Can a Texas county give money to a school district or hospital district?

Plain-English summary

Midland County wanted to write some checks to neighboring governments, and its county attorney wanted to know whether the constitution allowed it. The county was considering paying a public school district for grounds maintenance, a library, and law enforcement, and separately paying the county hospital district to buy a building for use as a mental health facility. The question was whether either expenditure would amount to an unconstitutional gift of public money.

The AG began with article III, section 52(a) of the Texas Constitution, which forbids the Legislature from authorizing a county to lend its credit or grant public money or anything of value to any individual, association, or corporation — language the courts have read to bar a county from gratuitously handing its funds even to another government body. But spending public funds for a legitimate public purpose, in exchange for a clear public benefit, is not a prohibited gift. The Texas Supreme Court built that idea into a three-part test: the predominant purpose of the expenditure must be to accomplish a public purpose rather than to benefit private parties; the public entity must keep enough control over the funds to make sure the public purpose is achieved; and the entity must receive a return benefit. Whether a given expenditure passes the test is for the commissioners court to decide in the first instance, subject to court review for abuse of discretion.

For the payments to the school district, the AG focused on the first prong's catch: the public purpose has to be a purpose of the county, not just the general public good, and a county has only the powers the statutes or constitution give it. The county pointed to its authority over law enforcement (through the sheriff), libraries, and parks. The AG agreed the county has those powers in general, but said that did not answer the question — the commissioners court still had to determine whether funding law enforcement, grounds maintenance, and a library for an independent school district served a specific county purpose. The AG did not decide that for them.

The hospital-district question was different and the AG gave a clearer answer. Health and Safety Code provisions authorize a county to establish a hospital or health facility and to provide mental health services to residents, so a purchase serving those ends would generally be within county authority. The complication was that the proposed recipient was the county hospital district, and article IX, section 9 generally prohibits a county from taxing, issuing bonds, or providing medical care for hospital purposes inside a hospital district. The AG read that prohibition together with article IX, section 13 — adopted later specifically to let political subdivisions help provide mental health services — which allows a subdivision within a hospital district to participate in providing mental health care and to spend public money for that purpose unless the statute creating the district expressly prohibits it. Because the chapter governing the Midland County Hospital District contains no such express prohibition, the AG concluded that a court would likely find the county may provide funds to the hospital district to buy a building to be used as a mental health facility.

Currency note

This opinion was issued in 2019. 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.

What the opinion meant for those who asked

Commissioners courts considering payments to other governments: At the time of the opinion, the AG read article III, section 52(a) to require that any such expenditure satisfy the three-part public-funds test — county public purpose, retained control, and return benefit — and explained that whether a payment qualifies is the commissioners court's call in the first instance, subject to judicial review.

Counties weighing payments to a school district: The opinion explained that a county's general authority over law enforcement, libraries, and parks did not by itself justify funding those things for an independent school district; the commissioners court still had to determine whether each payment served a specific county purpose.

Counties and hospital districts on mental health facilities: The AG concluded that, despite the general bar in article IX, section 9, article IX, section 13 and the Health and Safety Code would likely permit a county to fund a county hospital district's purchase of a building for use as a mental health facility, because the district's enabling chapter did not expressly prohibit it.

Common questions

Can a Texas county give money to a school district?
Only if the payment serves a county purpose and meets the constitution's three-part test, the AG advised. The county's general authority over libraries, parks, and law enforcement does not by itself make a payment to an independent school district constitutional — the commissioners court must decide whether each payment serves a specific county purpose.

What is the three-part test for spending public funds?
The AG described the Texas Supreme Court's test: the predominant purpose must be a public purpose rather than a private benefit; the public entity must retain enough control (often by contract) to ensure the purpose is met; and the entity must receive a return benefit. The return benefit need not be money — it can be accomplishing the public purpose.

Who decides whether a county expenditure is constitutional?
The AG explained the commissioners court makes that determination in the first instance, subject to judicial review for abuse of discretion.

Can a county fund a hospital district's mental health facility?
The AG concluded a court would likely say yes. Although article IX, section 9 generally bars county spending for hospital purposes inside a hospital district, article IX, section 13 allows a subdivision within the district to help provide mental health services unless the district's statute expressly forbids it — and the Midland County Hospital District's chapter did not.

Does article IX, section 9 always block county hospital spending?
Not for mental health services. The AG noted article IX, section 13 was adopted after section 9 specifically to let political subdivisions participate in providing mental health services, and as the later expression of the people's will it controls where the two conflict.

Background and statutory framework

The request asked about two sets of county payments. The AG analyzed both under article III, section 52(a) of the Texas Constitution, which bars authorizing a county to grant public money or a thing of value to any individual, association, or corporation, a provision aimed at preventing gratuitous grants of public funds (Byrd v. City of Dallas) and construed to bar a county from gratuitously granting funds to another political subdivision (Tex. Att'y Gen. Op. No. GA-0664 (2008); Fort Worth Indep. Sch. Dist. v. City of Fort Worth; San Antonio Indep. Sch. Dist. v. Bd. of Trs. of San Antonio Elec. & Gas Sys., addressing article III, sections 51 and 52). Spending for a legitimate public purpose to obtain a clear public benefit is not a prohibited grant (Edgewood Indep. Sch. Dist. v. Meno; Barrington v. Cokinos). The Texas Supreme Court's three-part test asks whether the predominant purpose is public, whether the entity retains sufficient control, and whether it receives a return benefit (Texas Municipal League Intergovernmental Risk Pool v. Texas Workers' Compensation Commission), a determination for the political subdivision subject to judicial review for abuse of discretion (Tex. Att'y Gen. Op. Nos. KP-0204 (2018), KP-0007 (2015)).

On the first prong, the public purpose must be a purpose of the county, and because a county has only the powers conferred by statute or the constitution (Guynes v. Galveston Cty.; State ex rel. Grimes Cty. Taxpayers Ass'n v. Tex. Mun. Power Agency), the expenditure must be within those powers; using county funds to fulfill a statutory county function generally serves a county purpose (Tex. Att'y Gen. Op. No. KP-0104 (2016)). Control may be retained by contract (Tex. Att'y Gen. Op. No. KP-0091 (2016)), which can also secure the return benefit; chapter 791 of the Government Code governs interlocal contracts and requires that both parties be individually authorized to perform the contracted function (§§ 791.001-.037; § 791.011(c)(2); Tex. Att'y Gen. Op. No. GA-0917 (2012)). The county cited its law enforcement authority (Tex. Const. art. V, § 23), library authority (Tex. Loc. Gov't Code § 323.001), and park authority (§ 331.001), but the AG explained the proposed school-district payments must still serve a county purpose, leaving that question to the commissioners court (Tex. Att'y Gen. Op. Nos. KP-0204 (2018), JC-0432 (2001)).

For the hospital-district payment, the AG noted county authority to establish a hospital or health facility (Tex. Health & Safety Code § 263.021; § 263.021(a)) and to provide mental health services (§§ 615.001, 534.001). Because the recipient was a county hospital district, article IX, section 9 generally prohibited the county from taxing, issuing obligations, or providing medical care for hospital purposes within the district (Tex. Const. art. IX, § 9; Tex. Spec. Dist. Code §§ 1061.102, 1061.002). Read together with article IX, section 13 — enacted later to permit subdivisions to participate in providing mental health services, and controlling as the later expression of the people's will (State v. Brownson) — a subdivision within a district may participate and spend public money for mental health services unless the district's creating statute expressly prohibits it. Chapter 1061 of the Special District Code contained no such express prohibition (§§ 1061.001-.256; Tex. Att'y Gen. LO-88-33 (1988); Tex. Att'y Gen. Op. No. H-454 (1974)), and Health and Safety Code provisions authorize county mental health services (§§ 534.001, 615.001). The AG concluded a court would likely determine the county may fund a county hospital district's purchase of a building to be used as a mental health facility.

Citations

Statutory and constitutional provisions:

• Tex. Const. art. III, § 52(a); art. III, § 51; art. V, § 23; art. IX, § 9; art. IX, § 13
• Tex. Loc. Gov't Code § 323.001; § 331.001
• Tex. Gov't Code §§ 791.001-.037; § 791.011(c)(2)
• Tex. Health & Safety Code § 263.021; § 263.021(a); § 534.001; § 615.001
• Tex. Spec. Dist. Code §§ 1061.001-.256; § 1061.002; § 1061.102

Cases and Attorney General opinions:

• Byrd v. City of Dallas, 6 S.W.2d 738, 740 (Tex. 1928)
• Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 842-43 (Tex. 2000)
• San Antonio Indep. Sch. Dist. v. Bd. of Trs. of San Antonio Elec. & Gas Sys., 204 S.W.2d 22, 25 (Tex. Civ. App.-1947, writ ref'd n.r.e.)
• Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 740 (Tex. 1995)
• Barrington v. Cokinos, 338 S.W.2d 133, 140 (Tex. 1960)
• Tex. Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Comm'n, 74 S.W.3d 377, 384 (Tex. 2002)
• Guynes v. Galveston Cty., 861 S.W.2d 861, 863 (Tex. 1993)
• State ex rel. Grimes Cty. Taxpayers Ass'n v. Tex. Mun. Power Agency, 565 S.W.2d 258, 265 (Tex. Civ. App.-Houston [1st Dist.] 1978, writ dism'd)
• State v. Brownson, 61 S.W. 114, 115 (Tex. 1901)
• Tex. Att'y Gen. Op. No. GA-0664 (2008)
• Tex. Att'y Gen. Op. No. KP-0204 (2018)
• Tex. Att'y Gen. Op. No. KP-0007 (2015)
• Tex. Att'y Gen. Op. No. KP-0104 (2016)
• Tex. Att'y Gen. Op. No. KP-0091 (2016)
• Tex. Att'y Gen. Op. No. GA-0917 (2012)
• Tex. Att'y Gen. Op. No. JC-0432 (2001)
• Tex. Att'y Gen. LO-88-33 (1988)
• Tex. Att'y Gen. Op. No. H-454 (1974)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0237
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2019/kp-0237.pdf

Original opinion text

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

January 22, 2019

The Honorable Russell W. Malm Opinion No. KP-0237
Midland County Attorney
500 North Loraine Street, Suite 1103 Re: Whether a county may provide funding to
Midland, Texas 79701 a school district for grounds maintenance, a
library, and law enforcement and funding to a
hospital district for purchase of a mental health
facility (RQ-0240-KP)

Dear Mr. Malm:

     You seek an opinion on the "ability of a county to enter into a written agreement to pay

money to certain entities." [1] Specifically, you are interested in Midland County's (the "County")
authority to pay funds to a public school district for grounds maintenance, library, and law
enforcement purposes. See Request Letter at 1. You also ask about the County's authority to
provide funds to the county hospital district to purchase a building to be used as a mental health
facility. See id.

     The County's proposed expenditure of public funds implicates article III, section 52(a) of

the Texas Constitution, which provides "the Legislature shall have no power to authorize any
county, city, town or other political corporation or subdivision of the State to lend its credit or to
grant public money or thing of value in aid of, or to any individual, association or corporation
whatsoever." TEX. CONST. art. III, § 52(a). Article III, section 52(a)'s purpose is to "prevent the
gratuitous grant of [public] funds to any individual, corporation, or purpose whatsoever." Byrd v.
City of Dallas, 6 S.W.2d 738, 740 (Tex. 1928). "Section 52(a) has been construed to prohibit
political subdivisions such as counties from gratuitously granting its funds to another political
subdivision." Tex. Att'y Gen. Op. No. GA-0664 (2008) at 2; see Fort Worth Indep. Sch. Dist. v.
City of Fort Worth, 22 S.W.3d 831, 842-43 (Tex. 2000) (determining that article III, section 51
and 52 would not permit a city to gratuitously pay "the City's 'public money'" to a school district),
San Antonio Indep. Sch. Dist. v. Bd. of Trs. of San Antonio Elec. & Gas Sys., 204 S.W.2d 22, 25
(Tex. Civ. App.-1947, writ ref'd n.r.e.) (holding that under article III, sections 51 and 52 a "city
cannot donate its funds to an independent municipal corporation such as an independent school
district"). Spending public funds for a legitimate public purpose to obtain a clear public benefit,
however, is not an unconstitutional grant of public funds. See Edgewood Indep. Sch. Dist. v. Meno,
917 S.W.2d 717, 740 (Tex. 1995); see also Barrington v. Cokinos, 338 S.W.2d 133, 140 (Tex.
1960) (stating that an expenditure which incidentally benefits another party is not invalidated under
the Constitution if made for the direct accomplishment of a legitimate public purpose).

     [1] Letter from Honorable Russell W. Malm, Midland Cty. Att'y, to Honorable Ken Paxton, Tex. Att'y Gen. at

1 (July 17, 2018), https://www2.texasattorneygeneral.gov/opinion/requests-for-opinion-rqs ("Request Letter").

    In Texas Municipal League Intergovernmental Risk Pool v. Texas Workers' Compensation

Commission, the Texas Supreme Court articulated a three-part test by which to determine whether
an expenditure or transfer of public funds satisfies article III, section 52(a). 74 S.W.3d 377, 384
(Tex. 2002). The test requires that (1) the predominant purpose of the expenditure is to accomplish
a public purpose, not to benefit private parties; (2) the public entity must retain sufficient control
over the expenditure to ensure that the public purpose is accomplished; and (3) the public entity
receives a return benefit. See id. The determination whether a particular expenditure satisfies the
three-part test is for the political subdivision to make in the first instance, subject to judicial review
for abuse of discretion. See Tex. Att'y Gen. Op. Nos. KP-0204 (2018) at 2, KP-0007 (2015) at 2.

     Regarding the first prong, "[t]he public purpose to be served is not the general good of the

public, but a specific purpose of the" public entity making the expenditure. Tex. Att'y Gen. Op.
No. KP-0204 (2018) at 3. And as a Texas county has only those powers specifically conferred on
it by statute or the Constitution, the expenditure must be for something within the County's powers.
See Guynes v. Galveston Cty., 861 S.W.2d 861, 863 (Tex. 1993), State ex rel. Grimes Cty.
Taxpayers Ass'n v. Tex. Mun. Power Agency, 565 S.W.2d 258, 265 (Tex. Civ. App.-Houston [1st
Dist.] 1978, writ dism'd). Generally, the use of county funds to fulfill a statutory function of the
county serves a public purpose of the county. See Tex. Att'y Gen. Op. No. KP-0104 (2016) at 2
(determining that a county using public funds to purchase flags for display in front of local
businesses on holidays served a county purpose because the county was acting within its statutory
authority to display the United States flag on specific holidays). As to the second prong, a political
subdivision may retain public control over the funds by entering into an agreement or contract that
imposes upon a recipient of public funds the obligation to accomplish the public purpose. [2] See
Tex. Att'y Gen. Op. No. KP-0091 (2016) at 2. Such an agreement or contract could also ensure a
political subdivision receives the return benefit in satisfaction of the third prong; see id. at 2-3
("The return benefit received by the county need not be monetary, but could instead be the
accomplishment of the county's public purpose.").

    As previously noted, it is for the county commissioners court to determine in the first

instance whether the proposed expenditures satisfy article III, section 52(a). See Tex. Att'y Gen.
Op. No. GA-0664 (2008) at 4. You posit that each proposed expenditure "fits within a power
granted to counties by the Texas Legislature." Request Letter at 2. You argue that the proposed
expenditures are valid because Texas Constitution article V, section 23 authorizes a county to
provide law enforcement services through the sheriff's office; Local Government Code section
323.001 authorizes a county to operate libraries; and Local Government Code section 331.001
authorizes a county to operate parks. See id. at 1-2. While you are correct that a county possesses
certain law enforcement, library, and park authority, the predominant purpose of the proposed
expenditures to the school district must nonetheless serve a county purpose. See, e.g., Tex. Att'y
Gen. Op. Nos. KP-0204 (2018) at 3, JC-0432 (2001) at 2. Thus, with respect to each proposed
expenditure, the question for the commissioners court is whether providing funds for law
enforcement services, grounds maintenance, and a library for an independent school district serves
a specific county purpose.

      [2] Chapter 791 of the Government Code governs interlocal contracts. See TEX. GOV'T CODE §§ 791.001-.037.

Among other things, chapter 791 provides that an interlocal contract may be to "provide a governmental function or
service that each party to the contract is authorized to perform individually." Id. § 791.011(c)(2); see also Tex. Att'y
Gen. Op. No. GA-0917 (2012) at 1 ("Thus, unless both governmental entities that would be parties to the proposed
contract are specifically and individually authorized to perform the contract, the Government Code does not authorize
the governmental entities to enter into the contract.").

    Next, we consider the County's proposed expenditure of funds to a hospital district to

purchase a building for use as a mental health facility. See Request Letter at 1. You refer to Health
and Safety Code section 263.021 as general authority for a county to provide funds for a building
to provide a mental health facility. See id. at 3; see also TEX. HEALTH & SAFETY CODE § 263.021(a)
(authorizing a county to establish a "county hospital or any medical or other health facility"). You
also refer to provisions in the Health and Safety Code authorizing a county to provide mental health
services. See Request Letter at 3; see also TEX. HEALTH & SAFETY CODE §§ 615.001 (requiring a
county commissioners court to support county residents with mental illness or intellectual
disabilities), 534.001 (authorizing a county to establish and operate a community center to provide
mental health services). To the extent the proposed expenditure is for the County to purchase a
building for a county hospital or to provide mental health services to county residents, a court
would likely find the expenditure within the scope of a county's statutory authority and serves a
county purpose.

     Yet, in your letter you state that the proposed recipient of the County's funds is a county

hospital district. See Request Letter at 3. To the extent the recipient of the proposed expenditure
is a county hospital district, article IX, section 9 would generally prohibit the County from levying
a tax or issuing bonds or other obligations for hospital purposes or providing medical care within
the boundaries of the hospital district. See TEX. CONST. art. IX, § 9; see also TEX. SPEC. DIST.
CODE §§ 1061.102 (providing that "[a] political subdivision of this state, other than the district,
may not impose a tax or issue bonds or other obligations for hospital purposes or to provide
medical care in the district"), 1061.002 (providing that the Midland County Hospital District "is
created under the authority of Section 9, Article IX, Texas Constitution"). We must consider this
prohibition in connection with article IX, section 13, which was enacted after article IX, section 9,
to permit political subdivisions to participate in the provision of mental health services. See TEX.
CONST. art. IX, § 13; see also State v. Brownson, 61 S.W. 114, 115 (Tex. 1901) ("Being the last
expression of the will of the people, any provisions of the constitution previously existing must, if
in conflict, yield to it."). Article IX, section 13 states that "unless a statute creating a hospital
district shall expressly prohibit participation by any entity other than the hospital district in the
[provision] of mental health services ... within or partly within the boundaries of any hospital
district," any political subdivision within the hospital district may participate in the provision of
mental health care services and "may ... expend public moneys for such purposes as provided by
law" if otherwise authorized to do so. TEX. CONST. art. IX, § 13; see Tex. Att'y Gen. LO-88-33
(1988) at 3. Chapter 1061 of the Special District Code does not expressly prohibit a political
subdivision within the hospital district from participating in the provision of the services listed in
article IX, section 13. See TEX. SPEC. DIST. CODE §§ 1061.001-.256; see also Tex. Att'y Gen. LO-
88-33 (1988) at 3-4, Tex. Att'y Gen. Op. No. H-454 (1974) at 4. And provisions in the Health and
Safety Code authorize a county to provide mental health services to county residents. See TEX.
HEALTH & SAFETY CODE §§ 534.001 (providing for county establishment of community center to
provide mental health services), 615.001 ("Each commissioners court shall provide for the support
of a person with mental illness" who is a county resident unable to provide self-support or be
admitted to a state mental health hospital or facility.). Accordingly, a court would likely determine
that the County may provide county funds to a county hospital district to purchase a building to be
used as a mental health facility.

                                    SUMMARY

                   Article III, section 52(a) of the Texas Constitution prohibits
           the expenditure of county funds for private purposes unless the
           county (1) ensures the predominant purpose of the expenditure is to
           accomplish a public purpose of the county, not to benefit private
           parties; (2) retains sufficient control over the public funds to ensure
           the public purpose of the county is accomplished; and (3) ensures
           the county receives a return benefit.

                   Whether a particular expenditure satisfies this three-part test
           is a determination for the county commissioners court in the first
           instance subject to judicial review. With respect to the proposed
           expenditures to a school district, the specific question for the
           commissioners court is whether providing law enforcement
           services, grounds maintenance, and a library for an independent
           school district serves a specific county purpose.

                   Under article IX, section 13, of the Texas Constitution, a
           court would likely determine that the County may provide county
           funds to a county hospital district to purchase a building to be used
           as a mental health facility.

                                          Very truly yours,

                                          KEN PAXTON
                                          Attorney General of Texas

JEFFREY C. MATEER
First Assistant Attorney General

BRANTLEY STARR
Deputy First Assistant Attorney General

VIRGINIA K. HOELSCHER
Chair, Opinion Committee

CHARLOTTE M. HARPER
Assistant Attorney General, Opinion Committee