Does the Oklahoma Housing Finance Agency (OHFA) have to follow state agency rules for purchasing, finance, and consulting like other state agencies?

Plain-English summary

OHFA's chairman asked whether the agency has to follow three state-agency procurement and finance laws: the Central Purchasing Act (CPA), the State Finance Act (SFA), and the State Consultants Act (SCA). The Attorney General said mostly no.

OHFA is a "public trust" created in 1975 under 60 O.S. § 176, not a state agency. The CPA and SCA define "state agency" as offices, officers, bureaus, etc., that are part of the executive or judicial branch of state government. The SFA's definition is similar (executive department only). Public trusts are organized to benefit the State but are statutorily separate and distinct from it. They are not part of the executive branch.

The opinion withdraws an old 1984 OK AG opinion (1984 OK AG 135) that had concluded public trusts are state agencies. It aligns the AG's position with later opinions (1986 OK AG 131, 1996 OK AG 47) and the Oklahoma Supreme Court's analysis in Oklahoma City Zoological Trust v. State ex rel. PERB (2007) holding that the trustee-as-agent provisions in 60 O.S. § 179 only address liability limitations.

The trustees themselves are public officers (created by law, with imposed duties, exercising sovereign power, per the three-part test in Oklahoma City v. Century Indem.). But being public officers does not make the trust they administer a "state agency." The trust is a separate legal entity from the State.

Two narrow SFA exceptions apply because they expressly cover state beneficiary public trusts:

• 62 O.S. § 34.11.3(C): publications submission to the Chief Information Officer.
• 62 O.S. § 34.11.4: forms submission to the Chief Information Officer.

OHFA must comply with these. Otherwise, OHFA's procurement, contracting, and finance operations are governed by its trust indenture and trustee-set policies, not the CPA/SFA/SCA.

The opinion notes that the 2023 Housing Stability Program (74 O.S. §§ 2903 et seq.) explicitly exempted OHFA from the CPA and other state-finance laws. The AG reads that exemption as confirming the Legislature's understanding that OHFA was already outside the CPA, not as implying the rest of OHFA's operations are inside the CPA.

What this means for you

If you are an OHFA trustee or executive

Continue operating under your trust indenture and trustee-adopted policies for procurement, contracting, and consultants. You are not bound by the Central Purchasing Act, the State Consultants Act, or most of the State Finance Act. Two things to comply with:

1. Submit publications to the Chief Information Officer per 62 O.S. § 34.11.3(C).
2. Submit forms to the Chief Information Officer per 62 O.S. § 34.11.4.

You retain compliance obligations under other generally-applicable statutes (Open Meeting Act, Open Records Act, fiduciary duties under your indenture, federal compliance for HUD-funded programs, etc.). The opinion only addresses CPA/SFA/SCA.

If you are a vendor to OHFA

OHFA's procurement processes are set by its trustees and trust indenture, not the CPA. There is no statewide bidding portal requirement. Watch the OHFA website and trustee-adopted procurement rules for solicitation processes. Disputes about procurement go through OHFA's own dispute resolution channels, not OMES.

If you are at OMES (Office of Management and Enterprise Services)

OHFA is outside your CPA jurisdiction. Direct any OHFA procurement matters back to OHFA itself. Your role for OHFA is limited to the publications and forms submissions under 62 O.S. § 34.11.3(C) and § 34.11.4.

If you are at the State Auditor and Inspector

OHFA is still subject to audit, but the audit framework is the Public Trusts Act and OHFA's own indenture, not the CPA. Continue auditing per your usual public-trust procedures.

If you are an Oklahoma legislator

If you want OHFA bound by the CPA, SFA, or SCA, you would need to amend the statutes to expressly include public trusts in the definition of "state agency." The AG's position is that the absence of "public trust" from those definitions reflects legislative intent. Amending those acts (or the Public Trusts Act) to extend coverage would be the path.

If you administer another state beneficiary public trust

The opinion's logic likely extends to other state beneficiary public trusts (state higher education foundations, state-beneficiary economic development trusts, etc.), unless those trusts are otherwise expressly subject to a particular act. Review your indenture and check the relevant statutes for express inclusion language.

Common questions

Q: What is OHFA?
A: The Oklahoma Housing Finance Agency, a public trust created May 1, 1975 with the State as beneficiary. It works to provide adequate housing for Oklahomans, including by issuing mortgage revenue bonds and administering federal housing programs.

Q: What is a "public trust" under Oklahoma law?
A: A trust created under 60 O.S. §§ 176–180 to further public functions of the State, county, or municipality. Public trusts have trustees, a trust indenture, and operate as legal entities separate from their beneficiaries.

Q: Why isn't OHFA a state agency?
A: Because it is a public trust, organized under § 176, that operates "separate and independent from the affairs of the beneficiary in all matters or activities." § 176.1(D). The CPA, SCA, and SFA all define "state agency" by reference to entities within the executive branch. OHFA is not within the executive branch.

Q: But OHFA's trustees are appointed by the Governor.
A: Yes, but the appointment power does not pull OHFA into the executive branch. Many public trusts have governor-appointed trustees. The trust itself remains a separate legal entity.

Q: Are OHFA's funds public funds?
A: The opinion does not directly address this. Other AG opinions (1986 OK AG 131) have held that public trust funds are not "public funds" within the same meaning as state agency funds. OHFA's indenture confirms that trust revenues belong to the trust, not the State.

Q: What about OHFA's bond issuances?
A: OHFA's bonds are obligations of the trust, not the State. The trust indenture is explicit that "any indebtedness incurred by the Trustees on behalf of OHFA shall not constitute an indebtedness of the [State]."

Q: What changed in this opinion?
A: The AG formally withdrew 1984 OK AG 135, which had concluded public trusts are state agencies. That conclusion had been informally rejected by 1986 OK AG 131 and 1996 OK AG 47 but never withdrawn. This opinion does the housekeeping.

Q: What about the Open Meeting Act and Open Records Act?
A: Those acts expressly cover public trusts (25 O.S. § 304(1); 75 O.S. § 250.5). They apply to OHFA. The CPA, SFA, and SCA do not have the same express inclusion.

Q: What about the Public Competitive Bidding Act?
A: Outside the scope of this opinion. The 2023 Housing Stability Program statute (74 O.S. § 2903.5) expressly exempted OHFA from the Public Competitive Bidding Act for that program, suggesting OHFA otherwise might be subject. The opinion does not opine on PCBA generally.

Background and statutory framework

Oklahoma's public trust framework was developed in the mid-20th century to allow public functions to be financed and administered through legally separate entities. Title 60, § 176 et seq. authorizes trusts for state, county, or municipal benefit. The trust is a separate legal entity, with trustees acting as fiduciaries. Examples include OHFA, the Oklahoma Industrial Authority, county hospital trusts, and many municipal economic development authorities.

Three threads run through the AG's analysis:

1. The "state agency" definition in the CPA, SFA, and SCA each requires the entity to be part of the executive branch (or, for the CPA, executive or judicial). Public trusts are not part of either branch.

2. The separateness presumption in 60 O.S. § 176.1(D). Public trusts operate separately and independently from their beneficiaries in all matters and activities authorized by their indenture, including budget, expenditures, revenues, and general operation.

3. The trustees-are-public-officers test from Oklahoma City v. Century Indem. (1936) requires three elements: position created by law, definite duties imposed by law, exercise of sovereign power. OHFA trustees meet all three. But making the trustees public officers does not transform the trust itself into a state agency.

The opinion's careful housekeeping (withdrawing 1984 OK AG 135) leaves the AG's position internally consistent. Future state public trusts can rely on this framework. The opinion is binding on state officials.

The AG also flags a textual ambiguity in the CPA: by listing "political subdivisions of the state" as the only excluded entities, the statute could be read to imply that all other entities (including public trusts) are included. The opinion rejects that reading, holding that the express list of included entities (offices, officers, bureaus, etc., of the executive or judicial branches) controls. The "excluding only" clause clarifies the inclusive list, not the universe of excluded entities.

Citations and references

Statutes:
- 60 O.S. § 176 et seq. (Public trusts)
- 74 O.S. § 85.2 (CPA state agency definition)
- 62 O.S. § 34.3 (SFA state agency definition)

Cases:
- Oklahoma City Zoological Tr. v. State ex rel. PERB, 2007 OK 21, 158 P.3d 461 (trustee-as-agent only addresses liability)
- Oklahoma City v. Century Indem., 1936 OK 589, 62 P.2d 94 (three-element public office test)
- Shotts v. Hugh, 1976 OK 73, 551 P.2d 252 (OHFA established to provide housing)

Withdrawn AG opinion:
- 1984 OK AG 135 (formerly held public trusts are state agencies)

Source

• Landing page: https://oklahoma.gov/oag/opinions/ag-opinions/2023/ag-opinion-2023-13.html
• Original PDF: https://oklahoma.gov/content/dam/ok/en/oag/opinions/ag-opinions/2023/ag_opinion_2023-13_z-12.pdf

Original opinion text

GENTNER DRUMMOND
ATTORNEY GENERAL
ATTORNEY GENERAL OPINION
2023-13

Mike Buhl, Chairman, Board of Trustees
Oklahoma Housing Finance Agency
P.O. Box 26720
Oklahoma City, OK 73126-0720

December 1, 2023

Dear Chairman Buhl:

This office has received your request for an official Attorney General Opinion in which you ask, in effect, the following questions:

1. Must the Oklahoma Housing Finance Agency ("OHFA") comply with the Central Purchasing Act, title 74, sections 85.1–85.44E of the Oklahoma Statutes ("CPA")?
2. Must the OHFA comply with the Oklahoma State Finance Act, title 62, sections 34–34.501 of the Oklahoma Statutes ("SFA")?
3. Must the OHFA comply with the provisions of title 61, sections 61–65 of the Oklahoma Statutes ("State Consultants Act" or "SCA"), regarding the state construction managers and consultants?

I. SUMMARY

Generally, OHFA is exempt from the CPA, SFA, and SCA. Compliance with these statutes is mandatory if an entity is a "state agency," generally defined as an office or officer that is a part of the executive or judicial branch. The OHFA is a public trust whose beneficiary is the state, and its trustees are public officers. However, neither the OHFA nor its trustees are part of the executive branch. Accordingly, the OHFA and its trustees are not within the scope of the term "state agency" and, therefore, generally not subject to each of these statutes. Notwithstanding, the SFA includes specific provisions that require action by a public trust having the State of Oklahoma as its beneficiary, such as OHFA. Therefore, the OHFA must comply with these limited provisions of the SFA.

II. BACKGROUND

A. Public Trusts in Oklahoma.

Trusts for the benefit of the State, a county, or a municipality may be established under the Trusts for Furtherance of Public Functions provisions of Oklahoma law. See 60 O.S.2021, §§ 176–180.4. In summary, public trusts may be authorized to "provide funds for the furtherance and accomplishment of any authorized and proper public function or purpose of the state[.]" 60 O.S.2021, § 176(A). Beneficiaries may include the State of Oklahoma, its counties or municipalities, or any combination thereof.

In their operations, Oklahoma law provides:

Except where the provisions of the trust indenture or of Section 176 et seq. of this title, or of any other law written specifically to govern the affairs of public trusts, expressly requires otherwise, the affairs of the public trust shall be separate and independent from the affairs of the beneficiary in all matters or activities authorized by the written instrument creating such public trust including, but not limited to, the public trust's budget, expenditures, revenues and general operation and management of its facilities or functions . . . .

60 O.S.2021, § 176.1(D).

B. The OHFA.

OHFA is a public trust created under title 60, section 176(A)(1), and by trust indenture executed on May 1, 1975. OHFA operates for the benefit of the State by fulfilling the public purposes outlined in the Trust Indenture. Generally, the OHFA was established to provide adequate housing for the State's citizens and eliminate substandard housing. Shotts v. Hugh, 1976 OK 73, 551 P.2d 252.

Concerning financial matters, the Trust Indenture establishes that indebtedness incurred by the Trustees on behalf of OHFA "shall not constitute an indebtedness of the [State]," but instead "shall constitute obligations of OHFA payable solely from the Trust Estate[.]"

C. History of Attorney General Opinions Concerning State Beneficiary Public Trusts and the CPA.

This office initially addressed the applicability of the CPA to state beneficiary public trusts in 1984 OK AG 135. That opinion concluded that public trusts are a "state agency." In 1986, this office determined that while the public trustees are an "agency of the state" under title 60, section 179, that agency status only pertains to limitations of their liability and is not a declaration that the trustees are a state agency. Subsequently, this office affirmed the 1986 opinion in 1996 OK AG 47.

III. DISCUSSION

B. Under the CPA, a state beneficiary public trust formed under title 60, sections 176–180, such as the OHFA, is not a "state agency" and is therefore not governed by the CPA.

The CPA defines "state agency" as "any office, officer, bureau, board, counsel, court, commission, department, institution, unit, division, body or house of the executive or judicial branches of the state government."

Whether the OHFA and its trustees are subject to the CPA depends on whether the OHFA is an office or its trustees are officers of the executive or judicial branch.

For a position to constitute an office, all three elements from Oklahoma City v. Century Indem. must be satisfied:

1. The position was created or authorized by law;
2. The law imposes certain definite duties upon the position holder; and
3. The duties imposed involve the exercise of some portion of sovereign power.

The position of public trustee was created by law. The law imposes duties on the public trustees. Trustees are organized to further and accomplish public functions; they are invested with a portion of the sovereign power. Accordingly, OHFA, a state beneficiary public trust, is a public office, and its trustees are public officers. This determination is not dispositive, however, of whether the CPA applies to the OHFA and its trustees; this office must also determine if either is a part of the executive branch.

A review of laws applicable to public trusts and established case law demonstrates that the Legislature intended for public trusts to be separate from the executive branch. Title 60, section 176.1(A) provides that state beneficiary public trusts are presumed "to exist as a legal entity separate and distinct from" the State. All affairs of the public trust shall be separate and independent from the executive branch.

A 2007 decision by the Oklahoma Supreme Court confirms this is the proper determination. Oklahoma City Zoological Tr. v. State ex rel. Pub. Emps. Rels. Bd., 2007 OK 21, 158 P.3d 461. Accordingly, this office concludes that the Oklahoma Housing Finance Agency is not part of the executive branch of state government and is, therefore, not subject to the CPA.

C. OHFA is exempt from the SFA except the provisions that specifically apply to state beneficiary public trusts.

The SFA defines "state agency" as "any agency, board, bureau, commission, or other entity organized within the executive department of state government." A state beneficiary public trust is not an entity of the executive branch of the state government. However, the legislature deliberately included specific provisions in the SFA that require action not only by state agencies but also by "public trust[s] having the State of Oklahoma as a beneficiary." Accordingly, OHFA must only comply with the provisions of the SFA that specifically apply to state beneficiary public trusts.

It is, therefore, the official Opinion of the Attorney General that:

1. 1984 OK AG 135 is hereby withdrawn.

2. OHFA, as a state beneficiary public trust formed under title 60, sections 176–180 of the Oklahoma Statutes, is an agent of its principal/beneficiary the State and exists outside of the executive branch of state government. Therefore, OHFA does not fall within the definition of "state agency" in the CPA and the SCA and is not governed by the either of these statutory schemes.

3. OHFA, as a state beneficiary public trust formed under title 60, sections 176–180 of the Oklahoma Statutes, is an agent of its principal/beneficiary the State and exists outside of the executive branch of state government. Therefore, OHFA does not fall within the definition of "state agency" or "agency" in the SFA and is not governed by the SFA.

GENTNER DRUMMOND
ATTORNEY GENERAL OF OKLAHOMA

BENJAMIN H. GRAVES
ASSISTANT ATTORNEY GENERAL