Court Opinion

ID: 3262583
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:33:08.561365+00
Date Added: 2024-06-11T13:59:48.972960
License: Public Domain

The Honorable David Wyatt State Senator
159 Wyatt Lane Batesville, Arkansas 72501
Dear Mr. Wyatt:
I am writing in response to your request for my response to the following question:
  Is it allowable for a public school to use state funds (foundation aid) to make charitable donations to registered non-profit service organizations? If allowed, is there a limit to the amount the school can donate?
RESPONSE
In my opinion, the answer to your first question is "no," rendering your second question moot.
I should note initially that your use of the term "foundation aid" is somewhat problematic. The term "foundation funding" is defined as follows in the Arkansas Code:
  "Foundation funding" means an amount of money specified by the General Assembly for each school year to be expended by school districts for the provision of an adequate education for each student[.]1 *Page 2
As I noted in a previous opinion:
  The term "foundation funding aid" should not be confused with the term "foundation funding." The latter term denotes the entire amount the state is obliged to provide a district in order to ensure its students an adequate education. This amount includes, but is not limited to, state revenues realized through the URT.2 The difference between the constitutionally mandated "foundation funding" and these URT revenues as supplemented by "miscellaneous funds" . . . constitutes the "aid" that the state must provide in order to meet its constitutional obligations.3
In my opinion, irrespective of whether your use of the term "foundation aid" is intended to extend beyond the supplementary state funding just discussed, the diversion of these funds to a private nonprofit corporation would be impermissible.
At issue is the application of Ark. Const. art. 14, § 2, which provides as follows:
  No money or property belonging to the public school fund, or to this State, for the benefit of schools or universities, shall ever be used for any other than for the respective purposes to which it belongs.
Foundation funding aid belongs in the first instance to the state, and its sole purpose is to fund the education of the school districts' students. Its diversion to a private nonprofit corporation as a charitable donation is consequently impermissible. This same conclusion applies to revenues realized from the URT, which pursuant to Ark. Const. art. 14, § 3 are irrevocably dedicated to maintenance and operation of the schools. *Page 3 
Also of possible application is Ark. Const. art. 12, § 5, which provides as follows:
  No county, city, town or other municipal corporation, shall become a stockholder in any company, association, or corporation; or obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual.
In Clifton v. School District No. 14 of Russellville,192 Ark. 140, 90 S.W.2d 508 (1936), the Arkansas Supreme Court applied this constitutional provision to a school district. However, in Op. Att'y Gen No. 91-411, this office opined that a school district does not fall under this constitutional provision, not being a "county, city, town or other municipal corporation."4 Regardless of whether this constitutional provision applies in this case, I believe the other constitutional mandates discussed above would preclude a school district from funneling foundation funding aid to a nonprofit service organization in the form of a charitable donation. See Op. Att'y Gen. Nos. 91-411 and 85-213 (opining that school district contributions of public funds to private nonprofit corporations are generally prohibited on constitutional grounds).
Assistant Attorney General Jack Druff prepared the foregoing opinion, which I hereby approve.
Sincerely,
DUSTIN McDANIEL Attorney General
DM/JHD:cyh
1 A.C.A. § 6-20-2303(6) (Supp. 2009).
2 The URT is the uniform rate of tax mandated by Ark. Const. amend. 74, currently incorporated in Ark. Const. art. 14, § 3, to be devoted to maintenance and operation of the schools.
3 Op. Att'y Gen. No. 2010-094 n. 3.
4 My predecessor supported this conclusion by citingSchmutz v. School District of Little Rock, 78 Ark. 118 (1906), in which the Arkansas Supreme Court held that Ark. Const. art. 16, § 1, which applies to any "county, city, town or municipality," does not apply to a school district. *Page 1