Could Louisiana advance ancillary appropriation funds for nonprofit capital construction and collect repayment over several years?

Plain-English summary

Louisiana's commissioner of administration asked whether a state agency could receive an advance from the Ancillary Appropriations Act to support a cooperative endeavor with a nonprofit for capital construction, with repayment over more than one year. In the official opinion, the AG said it could not.

The AG read Act 32 of the 2001 Regular Session as funding ancillary operations and working capital, not capital outlay. It also said an advance on an appropriation had to be repaid within the same fiscal year because the appropriation itself was valid for only one year. The opinion added that such an advance could also be argued to constitute a prohibited loan of public funds.

Currency note

This opinion was issued in 2002. 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

Could the ancillary fund advance pay for nonprofit capital construction?
The AG said no. It read the fund's purpose as operational rather than capital outlay.

Could the advance be repaid over more than one fiscal year?
The opinion said no; an advance on an appropriation had to be repaid within the fiscal year of that appropriation.

Did the AG make a separate public-funds argument?
It said the proposed cooperative-endeavor advance could also be argued to be a loan of public funds prohibited by the cited constitutional provision.

Background and statutory framework

The opinion examined Section 8 and Section 1 of Act 32 of the 2001 Regular Session. It distinguished operational ancillary funds from capital outlay and cited Louisiana constitutional provisions governing capital budgets, annual appropriations, and public funds.

Citations and references

• Act 32 of the 2001 Regular Session (ancillary appropriations)
• La.Const. Art. VII, Sec. 14 (public funds provision cited by the AG)
• Louisiana constitutional appropriation provisions quoted in the original text

Source

• Landing page: https://www.ag.state.la.us/Opinions
• Original PDF: https://www.ag.state.la.us/Opinion/Download/02-0030

Original opinion text

~t~te o~ ~oui~i~
One American Place
301 Mare Street, Suite 600
DEPARTMENT OF JUSTICE
P O. Box 94005
CIVIl_ DIVISION
TEL. ~225,342-701.3
FAX: (225/ 342-2090
BATON ROUGE
RICHARD P. IEYOUB
70804-9005
ATTORNEY GENERAL
FEB ,~ 0 2002
OPINION NUMBER 02-0030

APPROPRIATIONS

La. Const. Art. VII, §11 La. Const. Art. III, §16; La.
Mr. Mark C. Drennen
Const. Art. VII, §10; Act 32 of 2001
Commissioner of Administration
An advance of funds from the Ancillary Appropriations Act may
P. O. Box 94095
not be made to a state agency to support a cooperative
Baton Rouge, LA 70804
endeavor agreement between the agency and a non-profit
corporation to support non-operational activities to be repaid over a period of more than one year.
Dear Commissioner Drennen:

You requested the opinion of this office concerning whether an advance of funds from the advance appropriation contained in the Ancillary Appropriations Act may be made to a state agency to support a cooperative endeavor agreement between the agency and a non-profit corporation to support non-operational activities (capital construction) to be repaid over a period of more than one year.

The appropriation to which you are referring is found in Section 8 of the 2001-2002 Ancillary Appropriation Act, Act 32 of the 2001 Regular Session ("Act 32"), and states as follows:

"Section 8. Auxiliary Funds. These funds are for the establishment of an Auxiliary Fund to finance the operation of a subsidiary support activity and properly reported as a governmental fund type under generally accepted accounting principles.

DEPARTMENT OFTHETREASURY

For providing monies to establish petty cash, travel imprest funds and "seeding" of appropriations as authorized and approved by the commissioner of administration

Payable from:
State General Fund be it more or less estimated at: $1,000,000"

Section 1 of Act 32 provides that the appropriations in the Act are for the establishment and reestablishment of agency ancillary funds, the money in which shall be used for working capital in the conduct of business enterprises rendering public service, auxiliary service and interagency service. Act 32 clearly contemplates that the appropriated funds are to be used for operational purposes, not for non-operational activities, such as capital

Page 2

Commissioner Mark C. Drennen
OPINION NUMBER 02-0030
Page -2-

outlay. Capital outlay projects are properly included in the capital budget not in an operating budget. See La.Const. Art. VII, Sec. 11.

A seed is an advance on an appropriation. Appropriation acts are only valid for one year. La. Const. Art. III, Sec. 16; Art. VII, Sec. 10. If a seed could be repaid over a period of more than one year, the appropriation which was seeded would have expired and could not be repaid. This is contrary to the concept of a seed or advance of an appropriation. Seeds must be repaid within the same fiscal year in which the appropriation is made.

It could also be argued that seeding a cooperative endeavor between a state agency and a non-profit corporation is a loan of public funds in violation of La.Const. Art. VII, Sec. 14.

Based upon the foregoing, it is the opinion of this office that an advance of funds from the advance appropriation contained in the Ancillary Appropriations Act may not be made to a state agency to support a cooperative endeavor agreement between the agency and a non-profit corporation to support non-operational activities (capital construction) to be repaid over a period of more than one year.

Trusting this adequately responds to your request, we remain

Yours very truly,
/’
RICHARD P. IEYOUB
Attorney General

/ AsSistant Attorney General

RPI/MSH