How may a Mississippi city spend opioid settlement funds, and can it donate those funds to a nonprofit?

Plain-English summary

The City of Gulfport's attorney asked how the city can spend money received from the national opioid litigation settlement and whether the city can donate some of that money to a nonprofit doing social services work that the settlement also authorizes. The court that approved the settlement permits a wide range of opioid-abatement uses; the question is whether Mississippi state law adds limits.

The AG's answer: settlement money paid to a Mississippi municipality is public money, full stop. The Mississippi Supreme Court said as much in Pickering v. Hood, 95 So. 3d 611 (Miss. 2012). Once it is public money, it is governed by the same state-law expenditure rules that apply to any other municipal money, regardless of what the settlement agreement permits.

The opioid settlements have a wrinkle. The State entered into the litigation, and the State's settlement agreement and the participation agreements/MOUs that local government units signed before settlement say that funds distributed directly to local government units "may be spent for opioid abatement or any purpose deemed appropriate by said County or Municipality." So the abatement requirements bind the State, not the locality. The funds in the locality's hands are no different, in legal character, from any other settlement money: they are public funds subject to state law.

State law on municipal donations is restrictive. Section 21-17-5(2) prohibits municipal donations unless specifically authorized by statute. Two statutes specifically authorize municipal contributions to nonprofits, and both are matching-fund statutes:

• Section 21-19-65 lets a city spend general-fund money to "match any other funds for the purpose of supporting social and community service programs," with examples like juvenile residential treatment centers, half-way houses, prenatal care facilities, child day care, mentally ill / alcoholic half-way houses, child and adult emergency shelters, and elderly home health aide programs.
• Section 21-17-1(8) lets a city spend money to "match any state, federal or private funding for any program administered by the State of Mississippi, the United States government or any nonprofit organization that is exempt under 26 USCS Section 501(c)(3) from paying federal income tax."

Both statutes require matching, not outright donations. The AG concluded that any donation must comply with that matching requirement.

What this means for you

For mayors and city finance officers

Treat opioid settlement money as ordinary municipal public funds. State spending rules apply. Procurement rules apply. Documentation rules apply. State Auditor oversight applies (Section 7-7-211). The settlement court order does not unlock spending authority that state law does not give the city, but the settlement does not create new state-law restrictions either; the analysis collapses back to what the city could otherwise do with public money.

If the city wants to fund a nonprofit's social services work using these settlement dollars, the only path is matching under Section 21-19-65 or Section 21-17-1(8). That means the nonprofit (or another funder) has to bring matching funds to the table. The city cannot just write a check.

For city attorneys

Section 21-17-5(2)'s prohibition on donations is one of the recurring trip wires for Mississippi municipalities. The AG opinion in MS AG Op., LeSure (Dec. 10, 2010), restates the principle: "[a] municipality may not donate municipal funds or municipal real or personal property to a private nonprofit corporation without specific statutory authority to do so." For opioid settlement spending in particular, the safest plan is in-house spending on opioid-abatement activities the city itself can administer or, if working with a nonprofit, structuring the engagement either as a procurement (city pays for services rendered) or as a matching contribution under Section 21-19-65 or 21-17-1(8).

The Division of Technical Assistance at the Office of the State Auditor is a useful early consult on specific expenditures.

For nonprofit organizations seeking opioid settlement funding from cities

A Mississippi city cannot simply donate to your organization out of these funds. There are two viable paths. First, you can match the city's contribution dollar-for-dollar (or per Section 21-19-65 / 21-17-1(8)'s rules) and the city's contribution becomes a matching fund. Second, you can contract with the city as a service provider, with the city procuring your services in accordance with state procurement law. The contract pathway is not addressed by this opinion but is a recognized state-law pattern for municipal-nonprofit collaboration.

For state legislators

The Bruni opinion exposes a friction between the way the opioid settlement framework was designed (with broad local discretion to spend on abatement) and Mississippi's more restrictive municipal-spending statutes. The legislature could clarify either direction: by giving cities express authority for direct grants from settlement funds to nonprofits providing opioid-abatement services, or by leaving the matching-only framework in place. As written, only the matching framework applies.

Common questions

Are opioid settlement funds paid to a Mississippi city public funds?

Yes. Pickering v. Hood, 95 So. 3d 611 (Miss. 2012), held that money paid to the State of Mississippi in settlement of a lawsuit is public money. The same principle applies to a city. Once received, the money is subject to state-law spending rules.

Doesn't the court's approval of the settlement let a city use the money any way the court permits?

No. The court order and the participation agreements bind the State on opioid-abatement obligations. The funds distributed to the locality are public funds subject to state law. The court order does not override state-law spending limits.

Can a Mississippi city donate to a nonprofit?

Only with specific statutory authority. Section 21-17-5(2) generally prohibits donations. Two statutes provide specific authority, and both require matching: Section 21-19-65 (social and community service programs) and Section 21-17-1(8) (programs administered by the state, federal government, or 501(c)(3) nonprofits).

What programs does Section 21-19-65 cover?

Social and community service programs "including, but not limited to, juvenile residential treatment centers; juvenile and half-way houses; prenatal care facilities; child day care facilities; mentally ill and alcoholics half-way houses; child and adult emergency shelters; elderly home health aides programs."

What does Section 21-17-1(8) cover?

"Match any state, federal or private funding for any program administered by the State of Mississippi, the United States government or any nonprofit organization that is exempt under 26 USCS Section 501(c)(3) from paying federal income tax."

So does that mean the city can never give settlement money to a nonprofit?

The city can use settlement money as a matching contribution to a qualifying program under Section 21-19-65 or Section 21-17-1(8). It cannot make an outright donation. Procurement-style contracts where the city pays for services rendered are not "donations" and are not addressed by this opinion.

What if the city wants to do the abatement work itself?

That is allowed. The city can spend settlement funds on its own opioid-abatement activities, subject to state procurement law, the State Auditor's regulations, and any applicable settlement-agreement obligations the State may have flowed down through the participation agreement.

Background and statutory framework

Section 21-17-5(2) prohibits municipal donations except as specifically authorized by statute.

Section 21-19-65 authorizes municipalities to expend general-fund money to "match any other funds for the purpose of supporting social and community service programs," with non-exclusive examples.

Section 21-17-1(8) authorizes municipalities to expend money to match state, federal, or private funding for programs administered by the State, the federal government, or 501(c)(3) nonprofits.

Section 7-7-211 sets out the State Auditor's powers and duties, including review of municipal expenditures.

Pickering v. Hood, 95 So. 3d 611, 619 (Miss. 2012), holds that "[m]oney paid to the State of Mississippi in settlement of a lawsuit is public money."

MS AG Op., Bailey (Oct. 12, 2007) consistently opines that money received by a governmental entity becomes public funds and may only be expended in accordance with state law.

MS AG Op., LeSure (Dec. 10, 2010) restates the donation-prohibition rule for municipalities.

Citations

• Miss. Code Ann. § 21-17-5(2)
• Miss. Code Ann. § 21-19-65
• Miss. Code Ann. § 21-17-1(8)
• Miss. Code Ann. § 7-7-211
• Pickering v. Hood, 95 So. 3d 611 (Miss. 2012)
• MS AG Op., Bailey (Oct. 12, 2007)
• MS AG Op., LeSure (Dec. 10, 2010)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/12/J.-Bruni-November-19-2024-Municipal-Expenditure-of-Litigation-Settlement-Funds.pdf

Original opinion text

November 19, 2024
Jeffrey S. Bruni, Esq.
City Attorney
P. O. Box 1780
Gulfport, Mississippi 39502-1780
Re:

Municipal Expenditure of Litigation Settlement Funds

Dear Mr. Bruni:
The Office of the Attorney General has received your request for an official opinion.
Background
According to your request, you are seeking clarity on the authority the City of Gulfport ("City")
to utilize monies that it receives as a result of a court settlement, in this case an approved settlement
of litigation against various manufacturers of opioid medications ("the opioid litigation"). You
specifically state that you are not asking our office to interpret or give any opinion regarding the
requirements associated with the Court's settlement terms or conditions.
Questions Presented
1. Must the settlement funds in the opioid litigation received by a municipality be expended in
accordance with state law even if the Court permits or allows certain uses of the monies by
municipalities?
2. May a municipality donate municipal funds (in this case, funds received as a result of the opioid
litigation settlement) to a non-profit (generally, one that focuses on certain social services) to fund
activities that are authorized under the settlement requirements?
3. If a municipality may make such a donation, must the City's donation to the non-profit be
donated as matching funds or may such a donation be given outright to fund such activities?
Notably, we are aware of Mississippi Code Annotated Sections 21-19-65 and 21-17-1(8).

Brief Response
This office does not opine on or interpret judicial orders or settlement agreements. However, for
informational purposes, we provide the following background on the opioid litigation. As a general
matter, while the opioid settlements entered into by the State include requirements for use of
certain funds on opioid abatement purposes, we refer you to the participation agreements and
MOUs into which the City and all Mississippi local government units entered prior to approval of
the settlement agreements. Those terms state that funds distributed directly to local government
units, "may be spent for opioid abatement or any purpose deemed appropriate by said County or
Municipality." The abatement requirements apply to the State, not the individual locality. Thus,
the fact that the funds in question are received as a result of these settlements does not make them
different from funds received by the City from any other settlement. The same rules for use of
appropriation of public money apply.
1. Settlement funds paid to a municipality are public funds and must be spent in accordance with
state law.
2. Regardless of restrictions placed on the funds in any settlement agreement, municipalities are
prohibited from granting any donation unless specifically authorized by statute.
3. Any donation made pursuant to Sections 21-19-65 and 21-17-1(8) must comply with the
requirement for matching funds.
Applicable Law and Discussion
The Mississippi Supreme Court has held that "[m]oney paid to the State of Mississippi in
settlement of a lawsuit is public money." Pickering v. Hood, 95 So. 3d 611, 619 (Miss. 2012). This
office has consistently opined that once a governmental entity, in this case a municipality, accepts
money, it becomes public funds and may only be expended in accordance with state law. MS AG
Op., Bailey at 1 (Oct. 12, 2007). Accordingly, in response to your first question, expenditures of
any settlement funds by the City must be in accordance with state law and any applicable public
purchasing laws and are subject to any applicable regulations by the Office of the State Auditor.
See Miss. Code Ann. § 7-7-211.
With respect to your second question, municipalities are prohibited from granting any donation
unless specifically authorized by statute. Miss. Code Ann. § 21-17-5(2); see MS AG Op., LeSure
at 1 (Dec. 10, 2010) (opining that "[a] municipality may not donate municipal funds or municipal
real or personal property to a private nonprofit corporation without specific statutory authority to
do so."). Thus, a municipality may only donate funds received as a result of the opioid litigation
settlement to a non-profit organization if there is specific statutory authority to do so.
As you note in your request, Section 21-19-65 specifically grants municipalities:
the power to expend monies from the municipal general fund to match any other
funds for the purpose of supporting social and community service programs
including, but not limited to, juvenile residential treatment centers; juvenile and
half-way houses; prenatal care facilities; child day care facilities; mentally ill and
alcoholics half-way houses; child and adult emergency shelters; elderly home
health aides programs.
Further, Section 21-17-1(8) grants municipalities the discretion to "expend municipal funds to
match any state, federal or private funding for any program administered by the State of
Mississippi, the United States government or any nonprofit organization that is exempt under 26
USCS Section 501(c)(3) from paying federal income tax." In response to your third question, any
donation made pursuant to either of these two statutes must comply with the requirement for
matching funds. In summary, regardless of restrictions placed on the funds in any settlement
agreement, those funds received by a municipality as a result of the settlement of litigation are
public funds and must be expended in accordance with Mississippi state law. We suggest that you
contact the Division of Technical Assistance in the Office of the State Auditor if you have any
questions regarding specific expenditures of these settlement funds.
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/ Beebe Garrard
Beebe Garrard
Special Assistant Attorney General