     .


         ,-    ‘.. ’




                           The Attorney General of Texas
                                                October   5.   1981
MARK WHITE
Attorney General



                        Mr. E, D. Walker, Chancellor                   Opinion No.     ml-373
                        The University of Texas System
                        601 Colorado Street                             Re:    Agreement  between       the
                        Austin, Texas 78701                             University of Texas Law
                                                                        School Foundation and the
                                                                        University of Texas
                                                                        School of Law
                        Dear Mr. Walker:

                              You inquire    about the relationship        between the University          of
                        Texas and the University         of    Texas Law School          Foundation.     The
                        University   of Texas Law School Foundation is a nonprofit             corporation
                        vith   the purpose of supporting        the educational       undertaking     of the
                        School of Lav of the Universi.ty of Texas.           It solicits     donations and
                        expends funds to benefit       the law school,          acting     as conduit    and
                        coordinator    of gifts   made by other       parties.       You state     that the
                        foundation    and school  of law wish to formalize             their  relationship
                        through a Memorandumof Understanding which you have submitted to us.
                        The memorandum states      the foundation’s       intent    to continue      to make
                        donations to the university.        describes   the purposes to be, served by
                        these    donations,   and states      certain    conditions      under vhich      the
                        university   will accept them.

                              You    ask   whether   the   university’s    compliance    vlth   its
                        representations   under the Memorandumof Understanding would constitute
290Mai”Flu.. suit* uo
                        a gift   or grant of public     money to a corporation     in violation   of
S,” A”lonii. TX.75205   article   III,   section   51 of the constitution.     which provides     in
 512J7294191            pertinent part:

                                          The Legislature    shall have no power to make
                                    any grant or authorize     the making of any grant of
                                    public moneys to any individual,        association     of
                                    individuals,     municipal    or  other    corporations
                                    whatsoever.

                        The Memorandumof Understanding         raises   this constitutional    question
                        because,   in .addition   to providing      for donations    flowing  from the
                        foundation to the law school,       it also states that the law school will
                        provide,    for  example,    office    space,    utilities,    and some staff
                        assistance   to the foundation.
    E. D. Walker - Page 2         ow373)

.


           We must first,    hovever, determine vhether   the  university    has
    statutory   authority   to accept the terms of the five   sections    of the
    memorandum. Section 6S.31 of the Education Code states aome relevant
    powers   of the University  of Texas Regents.

                      (a) The board is authorized     and directed  to
                govern. operate,   support , and maintain each of the
                component   institutions     that  are   nov or    may
                hereafter  be included in a part of The University
                of Texas System.

                       . . . .

                       (c) The board has authority         to promulgate   and
                 enforce    such other     rules    and regulations    for the
                 operation,       control,       and   management of       the
                 university     system and the component institutions
                 thereof as the board may deem either necessary or
                 desirable....

                       (e) The board Is specifically      authorized.
                 upon terms and conditions    acceptable   to it,     to
                 accept and administer gifts,  grants, or donations
                 of any kind,   from any source.     for use by the
                 system or any of the component institutions    of the
                 system.

    Section 65.31(e)    of the Education Code gives the regents considerable
    discretion  to accept donations “of any kind” with conditions          attached
    by the donor.      We believe   this broad language authorioes~ the regents
    to accept    gifts    of money, other        intangibles,   real  and personal
    property,  and services.      See Letter Opinion R-1009 (To Honorable Frank
    Smith. Jan. 27, 1948).        ?he conditions     attached to the grant must be
    acceptable  to the regents.

            The board        has    considerable     latitude      in exercising      powers
     delegated     to it by the legislature,          subject     to review for abuse of
     discretion.       Foley    v. Benedict,      SS S.W.2d 805 (Tex. 1932);          Letter
     Advisory     No. 6 (1973).          However, the board is charged vith               the
     governing of the university           system, see Education Code Section 65.11,
     and the exercise       of its specific     powersmust be In furtherance         of this
     duty.     A “university      system”   is the assoclatlon       of agencies of higher
     education     under a single governing board.            Educ. Code 561.00319.       The
     broad powers granted the regents by section                 65.31(a),    (c), and (e).
     &.       to support and maintain, to promulgate rules and regulations,
     and to accept gifts.          are to be exercised       on behalf of the component
     institutions      of the system.       The University      of Texas at Austin is an
     “institution       of higher       education   within     The University      of Texas
     System.”      Educ. Code $67.02.         Thus the board of regents must exercise
      its   powers of governance          for the purpose of higher education               as
      carried    out by the component Institutions.              Grants accepted     for the
      university     at Austin      must reasonably      relate    to its purposes as an




                                             p.   1240
E. D. Walker - Page 3        (Ml-373)



educational institution.  See Attorney          General Opinions      M-391 (1969);
W-334 (1958); WW-S (1957).’

      The Memorandum of Understanding contains a number of statements
as to the foundation’s  goal of serving the educational  purposes of the
law school and the kind of assistance   it has rendered in the past and
proposes   to render in the future.     These statements   are   found in
sections  one through three:

                 1. The Foundation has engaged in development
          activities      for The University       of Texas School of
          Law (The Law School),          has assisted     in maintaining
          alumni reletions         on behalf of The Law School, has
          participated~       ins the Continuing       Legal Education
          (CLE) program of The Law School,                  has provided
          various       and       substantial     support        for    the
          development       of The Law School,         its faculty      and
          staff,     and has furnished important administrative
          and other        services     to The Law School and The
          University.        The continuation     of these activities
          is essential       to the maintenance of a law school of
          the     first       class.      The University          and   The
          Foundation deem it appropriate            to, and do hereby,
          memorialize the nature of the relationship                between
          The Foundation          and The University         and The Law
          School,     ratify     and approve these past activities
          by The Foundation,            and agree mutually for           the
          future regarding the respective            roles,    rights,   and
          obligations       of The University       and The Foundation
           in this relationship.

                  2.   The Foundation is a nonprofit          educational
           corporation    chartered in 1952 for the purposes of
           supporting    the educational       undertaking of The Law
           School     by    furthering      legal     education,      legal
           research,      financial       assistance      to     deserving
           students,     and the        progress     of   law,     and    of
           soliciting    donations for particular          objectives     to
           accomplish    such purpose, and of cooperating              with
           the ~advancement of the general              welfare     of The
           University       as   a    whole.       The    Statement       of
           Development Policy by the Board of Trustees of The
           Foundation     includes     the activities       of securing,
           holding in trust.~ and administering            funds for the
           benefit    of The School of Law of The University              of
           Texas at Austin.

                 3.   The Foundation agrees that,   during              the
           term of     this Memorandum of Understanding,                The
           Foundation:      (1) will continue   to invest               and
           administer    the funds presently  on hand for               the
           benefit   of The Law School;   (2) will continue              to




                                         p. 1249
E. D. Walker - Page 4          (km-373)



             conduct a development program for the benefit of
             The Lav School            and The University            to insure
             procurement         and retention         of   outstanding       law
             faculty      members,        to     enrich     the    educational
             environment        of The Law School,             and by other
             reasonable means to enhance the prestige                    of, and
             to advance, The Law School, and will utilize                     its
             expertise,        resources,       and personnel         for    such
             purposes;       (3)    will     use    reasonable     efforts      to
             finance     and conduct,          or work with law school
             alumni      groups       interested        in    financing       and
             conducting,      programs and publications            designed to
             maintain good alumni relations                on behalf of The
             Law School;         (4) will      use on behalf       of Ihe Law
              School, or will lease,             loan, or give to The Law
              School from time to time, to the extent~that it is
              feasible    to do so, equipment needed by The Law
              School or helpful            to its     operations;       (5) will
              continue     to    render other assistance            to The Law
              School of the general              nature of the assistance
              that it has rendered in the past, and to render
              other assistance         to The Law School in the future
              as may mutually appear desirable;                  and (6) will
              continue     to recognize         The School of Lav of The
              University        of   Texas      at    Austin    as     the sole
              beneficiary        of its      development      policy     and its
               educational      support.

       These provisions         restate     and elaborate          on the foundation’s
 purpose,    as expressed       in its     charter,     which is to support              legal
 education     by soliciting      and expending donations              for that purpose.
 They express numerous specific            purposes directed         at serving the law
 school’s    educational      enterprise:        the provision          of administrative
 services,    financial    aid for students,       and funds and services            directed
 at faculty     recruitment.      In addition,      it has participated            in the law
 school Continuing Legal Education program and has worked with alumni
 groups.     With the possible        exception     of the latter          endeavor,     these
 activities     are closely      related     to the educational           function     of the
 university.       See Attorney     General Opinions M-391 (1969)(provision                   of
  financial     aido       students);      WW-334 (19SB)(Texas            Tech television
  channel    may accept       conxnercial      programs provided           directors       find
  reasonable     relationship      to statutory        purposes       of college);         WW-S
  (19S7)(Texas     Tech may engage in educational            television      broadcasting);
  V-1476 (1952)(salary        of university       comptroller        may be supplemented
  with donated funds);         O-4167 (1941)(University             may spend funds for
  purpose of soliciting         gifts    from potential          donors).      ct.    Attorney
  General Opinion M-223 (1968)(hospital             district      may spend public funds
  to pay travel costs of employees who recruit                   prospective       employers).
  The legislature      has in fact recognized        that universities         may cooperate
  with alumni associations.            See V.T.C.S.       art.     1396-2.23A(E)(8).           It
  has, hovever. prohibited        the=       of appropriated        funds for the support
   and maintenance       of alumni organizations              Of    activities.        General




                                          p.   1250
g. D. Walker - Page S      (MW-373)



Appropristlons   Act, Acts 1979. 66th Leg., ch. 843. art. IV, 117. at
2859.   Thus, if the regents of the university   believe that the support
of alumni organizations   will benefit   the educstional    purposes of the
school,   they will have to locate a permissible      funding source’   The
foundation can provide precisely   that.

      Section    four of the memorandum states           in    part    the terms and
conditions    on which the university is willing        to    accept   donations from
the foundation:

                   4.    The University       agrees that,   during the
            term of this         Hemorandum of Understanding,         The
            University:       (1) will provide reasonable      space in
            or near The Law School building,            as approved by
            The University       President and The Lav School Dean,
            to The Foundation for the purpose of carrying out
            its    obligations      hereunder and for      its    general
            operations     on behalf of The Law School*
            provide      the    utilities      and telephon:    “,‘e%
            reasonably      needed by The Foundation in carrying
            out     its   activities       under this    Memorandum of
            Understanding;       and (3) will permit reasonable use
            of University equipment and personnel as needed to
            coordinate      the activities      of The Foundation with
            the educational        operations   of The Law School, and
            hereby      expressly       recognizes    that   the     Dean,
            Associate      Deans, and members of The Law School
             faculty may reasonably assist from time to time in
            development programs as may be needed or helpful
             in coordinating        those Foundation activities       with
             the operations      of The Law School.

        In our opinion,    the university    has statutory    authority to provide
 the   foundation with the items enumerated in section            4 as “terms and
 conditions’      attached    to  donations.       See Educ. Code 165.31(e).
 University     property   is state property, see         Walsh v. University    of
 Texas’ 169 S.W.2d 993 (Tex. Civ. App. - El-so              1942, writ ref’d),  but
 the regents have power to determine the use of campus buildings.
 Splawn v. Woodard, 287 S.W. 677 (Tex. Civ. App. - Austin 1926. no
 writ).     Compare V.T.C.S.     art.    601b. 54.01     (Purchasing   and General
 Services    Commission’s control      of public    building   does not extend to
 higher education buildings).

        Counties have been oermitted        to provide a nrivate       entity with
 space in a public building where convenient or necessary to carry out
 a county purpose.        See Sullivan v. Andrevs County, 517 S.W. 2d 410
 (Tex. Civ. App. - KPaso            1974, writ ref’d     n.r.e.)(county       leased
 clinic   to physicians);    Dodson v. Marshall,     118 S.W. 2d 621 (Tex. Civ.
 APP. - Waco 1938,          writ   dism’d)(space     in courthouse       leased.   to
 individual     for concession    stand);    Attorney General Opinions MU-200
 (1980)(county     provided   rent free space in courthouse          to employees
 credit    union);  H-912 (1976)( contract ,with physician         to practice     in




                                       p.   1251
E.   0. Walker - Page 6       (nw373)




county medical clinic).      Countfes have only those powers expressly or
impliedly    granted by the     constitution     and statutes.       Canales v.
Laughlin,   214 S.W.2d 451 (Tex. 1948); Anderson V. Wood’
1084 (Tex. 1941).       The regents of the University         of Texas have far
broader powers to operate and manage component institutions           within the
system pursuant to regulations         they   deem necessary     and desirable.
Educ. Code 565.31(c).        In our opinion,       the   board of regents     has
statutory   authority over the provision of apace to private         entitles   at
 least as great as, and in all probability          greater thsn. that of the
 commlasioners   court.    The provision    of utilities     may be regarded as
 incidental   to the provision   of space in the lav school,in       view of the
 difficulty  of the foundation making separate provision for them.

       Section 65.31(e)   of the Education Code permits the university       to
 “accept and administer” grants.      This language implicitly    acknowledges
 that the university     vi11 have to devote some of its         resources   to
 administering    grants   it  accepts,   in particular     the services     of
 personnel.    The regents have statutory authority     to decide whether or
 not to accept a grant which involves particular        administrative    coats
 for the university.

        There is little   or no precedent for a governmental body providing
 telephone services     and the use of equipment to a private entity which
 uses space provided by the governmental body.             See Attorney    General
 Opinion     MW-200 (1980) (county     may provide      media free       space   in
 courthouse,    but may not provide free telephone service).          tlovever, we
 believe    the regents may regard the provision         of this assistance      as
 incidental    to the provision   of office     space in the law school to the
 foundation.     The foundation exists      to serve the educational      purposes
 of the law school by making various types of donations.                 The joint
 purposes of the law school and foundation may possibly be accomplished
  in a more cost effective       way if the board of regents provides the
  foundation with a telephone and some equipment, rather than requiring
  it  to use foundation resources to pay Its telephone bills           and buy its
 own copy machine.      We conclude that the board of regents has authority
 under section 65.31 of the Education         Code which permits the law school
   to provide    to the foundation      in reasonable     amount the resources
  enumerated in section four of the memorandum.

        Section   five   of the agreement states   as follows:

                   5.    It is expressly       mutually agreed that:
             (1) staff     personnel   working for or serving The
             Foundation may be paid as University              employees,
             but the salaries      and The University’s        portion of
             retirement    benefits    for such personnel         will  be
             reimbursed to The University          by The Foundation,
             and other usual benefits        for such personnel will
             be provided by The University:           however, all such
             personnel     are   subject    to   all     of   the rules.
             regulations’      and    personnel      policies     of   The
             University;     (2) funds raised by the development




                                        p. 1252
E. 0. Walker - Page 7          ww-373)




             activities     of The Foundation may be subject         to a
             reasonable     management or operations      charge or fee
             by The Foundation, but all such charges or fees in
             regard to endoved funds shall come from income and
             not from corpus;         all   funds,   whether endowed,
             restricted,       or   unrestricted,     raised     by    the
             development activities       of The Foundation shall be
             held,     invested.    managed, and disbursed        by The
             Foundation for the aole benefit of The Law School,
             subject      to any restrictions      placed    thereon     by
             particular     donors.

       We understand        section      five,    subsection    (1)    to provide       that
foundation employees are permitted to be on the university                     payroll and
to be eligible         for retirement        and other benefits         provided    by the
university    to its own employees.            The statutes    and appropriations         act
forbid   this arrangement.            The appropriations      act provides       funds for
departmental operating          expense and staff        benefits.      Acts 1979, 66th
Leg.,   ch. 043, art.        IV, at 2787.         See V.T.C.S.     art. 68138.       In our
opinion,    these    funds are appropriatedfor             university     employees,      and
may not be specifically           allocated    for salaries    or fringe benefits         for
the employees of a private              corporation    which is under contract          with
the university.         See Acts 1979, 66 Leg., ch. 843. art. V. II(p),                    at
2895.    Nothing in-e          university’s      budget request to the sixty-sixth
legislature       indicates      that any of the lav school’s                 departmental
operating expense was to be allocated                to foundation employees.          State
of Texas Request for Legislative               Appropriations,      Fiscal Years Ending
August 31, 1980 and 1981, the University                  of Texas of Austin,        at 74,
~87.

       Where authorized       by law. state agencies may employ an independent
 contractor,      but he does not occupy an office             or position      under the
 state nor is he an agent of the state.             Attoiney General Opinion V-345
 (1947).        See also     Attorney      General    Opi.lion   H-1304     (1978).        In
 addition,      the appropriations       act may authorize      an expenditure         for a
 consultant.       Attorney General Opinion S-13 (1953).            Hovever. vhere the
 appropriations       act indicates       that work is to be done by employees
 under the direct          control     of the agency,        it may not expend its
 appropriation      to contract     for the performance of those services              by an
 independent contractor.           Attorney   General  Opinion    S-80  (1953).       In  our
 opinion, employees of the Texas Law School Foundation are not entitled
 to be paid by the university.                 Nor are they entitled          to receive
 vacation and sick leave benefits which the appropriations                  act provides
 state      employees.       Acts     1979.    66th    Leg.,     ch.   843.      art.      V,
 $7(a),(b),(c).       at 2901.

       Employees of the Law School Foundation may not become members In
 the Teacher.Retirement  System.  Section 3.03(b) of the Education Code
 provides as follows:

                   Every employee in any public school or other
              branch or unit of the public school system of this




                                           p. 1253
E. D. Walker - Page 8     (W-373)



           State is    a member of the retirement        system ao    a
           condition   of his employment.

“Employee” is defined       in part as “any person elnployed to .render
service   on a full-time,     regular   salary basis . . . by the board of
regents of any college      or university.”     Educ. Code #3.02(s)(3).        In
Attorney General Opinion O-3399 (1941),       it YPS determined that      public
school   teachers who were employed and paid by the federal government
and vhose services      were controlled     by a federal    agency could not
participate    in the teacher   retirement system.     These persons were not
 teachers as that term is defined        in the retirement statute       because
 they were not employed by any state           educational   agency but were
 employed directly   and exclusively   by the federal government.       See also
Attorney General Opinion O-3409 (1941).          Since employees of the Law
 School Foundation are not university       employees, they are’ not eligible
 for retirement benefits    under the teacher’s    retirement system.

       Nor are employees of the foundation entitled         to participate         in
the group insurance plan which the university provides its employees.
Article     3.50-3 of the Insurance Code, the Texas State College                 and
University      Employees Uniform Insurance Benefits Act,        provides      group
coverage for all employees of Texas state colleges           and universities.
“Employee” is defined as any person employed by a governing board of a
 state university,      senior or community/junior    college,     or any other
 agency of higher education.           Ins. Code art.    3.50-3.    13(a)(4)(A).
 Employees of      the Texas Law School        Foundation do not         fit     this
 definition     and consequently    are not eligible  for insurance benefits
‘under article     3.50-3 of the Insurance Code. See also V.T.C.S.               art.
 5221b-6(b) (2) (unemployment compeqsation       for state    employees);        art.
 6252-19 (Tort Claims Act makes state liable for torts of persons in
 paid service of state);       art. 83098 (workmen’s compensation for state
 employees).

       Raving examined the memorandum from the perspective             of the
 university’s     statutory   authority    to agree to it,     w turn to your
 question:      whether the university     would violate article  III. section
 51 by complying         with its    representations    under the memorandum.
 Article    III,   section   51 of the constitution      provides in pertinent
 part:

                   The Legislature   shall have no power to make
             any grant or authorize    the making of any grant of
             public moneys to any individual,       association    of
             individuals,    municipal    or  other    corporations
             whatsoever

 This provision prevents the legislature    from giving away public  funds
 or enacting a .statute   which authorizes   a state agency or political
 subdivision   to do so.   See Texas Pharmaceutical Ass’n v; DooleF. 90
 S.W.   2d 328 (Tex. Civ.App.       - Austin 1936, no wit).     Thus, the
 legislature   may not authorize  the University of Texas to grant public
 funds to an individual   or corporation.




                                      p. ,1254
E. 0. Walker - Page 9       (nw-373)



       Although article    III,   section     51 on its    face prohibits     only
grants of money, it has been liberslly          construed to prohibit  the grant
of state     property   and contract      rights    as well as money.      Rhoads
Drilling    ~Co. v. Allred.     70 S.W. 26 576. 582 (Tex.          1934)(dicta);
Attorney Gener al Opinions WW-790 (1960); I&153 (1957).

      We note that provisions         one through three of the memorandum do
not    raise    the constitutional        issue   which concerns     you.    These
provisions     describe     the foundation’s    donative   purposes,  and do not
refer    to benefits      flowing   from the university      to the foundation.
Section five does not raise,the         article  III, section 51 issue, because
various     statutes    prevent the university       from providing     foundation
employees with the described benefits.

       Section    four    of   the memorandum does,       however,     raise     the
constitutional     issue.    It states   that the university     will provide the
foundation with office       space, telephone service,    utilities,    assistance
from university      staff and the use of university        equipment.     We have
determined that the regents have statutory          authority     to provide this
assistance     to the foundation;     we must next consider whether statutes
granting such authority are constitutional         as applied to the situation
you present.

       Article  III, section 51 of the constitution     requires that a grant
by the university      to the foundation   must serve a public        purpose,
appropriate     to the function    of a university,        and that adequate
consideration     must flow to the public.       Attorney General Opinions
hW-89 (1979); H-1260 (1978); H-520 (1975); H-403 (1974).         In addition,
the university      must, maintain  some controls     over the foundation’s
activities,    to ensure that the public    purpose is actually      achieved.
Attorney General Opinions MW-89 (1979);       H-1309 (1978); H-912 (1976).
If these conditions      are met, the grant by the public entity        is not
unconstitutional.

      As made clear by sections    one through three of the memorandum,
and by its charter,    the foundation    exists    to serve the educational
function   of   the law school.      Public     education  is  an essential
governmental functiog.    Rainey v. Malone, 141 S.W. 2d 713 (Tex. Civ.
APP. - Austin 1940, no writ).          The assistance      provided by the
foundation    to the university  helps    it accomplish    a public purpose
entrusted to it.

       The foundation’s     charter requires   it to devote Its resources      to
benefitting    the law school;      therefore,    the law school would still
receive    donations    from the foundation      even if it    did not provide
office   space and other in klnd,assistance.        -See Boyd v.  Frost National
Bank, 196 S.W. 2d 497 (Tex. 1946).

       Nonetheless,   a public    purpose may be served by providing       the
 foundation with rent-free     space In the law school.   This determination
 is to be made by the university           in the first    instance.  and if
 challenged,   ultimately  by a court.       Attorney General Opinion H-403




                                       p.   1255
        e.    D. walxer   - rage    10   (tsw-373)


.   .
        (1974);    see also Dodson v. Harshall, z,       at 624.     Although we lack
        sufficient     information  to state with certainty     how the foundation’s
        presence     in the law school      serves the public     purpose of higher
        education,     we can at least raise some poasibilitles     for consideration
        by the regents.

               For example, if law students    and faculty members have easy access
        to the foundation office,     they may learn about and benefit          from the
        scholarship    and research grants it offers.       The foundation’s     presence
        in the law school may help achieve          full and efficient       use of its
        resources     by prospective    recipients.      It   will   also     serve    the
        convenience     of persons   in the law school         who can contact         the
        foundation vith a minimal expenditure        of time.    See
                                                                 -   Attorney     General
        Opinion MS-200 (1980).

               Law school administrators          work with the foundation to coordinate
         foundation activities       with those of the lav school.         Their convenience
         will    be     served    if     the    foundation     is  easily    available     for
         consultations.        If    the     foundation    also   provides    administrative
         services,   these can be utilized         easiest on the law school premises.

                Another factor      to consider     is whether the provision            of office
         space and other         assistance      to the foundation          enhances     the cost
         effectiveness      of operating the foundation.        The regents might consider
         the value of the office          space,   telephone,    utilities,       equipment, and
         staff assistance      the law school will provide as compared to equivalent
         items purchased on the market.               Rental paid for an office               would
         probably      include    a landlord’s        profit.     Since       the    foundation’s
         resources      are to be used to benefit             the university,          savings    on
         overhead costs should go to the law school.               Providing the foundation
         with an office       might free    some resources worth more than the office
          from use for        overhead so they could be devoted                   to law school
          education.

                    In addition to serving a public purpose, the provision          of office
             space and related       assistance   to the foundation must be subject          to
             controls,   contractual    or otherwise.    to insure that the public purpose
             is met. The Memorandumof Understanding is not a contract,              since the
             representations     made by the foundation         either   relate  to Its past
             activities    or express generalized      intentions    as to future help.     The
             promises appear too vague to be enforceable             as a contract,   and the
             foundation’s     compliance with its legal duties under the charter does
             not constitute~consideration.        -See Teague v. Edwards, 315 S.W. 2d 950
              (Tex. 1958).

                   llovever , other controls        exist   to assure that the provision            of
             university     office    space and other benefits        to the foundation        serves
             and will      continue     to serve a public        purpose,     whether it      is the
             convenience       of the law school          or increasing        the value      of   the
             foundation’s      contributions    to public education.       The board of regents
             has sufficient        rule-making    power to establish          controls     over this
             transaction.       -See Educ.   Code  565.31.    In  particular,     it   has  authority




                                                     p.   1256
E. 0. Walker - Page 11       (MJ-373)



to control   the use of university      property.    Splawn v. Woodard. w.
The memorandum recognizes      this in noting that the university        president
and law school      dean will    control    the allocation     of space to the
foundation   subject to a test of reasonableness.           Other office-related
assistance   going to the foundation is provided subject            to a test of
reasonableness.     Memorandum, section 4.        Law school administrators      can
see that the office      space and other items provided actually         serve the
law school’s    purposes.

        With respect      to gifts    for   professorships        and scholarships,
section     65.36 of the Education Code provides          detailed   controls    as to
conditions      which may be attached to these donations.             Moreover, the
convenient       location    of   the   foundation     may enable         law school
administrators       to shape foundation activities         to some extent toward
fulfilling      the current needs of the law school.            If the foundation’s
presence on university        property ceases to serve a public purpose, it
may be removed at any time’ since it has no lease.                The university   has
control     of its premises and may require the foundation             to vacate the
office     it uses.     Cf. Morris v. Novotny’ 323 S.W. 2d 301 (Tex. Civ.
APP. - Austin 195x writ ref. n.r.e.),               cert.    denied,    361 U.S. 889
(1959).

       Additional     controls   over the allocation      of university    space to
the foundation are found outside of the university.             The state auditor
is required      to audit the use of public        funds by the university       and
report      to     the    Legislative     Audit    Committee.      V.T.C.S.     art.
4413a-13(l),(2).         Thus, university      expenditures   on behalf      of the
foundation       will   be subject     to   examination     by the     auditor   and
legislature.

        In addition,  the Open Records Act defines ‘governmental body’ to
 include the portion of every corporation      “which is supported in vhole
 or in part by public funds....”     V.T.C.S. art. 6252-17a. 52(F).        Since
 the foundation receives    support from the university       that is financed
 by public funds’ its records relating       to the activities     supported by
 public    funds will be subjec,t to public     scrutiny.    See
                                                             -    Open   Records
 Decision No. 228 (1979).

       Despite the absence of contractual        controls   designed to ensure
 that the presence of the foundation          in the law school will serve a
 public purpose, we believe the regents can exercise sufficient          control
 over this transaction       pursuant to statutory    authority.    Furthermore,
 additional    limitations   on the foundation derive from other statutes as
 discussed    above.     Consequently,  the university    may comply with its
 representation     under section four of the memorandum.



                                    SUMMARY

                   The University. of Texas may provide the Law
             School   Foundation with office   space and other




                                        p.   1257
C.   0.   Walker          - Page 12 (W-373)



               assistance     where     a public purpose will thereby be
               served,      The regents have authority          to decide   in
               the    first    instance    whether a public       purpose is
               served.       Sufficient     statutory   controls     exist  to
               ensure     that the public Purpose will be achieved.
               Thus, the university           may provide    the   foundation
               with         the stated benefits vithout violating         article
                   III,     section 51 of the constitution.

                         The university    lacks  authority   to place
                   foundation ,employees on its payroll and give them
                   fringe benefits  reserved for state  employees.




                                                           HARK       WHITE
                                                           Attorney   General of    Texas

 JOHN W. FAINTER, JR.
 First     Assistant          Attorney     General

 RICHARD E. GRAY III
 Executive         Assistant      Attorney     General

 Prepared by Susan Garrison
 Assistant         Attorney      General

 APPROVED:
 OPINIONCOMHITTEE

 Susan L. Garrison.              Chairman
 Jon Bible
 Jim Noellinger




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