Could the State of Idaho lend public employees to the United Way for an eight-week fundraising drive while still paying their state salaries, and what general limits applied to sharing state employees and facilities with private charitable foundations?

Plain-English summary

Representative Dorr and Senator Crow asked the AG to evaluate Idaho's participation in the United Way's "loaned executive" program, in which state agencies released two or three upper-level employees to work full-time for the United Way's annual fundraising campaign for roughly eight weeks while continuing to draw their state salary and benefits. They also asked the broader question of what limits applied to sharing state employees or facilities with private charitable foundations.

Deputies William Von Tagen and Thomas F. Gratton, writing for AG Alan G. Lance, concluded the United Way arrangement violated the public purpose doctrine. The doctrine, inferred by the Idaho Supreme Court from Article 8, section 2 of the Idaho Constitution and confirmed in Board of County Commissioners v. Idaho Health Facilities Authority, 96 Idaho 498, 531 P.2d 588 (1975), prohibits state expenditures whose primary purpose is private rather than public. Idaho Water Resource Board v. Kramer, 97 Idaho 535, 548 P.2d 35 (1976) defined a public purpose as "an activity that serves to benefit the community as a whole and which is directly related to the function of government." The United Way is a worthy organization, but using state employees to do its fundraising directly benefited a specific private charity, conferred preferential status on it relative to other charities, and lacked any legislative declaration of public purpose.

The opinion drew on the Oregon Attorney General's 1981 analysis (41 Or. Op. Atty. Gen. 347) and the Texas Attorney General's 1979 opinion (No. MW-89). Oregon had said incidental work to administer a charitable payroll deduction program was permissible but anything beyond that risked promoting a private charity at state expense. Texas had concluded that letting teachers work for professional organizations on district salaries was an "unconditional grant of public funds to a private organization."

For the broader foundation-sharing question, the opinion offered guidance on what arrangements were most likely to survive judicial challenge. The clearest example was the relationship between Idaho's three universities and their fundraising foundations, which exist solely to support the universities and engage only in activities the universities themselves are authorized to conduct. Texas Attorney General Opinion No. MW-373 (1981) and Utah Attorney General Informal Opinion No. 78-183 (1978) both endorsed similar arrangements. The AG's recommendation: any sharing arrangement should (a) benefit the community and be directly related to the state agency's function, (b) involve a foundation whose sole or principal purpose is to support the agency, (c) be memorialized in writing, and (d) preserve sufficient state control to ensure the public-purpose justification continues to be served.

The opinion's footnote 5 adds an often-overlooked procedural rule: before entering into facility- or personnel-sharing arrangements, state agencies must obtain written approval of the governor under Idaho Code § 67-2502.

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

What was the public purpose doctrine doing the work in this opinion?

The public purpose doctrine asks whether the primary objective of an expenditure of public funds is public or private. If primarily public, incidental private benefits are tolerated; if primarily private, the expenditure is unconstitutional even if it incidentally produces public benefits. Idaho Water Resource Board v. Kramer's two-part formulation (community benefit + direct relation to government function) sets a higher bar than the Alabama Supreme Court's looser version in Slawson v. Alabama Forestry Commission. The opinion explicitly noted Alabama's broader public-purpose rule does not match Idaho's.

Why was the United Way arrangement worse than the universities-foundation arrangement?

Three reasons. First, the United Way is not directly aligned with any specific state agency's mission, so the activity did not advance "a function of government." Second, the loaned executives were doing activities (charitable fundraising, donor coordination) that the state itself would not be authorized to do; they crossed from administering a payroll deduction (which is permissible) to running someone else's fundraising campaign. Third, by selecting one charity for preferential support, the state implicated the line in Boise Redevelopment Agency v. Yick Kong Corp. against conferring "favored status on any private enterprise."

Why are university foundations different?

Universities are required by statute to accept and administer gifts and endowments. Performing that function inherently requires personnel and resources. A university foundation that exists solely to support the university and only does what the university could do itself is essentially performing the university's own work more efficiently. The university is delegating a function it is required to perform, not subsidizing an unrelated private entity.

What did "memorialized in writing" mean in practice?

The opinion did not prescribe a specific form, but the Texas and Utah AG opinions it relied on contemplated written agreements describing the foundation's purpose, the scope of facilities and personnel provided, the consideration flowing back to the state (whether in fees, contributions, or services), and the controls the state retained. Without writing, it would be hard for a court to assess whether the public-purpose requirement continued to be met as the foundation's activities evolved.

What about Idaho Code § 67-2502?

Idaho Code § 67-2502 requires state agencies to obtain written approval of the governor before entering into facility- or personnel-sharing arrangements. The opinion flagged this in a footnote, observing that even arrangements that satisfy the public-purpose doctrine still need this procedural step. Agencies that have informal sharing arrangements without governor approval would be operating outside the statutory framework regardless of the public-purpose analysis.

Background and statutory framework

Idaho's Constitution does not contain an explicit public-purpose clause, but the Idaho Supreme Court has inferred such a doctrine from several constitutional provisions, principally Article 8, section 2 (prohibiting the loan of state credit to any individual, association, municipality, or corporation, with limited exceptions). The doctrine has accumulated substantial case law: Fluharty (preventing public money passing to private control), Village of Moyie Springs (preventing aid to a particular commercial enterprise to the detriment of others), Boise Redevelopment Agency v. Yick Kong Corp. (preventing favored status), and Idaho Water Resource Board v. Kramer (preventing aid to private schemes).

The opinion's framework remains the basic Idaho test for evaluating any state expenditure that involves a private beneficiary: identify the primary purpose; ask whether it serves the community as a whole and is directly related to a function of government; treat any private benefit as incidental only if the public purpose dominates. Legislative findings of public purpose, while not determinative, receive considerable deference under Bevis v. Wright, 31 Idaho 676, 175 P. 815 (1918).

Citations

• Idaho Const. art. 8, § 2
• Idaho Code § 67-2502
• Board of County Commissioners v. Idaho Health Facilities Authority, 96 Idaho 498, 531 P.2d 588 (1975)
• Village of Moyie Springs v. Aurora Mfg. Co., 82 Idaho 337, 353 P.2d 767 (1960)
• Boise Redevelopment Agency v. Yick Kong Corp., 94 Idaho 876, 499 P.2d 575 (1972)
• Idaho Water Resource Board v. Kramer, 97 Idaho 535, 548 P.2d 35 (1976)
• Nelson v. Marshall, 94 Idaho 726, 497 P.2d 47 (1972)
• Engelking v. Investment Board, 93 Idaho 217, 458 P.2d 213 (1969)
• Fluharty v. Board of County Comr's of Nez Perce County, 29 Idaho 203, 158 P. 320 (1916)
• State v. Idaho Power Co., 81 Idaho 487, 346 P.2d 596 (1959)
• Slawson v. Alabama Forestry Commission, 631 So. 2d 953 (Ala. 1994)
• Bevis v. Wright, 31 Idaho 676, 175 P. 815 (1918)
• Iowa Atty. Gen. Op. No. 94-1-6 (1994); Tex. Atty. Gen. Op. No. MW-89 (1979); Tex. Atty. Gen. Op. No. MW-373 (1981); Ut. Atty. Gen. Informal Op. No. 78-183 (1978); 41 Or. Op. Atty. Gen. 347 (1981)

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP95-07.pdf

Original opinion text

The full text of Attorney General Opinion 95-07, addressing the United Way "loaned executive" program and broader foundation-sharing arrangements, is available at the linked PDF above. Key passages reproduced here for reference.

ATTORNEY GENERAL OPINION NO. 95-07
To: Honorable Tom Dorr, Idaho House of Representatives; Honorable Gordon F. Crow, Idaho State Senate

CONCLUSION

1. Loaning public employees to the United Way for eight (8) weeks while continuing to pay their salaries and benefits from state funds violates the "public purpose doctrine."

2. State of Idaho employees or facilities may not be shared with or loaned to private charitable foundations unless such action serves a public purpose and is directly related to a function of government. Moreover, such arrangements will be most likely to withstand a judicial challenge if the foundation involved exists for the benefit of the state agency and performs activities which the state agency can conduct. Additionally, there should be state control, whether contractual or otherwise, to ensure that the activities of the charitable foundation continue to meet the public purpose requirement.

ANALYSIS

The Idaho Constitution requires that public funds only be expended for public purposes. While Article 8, section 2 of the constitution is expressly directed at prohibiting the state from loaning "credit" to any "individual, association, municipality or corporation," the Idaho Supreme Court has held that this section also impliedly prohibits the state from engaging in or funding activities that "do not have primarily a public, rather than a private purpose." Board of County Commissioners v. Idaho Health Facilities Authority, 96 Idaho 498, 502, 531 P.2d 588, 592 (1975).

The Idaho Supreme Court has stated that a "public purpose is an activity that serves to benefit the community as a whole and which is directly related to the function of government." Idaho Water Resource Board v. Kramer, 97 Idaho 535, 559, 548 P.2d 35, 59 (1976). If a proposed appropriation or expenditure meets the "public purpose" test, it is immaterial that, incidentally, private ends may also be advanced. However, if the primary object is to promote some private end, the expenditure is illegal even though it may incidentally also serve some public purpose. Village of Moyie Springs v. Aurora Mfg. Co., 82 Idaho 337, 353 P.2d 767 (1960).

Allowing state personnel to work full time for the United Way to assist in its fundraising while also receiving wages and benefits from the state violates the public purpose doctrine. While the United Way serves the public good, this purpose is not sufficient. The state's payment of wages and benefits to public employees while they work for the United Way constitutes a significant expenditure of state funds that primarily benefits a private organization. Allowing state employees to work for the United Way at state expense gives the United Way favored status and preferential treatment.

For broader sharing arrangements, the most clearly permissible model is the relationship between Idaho's universities and their fundraising foundations. Texas Attorney General Opinion No. MW-373 (1981) and Utah Attorney General Informal Opinion No. 78-183 (1978) both endorsed similar arrangements where the foundation's sole purpose was to support the public university and where the foundation performed only activities the university itself was authorized to conduct.

The most important factors for a sharing arrangement to survive judicial challenge: (1) the foundation's sole or principal purpose should be to support the state agency; (2) the foundation should engage only in activities the agency is specifically authorized to conduct; (3) the arrangement should be memorialized in writing; (4) the state should retain sufficient control to ensure the public-purpose justification continues to be served.

Before entering into such facility- and personnel-sharing arrangements, state agencies are required to obtain written approval of the governor. Idaho Code § 67-2502.

DATED this 1st day of November, 1995.
ALAN G. LANCE
Attorney General

Analysis by:
WILLIAM VON TAGEN
THOMAS F. GRATTON
Deputy Attorneys General
Intergovernmental and Fiscal Law Division