Can Georgia school boards form a nonprofit corporation to pool resources and sue the State for more education funding?

Plain-English summary

The Governor asked whether local boards of education could lawfully use state or local school funds to pay membership dues to the Consortium for Adequate School Funding in Georgia, Inc. ("Consortium"). The Consortium was a nonprofit corporation, organized by school district superintendents, that funded litigation and public-relations activity to obtain more state education funding.

The Attorney General did not need to answer the dues question. The threshold problem was that boards of education were not authorized to create or join the Consortium in the first place. Local school systems and their boards of education are creations of the State (Ga. Const. art. VIII, § V, ¶¶ I and II; O.C.G.A. § 20-2-50). State creations have only the powers the General Assembly has expressly or impliedly granted them. Title 20, Chapter 2 contains no provision authorizing school boards to form or join a nonprofit corporation. By contrast, the General Assembly has given that power expressly to other state creations (the Music Hall of Fame Authority, community service boards, the Georgia Housing and Finance Authority, the OneGeorgia Authority). The fact that the General Assembly knew how to grant the power and did so by name elsewhere supports the conclusion that the silence in Title 20 is intentional.

The opinion also flags a constitutional layer. Ga. Const. art. VIII, § V, ¶ V(b) lets the General Assembly authorize "joint administrative authority" between local boards. Without that legislative authorization, joint authority via a nonprofit shell is improper. And footnote 4 cites Rogers v. Med. Ass'n of Georgia and Stone Mtn. Scenic R.R. for the rule that the General Assembly cannot delegate board powers to a private nonprofit even if it tries.

Currency note

This opinion was issued in 2009. 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: What was the Consortium for Adequate School Funding doing?
A: According to the opinion's footnote 1 and the Consortium's own court filings, the Consortium was a nonprofit corporation formed by several school district superintendents. It filed Consortium for Adequate School Funding in Georgia, Inc. v. The State of Georgia in Fulton County Superior Court, seeking increased state education funding. The Consortium voluntarily dismissed without prejudice. Member school systems paid dues to fund the litigation and related public-relations work.

Q: Why are school boards considered "creations of the State"?
A: Because the Georgia Constitution and statutes establish them. Ga. Const. art. VIII, § V, ¶¶ I and II creates the structure, and O.C.G.A. § 20-2-50 implements it. As creations of the State, school boards do not have inherent powers; they have only the powers the General Assembly granted (Bentley v. State Bd. of Med. Exam'rs, 152 Ga. 836). This is a Georgia-specific version of the general "Dillon's Rule" approach to subordinate government entities.

Q: Why does the AG point to other agencies that DO have nonprofit-formation power?
A: To show that the General Assembly knows how to grant the power when it wants to. The opinion lists O.C.G.A. § 12-3-524(22) (Music Hall of Fame Authority), § 37-2-6.1 (community service boards), § 50-26-8(a)(27) (Georgia Housing and Finance Authority), § 50-34-6(a)(25) (OneGeorgia Authority), and § 50-8-35(f) (regional commissions). Each of those was an explicit grant. The absence of any similar provision in Title 20 for school boards is meaningful.

Q: What about the constitutional "joint administrative authority" provision?
A: Ga. Const. art. VIII, § V, ¶ V provides two separate powers. Subparagraph (a) allows two or more boards of education to "contract with each other for the care, education, and transportation of pupils and for such other activities as they may be authorized by law to perform." Subparagraph (b) allows the General Assembly to "provide by law for the sharing of facilities or services by and between local boards of education under such joint administrative authority as may be authorized." The AG read (b) as requiring the General Assembly to actually pass enabling legislation, which it has not done for nonprofit corporations.

Q: Did the General Assembly authorize school boards to join private athletic associations?
A: Yes, but only by specific statute. Footnote 4 cites O.C.G.A. §§ 20-2-316 and 20-2-316.1, which authorize schools to join "athletic associations." The AG distinguishes athletic association membership (scheduling and regulating sports) from joining a nonprofit corporation that performs functions that would otherwise be the school board's responsibility. The fact that the General Assembly explicitly authorized one specific kind of association is more evidence that other forms of nonprofit participation require similar express authorization.

Q: Could the General Assembly fix this by passing a statute?
A: Maybe, but it would have to be carefully drafted. Footnote 4 says any such legislation "would have to be appropriately drafted to ensure that the creation of such corporations did not impermissibly permit the delegation of the powers of the boards to nonprofit corporations." The AG cites Rogers v. Med. Ass'n of Georgia, Stone Mtn. Scenic R.R., and Levine v. Perry for the principle that a public body cannot delegate its discretionary governmental powers to a private organization.

Q: Did the AG decide whether the dues themselves were a constitutional school-funds expenditure?
A: No. The opinion explicitly says "in light of the absence of authority for school boards to create the Consortium, it is unnecessary to address your request regarding whether state or local school funds can be properly expended by local school boards to pay dues to the Consortium." The threshold no-authority answer made the dues question unnecessary.

Background and statutory framework

The Consortium for Adequate School Funding emerged in the mid-2000s as a vehicle for school districts that believed Georgia was not meeting its constitutional duty to provide an "adequate" public education. School systems pooled dues, and the Consortium filed a major adequacy lawsuit in Fulton County Superior Court (Civil Action No. 2004CV91004). The case was dismissed without prejudice. Districts that were considering re-engaging with the Consortium, or new districts considering joining, prompted the Governor's request to the AG.

The AG's 2009 opinion drew heavily on 1978 Op. Att'y Gen. 78-4 and 1992 Op. Att'y Gen. 92-1. The 1978 opinion had held county boards of education could not form a nonprofit for procurement and other functions. The 1992 opinion had reached a similar conclusion for regional development centers. Both opinions had two structural arguments: (1) school officials act only on express or implied statutory authority, and (2) at that time, governmental entities were not on the list of permitted incorporators of Georgia nonprofits. The 1992 opinion led the General Assembly to add governmental incorporators to the nonprofit code (O.C.G.A. § 14-3-140), which removed the second argument. But the 2009 opinion explained that even with governmental entities now eligible to be nonprofit incorporators in general, school boards specifically still need their own enabling statute, which the legislature has never passed.

The opinion's broader doctrinal claim is that the listing of express grants to specific entities is significant. When the General Assembly authorizes an authority or board to create nonprofit corporations by name, the absence of similar authorization for school boards is intentional silence, not legislative oversight.

Citations and references

Constitutional provisions:
- Ga. Const. art. VIII, § V, ¶¶ I and II, local school systems are state creations
- Ga. Const. art. VIII, § V, ¶ V, joint administrative authority requires legislation
- Ga. Const. art. VIII, § VI, ¶ I: funding clauses

Statutes:
- O.C.G.A. § 20-2-50, local boards of education
- O.C.G.A. §§ 20-2-316, 20-2-316.1, schools may join athletic associations (specific authorization)
- O.C.G.A. §§ 14-3-140(14), (17), (22), (24), (30), nonprofit code permits governmental incorporators
- O.C.G.A. § 12-3-524(22), Music Hall of Fame Authority can incorporate nonprofits
- O.C.G.A. § 37-2-6.1, community service boards can incorporate nonprofits
- O.C.G.A. § 50-26-8(a)(27), Housing Finance Authority can incorporate nonprofits
- O.C.G.A. § 50-34-6(a)(25), OneGeorgia Authority can incorporate nonprofits
- O.C.G.A. § 50-8-35(f): regional commissions can incorporate nonprofits

Cases:
- Bentley v. State Bd. of Med. Exam'rs, 152 Ga. 836 (1922), state creations have only granted powers
- Floyd County Bd. of Comm'rs v. Floyd County Merit Sys. Bd., 246 Ga. 44 (1980), same
- Bryant v. Employees Ret. Sys. of Georgia, 216 Ga. App. 737 (1995), same
- Rogers v. Med. Ass'n of Georgia, 244 Ga. 151 (1979), limits on delegating board powers
- Stone Mtn. Scenic R.R. v. Stone Mtn. Mem'l Ass'n, 230 Ga. 800 (1973), same
- Levine v. Perry, 204 Ga. 323 (1948), same

Prior AG opinions:
- 1978 Op. Att'y Gen. 78-4, county boards cannot form nonprofit corporations
- 1992 Op. Att'y Gen. 92-1, regional development centers cannot form nonprofit corporations
- 1986 Op. Att'y Gen. 86-29, limits on delegation
- 1974 Op. Att'y Gen. 74-72, case-by-case analysis of school fund expenditures
- 1975 Op. Att'y Gen. U75-32: board of education intergovernmental contracts

Source

• Landing page: https://law.georgia.gov/opinions/2009-3
• Original PDF: not linked from landing page

Original opinion text

This responds to your request for an official opinion regarding whether Georgia boards of education are permitted to utilize state or local school funds to pay dues to the Consortium for Adequate School Funding in Georgia, Inc. ("Consortium"). Your request describes the Consortium as a nonprofit corporation formed to obtain additional support from the State in the financing of schools in Georgia whose activities include funding and directing litigation against the State in an effort to obtain increased State education funding as well as public relations related to the effort to obtain increased State education funding. Some school systems are members of the Consortium and pay dues, presumably from state or local school funds, in order to fund the Consortium's activities.[1] Your request focuses primarily on whether the expenditure of funds by boards of education to fund the Consortium violates article VIII, section VI, paragraph I of the Georgia Constitution or O.C.G.A. § 20-2-411. Although not raised in your request, a threshold legal issue is whether boards of education are empowered by general law to create and utilize a nonprofit corporation like the Consortium to act on behalf of the boards for the purpose of pursuing litigation against the State and other activities related to school funding. A previous opinion of the Attorney General concluded that county boards of education are not authorized by law to form a nonprofit corporation to be utilized as an agent for procurement and other functions. 1978 Op. Att'y Gen. 78-4; see also 1992 Op. Att'y Gen. 92-1. 1978 Op. Att'y Gen. 78-4 reaches its conclusion for two reasons. First, school officials can only perform acts that are expressly authorized by law or are clearly implied by express provisions of law. Second, the law on nonprofit corporations did not then include governmental entities among permitted incorporators or members for nonprofit corporations. The law regarding nonprofit corporations now includes governmental entities as permitted incorporators of nonprofit corporations. See O.C.G.A. §§ 14-3-140(14), (17), (22), (24), and (30); 1992 Op. Att'y Gen. 92-1. However, notwithstanding the changes in the nonprofit corporation code since the issuance of 1978 Op. Att'y Gen. 78-4, local school boards still cannot form or be members of a nonprofit corporation. The changes in the nonprofit corporation law since the issuance of 1978 Op. Att'y Gen. 78-4 allow its use by a governmental entity if the entity is otherwise empowered to incorporate or become a member of a nonprofit corporation. An entity created by the State "has only such powers as the legislature has expressly, or by necessary implication, conferred upon it." Bentley v. State Bd. of Med. Exam'rs, 152 Ga. 836, 838 (1922); Floyd County Bd. of Comm'rs v. Floyd County Merit Sys. Bd., 246 Ga. 44, 45 (1980); Bryant v. Employees Ret. Sys. of Georgia, 216 Ga. App. 737, 738 (1995). Local school systems and their boards of education are creations of the State. Ga. Const. art. VIII, § V, ¶¶ I and II; O.C.G.A. § 20-2-50. Under the Constitution, county boards of education must have a statutory power to form nonprofit corporations or to pursue other joint administrative authority.[2] Although the General Assembly has not authorized county boards of education to incorporate or become members of nonprofit corporations, the General Assembly has enacted legislation specifically authorizing other creations of the State to form or become members of nonprofit corporations. See, e.g., O.C.G.A. § 12-3-524(22) (the Georgia Music Hall of Fame Authority has the power "[t]o incorporate one or more nonprofit corporations as subsidiary corporations of the authority"); O.C.G.A. § 37-2-6.1 ("[a] community service board may create, form, or become a member of a nonprofit corporation"); O.C.G.A. § 50-26-8(a)(27) (the Georgia Housing and Finance Authority has the power "[t]o incorporate one or more nonprofit corporations as subsidiary corporations of the authority … [and] [t]he members of the board of directors of the authority shall constitute the members of and shall serve as directors of any subsidiary corporation"); O.C.G.A. § 50-34-6(a)(25) (the OneGeorgia Authority has the power "[t]o incorporate one or more nonprofit corporations as subsidiary corporations of the authority . . .[and] [t]he members of the board of directors of any such corporation shall be appointed by the authority and may include persons who are members of the authority").[3] The fact that the General Assembly has expressly granted powers to these creations of the State regarding the incorporation of nonprofit corporations supports the conclusion that the boards of education, which lack express powers, do not have the authority to create and utilize nonprofit corporations such as the Consortium. Thus, as the Consortium is described in your request and by the Consortium itself, the creation of the Consortium by the local school boards is unauthorized.[4] County boards of education do not have the express or implied power to create a nonprofit corporation like the Consortium. Therefore, in light of the absence of authority for school boards to create the Consortium, it is unnecessary to address your request regarding whether state or local school funds can be properly expended by local school boards to pay dues to the Consortium. Therefore, it is my official opinion that, under general law, Georgia boards of education are not empowered to share services by creating and utilizing a nonprofit corporation such as the Consortium for Adequate School Funding in Georgia, Inc., for the purpose of challenging state school funding by litigation or otherwise. Prepared by: W. Wright Banks, Jr. Senior Assistant Attorney General Oscar B. Fears, III Senior Assistant Attorney General [1] Through the Consortium's website at http://www.casfg.org can view a copy of the Consortium's Response to the State Defendants' Motion for Summary Judgment ("Response") in Consortium for Adequate School Funding in Georgia, Inc. v. The State of Georgia, Civil Action No. 2004CV91004 in the Superior Court of Fulton County, which case the Consortium voluntarily dismissed without prejudice. In the Response, the Consortium describes itself as "a nonprofit corporation … formed by several school district superintendents." [2] Ga. Const. art. VIII, § V, ¶ V provides that: (a) Any two or more boards of education may contract with each other for the care, education, and transportation of pupils and for such other activities as they may be authorized by law to perform. (b) The General Assembly may provide by law for the sharing of facilities or services by and between local boards of education under such joint administrative authority as may be authorized. Thus, apart from intergovernmental contracts, "joint administrative authority" among local boards of education can only be exercised if "provide[d] by law." See generally 1975 Op. Att'y Gen. U75-32 (addressing ability of board of education to enter into intergovernmental contracts for care, education, and transportation of students). After 1975 Op. Att'y Gen. U75-32, the Georgia Constitution was amended as quoted above to provide in art. VIII, § V, ¶ V(b) that if otherwise authorized by law, county boards of education could share facilities and services "under such joint administrative authority as may be authorized [by the General Assembly]." However, as the General Assembly has not authorized county boards of education to create or utilize a nonprofit corporation such as the Consortium, the provision in Ga. Const. art. VIII, § V, ¶ V(b) cannot be relied upon and the combination of certain school boards through the Consortium is improper. [3] Also worth noting in this regard are the provisions of O.C.G.A. § 50-8-35(f) regarding the creation of nonprofit corporations by regional commissions or their predecessors which appear to have been enacted in response to an opinion of the Attorney General finding a lack of authority in regional development centers to create nonprofit corporations. 1992 Op. Att'y Gen. 92-1. [4] A 1974 opinion involved the question whether a local school board could expend school funds to pay membership dues to the Georgia High School Association, but provides little guidance in this matter because it does not address the general authority of school boards to establish a nonprofit corporation or other joint administrative authority to conduct school business. 1974 Op. Att'y Gen. 74-72. In considering the issue presented, 1974 Op. Att'y Gen. 74-72 largely concluded that a case-by-case analysis is required regarding whether a particular expenditure of school funds is authorized. Since the issuance of 1974 Op. Att'y Gen. 74-72, the General Assembly has expressly addressed the general law issue and has authorized schools to join "athletic associations." See O.C.G.A. §§ 20-2-316, 20-2-316.1. These statutes simply authorize schools to participate in a private organization that schedules and regulates sports for public and private schools. The situation in which schools join athletic associations for the purpose of scheduling and regulating sporting events is distinct from the situation in which a board becomes a member of a nonprofit corporation, which may perform functions that would otherwise be the responsibility of the local boards of education. The fact the General Assembly has expressly authorized schools to participate in a specific association by name provides additional support for the conclusion that local school boards are not generally empowered to form nonprofit corporations such as the Consortium. Further, if the General Assembly determined to permit local school boards to form nonprofit corporations such as the Consortium, legislation would have to be appropriately drafted to ensure that the creation of such corporations did not impermissibly permit the delegation of the powers of the boards to nonprofit corporations. See Rogers v. Med. Ass'n of Georgia, 244 Ga. 151, 153 (1979); Stone Mtn. Scenic R.R. v. Stone Mtn. Mem'l Ass'n, 230 Ga. 800, 806 (1973) (citing Levine v. Perry, 204 Ga. 323 (1948)); 1986 Op. Att'y Gen. 86-29.