Can a New Mexico educational-services cooperative use its joint-powers procurement agreement to fund a student scholarship program?

Plain-English summary

Senator David M. Gallegos asked whether Cooperative Educational Services (CES), the state's education-services cooperative, could lawfully establish a scholarship program for students at member colleges and universities. The senator framed the question around the New Mexico Constitution's Anti-donation Clause. The AG never reached the constitutional issue. The advisory letter resolves the question one step earlier: CES does not have the statutory authority to run a scholarship program in the first place.

Here is the chain. CES exists because school districts (and later other state educational institutions) signed a "joint powers agreement" under the Joint Powers Agreements Act (JPAA), authorized by NMSA 1978, § 13-1-135 of the Procurement Code as a cooperative-procurement vehicle. Section 13-1-135(A) caps that kind of agreement at "the procurement of items of tangible personal property, services or construction." The CES Restated and Amended Joint Powers Agreement tracks that language: CES is in the business of "cooperative purchasing services."

A scholarship is a cash disbursement to a student, not a purchase of personal property, services, or construction by the member agencies. It is also not a service that CES provides to its member agencies. So the proposed program would exceed both the statutory cap in § 13-1-135(A) and the scope spelled out in CES's own agreement. Because the question fails on statutory grounds, the AG declined to reach the Anti-donation Clause analysis (a routine application of constitutional avoidance).

The advisory letter is best read as a "no, but here is the path forward" answer. The path forward is not in this letter. If New Mexico wants CES to administer scholarships, the Legislature would need to authorize that activity directly, or CES's authorizing instrument would need a different legal foundation than the cooperative-procurement structure it currently sits on.

What this means for you

If you administer CES or a similar joint-powers cooperative

Do not launch a scholarship program on the theory that the existing JPA covers it. The advisory letter is clear that cooperative-procurement authority does not stretch that far. If a member institution wants its students to benefit from a CES-administered scholarship, the cleanest paths are: (a) ask the Legislature for explicit statutory authority for CES to run scholarship programs, (b) restructure the cooperative under a different enabling statute that authorizes student aid disbursements, or (c) have the member institutions run the scholarships themselves under their own established scholarship authorities.

If you are a school district or state university that is a CES member

Scholarship awards to your students should continue to flow through your own institution's authorities, not through CES. If CES has marketed a scholarship-pool concept to your business office, slow down and confirm the legal basis before you participate; this advisory letter says the basis is not in the JPA you signed.

If you are a state legislator

The advisory letter identifies a structural gap. New Mexico has a well-developed framework for joint procurement among public agencies, but it does not have a parallel framework for joint student-aid programs administered through that procurement vehicle. If pooling resources for student scholarships is good policy, the fix is statutory: amend § 13-1-135 to extend cooperative-procurement authority to certain disbursement programs, or pass a standalone statute authorizing CES (or a successor cooperative) to administer scholarship pools.

If you are a constitutional law researcher interested in the Anti-donation Clause

Note that the AG declined to reach Article IX, § 14. The advisory letter cites Huey v. Lente, 1973-NMSC-098, for the constitutional-avoidance principle: courts and the AG resolve cases on non-constitutional grounds when they can. The Anti-donation question would re-emerge only if the underlying statutory authority issue were cured.

If you are a higher-education attorney

The opinion's framing of "scholarship" turns on whether the disbursement is properly characterized as procurement of services. Tuition reductions and waivers granted by an institution that itself charges tuition can fall within the institution's procurement-adjacent authority (see AG Opinion 97-02 (1997), discussed in the letter). But a third-party administrator (CES) disbursing cash to students of other institutions is a different structure, and the procurement frame does not stretch to cover it.

Common questions

Q: Can a state university in New Mexico still award scholarships?
A: Yes. The advisory letter does not affect a state university's own scholarship authority. AG Opinion 97-02 (1997) recognized that a public educational institution that charges tuition may offer scholarships in the form of tuition reductions or waivers, awarded under a rational and even-handed policy, and within the granting agency's constitutional or statutory authority.

Q: What is CES?
A: Cooperative Educational Services. Under the Restated and Amended Joint Powers Agreement (2018), CES is a cooperative procurement entity that provides member school districts and state educational institutions with "cooperative purchasing services" for tangible personal property, services (ancillary, special-education, placement, food, professional, consultant, etc.), and construction.

Q: Why couldn't CES just amend its JPA to add scholarship authority?
A: Because the cap is statutory, not contractual. NMSA 1978, § 13-1-135(A) limits cooperative-procurement agreements to procurement of tangible personal property, services, and construction. A JPA cannot grant powers that the underlying enabling statute does not authorize. To go beyond procurement, CES would need a different enabling statute.

Q: What did the senator's request actually propose?
A: According to the advisory letter, CES proposed to establish a scholarship program for students attending member state educational institutions, with the scholarships defraying tuition, books, supplies, and materials. The request did not provide structural details (eligibility, award amount, governance), but the program clearly involved disbursement of funds rather than purchase of property, services, or construction.

Q: What is the Anti-donation Clause?
A: New Mexico Constitution, Article IX, § 14, generally prohibits the State or any political subdivision from making any donation to or in aid of any person, association, or public or private corporation. There are constitutional exceptions and statutory carve-outs, and a substantial body of NM case law on what counts as a "donation." The advisory letter declined to reach this clause because the statutory-authority issue resolved the question.

Q: Is an "advisory letter" different from a formal AG opinion?
A: It is the same office speaking, but in a less formal posture. An advisory letter (sometimes called a "letter opinion") still represents the AG's considered legal view and is publicly available. It carries the same persuasive weight as a formal opinion and is treated by courts and agencies in the same way, even though it is styled differently.

Background and statutory framework

New Mexico's Procurement Code, NMSA 1978, ch. 13, art. 1, governs how state agencies and local public bodies acquire goods and services. Section 13-1-135 is the cooperative-procurement provision: it allows multiple public bodies to pool their purchasing through a single agreement, capturing volume discounts, reducing duplication, and standardizing terms. The statute requires the agreement to "clearly specify the purpose" and the "method by which the purpose will be accomplished," and it caps the subject matter at "items of tangible personal property, services or construction."

The Joint Powers Agreements Act (JPAA), NMSA 1978, §§ 11-1-1 to -7, sits underneath. It authorizes public agencies to "jointly exercise any power common to the contracting parties," and it requires the parties to designate an administering agency that may itself be a board or commission constituted by the agreement. CES was set up exactly that way: a board constituted by a JPA among 89 school districts, with state universities and other educational institutions joining later.

Under § 11-1-5(C), the administering agency "possess[es] the common power specified in the agreement" and must exercise it "in the manner or according to the method provided in the agreement, subject to . . . the restrictions imposed upon the manner of exercising such power" by the contracting agencies. The New Mexico Court of Appeals' decision in Gebler v. Valencia Reg'l Emergency Commc'ns Ctr., 2023-NMCA-070, treats a JPAA-created entity as an "instrumentality" of the public agencies that created it, with the same powers (and limits) as those parent agencies.

The structural conclusion follows: if the underlying statute and the JPA both define the common power as "procurement," then the entity (CES) cannot do something that is not procurement, no matter how worthy the purpose. Disbursing cash scholarships to students is not procurement of property, services, or construction. It is also not a "service" that CES provides to its member agencies. Both characterizations would have to fail for the program to be authorized; both do.

The Anti-donation Clause analysis the senator originally asked about (Article IX, § 14) would be reached only if the statutory-authority hurdle were cleared. Because it is not, the AG followed the constitutional-avoidance rule articulated in Huey v. Lente, 1973-NMSC-098, and stopped at the statute.

Citations and references

Statutes and constitutional provisions:
- NMSA 1978, § 13-1-135 (cooperative procurement agreements)
- NMSA 1978, § 13-1-135(A) (purpose/method requirement; cap on subject matter)
- NMSA 1978, § 13-1-135(B) (JPAA pathway)
- NMSA 1978, § 13-1-74 (definition of "procurement")
- NMSA 1978, §§ 11-1-1 to -7 (Joint Powers Agreements Act)
- NMSA 1978, § 11-1-3 (joint exercise of common powers)
- NMSA 1978, § 11-1-5(A), (C) (administering agency authority)
- N.M. Const., Art. IX, § 14 (Anti-donation Clause)

Authorities:
- Gebler v. Valencia Reg'l Emergency Commc'ns Ctr., 2023-NMCA-070 (JPAA-created entity is an instrumentality of its parent public bodies)
- Huey v. Lente, 1973-NMSC-098 (constitutional avoidance: resolve on non-constitutional grounds when possible)
- Attorney General Opinion 97-02 (1997) (public educational institutions may offer scholarships as tuition reductions or waivers within their own authority)

Source

• Landing page: https://nmdoj.gov/publication/opinion/2024-01-advisory-letter-cooperative-educational-services-scholarship-authority/
• Original PDF: https://nmdoj.gov/wp-content/uploads/AG_Advisory_2024-01_-Sen._Gallegos-_Educational_Scholarship_Authority.pdf

Original opinion text

January 19, 2024

The Honorable David M. Gallegos
New Mexico State Senator
P.O. Box 998
Eunice, NM 88231

Re: AG Advisory No. 2024-01 — Advisory Letter on Cooperative Educational Services Scholarship Authority

Dear Senator Gallegos:

You requested our advice regarding a proposal by Cooperative Educational Services (CES) to establish a scholarship program for students attending state educational institutions. In particular, you ask whether the program, if implemented, would violate the Anti-donation Clause of Article IX, Section 14 of the New Mexico Constitution. As discussed in more detail below, based on our review of the information provided to us and the applicable law, we are unable to conclude that CES has sufficient legal authority to establish a scholarship program. Because this question is resolved on statutory grounds, we decline to address constitutional issues raised by the proposed program.

CES's Authority to Establish a Scholarship Program

We start with the understanding that public educational institutions that charge tuition may offer scholarships in the form of tuition reductions or waivers. Attorney General Opinion 97-02 (1997). "[T]o be permissible a scholarship must be for the purpose of obtaining public education provided by a government entity, awarded in accordance with a rational and even-handed policy, and within the granting agency's constitutional or statutory authority." Id. These scholarships may not include stipends, reimbursements for living expenses, or cash support. Id.

As explained in your request, CES was created under a cooperative procurement agreement authorized by the Procurement Code, NMSA 1978, § 13-1-135 (1999), and entered into under the Joint Powers Agreements Act (JPAA), NMSA 1978, §§ 11-1-1 to -7 (1961, as amended through 2009). The agreement was initially entered into by 89 school districts in New Mexico, and later amended to include additional parties, including state universities and other state educational institutions. See Restated and Amended Joint Powers Agreement to Establish an Educational Cooperative (2018) (EC Agreement).

Section 13-1-135 authorizes state agencies and local public bodies, as defined in the Procurement Code, to participate in a cooperative procurement agreement "for the procurement of any services, construction or items of tangible personal property." Cooperative procurement agreements entered into under Section 13-1-135 must "clearly specify the purpose of the agreement and the method by which the purpose will be accomplished" and are "limited to the procurement of items of tangible personal property, services or construction." NMSA 1978, § 13-1-135(A). The Code defines "procurement" as "purchasing, renting, leasing, lease purchasing or otherwise acquiring items of tangible personal property, services or construction" and related "procurement functions." NMSA 1978, § 13-1-74 (1984).

Section 13-1-135(B) provides that cooperative procurement agreements may be entered into under the JPAA, which allows public agencies to enter into agreements to "jointly exercise any power common to the contracting parties." NMSA 1978, § 11-1-3 (1983). Similar to Section 13-1-135, the JPAA provides that a joint powers agreement must "clearly specify the purpose of the agreement or for any power which is to be exercised [and] . . . provide for the method by which the purpose will be accomplished and the manner in which any power will be exercised under such agreement."

The JPAA requires the parties to a joint powers agreement to designate an agency to "administer or execute" the agreement. NMSA 1978, § 11-1-5(A) (1961). The designated agency may be one of the parties or, like CES, "a commission or board constituted pursuant to the agreement." Id. The administering agency shall:

possess the common power specified in the agreement and may exercise it in the manner or according to the method provided in the agreement, subject to any of the restrictions imposed upon the manner of exercising such power of one of the contracting public agencies or such restrictions of any public agency participating which may be designated or incorporated in the agreement.

Section 11-1-5(C) (emphasis added). In effect, an entity created under a joint powers agreement authorized by the JPAA is an instrumentality of the public agencies that are parties to the agreement. Gebler v. Valencia Reg'l Emergency Commc'ns Ctr., 2023-NMCA-070, ¶ 12 (holding that an entity created by local public bodies under the JPAA to provide enhanced 911 emergency communications functions was an "instrumentality" of the public bodies and granted immunity from liability under the Tort Claims Act).

The EC Agreement is a cooperative procurement agreement covered by Section 13-1-135. According to the recitals in the Agreement, its purpose is to pool the parties' "efforts and resources in order to bring additional, necessary educational services to their respective institutions at an affordable cost." EC Agreement, p. 1. The common power exercised by the parties to achieve the Agreement's purpose is "the power to procure" or "purchase" services, professional services, construction and tangible personal property. Id.

CES was created under the EC Agreement to "conduct[] cooperative procurements" on behalf of the parties. Id. ¶ 1. As the administrating agency, CES is charged with:

establish[ing] and maintain[ing] a system for providing cooperative purchasing services under the State Procurement Code for tangible personal property, services and construction which includes, but is not limited to, ancillary services, special education services, placement services, food procurement, needs assessments, supplemental employee benefits, construction services, professional services and general consultant services. CES is also authorized to provide services to [the parties] and other participants …

Id. ¶ 2.

The EC Agreement controls CES's authority, if any, to establish a scholarship program. As quoted above, Section 13-1-135(A) of the Procurement Code provides that a cooperative procurement agreement is "limited to the procurement of items of tangible personal property, services or construction." Consistent with this limitation, the EC Agreement authorizes CES to provide "cooperative purchasing services" and the common power specified for carrying out the Agreement's purposes is "the power to procure" tangible personal property, services, and construction.

Conclusion

According to the request, CES proposes to establish a scholarship program for students attending state educational institutions that are parties to the EC Agreement. The scholarships "would defray costs associated with tuition, books, supplies, and materials charged by higher educational institutions." The request does not provide details regarding the structure or operation of the proposed program. However, it is clear from the request that the scholarship program would include a disbursement of funds, not a procurement of tangible personal property, services, or construction. This program also would not be considered a service provided by CES to the public agencies that are parties to the EC Agreement. Based on the limitations recognized by Section 13-1-135(A) and included in the EC Agreement, this program would exceed the scope of CES's authority.

Based on the information available to us at this time, we are unable to conclude that CES has sufficient authority to establish a scholarship program under the EC Agreement and applicable law. We do not discuss the Anti-donation Clause because we refrain from addressing constitutional issues unnecessarily. Cf. Huey v. Lente, 1973-NMSC-098, ¶ 5 (discussing a similar principle as a matter of judicial restraint).

If our office may be of further assistance, please let us know. Your request to us was for a formal Attorney General's opinion on the matters discussed above. Such an opinion would be a public record, available to the general public. Although we are responding to your request in the form of a letter rather than a formal opinion, we believe this letter is also a public document.

Sincerely,

Todd S. Baran
Assistant Attorney General