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) could establish a scholarship program for students at member educational institutions without violating New Mexico's Anti-donation Clause. The AG's office did not reach the constitutional question. Based on the information supplied, it could not conclude that CES had sufficient authority under its agreement and the applicable procurement law.

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."

The proposed program would disburse funds to defray tuition, books, supplies and materials. The letter said that was not procurement of property, services or construction, nor a service CES provided to the member agencies. It would therefore exceed the scope of CES's authority under this agreement and § 13-1-135(A). The office declined to reach the Anti-donation Clause.

The letter gives no legislative or organizational plan for creating a scholarship program. Its conclusion is limited to the proposal and authority described in the request.

What this means for you

If you administer CES or a similar joint-powers cooperative

Before using the existing agreement for a scholarship program, compare the proposed disbursement with CES's specified procurement powers. The letter found the proposal described here outside those powers. It does not decide whether another arrangement could be authorized.

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

The letter distinguishes CES's proposed program from tuition reductions or waivers offered by an educational institution that charges tuition, which it discusses through AG Opinion 97-02. Check your own institution's authority separately; this letter does not decide a member institution's specific program.

If you are a state legislator

The letter says CES's cooperative procurement agreement does not cover the proposed scholarship disbursements. It does not recommend an amendment to § 13-1-135 or another statute.

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

The office declined to analyze Article IX, § 14 because it could resolve the request on statutory-authority grounds. It cited Huey v. Lente, 1973-NMSC-098, on avoiding unnecessary constitutional questions.

If you are a higher-education attorney

The letter discusses AG Opinion 97-02, which addressed tuition reductions or waivers by an institution that charges tuition and acts within its own authority. It treats CES's proposed fund disbursements differently because they are outside the procurement power specified for CES.

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: The letter says both NMSA 1978, § 13-1-135(A) and CES's existing agreement limit the cooperative procurement power. It does not analyze a proposed amendment to the agreement or identify another legal structure.

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: The senator asked whether the proposed scholarship program would violate Article IX, § 14 of the New Mexico Constitution. The letter does not analyze the clause because the office resolved the request on CES's statutory authority.

Q: Is an "advisory letter" different from a formal AG opinion?
A: The office said the senator requested a formal opinion but received this response as a letter. It stated that the letter, like a formal opinion, is a public document. It did not compare their legal weight or treatment by courts.

Background and statutory framework

Section 13-1-135 of New Mexico's Procurement Code permits cooperative procurement agreements for services, construction and tangible personal property. The agreement must specify its purpose and method, and the statute limits it to procurement of those categories.

The Joint Powers Agreements Act (JPAA), NMSA 1978, §§ 11-1-1 to -7, permits public agencies to "jointly exercise any power common to the contracting parties." The parties designate an administering agency, which may be a board constituted by their agreement. CES's agreement began with 89 school districts and later added other educational institutions.

Under § 11-1-5(C), the administering agency possesses the common power specified in the agreement and exercises it according to the agreement's method and restrictions. The letter cites Gebler v. Valencia Reg'l Emergency Commc'ns Ctr., 2023-NMCA-070, for describing a JPAA-created entity as an instrumentality of its constituent public bodies.

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