Can a Mississippi county pay each employee a $1,000 ARPA bonus for staying on the job during the pandemic?

Plain-English summary

Issaquena County wanted to thank its employees for staying on the job during the pandemic by giving each of them a $1,000 bonus from American Rescue Plan Act (ARPA) money the county had received. The board's president asked the AG whether that was legal.

The AG said no, and the analysis is short and structural.

The opinion makes two upfront limits clear. First, the AG does not interpret federal law. ARPA's federal rules govern federal eligibility, but the AG's office cannot decide whether a particular county expenditure satisfies those rules. Second, once ARPA funds are deposited in the state's or county's treasury, Mississippi state-law rules also apply. So the question gets analyzed under state law, and the federal-law half is left for federal authorities.

On the state-law side, the answer comes from two provisions of the Mississippi Constitution. Article 4 § 66 prohibits laws granting "a donation or gratuity in favor of any person or object" except by a two-thirds legislative vote. Article 4 § 96 prohibits granting "extra compensation, fee, or allowance, to any public officer, agent, servant, or contractor, after service rendered or contract made."

Mississippi has applied those prohibitions to retroactive bonuses for years. The AG's prior opinions are unanimous: a public entity cannot pay employees extra compensation or bonus payments for past services because doing so would equate to an unlawful donation. The Eleuteris (2013) opinion said it directly. The Adams (2003) opinion said teachers under contract for the school year could not get extra pay for services already rendered. The Chiles (2020) opinion was the closest precedent: "A county may only expend county funds for incentive pay, including 'hazard pay,' when such incentives are contracted for prior to the date when services are to be performed."

Issaquena's proposal was for past service. The employees stayed on the job during the pandemic. Their employment contracts already governed that work. A new $1,000 payment would be added compensation for services already covered by contract. That is exactly what §§ 66 and 96 prohibit.

The opinion does not separately analyze prospective premium or hazard pay, but the Chiles opinion it relies on says a county may expend funds for incentive pay, including hazard pay, "when such incentives are contracted for prior to the date when services are to be performed."

What this means for you

For county boards of supervisors considering ARPA-funded employee pay

Under the opinion, the board cannot grant "additional compensation for services already rendered and included in a previously agreed upon contract"; a $1,000 bonus for past pandemic work would violate Sections 66 and 96. The opinion relies on Chiles (2020), which says a county "may only expend county funds for incentive pay, including 'hazard pay,' when such incentives are contracted for prior to the date when services are to be performed." So the line the opinion draws is between a backward-looking bonus (prohibited) and incentive or hazard pay contracted for before the service.

For county employees hoping for a pandemic bonus

Under the opinion, a retroactive bonus for past work, paid from county funds (including ARPA money once it is in the county treasury), is barred by Sections 66 and 96. The opinion is explicit that "once turned over to the state, the rules for expenditure of state funds also apply," so the state-law prohibition governs regardless of the federal source.

For city officials and others advising public employers

The same constitutional provisions reach municipalities and other public employers, and Section 96 expressly lists "contractor" alongside "public officer, agent, servant." The opinion separates two questions and answers only the state-law one: it declines to interpret the federal ARPA rules (citing Snell), and holds that under state law Sections 66 and 96 prohibit extra compensation for services already rendered under contract. Federal eligibility to use ARPA money in a category does not override that state-law prohibition.

Common questions

Q: Can a Mississippi county ever pay incentive pay to its employees?
A: Yes, prospectively. The opinion relies on Chiles (2020), which holds a county "may only expend county funds for incentive pay, including 'hazard pay,' when such incentives are contracted for prior to the date when services are to be performed." What it bars is a payment for work already done under an existing contract.

Q: Why doesn't the federal source of the money override state law?
A: Because, as the opinion puts it, "once turned over to the state, the rules for expenditure of state funds also apply." The AG declines to interpret the federal ARPA rules and analyzes only the state-law authority to use county funds for the bonus.

Q: What if the recipient is a contractor, not a county employee?
A: Sections 66 and 96 reach contractors too. Section 96 bars granting "extra compensation, fee, or allowance, to any public officer, agent, servant, or contractor, after service rendered or contract made," so a retroactive payment to a contractor for completed work raises the same problem.

Q: Does this opinion address other ARPA expenditures?
A: No. The opinion is limited to the donation and extra-compensation question for employee bonuses. It does not address other uses of ARPA funds, and it does not opine on the federal rules at all.

Background and statutory framework

The opinion turns on two provisions of the Mississippi Constitution. Article 4, Section 66 provides that "[n]o law granting a donation or gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds of the members elect of each branch of the Legislature." Article 4, Section 96 provides that "[t]he Legislature shall never grant extra compensation, fee, or allowance, to any public officer, agent, servant, or contractor, after service rendered or contract made." The opinion applies both to a county board of supervisors.

Prior opinions cited in the opinion form a consistent line: paying employees extra compensation or bonuses for past services "would equate to an unlawful donation" (Eleuteris 2013); teachers under contract could not be given extra pay for services already rendered (Adams 2003); and incentive pay, including hazard pay, must be contracted for before the service (Chiles 2020). The opinion also notes that it cannot interpret federal law (Snell 2018), and that once ARPA funds are turned over to the state, state expenditure rules apply (Adams 2003).

Citations

• Miss. Const. Art. 4, § 66 (prohibition on donations)
• Miss. Const. Art. 4, § 96 (prohibition on extra compensation after service rendered or contract made)
• MS AG Op., Snell (Mar. 16, 2018) (AG does not interpret federal law)
• MS AG Op., Adams (Jan. 10, 2003) (state spending rules apply to federal funds in state treasury; retroactive teacher bonuses prohibited)
• MS AG Op., Eleuteris (Nov. 1, 2013) (extra compensation for past services equates to unlawful donation)
• MS AG Op., Chiles (Nov. 10, 2020) (incentive pay, including hazard pay, must be contracted for before service)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2022/09/W.Holcomb-September-7-2022-Donation-of-ARPA-Funds-to-County-Employees.pdf

Original opinion text

September 7, 2022
William E. Holcomb, III
President, Issaquena County Board of Supervisors
Post Office Box 27
Mayersville, Mississippi 39113
Re:

Donation of ARPA Funds to County Employees

Dear Mr. Holcomb:
The Office of the Attorney General has received your request for an official opinion.

Question Presented
Is it legal for the Issaquena Board of Supervisors to donate one thousand dollars ($1,000.00) each
from American Rescue Plan Act funds deposited into the county treasury to county employees that
stayed on the job during the pandemic and are still employed by the county?
Brief Response
Sections 66 and 96 of the Mississippi Constitution prohibit the Issaquena Board of Supervisors
from granting additional compensation for services already rendered and included in a previously
agreed upon contract.

Applicable Law and Discussion
As an initial matter, we are aware that the federal government has issued rules and regulations
governing the expenditure of American Rescue Plan Act ("ARPA") funds, and note, for
informational purposes, that any expenditure of ARPA funds by the county must comply with any
applicable federal rules and regulations governing the same. However, this office is not authorized
to interpret or opine on federal laws or regulations by official opinion. See, e.g., MS AG Op., Snell
at 2 (Mar. 16, 2018). Thus, we must decline to respond by way of an official opinion regarding
the legality of using federal funds in a specific manner in accordance with federal laws and
regulations. Once turned over to the state, the rules for expenditure of state funds also apply. MS
AG Op., Adams at 1 (Jan. 10, 2003). Therefore, we offer the following opinion limited to the
authority of a county board of supervisors to use county funds for donations to employees.

Article IV, Section 66 of the Mississippi Constitution provides, "[n]o law granting a donation or
gratuity in favor of any person or object shall be enacted except by the concurrence of two-thirds
of the members elect of each branch of the Legislature, nor by any vote for a sectarian purpose or
use." Further, Article IV, Section 96 provides, in relevant part, "[t]he Legislature shall never grant
extra compensation, fee, or allowance, to any public officer, agent, servant, or contractor, after
service rendered or contract made, nor authorize payment, or part payment, of any claim under
any contract not authorized by law…."
We have previously said that Sections 66 and 96 prohibit a public entity from paying employees
extra compensation or bonus payments for past services because doing so would equate to an
unlawful donation. MS AG Op., Eleuteris at 1 (Nov. 1, 2013). See also MS AG Op., Adams at
1 (Jan. 10, 2003) (teachers who were currently under contract to perform services during school
year could not be given extra compensation for services already rendered and covered by contract);
MS AG Op., Chiles at *1 (Nov. 10, 2020) ("A county may only expend county funds for incentive
pay, including 'hazard pay,' when such incentives are contracted for prior to the date when
services are to be performed.") Therefore, the board of supervisors could not legally donate funds
from the county treasury to county employees for services already rendered because those services
were performed pursuant to a previously agreed upon contract. Such use of the funds would be in
direct violation of both Sections 66 and 96.
If this office may be of any further assistance to you, please do not hesitate to contact us.
Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By:

/s/ Abigail C. Overby
Abigail C. Overby
Special Assistant Attorney General