OFFICES AND OFFICERS ‑- STATE ‑- GOVERNOR ‑- COLLEGES AND UNIVERSITIES ‑- LOANS ‑- DESIGNATION OF NONPROFIT ORGANIZATION TO GUARANTEE STUDENT LOANS
The governor, through the issuance of an appropriate executive order, may legally designate a private nonprofit organization to guarantee student loans in Washington in accordance with Title IV of the federal Higher Education Act of 1965, as amended by PL 94-42 and PL 95-43.
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May 25, 1978
Honorable Dixy Lee Ray
Olympia, WA 98504 Cite as: AGLO 1978 No. 16
Dear Governor Ray:
This is written in response to your recent request for our opinion regarding your legal ability, as governor of the state of Washington, through the issuance of an executive order, to designate a private nonprofit organization to guarantee student loans in Washington.
From the related materials which you have sent us in conjunction with your request it is our understanding that your particular concern is with the possible designation of either an existing or yet to be formed nonprofit private organization to serve as a guarantee loan agency under Title IV of the federal Higher Education Act of 1965, as amended by PL 94-42 and PL 95-43. See, in particular, 20 U.S.C.A. § 1071(c)(1) which provides that:
[[Orig. Op. Page 2]] "For purposes of carrying out this part‑-
"(1) The Commissioner shall develop and execute a plan designed to encourange the establishment of student loan insurance program by each State (whether operated by an agency of the State or by a nonprofit private institution or organization designated by the State) which does not have such a program covered by an agreement pursuant to section 1078(b) of this title;" (Emphasis supplied)
Unfortunately, however, this federal act is totally silent on the question of how a state is to make such a designation. Therefore, following our receipt of your request we, in turn, wrote our own letter of inquiry to The Honorable Ernest L. Boyer, Commissioner, United States Office of Education. Specifically, by letter dated April 13, 1978, we posed to Mr. Boyer the following two related questions:
"(1) What action by the State of Washington would you find acceptable insofar as the matter of state designation of a nonprofit organization is concerned; specifically, would the issuance of an executive order by the Governor to this end be sufficient or, instead, would some form of state legislative action be necessary?
"(2) In the event that the State of Washington were simply to designate a nonprofit organization as a guarantee loan agency under 20 U.S.C.A. § 1071(c)(1),supra, and do nothing more in terms of supervising the activities of that organization, etc., would the United States government, and particularly, your office, nevertheless in any way look to the State of Washington or hold it responsible for the proper conduct of the student loan program or would the federal government, instead, then deal directly with the nonprofit organization and lookonly to it as the applicable guarantee loan agency?"
[[Orig. Op. Page 3]] Thereafter, by letter dated May 8, 1978, over the signature of Mr. Boyer, our two questions were answered as follows:
"The Governor of a State may designate a nonprofit private institution or organization by either executive order or State legislation.
"If the Governor were to designate a nonprofit organization to administer the guaranteed student loan program in the State, all contractual agreements would be executed between the Office of Education and the nonprofit organization. The Office of Education would deal directly with the designated nonprofit organization and would thereby hold it responsible for the proper administration of its student loan program."
Given the foregoing answers to our questions it would now appear to us that if you, in your capacity as governor, were to issue an executive order designating a particular private nonprofit corporation to serve as the guarantee loan agency in the state of Washington, such action would be legally effective under the applicable federal laws. It is important to note, however, that this act of designation should not be confused with the function offorming an eligible nonprofit corporation‑-which would have to be independently accomplished in accordance with the general laws relating to the formation of such organizations. See, in particular, the statutes contained in Title 24 RCW. Moreover, as we understand it, any such organization, even after being designated by you as ". . . the guarantee loan agency in the state of Washington . . ." (emphasis supplied), would not thereby constitute an agency of the state for any statutory or constitutional purposes. Accord, Mr. Boyer's response to the second of our two questions, above.
This leaves us, then, only with a need to identify the legal basis for the foregoing proposed action under state law. As you know, the governor of our state has only those powers which have either expressly or impliedly been granted by the state constitution or the various statutes enacted thereunder. [[Orig. Op. Page 4]] Accord,Young v. State, 19 Wash. 634, 54 Pac. 36 (1890) and AGO 1972 No. 9 [[to Perry B. Woodall, State Senator, on April 17, 1972]], copy enclosed, at p. 7. In the instant case, however, it is our opinion that sufficient authority exists to support the limited action which would here be required of you‑-in essence merely satisfying a federal statutory condition precedent to the establishment of direct relations between the Office of Education and the designated nonprofit organization.1/ See, in particular, Article III, § 2 of the state constitution which vests "The supreme executive power of this state. . ." in the governor together with RCW 43.06.010(4) which designates the governor as ". . . the sole official organ of communication between the government of this state and the government . . . of the United States." In addition, we further note the authority granted by the following language of RCW 43.06.110:
"The governor, or his designee, is hereby authorized and empowered to undertake such programs as will, in the judgment of the governor, or his designee, enable families and individuals of all ages, in rural and urban areas, in need of the skills, knowledge, motivations, and opportunites to become economically self-sufficient to obtain and secure such skills, knowledge, motivations, and opportunities. Such programs may be engaged in as solely state operations, or in conjunction or cooperation with any appropriate agency of the federal government, any branch or agency of the government of this state, any city or town, county, municipal corporation, [[Orig. Op. Page 5]] metropolitan municipal corporation or other political subdivision of the state, or any private corporation. Where compliance with the provisions of federal law or rules or regulations promulgated thereunder is a necessary condition to the receipt of federal funds by the state, the governor or his designee, is hereby authorized to comply with such laws, rules or regulations to the extent necessary for the state to cooperate most fully with the federal government in furtherance of the programs herein authorized."
It would, of course, be entirely appropriate for you to find the forms of education which would be funded or assisted by student loans under the here subject federal guarantee program to be a proper fulfillment of the apparent purposes of this statutory provision.
We trust that the foregoing will be of assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General
*** FOOTNOTES ***
1/In your executive order we would also suggest the inclusion of an appropriate disclaimer, in line with the second portion of the above‑quoted letter from Mr. Boyer, to the effect that
". . . in making this designation it is understood that the (nonprofit corporation) is not thereby designated and does not become a contractor or agent of the Governor or state and neither the Governor nor state assume or undertake any liability or responsibility for performance or ability to perform the obligations of such nonprofit corporation."