Could a South Carolina public university give a coach or president a contract longer than one year?

Plain-English summary

A legislator asked whether South Carolina public colleges could employ presidents, athletic directors, or coaches for more than one year when appropriations were annual. The 1996 opinion said a multiyear term was possible, but the state could not make an unconditional promise to pay from future appropriations that did not yet exist.

The AG treated a nonappropriations clause as the key condition: continued payment in each later fiscal year had to depend on the General Assembly providing funds. He said that principle also applied to athletic funds retained by universities, which he treated as public money. He did not examine a particular employment agreement or decide whether any particular contract complied.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Was every contract lasting more than one fiscal year forbidden? A: No. The opinion allowed a multiyear contract whose later obligations depended on continued appropriations.

Q: What happened if later funding was unavailable? A: The opinion described a nonappropriations condition that let the state end later obligations when the legislature did not provide the needed funds.

Q: Did payments from college athletics avoid the appropriations rule? A: The AG said those funds remained public funds subject to legislative appropriation, even when they were not generated by taxes.

Background and statutory framework

The opinion reviewed South Carolina's fiscal-year and appropriations limits, Section 11-1-40's constraint on contracting beyond available funds, and a procurement provision addressing longer service contracts. It applied earlier AG and court analysis to university personnel agreements.

Citations and references

Statutes discussed: Section 11-1-40 and Section 11-35-2030.

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/june-18-1996-1/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/12/96jun18kirsh.pdf

Original opinion text

The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CllARLES MOLON\' CONDON
ATTORNEY GENERAL

June 18, 1996

The Honorable Herbert Kirsh
Member, House of Representatives
Box 31
Clover, South Carolina 29710
Re: Informal Opinion
Dear Representative Kirsh:
You have asked the following question:
I am very interested in knowing if it is legal for
coJleges and universities in the Srate of South Carolina to offer a contract to their president or to their athletic directors and coaches that is longer than one year. I have always thought that the state could only offer funding for one fiscal year per the budget appropriation. It has always concerned me that s·ome of these schools were offering contracts two to five years over the one year limit.

Law/Analysis
In an opinion of this Office, dated February 22, 1982, we commented upon the various constitutional and statutory provisions governing multi-year contracts executed by state agencies. We stated therein:
[p]ursuant to Art. 10, Sec. I 0, South Carolina
Constitution ( 1895), the fiscal year is set as commencing on the first day of July of each year. More definitivelyJ Section J 1-9-80 restates inter alia this constitutional provision. This
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The Honorable Herbert Kirsh
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June 18, 1996
section further provides that all acts to be performed shall be
within the fiscal year and that all officers are required to keep
their accounts and records in confonnity with the fiscal year.
More specifically, Art. l 0, Sec. 9 of the Constitution
states that 'money ·shall be drawn from the Treasury only in
pursuance of appropriations made by law.' This provision
governs contracts made by public officers or officials.
Beacham v. Greenville County, 218 S.C. 18 l, 185, 62 S.E.2d

92. It was intended to 'prohibit expenditures of the public
    funds at the mere will and caprice of those having funds in
    custody without legislative sanction therefor.' ... Grimball v.
    Beattie, 174 S.C. 422, 431 , 177 S.E. 668. Contracts made by
    officers without a 'regular appropriation' of the monies
    expended by contract contravene An. I 0, Sec. 9. State of
    South Carolina v. Corbin and Ston~ , 16 S.C. 533, 538.
    We further noted that state officials possess no authority to obligate the State of South
    Carolina beyond the life of an appropriation, almost always the fiscal year. We referenced
    State ex rel. Edwards v. Osborne, 193 S.C. 158, 173, 7 S.E.2d 526. where our Supreme
    Court stated that "it may be conceded that the legislature has plenary power ... to change
    its mind from year to year as to the purpose to which .ii each year it will apply the
    proceeds of particular sources of revenue .... " Further, we noted that the case of Long v.
    Dunlap, 87 S.C. 8. 68 S.E. 80 I concluded that Section 11- t -40 "represents a limitation or
    constraint upon an agency's general authority to contract." Section 11-1-40 makes it
    unlawful for any public officer "to enter into a contract for any purposes whatsoever in
    a sum in excess of the tax levied or the amount appropriated for such purposes .... " Our
    reading of the Long case, which held that so long as an agency possesses appropriated
    funds in its hands, the agency may contract and obligate those funds pursuant to its
    general power1 was that "it would not represent an unfair extension of Long to conclude
    that a contract beyond the life of the agency's appropriation "would be invalid pursuar.t
    to Sec. 11-1-40."
    Also referenced in the 1982 opinion was the more recent case of Beacham v.
    Greenville County, supra. In Beacham! an appropriation was made to pay an architect
    $400,000 for work done concerning repair of a courthouse. The architect proceeded with
    the work which ultimately totalled $863.000. The Court noted that the architect was
    "charged with knowledge of the limited power and authority of the Board, had actual
    knowledge of their intentions that the project should cost $400,000 and, finally, he had

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The Honorable Herbert Kirsh
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June 18, 1996
actual and constructive notice of the amount of the legislative appropriation for the
project ...." 218 S.C. at 188.
Further noting that "assurances by state officials of continuation of the program
beyond the Iife of the appropriation for that program", the 1982 opinion concluded:
[b]oth the Beacham and Long cases, together with the wording
of Sec. 11-1-40 itself, strongly indicate that a contract made
by a public officer, which seeks to obligate state funds beyond
the fiscal year, where there is no existing appropriation
providing for the expenditure of such funds is invalid. Unless
the Legislature subsequently authorizes or ratifies the contract
in the form of an appropriation, as the General Assembly did
in Beacham, the contract may not be enforced.
The 1982 opinion recognized, however, that inclusion of the so-called "nonappropriations" clause in any contract rendered it valid for purposes of agency authority.
As was stated in the opinion,
[t]he only basis on which the State or an agency thereof could
validly enter into a contract obligating public funds for a
period beyond the fiscal year as determined by the constitution
and statutes of this State, would be the inclusion of a proviso
which would make continuation of the contract term
contingent upon the fact that the General Assembly
appropriated sufficient funds, from year to year, to pay the
consideration under the contract as to be solely determined by
the State or its agency.
Since the 1982 opinion was written, both this Office as well as our Supreme Court
have reaffirmed the fact that a "non-appropriations" clause is necessary for multi-year
contracts entered into by a governmental agency. In Op. No. 83-89 (November 15, 1983},
we reaffirmed the 1982 opinion and applied it to counties. There, we noted that
.. . contracts executed for terms in excess of one year will be
binding; however, the contract should contain a proviso to the
effect that the contract is subject to cancellation if funds are
not appropriated or otherwise made available for the contract
after the first year.

The Honorable Herbert Kirsh
Page 4
June 18, 1996
And in Cadde11 v. Lexington Co. Sch. Dist. No. 1, 296 S.C. 397, 373 S.E.2d 598 (1988),
our Supreme Court observed that "critical to" a lease-purchase arrangement for thirty years
between a school district and a private corporation was "a provision known as the 'nonappropriation clause,' under which the District may decline, without penalty, to renew the
annual lease by failing or refusing to appropriate the necessary funds." 373 S.E. 2d at

599. The Court, in rejecting the contention that the lease-purchase agreement constituted
     general obligation debt, pointed to the "non-appropriations clause" in concluding that it
     was not:

... a leaseback arrangement containing an explicit nonappropriation clause places no such requirement on the
political entity. Under the plan here, rental payments are to
be included in the District's annual budget. Liability under
the leaseback agreement is, at most, contingent: The District
has the option of tenninating simply by refusing to appropriate
money for rent.
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See also, Whiteside v. Cherokee Countv Sch. Dist. No. I, 428 S.E.2d 884, 888-89; Op.
Atty. Gen., Op. No. 93-61 (Sept. 23, 1993 ); Op No. 91-6 (Jan. 18, 1991) ["Such a contract
should contain a non-appropriation clause and be terminable with each fiscal year ..." Op.
Atty. Gen., No. 85-140 (December 9, 1985).

In addition, this reasoning has been applied in the context of contracts of university
personnel. The question of the validity of a multi.year contract for a university's men's
basketball coach was litigated in Universitv of Arizona v. Lindsey, 722 P.2d (Ariz. 1986).
There, it was contended that the contract for four years was invalid because it was beyond
the authority of the University of Arizona to grant it. The Court rejected that argument'
by stating:
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[t]here is no difference between promising Lindsey a four-year
period in which to rebuild a basketba11 program and telling a
tenured professor that his or her contract will be resubmitted
year after year until resignation or retirement. It is clear that
in both cases the final word is spoken by the legislature.
Tenured faculty members can be released for budgetary
reasons .... Similarly, contractual obligations entered by the
University of Arizona in non-tenure situations are necessarily
conditioned upon funding by the legislature. The so-called
"fiscal out" condition mandated by § 3 5-154 operates as a
condition subsequent, allowing the University to avoid its

The Honorable Herbert Kirsh
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Page 5
June 18, 1996
obligations if the requ1s1te funding is not forthcoming.
Subject to this implicit condition, contracts for more than one
year are valid and do not violate the statutory prohibition
against financial obligations for which there is no
appropriation. While neither side has so informed us, we can
take judicial notice of the fact that the University of Arizona
has maintained a men's basketball program after Lindsey's
termination; legislative funding for Lindsey's position must
necessarily have been approved.
722 P.2d at 255.
Likewise, by analogy, Section 11-35-2030 (1) [Consolidated Procurement Code]
provides that
[u]nless otheiwise provided by law, a contract for
supplies or services shall not be entered into for any period of
more than one year unless approved in a manner prescribed by
regulation of the board; provided, that the term of the contract
and conditions of renewal or extension, if any, are included in
the solicitation and funds are available for the first fiscal
period at the time of contracting. Payment and performance
obligations for succeeding fiscal periods shall be subject to the
availability and appropriation of funds therefor. (emphasis
added).
Subsection (3) further provides that "(w]hen funds are not appropriated or otherwise made
available to support continuation ofperfonnance in a subsequent fiscal period, the contiact
shall be cancelled." Relative thereto, we stated in Op. No. 85-140 (December 9, 1985),
that
[t]hese statutory provisions clearly provide that, as a matter of
law, every State contract for purchase of goods or services
which is covered by the Consolidated Procurement Code and
which extends beyond the first fiscal year, is conditioned .upon
there being an appropriation sufficient to meet payment and
performance obligations; otherwise the agreement is
automatically cancelled. See, Op. Atty. Gen. No. 77-123 at
105 (April 27, 1977).

The Honorable Herbert Kirsh
Page 6
June 18, 1996
It goes without saying that virtually every state university, college and institution
of higher learning in this State possesses the express authority to enter into contacts. See
Title 59 of the Code;~ Section 59-117-40 (4) [U.S.C. authority to make contracts]; 59119-50 [Clemson, authority to employ]; 59-121-50 [Citadel]; 59-125-70 [Winthrop].
Moreover, it is generally recognized that many of these contracts for personnel are on a
multi-year basis. Although there has been much litigation especially involving the
University of South Carolina with respect to coaching contracts, to my knowledge the
courts in approving settlement agreements reached between the parties, have never
questioned the validity of such contracts on the basis that they extended for more than one
year. It is evident that, as explained above, each such multi-year contract is subject to the
availability of continuing appropriations.

It is recognized herein that oftentimes coaches and athletic directors at state
universities and colleges are paid with athletic funds which are not raised through taxation.
However, we addressed the nature of such funds in Op. No. 85-132 (November 15, 1985).
We noted that such funds are appropriated by virtue of a provision in the State
Appropriations Act, which states that
... notwithstanding other provisions 0f this act, funds at State
Institutions of Higher Leaming derived wholly from athletic
or other student contents, from the activities of student
organizations, and from the operations of canteens and
bookstores, and from approved Private Practice plans may be
retained at the institution and expended by the respective
institutions only in accord with poricies established by the
Institutions Board of Trustees. Such funds shall be audited
annually by the State but the provisions of this Act concerning
unclassified personnel compensation, travel, equipment
purchases and other purchasing regulations shall not apply to
the use of these funds.
Despite the fact that such funds are not tax-generated, we concluded that they are "public
funds", and thus must be expended "in accordance with the State Constitution and other
statutory enactments." [citing Op. Attv. Gen., August 10, 1973]. Thus, while such funds
are appropriated each year by the General Assembly to the particular college or
educational institution which generates them, the General Assembly is, of course, free at
any time it chooses, not to appropriate the funds for that purpose, just as it may do with
respect to tax revenues or any other public funds. Thus, the general rules as to the
appropriation of funds, discussed above, should be applicable to this situation as well.

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The Honorable Herbert Kirsh
Page 7
June 18, 1996
Accordingly, while I have not examined any multi-year contract entered into by a
state university or college, such contract is subject to the same legal principles as set forth
in the 1982 opinion, discussed above, as well as other authorities herein. The multi-year
contact is subject to the condition that the General Assembly will continue to appropriate
funds -therefor. State contracts with which I am familiar contafu a provision making the
multi-year contract contingent upon such appropriations. Based upon the foregoing, I am
of the opinion that a multi-year contract by a state agency is valid, but must be "subject
to" the continuing appropriation of funds ther~fore by the General Assembly.
This letter is an informal opinion only. It has been written by a designated
Assistant Deputy Attorney General and represents the position of the undersigned attorney
as to the specific questions asked. It has not, however, been personally scrutinized by the
Attorney General nor officially published in the manner of a formal opinion.
With kind regards, I am
Very truly yours,

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Robert D. Cook
Assistant Deputy Attorney General

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