- - - - - - - - - - - - -
November 2, 1970
Honorable Walter Howe, Jr.
Office of Program Planning
and Fiscal Management
Olympia, Washington 98501
Cite as: AGLO 1970 No. 140
Re: Western Washington State
College ‑ proposed payment
By letter previously acknowledged you have requested the opinion of this office on two questions which we paraphrase as follows:
(1) May Western Washington State College legally pay, or be authorized by the state treasurer to pay, vendor and payroll obligations chargeable to its appropriated state treasury funds from its local funds; then periodically to reimburse its local funds with a single state warrant drawn on the treasury?
(2) If question (1) is answered in the affirmative, may such payment procedures be restricted to the state's four-year colleges and universities or must the procedure be permitted for other agencies with similar local funds?
We answer your first question in the negative, thus making an answer to your second question unnecessary.
The proposal by Western Washington State College which has given rise to this request, as described in a letter to you from the business manager of the college, [[Orig. Op. Page 2]] is as follows:1/
"1. The college will pay all vendor payment obligations from local funds.
"2. The college will prepare daily a warrant and related documents to reimburse the college for that day's operational disbursement from programs 010 through 060 and program 100. These operating programs are funded from both the college General Local Fund and the state General Fund.
"3. The state warrant and related documents will be immediately mailed to the State Treasurer for signature and processing, as is the normal practice. The disbursement documents supporting the drawing of this warrant will refer exactly to the day's local fund disbursements which are being reimbursed. The documents sent to the State Treasurer will reflect fund/ appropriation/ program/ object codes as summarized to be entered into State Treasurer and OPP&FM central records."
You have further explained in your letter:
"The programs referred to above are included in the Governor's 1969-71 Budget and reflect funding of $23.7 million from the state's General Fund and $6.1 million from the agency's local funds which are maintained outside of the State Treasury. Currently, Western Washington State College vendor obligations chargeable to State Treasury funds are paid to individual payees through state warrants signed by the State Treasurer. By contrast, the proposal provides for all such obligations to be paid to individual payees by checks drawn on the agency's General Local Fund. For amounts so paid, a warrant will then be drawn to reimburse the agency's General Local Fund. A similar proposal has been presented to this office involving the payment of payrolls chargeable to State Treasury Funds."
[[Orig. Op. Page 3]]
Our negative answer to your question does not necessarily indicate any disapproval of the idea, as a mechanical expedient. The problem is that we find no express or necessarily implied statutory authority for it, and not that we find in it some actual conflict with general law.
It should be noted, preliminarily, that all of the state's colleges and universities, including Western Washington State College, are state agencies, and they are specifically regarded as state agencies under chapter 43.88 RCW, the state budget and accounting act. As such, they exercise only delegated powers; i.e., only those powers which are granted to them by the legislature, either expressly or by necessary implication. State ex rel. Eastvold v. Maybury, 49 Wn.2d 533, 304 P.2d 663 (1956).
The "local funds" which are the main subject of this discussion, may be generally described as revenues of the colleges usually generated through some activity or fee source, which through long-established custom and/or legislative sanction are retained by the colleges, are not placed in the state treasury, and are not made the subject of periodic appropriations by the state legislature. They are recognized by the legislature in a number of statutes, and specifically in RCW 43.88.160, which provides in pertinent part as follows:
"(2) The treasurer shall:
"(a) Receive, keep and disburse all public funds of the state not expressly required by law to be received, kept and disbursed by some other persons: Provided, That this subsection shall not apply to those public funds of the institutions of higher learning which are not subject to appropriation;"2/ (Emphasis supplied.)
The substance of the present proposal is apparently to treat the payments in question as advances or loans from local funds to discharge obligations which are legally [[Orig. Op. Page 4]] chargeable to the general fund only, and to make reimbursement from the general fund as in the case of an interfund loan. This involves either of two alternative assumptions:
(1) That obligations of the college are divided into two classes; those which are legally chargeable to local funds and those which are legally chargeable to general funds; and the obligations to be discharged in the proposed memorandum are all in the latter category; or
(2) That all vendor and payroll claims are chargeable against the general fund and all local funds are held in reserve until exhaustion of general fund appropriations.
If the first assumption were correct,3/ the transactions would be characterized as interfund loans. RCW 43.84.100, establishing the procedures for such loans provides as follows:
"Whenever there is in any fund in the state treasury insufficient moneys to meet the current expenditures properly payable therefrom and there are in any other funds moneys in excess of the amount required to meet the current expenditures therefrom, the state treasurer, with the consent of the state finance committee, may make temporary loans from the funds having excess moneys to those having insufficient moneys of such sums as may be necessary to meet the demands thereon: Provided, That this shall not authorize the loan of any moneys from the permanent common school fund, or from any of the permanent irreducible funds, of the state."
[[Orig. Op. Page 5]]
This statute, it should be noted, does not authorize the type of loan proposed here, in which advances are made from local funds to be repaid from a treasury fund. Furthermore, the factual requisite for such a loan, i.e., a temporary lack of funds in the borrowing fund, is not present. Consequently, there is no express or necessarily implied authority for such an inter-fund loan.
On the other hand, if the proposal is made on the assumption that appropriated funds are to be first used, an affirmative answer would do violence to some fundamental concepts in the budgeting and expending of state funds.
Funds are appropriated to agencies, including colleges and universities, on the basis of a demonstrated need for such funds. Cf., RCW 43.88.090 through 43.88.110. As part of the budgeting procedure, RCW 43.88.120 contemplates that all agencies shall disclose to the governor indications of what revenues will be available to offset expenditures. RCW 43.88.150 then provides:
"For those agencies which make expenditures from both appropriated and nonappropriated funds, the governor is authorized to direct such agencies to charge their expenditures in such ratio, as between appropriated and nonappropriated funds, as will conserve appropriated funds."
Therefore, if there is any assumption in the mind of the legislature in making its periodic appropriations to the various agencies including colleges and universities, as to what funds will be first spent, that assumption must logically be that the agency will first expend its available local revenues. In other words, remembering the necessity of finding statutory authority and finding no express legislative authority for the proposal, we must look to the statutes for some indication of a necessarily implied legislative intent. In this case there is no basis for finding any legislatively implied intent that any agency, including colleges or universities, should consider local funds as expendable only after appropriations from the general fund have been exhausted.
Finally, we have considered and we sympathize with the policy reasons for the proposed procedure. It would be, if installed, a simplified, less expensive method of handling the payment of these claims. However, for [[Orig. Op. Page 6]] those very reasons the legislature has already authorized simplified procedures for the handling of claims, which your office has installed pursuant to the statutory authorization. They are designed to facilitate the handling of both payroll and vendor claims (with respect to both treasury and local funds) and they are available to colleges and universities as well as to other agencies. RCW 42.16.011, relating to payrolls, provides as follows:
"A state payroll revolving fund and an agency payroll revolving fund are created in the state treasury, for the payment of compensation to employees and officers of the state and distribution of all amounts withheld therefrom pursuant to law and amounts authorized by employees to be withheld pursuant to law; also for the payment of the state's contributions for retirement and insurance and other employee benefits: Provided, That the utilization of the state payroll revolving fund shall be optional except for agencies whose payrolls are prepared under a centralized system established pursuant to regulations of the budget director: Provided further, That the utilization of the agency payroll revolving fund shall be optional for agencies whose operations are funded in whole or part other than by funds appropriated from the state treasury."
Further relating to such payroll revolving fund, RCW 42.16.012 provides as follows:
"The amounts to be disbursed from the state payroll revolving fund from time to time on behalf of agencies utilizing such fund shall be transferred thereto by the state treasurer from appropriated funds properly chargeable with the disbursement for the purposes set forth in RCW 42.16.011, on or before the day prior to scheduled disbursement. The amounts to be disbursed from the agency payroll revolving fund from time to time on behalf of agencies electing to utilize such fund shall be deposited therein by such agencies from funds held by the agency pursuant to law outside the state treasury and properly chargeable with the disbursement for the purposes set forth in RCW 42.16.011, on or before the day prior to scheduled disbursement." (Emphasis supplied.)
[[Orig. Op. Page 7]]
As to vendor payments, RCW 42.26.010 provides as follows:
"An agency vendor payment revolving fund is hereby created in the state treasury. This fund is to be used for payment for services rendered or materials furnished to the state, which are properly payable from funds other than those appropriated from the state treasury: Provided, That the use of this revolving fund by a state agency shall be optional: And provided further, That payment of salaries and wages shall be subject to the provisions of chapter 42.16 RCW."
RCW 42.26.020, as to such disbursements, further provides as follows:
"The amount to be disbursed from the vendor payment revolving fund on behalf of an agency electing to utilize such fund shall be deposited therein by the agency on or before the day prior to scheduled disbursement. The deposit shall be made from funds held by the agency outside the state treasury pursuant to law and which are properly chargeable for the disbursement. Disbursements from the revolving fund created by this chapter shall be by warrant in accordance with the provisions of RCW 43.88.160."
Mindful that the question you have asked is basically one involving statutory construction and, therefore, of ascertaining legislative intent, we must heed the rule discussed in State ex rel. Eastvold v. Maybury, supra, page 539, quoting from State ex rel. State Board Etc. v. Clausen, 84 Wash. 279, 282, 146 Pac. 630 (1915), as follows:
"'But where a person or board is charged by law with a specific duty, and the means for its performance are appointed by law, there is no room for implied powers, and the means appointed must be followed, however inadequate may be the result.' (Italics ours.)"
Therefore, it is our opinion that under existing law Western Washington State College may not legally pay or be authorized by the state treasury to pay vendor and payroll obligations in the manner proposed; that is, it may not pay all claims from its "local funds"; then periodically reimburse its local funds with a single state warrant drawn on the [[Orig. Op. Page 8]] treasury. For the reasons discussed in this opinion, both vendor and payroll claims should be paid directly from the sources available for their payment, by warrant or check. If a revolving fund procedure is desired in order to simplify payment, the legislature has enacted provisions in chapters 42.16 and 42.26 RCW to take care of the need.
In our reasoning and conclusion we recognize the question to be solely one of statutory law. If the legislature desires to change the law so as to allow the procedure proposed in Western State College's letter to you, it may freely do so either by amending existing statutes or by the enactment of new legislation.
We trust the foregoing will be of assistance to you.
Very truly yours,
FOR THE ATTORNEY GENERAL
Robert F. Hauth
Assistant Attorney General
*** FOOTNOTES ***
1/In view of the context of your letter, and its references to this specific factual situation, we have, with your concurrence, limited this opinion as applicable only to Western Washington State College. One reason is that apparently not all colleges and universities are proposing to adopt the exact procedure outline by the business manager of this college in this letter. Another and connected reason is that variance in the statutes applicable to the various colleges and universities might authorize some alternative plan presently under consideration by one or the other of them, notwithstanding our negative answer to the question here being considered.
2/It should be noted that the legislature has placed a limitation upon the establishment of any such local funds in the future. Cf., RCW 43.88.195, enacted as § 1, chapter 48, Laws of 1969, Ex. Sess.
3/In discussing this subject with members of the state auditor's staff in recent months, we are informed that obligations of the colleges and universities are not usually susceptible of being divided into two categories. They are usually, by nature chargeable to either "local" or "treasury funds," without distinction, and both types of funds are available for payment. The primary reason for this is the practice of lump sum appropriations by the legislature, as opposed to "item" appropriations. Furthermore, colleges and universities are for the most part "single purpose" agencies which have only a single operation chargeable to the state's general fund. As to local funds, we are here expressly dicusssing unsegregated local funds termed "general local funds."