Could UConn share employees and computer services with its fundraising foundation?

Plain-English summary

In the opinion dated April 1995, Connecticut’s AG considered a revised fundraising arrangement between the University of Connecticut and its separate foundation. He said the university could contract with the foundation for fundraising and allow three university employees to work under foundation direction while retaining their university status. The foundation could pay compensation attributable to foundation work if the university’s executive authority gave the statutory written approval. He also found no bar to the foundation using the university’s contract payments to reimburse university expenses.

The answer on free computer support was narrower. The written agreement had to address the foundation’s use of university facilities and resources. The statute required reimbursement for expenses caused by foundation operations that the university would not otherwise have incurred. Because UConn had its own fundraising duty, the agreement could allow no-charge services for qualifying university fundraising expenses, but the opinion called for limits on their use and safeguards against misuse. The AG also required the foundation to fund its officers’ compensation for foundation work, including the proposed university vice president serving as foundation president.

University and foundation administrators at the time

The opinion placed shared staff, equipment and reimbursement terms in the required written agreement. It treated extra costs caused by foundation operations differently from costs UConn would have incurred for its own fundraising.

University employees at the time

Foundation direction of the described employees was permissible under the opinion’s reading of the statute and the cited labor agreement. Foundation-paid compensation required the university executive authority’s written approval.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a UConn employee work under the foundation’s direction?
A: Yes. The AG said the described fundraising arrangement was permitted, subject to the written agreement and compensation approval rules.

Q: Could the foundation reimburse UConn using money UConn paid it for fundraising?
A: Yes. The opinion found no statutory prohibition on that source of reimbursement.

Q: Did the foundation have to reimburse every university computer support cost?
A: No. The statutory duty covered expenses UConn would not otherwise have incurred because of foundation operations; the agreement could identify qualifying university fundraising services furnished without charge.

Q: Could UConn pay the foundation president’s foundation salary itself?
A: The AG said compensation for foundation officer work had to come from the foundation, even where a university vice president filled that role.

Background and statutory framework

The AG applied Conn. Gen. Stat. § 4-37f(9), which required a written agency-foundation agreement addressing resource use and incremental expenses, alongside the compensation controls in § 4-37i and § 4-37f(6).

Citations and references

Statutes: Conn. Gen. Stat. § 4-37f(9); Conn. Gen. Stat. § 4-37i; Conn. Gen. Stat. § 4-37f(6).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/1995-formal-opinions/harry-j-hartley-university-of-connecticut-1995012-formal-opinion-attorney-general-of-connecticut

Original opinion text

Harry J. Hartley, University of Connecticut, 1995-012 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

April 3, 1995

Harry J. Hartley

President

University of Connecticut

Gulley Hall

352 Mansfield Road, U-48

Storrs, CT 06269-2048

Dear President Hartley:

In your letter of November 7, 1995, you asked several questions concerning the relationship between the University of Connecticut and the University of Connecticut Foundation. You have informed us that the University of Connecticut (the "University") and the University of Connecticut Foundation (the "Foundation") currently have an agreement that was executed pursuant to Conn. Gen. Stat. § 4-37f(9). You have further informed us that the parties suggest that the agreement be substantially revised. Under this revision, as proposed, the University's Vice President for Institutional Advancement would become the Foundation's president and chief executive officer, and the Foundation would provide fund-raising services to the University. You have asked three specific questions.

First: May University employees work under the direction of the Foundation, with the Foundation reimbursing the University for the salary and fringe benefits of these employees?

Second: May the Foundation utilize money received from the University for fund-raising services to repay its obligations (including salaries) to the University?

Third: May the University provide services, such as computer support services, to the Foundation at no cost?

A "foundation" is "an organization, fund or other legal entity ... established for the principal purpose of receiving or using private funds for charitable, scientific, cultural, educational or related purposes that support or improve a state agency." Conn. Gen. Stat. § 4-37e(2). A "foundation" is not a state agency. Conn. Gen. Stat. § 4-37e(2). The University of Connecticut Foundation is a "foundation" within the meaning of Conn. Gen. Stat. § 4-37e(2).

Conn. Gen. Stat. § 10a-104(a)(1) provides: "Subject to state-wide policy and guidelines established by the board of governors of higher education, the board of trustees of the University of Connecticut shall: (1) Make rules of the government of the University and shall determine the general policies of the university, including those concerning the admission of students and the establishment of schools, colleges, divisions and departments, and shall direct the expenditure of the university's funds within the amounts available." This statute has been interpreted as granting the board "the authority to exercise complete direction and restraint over the actions of those connected with the University, including the teaching staff, employees and students." Connecticut State Employees Association v. Board of Trustees, 165 Conn. 757, 761, 345 A.2d 36 (1974).

1991 Conn. Public Act 91-174, §11 expanded the Board's responsibility under Conn. Gen. Stat. § 10a-104(a) by adding subsection (8), which now provides that the Board of Trustees of the University shall "promote fund-raising at the university." The Board of Trustees, however, has determined to contract with the Foundation to carry out the University's fund-raising duties. Pursuant to Conn. Gen. Stat. § 4-37f(9), the Board's assignment of the University's fund-raising responsibilities to the Foundation must be embodied in "a written agreement between the state agency and the foundation." That agreement must address "any use by the foundation of the agency's facilities and resources including, but not limited to, office space, storage space, office furniture and equipment, utilities, photocopying services,[and] computer systems...." Id. Additionally, the Foundation must "reimburse the state agency for expenses the agency incurs as a result of foundation operations, if the agency would not have otherwise incurred such expenses." Id. (emphasis added).

In response to your first question, we have learned that three employees, who were hired by the University's Development Office, are affected by the proposed transfer of fund-raising responsibility to the Foundation. According to the information you have supplied us, these individuals will work at the Foundation and continue their duties, formerly performed for the University, but under the direction of the Foundation. Our inquiries have also revealed that other fund-raising employees will be employed directly by the Foundation, under the proposed agreement with the University. Although employees are not expressly listed as a resource which may be utilized by a foundation in Conn. Gen. Stat. § 4-37f(9), the statutory itemization is not exclusive. Bridgeport Hospital v. Commission on Human Rights and Opportunities, 231 Conn. 91, 101, (1995). The list of resources contained in Conn. Gen. Stat. § 4-37f(a) was specifically made non-exclusive through the use of the phrase "including but not limited to:" University employees, therefore, may be utilized by the Foundation for fundraising.

In regard to whether the salaries and benefits of the University employees who will work under the direction of the Foundation may be paid by the Foundation, Conn. Gen. Stat. § 4-37i provides in pertinent part: "No officer or employee of a state agency shall receive a salary, fee or loan, or any compensation or other thing of value from the foundation or withdraw funds from a foundation account for any purpose, without the written approval of the executive authority ...." That statute makes it clear that a state employee may receive a salary from a foundation, if that arrangement is approved by the state agency's executive authority.1

In order to respond completely to your question, we have scrutinized the most recent collective bargaining agreement between the University of Connecticut and the union that represents the three employees: The University of Connecticut Professional Employees Association (UCPEA). Although the UCPEA contract expired on June 30, 1992, the parties have agreed that the terms of the expired agreement will remain in effect during the arbitration process, which has recently concluded with an arbitrator's award now pending before the General Assembly. We have found no provision that prevents supervision of UCPEA employees by an outside entity, nor are we aware of any authority that would prohibit a state employee from working under the supervision of a contractor, engaged by a state agency to fulfill its mission. Further, under the Board Prerogatives clause of the UCPEA contract (Article 3.2), both parties have recognized the Board's authority "to determine whether the whole or any part of the operation [the University] shall continue." That provision is continued, without change, in the arbitrator's proposed award. The University's proposal to contract with the Foundation for fund-raising services, while retaining three existing employees in their current status, is well within the Board's discretion under that clause.

Although you have not specifically requested our opinion on the propriety of the role of the University's Vice President for Institutional Advancement as an officer of the Foundation, it is critical that this issue be resolved. Conn. Gen. Stat. § 4-37f(6) provides that "[T]he salaries, benefits and expenses of officers and employees of the foundation shall be paid solely by the foundation." We examine this issue in the context of the proposed agreements between the University and the Foundation. Paragraph 6 of the Memorandum of Understanding requires the Foundation to reimburse the University for the time and effort of the Vice President, for carrying out his Foundation responsibilities. We have ascertained that the Foundation will transfer a sum to the University for an agreed-upon time and effort (during the initial period, twenty-five (25) percent), for inclusion in the Vice President's salary. In other words, twenty-five percent of the Vice President's salary will emanate from the Foundation. Thus, the Vice President's salary, as it pertains to his Foundation assignment, will be paid by the Foundation, as the law requires. Conn. Gen. Stat. § 4-37i, discussed ante, at p.3, is also relevant here. In this instance, a state employee (the Vice President) would be receiving a portion of his salary from the Foundation which is directly related to the portion of his time dedicated to work for the Foundation. This is clearly permissible under that statute, if it is approved by the University's executive authority.

Your second inquiry is whether the Foundation may utilize funds received by the Foundation under its fund-raising agreement with the University to repay the Foundation's obligations back to the University.

The University's Board of Trustees has the authority to enter into contracts to aid the performance of its mission. In Connecticut State Employees Ass'n v Board of Trustee, 165 Conn. 757 (1974), the Supreme Court held that the University's Board could, in the exercise of its authority to direct expenditures, hire a private contractor to provide food service for its students. It is equally clear that the University's Board may retain a contractor (in this instance, the Foundation) to provide fund-raising services and the University may pay the Foundation for its fund-raising services. Conn. Gen. Stat. § 4-37f. To the extent the Foundation utilizes the resources of the University in its fund-raising efforts, Conn. Gen. Stat. §4-37f(9) expressly "requires the foundation to reimburse the state agency for expenses the agency incurs as a result of foundation operations." There is nothing in the statutes which would prohibit the Foundation from making its reimbursement to the University from funds received from the University under the agreement.

In your final question, you have asked whether it is permissible for the University to provide certain services, including computer support, to the Foundation at no cost. According to Conn. Gen. Stat. § 4-37f(9), the use of agency facilities and equipment is a contractual matter between the foundation and agency. Furthermore, a foundation is required to reimburse an agency for state agency expenses incurred as a result of foundation operations only if the "agency would not have otherwise incurred such expenses." Conn. Gen. Stat. § 4-37f(9)(c). As we have already discussed, the Board of Trustees is required by statute to promote fund-raising at the University, whether a foundation exists or not. Accordingly, the contract between the University and the Foundation may specify that certain services provided by the University to its Foundation that support fund-raising need not be reimbursed by the Foundation because such fund-raising expenses would otherwise have been incurred by the University as part of its statutory duties. However, the agreement should specify the type and manner of use of such equipment which must be limited only to fund-raising for the University. Additionally, there should be safeguards in place to prevent the misuse or abuse of state equipment including safeguards to prevent use of state equipment for personal purposes.

A common thread that runs through all of your questions is the statutory requirement that there be an agreement in place between a state agency and foundation. Care must be taken to ensure that the agreement spelling out the respective responsibilities of both entities satisfies all statutory requirements.

We trust that this is responsive to your questions.

Very truly yours,

Richard Blumenthal

Attorney General

Paul M. Shapiro

Assistant Attorney General

RB/PMS:gdm

1 The proposal to reimburse the University by the Foundation for the salaries and benefits of the three University employees who will work for the Foundation, which reimbursement would presumably be made from funds provided by the University under its contract, is unnecessarily circuitous. According to the provisions of Conn. Gen. Stat. § 4-37f(9), discussed infra, the three University employees may be paid directly by the University.