovated   portion    of the     building    was formerly      used    for
auxiliary   purposes   and the rest of the building         will be used
for auxiliary    purposes    in the future, there is no         violation
of subsection    (f) of article       VII, section 17, of the        Texas
Constitution.

      Subsection    (f) bars the use of constitutional          funds    to
construct,     repair    or  rehabilitate      buildings     "or     other
permanent   improvements     that    are   to be    used    for   student
housing,    intercollegiate      athletics,     or   auxiliary      enter-
prises.n    Id.    § 17(f) (emphasis      added).    This    restriction
applies to a building QI a permanent          improvement    other    than
a building   that    will be    used in the     future for      auxiliary
purposes.    As   we have    already     pointed out,     a   "permanent
improvement"    may   be a wing      or other     separate part      of   a
building.    In    this case,    it is the part        of the    building
renovated     for    education    and     general    purposes.        This
permanent   improvement     will    not   be used     for   any   of    the
purposes   set out in article VII, section 17(f) of the              Texas
Constitution.

       Your    second   question    is as follows:

           May a university     use HEAF funds to renovate       a
           portion of a facility        used for both E&G     and
           auxiliary   purposes     when the    purpose of    the
           renovation    and    the   ultimate     use  of   that
           portion of the facility which is renovated           is
           exclusivelv   used    for    educational    purposes;
           e.s., when fold-up desk        arms are added to      a
           university's     theatre      to   provide    writing               -.

                                          P. 5124
Mr.   Alfred    F. Hurley   - Page   5     (JM-999)

          surfaces   s~o that the theatre may be used as a
          large classroom     for a.portion   of a day?     E&G
          appropriations     are used to support the     faci-
          lity partially    because    of its   instructional
          (E&G) use.

      You inform us     that the University    of North Texas    has
used HEAF funds to install fold-up desk arms on the seats in
its University    Theatre.   The theatre was previously     used for
auxiliary   purposes   100% of the time but is now reserved       for
several hours each weekday for use as a classroom.          You also
state that the fold-up desk arms have no use other than           for
instructional    purposes.   We   will assume   that these    state-
ments are    correct    and  base   our  answer   to   your   second
question on them.

       We believe that the literal language of subsection               (f)
of article     VII, section      17, prevents     this expenditure       of
HEAF funds.     The    funds appropriated      by the    constitutional
provision   "may not be      used for . . . equipping,        repairing,
or rehabilitating       buildings    or   other    permanent     improve-
ments that are to be used for . . . auxiliary             enterprises."
Although   the desk arms themselves       may be devoted exclusively
to educational     purposes,   they were added to a facility          used
in part    for auxiliary      enterprises.     In   our opinion,      they
were used    to    equip or    rehabilitate     a building     or    other
permanent    improvement      "to   be   used   for . . .      auxiliary
enterprises."       The   expenditure     is   therefore     within    the
subsection    (f) prohibition.

       Your    third   question   is as follows:

          May a university     use HEAF dollars to renovate
          a portion of a building used for both E&G and
          auxiliary   purposes,    when auxiliary   funds    and
          HEAF funds share proportionately        the cost    of
          the renovation;      e.s., replace" a roof      on   a
          building   that is occupied     50% by E&G and     50%
          by   an   auxiliary     enterprise?     Accordingly,
          HEAF funds are      used to    pay for   50% of    the
          roof replacement     and auxiliary   funds pay     for
          the other 50%.

      Your question    concerns replacing   the roof on a building
which is devoted in part to       dormitory   space and in part    to
education   and general purposes.      The subsection   (f) restric-
tion is    formulated     in terms of    tangible   structures    and
facilities,     specifically,    "buildings    or  other   permanent
improvements."       We believe that it permits the use of 'HEAF

                                         P. 5125
Mr. Alfred       F. Hurley   - Page   6     (JM-999)

funds    only  on facilities       that are    physically    distinct     in
some degree      from    facilities    for   student    housing,     inter-
collegiate     athletics,              auxiliary     enterprises.         It
therefore     does    not   peA:t       combining    HEAF    funds     with
auxiliary     funds    to    finance    a unified      renovation     to   a
building   used    both    for    an auxiliary     enterprise     and    for
educational    and general purposes.         Separating   the sources of
funding    as   an    accounting      matter   will   not    satisfy     the
requirement     of    physical       separateness    implicit     in     the
language of subsection        (f).

        Your    fourth   question   is as follows:

           May a university     use    HEAF monies     to   share
           proportionately    with auxiliary      funds in     the
           cost of an item of canital eouinment         used for
           both E&G    and   auxiliary   purposes;     e.cr., to
           install a lighting      system in the     University
           Theatre when the theatre        is used as a     large
           classroom   for   a portion of      each    day?     In
           conformance   with   State law,     E&G   appropria-
           tions may be,     and are, used     to support      the
           facility because of its instructional          use.

      Subsection    (f) of article VII, section 17, of the Texas
Constitution   provides   that the constitutionally      appropriated
funds may not be used to equip buildings         or other    permanent
improvements   that are to be used for auxiliary         enterprises.
As our answer to your third question        indicates,   the language
of subsection    (f) prevents    the use of    HEAF funds to      equip
buildings   or improvements   which are not physically        distinct
from auxiliary    enterprise    facilities.    Where the     equipment
is used for both auxiliary       and for educational     and   general
purposes,   the requirement    of physical   separation   is not met.
Consequently,    HEAF funds   may not be     used for the     combined
purpose inquired about in your fourth question.

       You inform us that appropriations         for educational       and
general purposes    are used to support the facility because of
its instructional    use.    This information     does not change our
conclusion   that subsection     (f) prohibits    the expenditure       of
HEAF funds in partial payment for an item of capital               eguip-
ment used for     educational   and general      purposes    and for    an
auxiliary   enterprise.    State colleges and universities           have
statutory    authority    to   establish     and   operate     auxiliary
enterprises.      See, e.cr     Educ.     Code    § 54.503       (student
services):   Educ. Code, Ah. 55 (financing permanent            improve-
ments including    student housing);     Attorney    General    Opinions
H-1312   (1978); H-513 (1975);      Letter Advisory      No. 6    (1973).

                                          P. 5126
     Mr. Alfred       F. Hurley       - Page   7     (JM-999)

     H-1312    (1978); H-513 (1975);      Letter Advisory     No. 6    (1973).
     The applicable       statutes and    appropriations     act   provisions
     control the      expenditure    of legislative      appropriations      by
     state colleges     and universities.      See. e.a:, Letter Advisory
     No.    50   (1973).               unaware     of  any    constitutional
     provision    prohibiti::     g:z use   of educational       and   general
     funds to operate facilities        used for auxiliary        enterprises
     as well as for educational       and general purposes.

             Your   final     question    is as follows:

                May the University    use bond proceeds   gained
                through any future    HEAF bond  sales to    pur-
                chase wital    eouioment   for an E&G   building
                which has not   been newly constructed,     e.q.,
                use HEAF bond proceeds to buy capital     equip-
                ment for a ten year old E&G building used for
                research and instruction?

           You ask about the future use of bond funds to       purchase
     "capital equipment,"     but in discussing    this  question    you
     refer to both ~@equipment~~ and "capital equipment."       Article
     VII, section 17, of the Texas Constitution      uses both    terms.
-.   We will    address   the significance    of these two    terms    in
     answering   your question.    We have not been asked whether any
     particular   item of equipment   is "capital equipment,"   and    we
     do not address any such question.

             Subsection       (a) of   section       17 states   the   purposes    for
     which    the funds       it appropriates        may be used:

                acquiring   land    either with     or without    per-
                manent     improvements,        constructing        and
                 cruioninq buildings      or other    permanent     im-
                &zovements     major repair or rehabilitation        of
                buildings   Ar   other    permanent    improvements,
                and acquisition     of caoital ecuioment,      library
                books   and     library    materials.        (Emphasis
                added.)

     Tex.    Const.    art.    VII,    5 17(a).

             Subsection    (e) of section  17 defines            the   authority    of
     the    eligible   institutions  to issue bonds:

                    Each governing    board authorized   to   parti-
                cipate in    the    distribution  of   money    under
                this section     is   authorized   to   expend    all
                money   distributed      to  it  for   any   of   the

                                                   P. 5127
Mr. Alfre-d F. Hurley         - Page   8     (JM-999)

          purposes   enumerated      in Subsection       (a).    In
          addition,    . . . such       governing     board     may
          issue    bonds    and    notes    for   the     purposes
          of...        acquiring     land.    either    with     or
          without permanent      improvements,       constructing
          and eouiuninq      buildings    or    other   permanent
          improvements,      and    for    major     repair     and
          rehabilitation     of    buildings     or   other    per-
          manent improvements,       and may pledge up to        50
          percent    of    the   money    allocated      to    such
          governing    board pursuant       to this section      to
          secure    the    payment     of   the   principal     and
          interest of such       bonds or notes.         (Emphasis
          added.)

Tex.   Const.   art.   VII,    § 17(e).

      Subsection    (a) of section 17 permits the constitutional
appropriation    to   be   used for      constructing      and   equipping
buildings   or   other    permanent      improvements,      and    for   the
acquisition    of capital equipment,        library books and       library
materials.      Subsection      (e),     in   contrast,     permits      the
issuance of bonds for        constructing     and equipping      buildings
                                                                               -
or other permanent      improvements,     but does not authorize         the
issuance of bonds      to acquire capital         equipment.     The    term
l@eguipment*' describes      a   category which       includes     "capital
equipment";    thus, the proceeds      of bonds issued under section
17(e)   of   article     VII    for   %onstructing       and     equipping
buildings   or other     permanent    improvements"     may    be used    to
acquire    the   capital     equipment      necessary    to    equip     the
building.    The    absence    of    authority    to   issue    bonds    for
"capital equipment"      alone    indicates     that   equipment    may   be
purchased   only in connection       with constructing      a building    or
other permanent     improvement,     and not     as a separate     item   to
be installed    in an existing structure.

      Our interpretation       of   the constitutional     provision     is
consistent    with the interpretation       given the former      version
of article VII, section 17 by the opinions            of this office.
The former version of        article VII, section 17,        established
a fund "for     the    purpose    of   acquiring,     constructing     &
initially   equipping      buildings   or   other permanent      improve-
ments at the      designated    institutions    . . . .*I    S.J.R.    NO.
4, Acts 1947, 50th Leg. at 1184 (emphasis added).                Attorney
General Opinion V-931 (1949)          determined   that the     constitu-
tional fund could not be used to equip space in an               existing
building   as    a college      printing   shop   to   be   operated     in
connection    with the Department      of Journalism.      The space had
"never been      equipped,     initially    or   otherwise,     for   that     -.

                                           P- 5128
    I

.

        Mr. Alfred     F. Hurley    - Page     9     (JM-999)

        purpose."    Attorney  General               Opinion    V-931   (1949).   The
        opinion stated as follows:

                   Article VII,    Section    17,   was   intended     to
                   provide for the     construction    or   acquisition
                   of buildings   and other permanent     improvements
                   and   for  the   initially     equipping     of  such
                   buildings  or   permanent   improvements.       There
                   is no provision     in the   amendment    for   'ini-
                   tially equipping'    existing buildings      . . . .

                       It will  be   noted also    that   the    amend-
                   ment   does  not   say    'for  the   purpose      of
                   acquiring,  constructing     er initially     eguip-
                   ping buildings   . . .' It     uses the    conjunc-
                   tive word 'and'     rather than the    disjunctive
                   word *or.'    (Emphasis in original.)

        Attorney     General   Opinion     V-931     at 3 (1949).

              We believe Attorney      General Opinion V-931 controls         the
        answer to your question.        Although   the modifier     "initially"
        does not    appear    .in the   present    version of    article     VII,
        section    17,   this    omission     is not    significant      because
        Attorney  General Opinion V-931 did not rely on that term               to
        reach its conclusion.        The present constitutional       provision
        uses the conjunctive      "and" rather than the disjunctive         "or."
        Bonds may be issued under         subsection   (e) of section 17      for
        81constructing and      equipping    buildings   or   other    permanent
        improvements    . . . .II Tex.       Const.     art.   VII,     5 17(e).
        Accordingly,    the   University    may   not   use the    proceeds     of
        bonds issued under article         VII, section 17(e), to       purchase
        capital equipment     for    a building which     has not been      newly
        constructed.

                                           SUMMARY

                       Funds appropriated   by article VII, section
                   17, of the Texas Constitution     may be used      to
                   renovate a portion of      a building     used    for
                   both educational     and  general    purposes     and
                   auxiliary  purposes,   if the renovated      portion
                   is a wing,     addition,   or   other    physically
                   distinct  part of    the building   and   if it    is
                   used exclusively    for educational   and    general
                   purposes.

                       Section     17(f)    of article VII prohibits   the
                   expenditure       of     such   funds to    construct,

                                                   P. 5129
                                                                              1

                                                                              .

Mr. Alfred   F. Hurley    - Page     10     (JM-999)

        equip,   repair, or    rehabilitate    buildings     or
        other permanent     improvements    to be used     for
        student housing,      intercollegiate      athletics,
        or   auxiliary    enterprises.      Subsection      (f)
        prevents    the   use    of  the   constitutionally
        appropriated    funds to assist in renovating         a
        building   or other permanent     improvement    which
        is used part of the time for educational           and
        general purposes,     and   part of    the time     for
        auxiliary   purposes.     The constitutional      fund
        may not    be applied     toward the    purchase     of
        capital equipment      used for    educational     and
        general purposes     and for auxiliary     purposes.

            The proceeds   of  bonds issued pursuant       to
        article VII, section      17 of the    constitution
        may not be used to purchase      capital equipment
        for   an  existing    educational     and    general
        building.

                                             zzti

                                                        MATTOX
                                             Attorney    General   of Texas

MARY KELLER
First Assistant   Attorney     General

LOU MCCREARY
Executive  Assistant     Attorney     General

JUDGE ZOLLIE STEAKLEY
Special Assistant  Attorney         General

RICK GILPIN
Chairman,  Opinion     Committee

Prepared by Susan L. Garrison
Assistant Attorney General

                                          P. 5130